Methods for Investing in Cryptocurrencies, Third Edition: Advice for the Proactive Trader
In my previous two pieces, I covered the two most widely used methods for investing in cryptocurrencies: Both 1) investing in blue chips and holding them, and 2) acting as a venture capitalist. In this article, I will discuss the Active Trader, the third most popular approach to investing in cryptocurrencies.
And how exactly does The Active Trader go about turning a profit?
Evidently, there are benefits and drawbacks to every approach, and various degrees of dedication and expertise are needed for each. Although I think it’s possible to acquire the knowledge and abilities needed for either strategy, I think that one of the most significant considerations when deciding between them is simply which one you prefer.
Strategy #3, “The Active Trader,” requires a significant time commitment and carries a high degree of risk. Traders with more experience should use this strategy. Most of your time as a trader will be spent monitoring market trends, putting in trades, and preparing for the next round.
It’s no surprise that Bitcoin (BTC) is the most sought-after cryptocurrency on the market right now. Ethereum (ETH), XRP (XRP), Bitcoin Cash (BCH), Litecoin (LTC), EOS (EOS), Tezos (XTZ), Cardano (ADA), and Chainlink (LINK) are some other cryptocurrencies that are widely traded (LINK).
As a general rule, short-term gains (within a few days) are the primary motivation for entering and exiting the cryptocurrency market. You place a buy order if you anticipate an increase in the price of a cryptocurrency. If you anticipate a decline in price, you can also “short” the market.
Note that selling and short selling are two entirely different activities.
Read these two articles for more information on margin trading and short selling.
Active traders aren’t satisfied with gains of 10-20% over the course of a few days, while the investor who adopts strategy #2 (Playing VC) hopes to see gains of 10X over the course of a year.
Comparison of Technical and Fundamental Analysis
When deciding whether to buy or sell, different indicators are used by different traders. The technical analysis is the sole concern of some.
Technical analysis is a method used to spot investment opportunities by studying historical data and graphical representations of market activity. The price and trading volume of a coin are two of the most crucial indicators. Technical analysis is both an art and a science, but we will get to that later.
Some investors prioritise more fundamental factors. Perhaps they are anticipating a major event that will cause a price change, such as a fork or a halving.
Investor sentiment, the number of wallet addresses, the Network value to transactions (NVT) ratio, development activity, exchange inflows and outflows, and many other fundamental factors are all watched by traders.
While conducting our research, the team here at Crypto Briefing considers both technical and fundamental factors. In many cases, signals from technical analysis and fundamental analysis conflict with one another. To give just one example, let’s say that technical analysis is suggesting a BUY but fundamental analysis is advising a SELL.
Before making a call on a trade, we need to see confirmation from both technical and fundamental analysis.
Benefits of Using Pro BTC Trader
Our chief Bitcoin analyst, Nathan Batchelor, regularly updates our members with buy and sell recommendations on Bitcoin and other cryptocurrencies along with precise price targets and stop losses.
Pro BTC Trader subscribers receive daily (seven days a week) email alerts covering fundamental market developments, technical analysis, sentiment analysis, and trends forecast.
It’s crystal clear where Bitcoin’s price is headed in the short, medium, and long term, and there’s insightful commentary on other popular cryptocurrencies, too.
Instructions for carrying out the trade, including the entry price, the target price, and the stop loss points.
Nathan Gann hosts a live webinar every week called LIVE Trading War Room.
Get 10% off a yearly subscription to Pro BTC Trader if you sign up right now! But if you are new to trading cryptocurrencies, it is recommended that you practise on virtual funds first.
Our series on the three best ways to invest in cryptocurrency has come to an end. I’m hoping you’ll be able to use this data to determine the best course of action for you. Have faith and proceed cautiously with your investments. To the finish line, my friend!