Profiting From the Swings in Crypto Value

Profiting from the swings in crypto value

Volatility in cryptocurrency markets is a big part of the ecosystem as a whole but if you can predict when the swings are coming there is a lot of money to be made. If you’re new to trading cryptocurrencies this article will help you understand some of the ways you can make money from trading the different available coins in the market at this time.

If you are an absolute beginner there are some great guides on cryptocurrency margin trading out there but here you will just find a brief description of where the money is to be made.

There is no easy way to make consistent profits but there are certainly ways to improve your probability of profiting from market swings.  

Profit from the news

The news is a great way to get a feel for what is about to happen in the cryptocurrency market as it is a great indicator of what the mass sentiment is about to shift towards. The trick with trading the news is to get in ahead of the curve. Get your news early and frequently by using leading crypto outlets as they tend to be the places where the news is entering the market at the fastest pace.

When trading the news the trick is to read the unbiased news stories and then try to figure out what they mean for the price of an underlying asset.

For example if news comes out that the CEO of Morgan Stanley is behind Bitcoin it may be a good idea to adjust your view of what may happen in the BTC market as if Morgan Stanley is behind it then it is likely that more bulls will be entering the market and the price will go up.

There are great ways to make money on Alt Coins by trading the news that comes out about them as the smaller companies that have already done an ICO are constantly growing and getting smaller and as a result there is a constant flow of news on them to trade.

Profit from Technical Analysis

Technical analysis is a surefire way to make sure you protect your gains and minimise your losses when trading. Technicals can also be a great way to time the market and figure out if you should be buying or short selling.

A very simple way you can use technical analysis is to input a Simple Moving Average and overlay it on the chart. If the Simple Moving Average line is above the value of the instrument it is a good time to buy the instrument. If the Simple Moving Average line is above the value of the instrument it is a good time to sell the instrument. Therefore we can say that as the instrument value crosses over the Simple Moving Average line it is a signal to buy the instrument and the opposite is true when the value crosses under the line.

This is a very simple example of one technical indicator but if you study technical indicators you will find a wide variety of different instruments that can indicate whether the instrument is a good buy or sell option at that given point in time.

Technicals should always be used when trading, no matter what your strategy is because it will make sure you are not only doing the right thing but doing it at the right time.

Profit from Sentiment

Gauging the sentiment of the market is a great way to profit from changing views and opinions of what is happening in the marketplace. Companies like Investing.com offer the ability to see what percentage of the traders on the platform are buying and what percentage are selling. The same is true for a number of other websites out there that allow traders and investors to indicate if they are bearish or bullish on an instrument. It’s wise to get an indication of what the numbers of people that are trading in one direction is so choose a website with a very large user base when gauging the sentiment.

As a general rule it’s wise to run in the direction of the crowd to avoid getting trampled. Think of it like surfing a wave, it’s impossible to go against a wave on a surfboard and as a result you should always be surfing in the direction the wave is going. That is how markets work. If the volume of buy orders is bigger than the volume of sell orders a wave will form in one direction, up. The bigger the volume the bigger the wave.

So run in the same direction as everyone else is running and you’re probably running in the right way.

Profiting from cryptocurrency trading

Of the methods above it is advisable to combine them into one cohesive strategy that allows you not only benefit from the news and general market sentiment but also time your entry and exit into the market using advanced technical analysis.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.