Technical Analysis for Crypto Trading
As the world of cryptocurrency grows ever larger, more and more people are taking an interest in it. Some are looking to invest, others want to know how they can benefit from the growth potential. But many would-be investors are still unsure of how exactly they should go about their research before making this potentially life-changing decision.
The truth is that cryptocurrency trading can be incredibly profitable, but only if you know what you are doing. This guide will set out how to go about using technical analysis when trading cryptocurrencies on Bitcoin Evolution, and why it is widely regarded as the most effective approach available today.
Technical Analysis (TA) is a method of evaluating investments that have existed far longer than most other methods used today. It is often called the “language of the markets”, and can be applied to any tradable asset; stocks, commodities, bonds, and more recently cryptocurrencies. This method has been around for over a century and is currently in use by millions of traders internationally.
Nowadays TA is used by millions of traders and investors around the world, and while it cannot be credited with predicting every major event in financial markets, over time it has proven itself to be one of the more reliable forms of analysis available today.
A casual look at some articles on cryptocurrency trading will show you that TA has become particularly popular here, with Bitcoin Evolution seeing plenty of content about it. However, despite its long history and widespread use many people still don’t understand how to use technical analysis. So, this guide will attempt to rectify that by explaining what you need to know about it.
Why Technical Analysis?
There are a number of different trading styles and methodologies available today, from the fundamental analysis that looks at the economic forces driving investment through to more commonly discussed technical analysis. The latter is particularly popular in cryptocurrency circles because it offers a relatively simple way of making predictions based on historical price data.
Technical Analysis vs Fundamental Analysis
Fundamental analysis is a system that looks at the economic forces behind particular security or asset. It attempts to value an investment based on the strength of its underlying economy and can be a lucrative approach if you know what you’re doing. However, it requires plenty of research to understand how all of these different forces work together, which can leave many people wondering if they’ve missed the boat.
The fundamental approach to trading has existed for much longer than technical analysis and is based on a number of different factors that can be difficult to grasp if you don’t have a great deal of knowledge about economics or finance.
TA instead focuses on historical price data to make predictions about where investment is likely to go next. It does this by looking at several different data points, including market trends and trading volume.
It has been around since the beginning of financial markets and requires a relatively small amount of information to work out where prices are going next. Its simplicity is one thing that makes technical analysis highly appealing for many traders, especially those who want to make an investment without having to spend hours studying the markets.
Technical analysis can be a valuable tool for cryptocurrency traders and is one of the most popular approaches available today. The next step is to learn how to use it properly, which should allow you to make the right choices when putting together your portfolio. This is quite an expansive topic and we will keep covering specific areas in our subsequent articles.
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