Today, you won’t surprise anyone with trading currency pairs on the Forex market, but cryptocurrency trading on stock exchanges is only gaining popularity and is on everyone’s lips. Many domestic and foreign brokers have long included digital assets in the list of their services. However, this is not surprising. It would be a crime to miss the opportunity to make money on assets with rush demand and high volatility.
Crypto Trading 2022 virtual coins through the Forex trading platform is convenient in terms of technical analysis. Classic cryptocurrency exchanges have rather modest functionality for assessing the situation on the market. Usually it consists of a couple of popular indicators, or even completely absent. The MT4 trading terminal in this respect surpasses the functionality of the exchange in all areas.
Consider Forex cryptocurrency trading strategies. What methods work? Where is the best place to trade cryptocurrencies?
Market features
Before becoming a crypto trader, you should know some of the features of digital money, namely, how their value is formed, which affects the price change, when you can trade, and when it is better to stand aside. Consider the key characteristics of the cryptocurrency market.
POLITICAL AND ECONOMIC INDEPENDENCE
Cryptocurrencies do not have a single center that regulates their circulation in the world. The price is formed by supply and demand. The more buyers, the higher the rate of digital money. If there are many more sellers than buyers, the value of virtual coins drops.
The course does not depend on political instability in a single state, economic turmoil, speeches by officials, as is the case with the euro-dollar. However, political and economic factors can influence the change in value if they are directly related to the cryptocurrency. For example, the ICO ban in China collapsed the Bitcoin exchange rate. A change in political leader can also contribute to the growth or fall of digital money if he previously spoke out in favor of banning cryptocurrencies or legalizing their circulation in the country.
TECHNICAL VULNERABILITY
The market technology is based on an open source code, so the problems of information security are particularly relevant. If any cryptocurrency has been hacked, especially if users’ funds have been stolen, a significant decline in the asset’s price should be expected. A short-term fall of the entire market as a whole is also possible.
IMPACT OF MARKET PLAYERS
In the cryptocurrency market, there is such a term as a dump – a sharp drop in the price of an asset caused by the release of a large lot of digital money by players with large capital. It is characterized by large impulse candles on the chart. It is difficult to predict it, but it is worth thinking about a deal during the massive hype around the currency. If you observe a massive active buying of the same Bitcoin, it is likely that in the near future its price will drop sharply.
What Cryptocurrency Trading Strategy Works In the Virtual Money Market
The digital coin market is quite young and this is more of a plus than a minus. Almost any cryptocurrency trading strategy with elements of technical analysis will work here, while it has not been profitable for a long time on standard Forex market assets. What trading systems are involved?
TRADING ON CORRECTIONS
Cryptocurrency trading strategies mainly involve buying it after a correction in the long term. Selling is more appropriate at short distances, and then only in cases where the price of the asset is too high, and the number of buy orders is significantly reduced in the total glass of orders. You can see the real number of applications online on any cryptocurrency exchange.
Fibonacci levels are successfully used to determine the beginning or end of a correction.
However, they are used in all areas of life, so it is not surprising that the cryptocurrency market also sees and “respects” them. In the example below, you can see for yourself.
The example clearly shows how the pair recovers its positions after a strong fall according to the Fibonacci levels. The strongest level was 61.8%. The pair resisted and failed to break through it twice, after which two local extremums and strong resistance formed here. If you prefer short-term cryptocurrency trading strategies, you can set pending buy or sell orders on Fibo lines, depending on the situation.
Brokerage companies primarily focus on the Forex market, so most of them only offer the most popular currency pairs – Bitcoin and Litecoin. It is very important that your broker offers more cryptocurrencies, in addition to Bitcoin and Litecoin, were Ethereum, Ripple, etc.), as Exness does, then you can safely try trading systems that involve searching for the correlation of currency pairs.
Price Action on Cryptocurrencies
Some traders claim that the Price Action cryptocurrency trading strategy does not work in this market. This opinion is absolutely wrong.
After a long fall, Bitcoin paired with the US dollar formed two pin bars that are adjacent to each other. Previously, the pair had already tested the level that was touched by the shadows of the pin bars. It resisted and became the starting point for a new uptrend. Perhaps you should not look for some rare combinations of Japanese candlesticks on cryptocurrency charts, but the most popular combinations, outside bar and pin bar, work great in this market as well.
Sloping channels, horizontal support and resistance levels, the simplest Moving Average indicators, graphical figures and much more can be successfully implemented in Forex cryptocurrency trading.
The cryptocurrency market opens up many opportunities for traders. A wide field for experiments due to the youth of the phenomenon itself, the large-scale growth in popularity and the high level of liquidity allows even beginners who are just mastering the basic principles of trading to make money on cryptocurrency trading.
