Cryptocurrency Analysis Tools

Author & Guarantor: Anton Yurchenko
6 min read

Graphical Analysis Tool

Graphical analysis is the cornerstone of a trader’s success.

The fact is that the cryptocurrency market is quite small, today the capitalization is just over $ 300 billion.

If suddenly this amount seemed large, then it is enough to remember that Apple’s capitalization is now approaching 1 trillion and amounts to about 957 billion US dollars.

By the way, it is Apple that is likely to become the world’s first trillion-dollar company.

As you can see, cryptocurrencies are a very young but dynamically developing market. However, it is the low capitalization that plays into the hands of traders.

The smaller the market, the more clearly the so-called crowd psychology can be traced. The market trades technically and is easily predictable from the point of view of classical market analysis techniques.

Graphical analysis is very capacious—but at the same time, it isn’t a very difficult technique to master. There are three main ways to represent prices in the form of a chart

  • Line chart
  • Japanese Candlestick chart, and
  • Bars chart.

The line chart is the least informative. It shows only one price value per unit of time, while the Candlestick chart and the Bars chart are very similar.

A candlestick chart shows four price values ​​for a selected time interval, and the candle itself has an open, close, minimum and maximum price.

Japanese candlestick chart

Unlike Bars, the distance between the open and close is painted over and forms the body of the candle.

In the case of Bars, the body is not displayed and is just a vertical bar. The advantage of this method of price display is that all random fluctuations are averaged and reduced to four basic values.

It allows you to cut off all fluctuation fluctuations and focus on the most important information.

Graphical analysis allows you to find certain patterns and make correct predictions of further price movement with a probability of up to 80%. These patterns are called graphical analysis patterns.

The patterns themselves are divided into continuation patterns, after which the price will most likely continue to move in the same direction as before.

Channel figure

Reversal patterns, after which the price will most likely change the direction of movement to the opposite and bi-directional patterns, after which the price can equally likely change or maintain the direction of its own movement.

Mathematical Analysis Tools

There are other types of market analysis: Mathematical and Fundamental. Mathematical Analysis is one of the most popular methods for analyzing exchange prices, available in the MetaTrader 5 trading terminal, it is directly carried out using indicators of mathematical analysis, and as a rule is an integral part of any trader’s trading system.

The indicators work on the basis of mathematical formulas. There are two most important concepts in the market—price and time. Based on price, time and mathematical calculations, indicators are obtained that help a trader determine when to buy, when to sell and when to fix the result.

However, Mathematical and Graphical analysis has another very important advantage: they allow the trader to understand when to enter the market and when it’s not necessary, since there are simply no trading signals.

News Trading Tools

Fundamental analysis of the Cryptocurrency market includes any news that is published and related to cryptocurrencies. Statements and opinions of managers of large funds, data on the listing of a particular cryptocurrency on the stock exchange, unverified information leaked to the Internet and much more.

Finding useful information among these mountains is a very difficult task. In most cases, special calendars, scheduled events and data scheduled for months in advance simply do not exist, and those that do exist do not stand up to scrutiny.

One of the simplest strategies for beginners may be to work at the intersection of two indicators such as Moving Averages. In the crypto market during periods of rapid growth and decline, this tactic has proven itself very well.

A Moving Average with a shorter averaging period is called a fast Moving Average, and a moving Average with a larger period is called a slow one. The intersection of a fast moving average and a slow one

  • From top to bottom give a sell signal, and
  • From the bottom up—a buy signal.

The signal to close the deal will be a counter signal from the moving ones, and the Stop-Loss order can be placed for the nearest price minimum or maximum when opening a deal. With the correct selection of moving moving parameters, this approach can bring significant profits.

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