Predicting Cryptocurrency Trends
All Investments come with a possible risk factor. A major determinant of being a responsible investor is being able to mitigate all risks to make maximum return on your investments (ROI). Predicting the direction or the actual price of any cryptocurrency at a particular time is becoming more difficult to do; considering the current market trends.
Being able to definitively or conclusively project prices might be impossible. But knowing the range at a time can be possible using some of the following tips. Always keep in mind though that, predictions are just that — a prediction.
Below are the 5 Basic tips for predicting cryptocurrency trends.
1) Follow Trend Lines: Trend lines can be referred to as the obvious trajectory that a coin appears to be following. The volatile nature of crypto assets can render a particular trend implausible or inefficient. Although the trends can help follow the rise and fall, this volatility might deter a wholesome view of trends. Knowing how to read a chat can help in understanding how things like candles, moving averages, RSI, and the order book can clue you into good spots to buy and sell.
Bollinger Band is one of the best price guess approximator in following trend lines. What it does is, stock of the price is bracketed by upper and lower band and these bands are its standard deviations. The simple logic is studying if the current price is below or above the bands and predicting it to fall back within the bands
Learning technical analysis is another strong way of following trend lines. The Long Short Term Memory (LSTM) is a good example. The Recurrent Neural Networks, a part of which are the LSTMs which help solve tike series problems. LSTMs have gained ground as a great forecast method for both stock market and crypto prices.
2) Use Social Media: A ton of social media platforms, accounts, and groups on Twitter, Slack and even Reddit offer current and professional insight into the world of cryptocurrency. Some even have current information on new appearances. Social vices should also help in knowing when big companies partner or invest in the coin and when cryptopreneurs start promoting a particular coin. Cryptocurrency market capitals are increasing super fast. But still, it is too volatile and manipulative. People are following each other’s movements.
3) Learn about position sizing and risk management. This method is akin to taking bets. The odds should determine the level of safety that a purchase or trade will represent. The ability to maintain an even keel regardless; will save a lot at the end. The skill acquired here will help in realizing that crypto tends to be pattern based and tends to go in cycles. This means that you want to be in coins before it starts it's rotation and leaving it as the rotation ends.
These takes experience and a good knowledge on position sizing and risk management.
4) Read the source codeYou can reach it from https://coinmarketcap.com/, just click on the coin you want to see and select source code from this helps in knowing how strong their security and core code is. This could also help in knowing the amount of a coin that has been traded in the last 24 hours.
Major trends precede very high trading numbers. Low trading volumes on the other hand represent a weaker trends.
5) Use Paid Resources and know your technology. It is A fact that value of paid products is higher than that of the free versions.
In other words, use paid resources to keep ahead of the cryptomarket and encourage better trading practices. Finally knowing what the coin you are investing in offers is very important because most times you need to check with your beliefs like how much do you believe technology will take over traditional banking?