Crypto trading feels overwhelming sometimes. There are indicators, news, experts who tell you the next big move on the market. This can be confusing. Trading signals are one tool that helps you through the jungle of crypto investing.
Crypto trading signals contain recommendations to you whether you should buy, sell the given coin and how much profit can you generate from a given trade. Some traders use these signals as it is, others combine it with there own analysis.
Whichever way you want to use these signals, it helps you understand the crypto market better. Learning from these can help you become a better trader. Here are some fundamentals on crypto trading signals.
How Does Crypto Trading Signals Generated?
For new traders in the crypto market trading signals are beneficial, because using them helps shorten your learning curve. If you try to understand the logic behind a signal, you will know how experts make their decisions. With time you can come up with your own.
Types of signals
Manual and automated signals
Manual trading signals are given by a seasoned expert. They are in the market for years and often you can check their track record to know how successful they are. These signals are based on fundamental and technical analysis. Automated signals are made by a computer program that analyses the market prices. It can be really accurate based on how sophisticated the algorithm is.
Paid and Free signals
There are entire businesses based on selling trading signals. Paid trading signals are usually more accurate because these companies watch their reputation. Free trading signals can come in the form of free trials of these paid services or can be found on forums and private blogs on social media. They are not inherently bad, there are some good free trading signals.
Either way, always research the company/trader that gives them to make sure they are trustworthy.
Entry and Exit trading signals
This depends on the trading period for a signal. Long-term trading signals usually suggest a time when you buy a crypto token. For example, there is a new coin with a very promising foundation. Long term entry trading signal would be to buy that coin and hold it. The opposite of this is an exit trading signal. Let’s say a government wants to regulate cryptocurrencies, so the trading signal says to sell that coin before the price moves down.
Short-term trading signals usually contain both. An example would be for this is buy ETH(Ethernum) at 3513.22$ and sell at 3516.24$.
What they are based on?
Crypto trading signals can be generated based upon technical and/or fundamental indicators. But what exactly this means? If you want to be a good crypto trader you need to know these indicators and how they generate the trading signals.
Fundamental indicators: This involves the analysis of the real economic impact on a cryptocurrency or a crypto trading pair. Popular fundamentals used to create trading signals:
News – this investigates economic data and politics and their impact on the crypto market.
Market sentiment – which is essentially the momentum of the crypto market that drives movement in certain currencies. Simply put market sentiment refers to the investor’s attitude towards the crypto market.
Volatility – is a statistical measure of the dispersion of returns for given crypto. Usually the higher the volatility is the riskier the coin.
Technical indicators: These strategies are mostly used to determine the entry and exit levels. These indicators are based on analyzing crypto trading charts. To be accurate a technical analyst use several methods to determine trends. Then they use indicators and other tools to know how strong is that trend when to enter or exit.
Some investors prefer fundamentals over technical analysis. In my college, our professor said it is nothing more than speculation that looks like science. On the other hand, some people make a profit solely with technical analysis.
In my opinion, the best shot would be to use trading signals that combine the two techniques. As you become a better investor and you see trading signals based on technical analysis, you can confirm it with fundamentals and vice versa.
Crypto Trading Signals and Copy Trading
A while back a trading signal system sent you emails or text messages when they found a good trade. Nowadays you have the option to copy trade. Copytrading means exactly what it sounds. You find an investor and every time he/she makes a trade you do the same. This is great because you free your time both on trading and learning to trade.
There are investing sites that integrated this option like eToro. But even if it is not a basic function you can always use bots and the exchanges API to make it happen. You can even customize the trade to fit your budget and risk tolerance.
If you use copy trading the same rules apply with trading signals. Research the trader that you want to copy. See how successful they are and their investing history if you can. The last thing you want is copying someone that doesn’t know what he/she doing.
How to use them?
The first step is you find a source for the trading signals. As I mentioned above it can be paid or free. Then you will start to receive trading signals to your mail on to your phone. If you find a trade that makes sense to you just do it on your exchange. Some of the crypto trading signal systems use API-s, with that you just hit trade.
If you are a beginner in the crypto market is a wise choice to follow these trading signals to the dot. Do your research on the company or the person who provides them and follow the signal. Try to understand how they determined the trade so you can become a better trader and with time you can come up with your trading signals.
If you have been around and know a thing or two about trading these signals also can help you. When you receive the signal you can use it as an addition to your analysis. Consider them as a tool in your decision-making repertoire.
Despite your experience level try to learn from the signals. As a crypto trader the more knowledge you have the bigger the chance for success. Plus it would be better to sell these signals than buying them, isn’t it?
Summary on Crypto Trading Signals
Crypto trading signals are given trades. They are determined by a seasoned expert or a sophisticated algorithm. You can find free and paid trading signals on the internet. Always research the provider to make sure you don’t lose money especially if you will pay for the signals. There are copy trading options that save you time, but make sure to copy someone who knows what he/she is doing. Use these signals not just to make money, but to learn and become a better investor. Maybe with time, you will become someone who is selling these signals.