Everybody heard about cryptocurrency, and some people even have been thinking about trading with the most popular crypto coins. However, you cannot just decide to trade and start trading. Or rather you can, but it might bring nothing at all in the best case. And in the worst case, you might suffer significant losses.
If you are just a newbie in the world of cryptocurrency trading, even the majority of terms can be completely confusing. Leave alone all those rules of how to read cryptocurrency charts and so on. It is impossible to trade efficiently if you don’t know at least the basics.
Here, we will check what those strange words mean and how to read trading charts cryptocurrency, both easy and depth charts. The more you learn, the more you can earn from trading with crypto coins.
How to Read Trading Charts Cryptocurrency: Basics
First of all, let us check how to read charts for cryptocurrency, the basics. The most common charts are candlestick charts. They are more objective, too, and provide the traders with more understanding about what is on in the market.
One of the main problems of any trader is to determine when to enter into a trade and when to exit. This is called market timing, and it determines to a huge extent whether you earn or lose. Whether you enter or exit too late or too early, you lose. Candlestick charts allow indicating what time you want to display. You will see the entire set of transactions that were made within the selected time. You can adjust the timeframe as you find convenient. When doing so, you can study the main trends present in the market.
Candlestick charts also display volume. It shows the activity that was performed during the timeframe that you have selected. The volume bar shows how much buying or selling activities were observed. The bars have different colors. Normally, they are green and red. A red bar shows the drop in the interest in a specific asset, the selling volume starts growing. A green bar, on the contrary, indicates the growth of interest in the coin. It indicates the growth of buying volume.
How to Read Cryptocurrency Price Charts: Bearish and Bullish
There are two main types of candlestick bars. They show the trend in the market. They are called:
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- Bearish;
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- Bullish.
These two terms are absolutely crucial to understanding clearly the market character and the behavior of cryptocurrencies. You need to learn how to read cryptocurrency price charts if you don’t want to lose all your investments.
A bullish movement indicates that the price of the selected cryptocurrency is growing. If you have a look at a candle stick, you will see that its bottom shows the price at the start of the selected timeframe. The bottom of a candle stick shows the price at the end of the selected timeframe.
Again, you can select the needed timeframe to check the trend for a particular period as well as the opening and the closing price. In day trading, these are the basic terms. If you don’t understand them, you will not be able to read any charts and will lose all your stock.
A bearish movement shows the price decrease. The bars mean the same.
However, just these things are not enough to know how to read cryptocurrency charts. If you decide to purchase crypto coins to trade on some kind of an exchange, such as Binance, you need to have basic knowledge about depth charts.
How to Read Cryptocurrency Depth Charts to Understand Everything about Crypto Trading
Depth charts are a must thing to know if you want to trade seriously. So, you need to learn how to read cryptocurrency depth charts. A depth chart is a chart that shows the number of orders for the purchase and sale of an asset. Any assets can be included in the chart.
A chart is split in the middle. In one part, the price for previous trades is shown. On the chart bottom, you can find the prices. And on the left, you can see the lowest order values. They indicate the price that is preferred by traders to purchase a specific asset. On the right side, you can see the prices set by sellers. Those are the highest order values. If you know both the values, you can get your coins at a reasonable price.
It might be very confusing to see all those values. Even more confusing is to determine how to interpret them. That’s why in a chart, the assets that have the same price are placed once only. It makes the entire chart shorter and clearer. To see all the assets, it is enough to put a mouse cursor on the price.
Nobody can learn how to read stock charts cryptocurrency during a couple of days. To get a clear idea about trading, you would need at least some months. Of course, just reading is not enough. You need to practice, too. Don’t hurry with trading with big money. Start with a small sum. For a while, don’t exceed it.
After you get a clear idea about the strategy you are using, you can increase your sum to a medium value. And only when the entire process of trading becomes clear and understandable, you can move to trade with the sums you need. Move to bigger sums only in the case if you really understand what you are going to do and whether it brings profit.
Trading with cryptocurrency bears huge potential in it. Some people have already become millionaires while trading with bitcoins. If you understand what cryptocurrency is, how it behaves, and how to earn from it, you can become successful indeed.
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