Cryptocurrency is one of the most popular assets among traders, which has exceptionally high volatility. The price of a crypt can change dramatically in a short period. Knowing where the trend is moving, you can make good money. But how can we predict the direction of the coin price, at least in the medium term? So, the best crypto signal can help traders in this regard.
What are cryptocurrency signals?
Trading signals of cryptocurrencies are recommendations about the conclusion of transactions on the exchange, usually displayed on the price chart. As a rule, signals for cryptocurrency trading are sent by automatic bots. With the help of built-in algorithms, they analyze the data of the charts of crypto assets, and as soon as they find the most successful point to enter the trade, they signal the trader.
The work of bots is based on the methods of technical analysis of the market. The trading robot is configured to search for graphical indicators that allow you to find the best positions for opening and closing a contract, thereby providing people with the best crypto signals.
Cryptocurrency trading signals have advantages over independent market analysis, but they also have some disadvantages.
Main advantages
- The signals work based on the analysis of a large number of market factors, and the search for the most successful positions for entering and exiting the transaction is carried out using mathematical formulas. A simple person can’t analyze such a large amount of information and make calculations. Automated cryptocurrency bots analyze this data and make recommendations instantly.
Main disadvantages
- Most trading robots have a limited number of built-in market indicators.
Not all cryptocurrency purchase signals are based on technical analysis data. Some signals are published by economic analysts or professional traders. But such recommendations are not without drawbacks. The financial market is a complex and predictable environment. So no matter how professional the author of the signals is, he can be wrong.
It doesn’t matter if you use an economic review with fundamental market analysis or the recommendations of a trading adviser. However, signals should be treated with extreme caution.
Cryptocurrency exchange signals or trading recommendations developed by professional analysts can be displayed on the price chart and come in the form of messages to your smartphone (email). If the signal provider is a broker, he can give trading advice to the client over the phone.
How to use cryptocurrency trading signals?
As a rule, a trading signal includes four main indicators:
- BUY – entry position for the trade;
- SELL-closing position;
- TERM – the time during which the contract remains open;
- LINK – link to the exchange where you can trade the instrument.
Conclusion
Trading signals are a good helper for the trader. They greatly simplify the trading process. It is more rational to use paid signals since their accuracy is an order of magnitude higher. But you should not rely on recommendations alone. The most effective way is to compare technical and fundamental analysis data. Then the market picture will be the most complete, and the chances of correctly determining the direction of the trend will increase.