As the number of cryptocurrencies grows and more sophisticated tools like futures enter the crypto market, it will become increasingly difficult to make money in this market.. In the cryptocurrency market, buying without any help and waiting for it to rise does not seem like a smart investment strategy.. Developing profitable cryptocurrency investment strategies has now become more complicated.. For example, when valuing stocks, price/earnings ratio etc.. A fundamental analysis can be done using many ratios such as. These are concepts that do not apply to crypto markets. So, is it possible to analyze cryptocurrencies and make money in the highly volatile but lucrative market on the other hand? The answer is yes. Below we have compiled 4 tips for you on how to do this.
Analyzing trading volumes
The first thing you should do before investing in a cryptocurrency is its trading volume. is to analyze. Unless there is some news about a low-volume crypto, as a rule, follow the cryptos with high trading volumes every day.. High volumes indicate the liquidity of a Crypto. And it tells us that this cryptocurrency has an active community.. The problem with low-volume cryptos is that they often don’t have a strong community backing them.. Such cryptocurrencies, on the other hand, can cause losses as they have the potential to be easily removed from the stock market.
Use the Sharpe rate
After examining the daily trading volumes of cryptocurrencies, their historical focus on price movements. The best way to do this is to use a financial ratio known as the Sharpe ratio.. Of course, you do not need to calculate this ratio manually.. You can easily find its automatic calculation when you search on the Internet.. The Sharpe ratio measures an asset’s potential return based on its volatility. Numbers higher than 1 are usually a sign of an asset with high potential returns.. Given that 2017 is the shining year of cryptocurrencies, most of them have a Sharpe ratio higher than 1.. Therefore, you can use this ratio for profitable cryptocurrency investment and identify the cryptos with the highest Sharpe ratio compared to others in the market.
Follow up-to-date cryptocurrency news for profitable cryptocurrency investment
With our advice so far, you should have narrowed your list down to a few cryptos with good potential for profitability.. However, you need to narrow your list further and find the cryptocurrencies that have the potential to rise faster than the rest.. That’s why you should follow the developments related to crypto money closely.. You should take a look at crypto news from different sources to determine which cryptocurrencies will be your focus.. Our site, on the other hand, publishes dozens of content every day about the latest news in the cryptocurrency market.. In this context, you can be informed about the developments quickly by opening your instant notifications to learn about these developments, which may be useful for you.
For example, Zclassic will be forked to create Bitcoin Private and investors with Zclassic will win Bitcoin Private as much as their coins.. This is great news and if Zclassic already meets the other criteria we mentioned above, then this news indicates that the probability of Zclassic gaining in value will be quite high.. Demand for Zclassic will likely grow in the coming days as people expect to earn some free cryptocurrencies.. Early learning of such high-importance news that will affect the prices of cryptocurrencies can enable you to act at the right time.. Sometimes the news does not give such clear information.. This situation, which we call fundamental analysis, means reading and analyzing interconnected news about cryptocurrencies.. As you read the news, you will gain experience and increase your fundamental analysis power.
Find an entry point
Now you have determined the coins to invest in. The final stage is to find an entry point for your investment.. Technical analysis has always been the best strategy for finding an entry point when investing in financial assets.. The best way to use technical analysis to find an entry point is to understand candlestick patterns.. For example, if you want to buy Bitcoin, a bullish candlestick pattern on the weekly chart will be a good indication that it is time to enter the market.. Of course, these technical analysis methods that we mentioned in the most basic sense do not guarantee you profit.. But they are very convenient tools that you can use on the way to profit.
If you follow these steps and you are lucky, you can make profitable crypto money investments in this market.. The last piece of advice we can give, and perhaps most importantly, never trade for fear of missing out (a kind of FOMO situation).. Remember, there are always opportunities in the market.. And it will never end.
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