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When trading using technical analysis, it is important to use a holistic approach. I personally like using indicators as a tool on top of my market structure analysis. The Relative Strength Index is one of the most popular indicators used because it helps explain when a coin is overbought and oversold. Overbought coins are known to sell off while oversold coins are known to have growth potential.
In the video above, I take a look at the popular cryptocurrency Ripple ($XRP). Using the RSI indicator, I was able to pick specific entry points for coins that allowed for easy 5-10% gains. One of the most important parts of using the RSI is being able to do analysis on the calculation itself. I personally draw support and resistance lines on my RSI chart because it gives a great indication of the true turnaround points.
The biggest issue with strictly using indicators is that they do not work perfectly. Use the RSI as a tool within your analysis. Do not use it as your analysis. As always, trade smart and trade without emotions!
Thanks Kyle. I have been using RSI, STOCH and MACD for a little over a week and I just have a few questions. I am mainly on bittrex and I don’t think I fully understand which coins to look for starting out. I know I need to stay in higher volume coins but when to get in is the trouble. Should I look for coins in the 2-7% change and look for RSI patterns? Also as you change the candle time frame the RSI obviously changes. So if the daily one shows 70%+ but the 30 min shows 40% should I be taking into account the daily RSI at all? I would like to eventually get into more trades per day but having a full time job I can’t check it as often so the volatility is tough. Do you recommend doing one trade as a beginner?
Thanks for your help.
Magnr is a handy cross-platform trading site connected to a few big Bitcoin exchanges. Accounts never require any personal data or identitiy proof. So signup is quick and possible with anonymous data.
Leverage is available at Kraken up to 5x for several cryptocurrency pairs, including bitcoin. The fees are depending on the volume of the margin account.
Bitcoin can be traded on GDAX up to 5x leverage. The margin trading option must be manually turned on the account in order to make sure the users understands and reads the associated risks.
Margin trading is basically borrowing funds to purchase an asset, this allows you to buy more bitcoins that you would normally be able to do normally in the hope of making bigger profits on the price movements.
Advantages of Margin Trading.
The biggest benefit of margin trading is that you can take advantage of the additional funds when the market moves in the direction you expected. The overall profit of the positions once the bitcoins are soled and the loan is repaid is significantly higher compared to an ordinary trade execution.
Disadvantages of Margin Trading.
The disadvantage of margin trading is by nature the amount of risk a margin account can hold. The higher amount of leverage you take the bigger amount of money you can loose in case the market moves in an unfavorable way. Due to the margin call, the margin account must be funded countinuesly that involves significant amount of liquidity. It is only advisable to trade on marking if you have enough experience already on the market. To mitigate the associated risk, many trading platforms only offers limited amount of leverage trading opportunites.