I’ve been involved in currency trading in various forms for the last goodness knows how many years. I am constantly amazed how traders lose it when a trade goes against them. However upon further examination of the charts you will probably find it’s just in an upward trend.
Currency Prices do not just go straight up — or down.
There is ALWAYS some movement with an upward trending market, remember that it’s a buyers vs sellers game. So the price will move in one direction till there are no buyers and then will drop back to find more buyers. Remember EVERYONE wants to buy at the bottom, but when there is no bottom and the price of a commodity is very high, it simply runs out of buyers and has to pull back, mostly to 50% of the last move before it can carry on.
What about sudden moves?
Sudden moves are often caused by good or bad news. Normally the price moves and then returns back to where it was before or slightly higher or lower as there is not that much volume (active trades) in the move. A price can move suddenly and stay at the new price when something like quantitative easing happens (this can never happen on Bitcoin), where say for instance int he UK the Government wants to stimulate the economy, it will print more money so that there is more money to loan out to business. (I know, this sounds like a crazy idea and IMHO it doesn’t work because you have devalued the currency making it harder to export goods).
So the two things that influence the price of any commodity are buyers, sellers and news.
One of the reasons I’m happy to hold my ripple is that Ripple’s intrinsic value — it’s actual fair price has not really changed. It’s simply bad news that has influenced sellers.
How can I protect myself?
- Do not use leverage. If you use leverage you are borrowing money from the broker to earn more if you win, but you will lose far quicker and not be able to take sudden drops.
- Look for dips when you are going to buy — IF YOU ARE BUYING CRYPTO DO IT AT THE WEEKEND WHEN VOLUME IS LOW
- Do not buy at the top when everyone is waving their hands in excitement with “oh Bitcoin‘s reached $54K”. Be patient.
- LEARN THE CHARTS and ESPECIALLY the MACD indicator.
- Do not be swayed by internet hype. There are whole groups of people talking up certain devices, but this talking up is normally followed by a huge fall, when the “leaders” of those groups will short whatever it is that they have talked up and take your money.
Learn to do your research. Being Autistic I love charts, I love the flow of the data, Fib ratios, the maths and how markets move.
Oh lastly, remember that crypto is normally compared to FIAT money. So if the dollar gets stronger the crypto will get weaker. But at the moment, the dollar is having trouble keeping up.
Right now — as you can see from my chart I expect a pull back on crypto and then further moves up. It’s simply run out of buyers.
If you want to buy Crypto $XRP included you can through eToro.