Component 7: Fundamental Analysis — Trading Cryptocurrencies

Does this make sense to utilize basic analysis for trading cryptocurrencies? Is this an investigation reliable enough? Sure, it’s. We wouldn’t spend so much time on it in our series dedicated specifically to this topic. You also may ask what are the specifics of trading cryptocurrencies as well as the risks.
Fundamental analysis has its pros and cons.
Pros: The good news is that cryptocurrencies tend to react to various political and economic news the way you would expect from them: the good news are usually followed by growth, bad news by decline. This makes the environment much more transparent for trading than in the trading of Forex fiat currencies. Another advantage of cryptocurrencies compared with dollar or euro is the lower capitalization (as transfers smaller than billions of euro or dollars are reflected in the price).
Cons: If everything was so simple as described above fundamental analysis would be used by all traders. This, however, is not happening. Why?
The advantage of the traditional Forex trading in this respect is the existence of established periodical news aggregators not enabled by cryptocurrencies. In cryptocurrencies, it is the opposite. There are no established official news aggregators and therefore important news about cryptocurrencies appear unexpectedly. This makes each trader to continuously follow news about every cryptocurrency because each project publishes information at its own discretion.
Thanks to the website of CryptoPanic you can follow news from multiple channels in a single point.
Monitoring news about cryptocurrencies
How to keep up to date on cryptocurrencies? We recommend the combination of two methods. See our practical demonstration below.
Crypto-broker (exchange) info channels
The first option to follow the news about cryptocurrencies is to use various information channels used by cryptocurrency brokers and crypto-exchanges, obviously as long as you trade with them. Their advantage, as opposed to large stock exchanges, is their limited currency portfolio. Using a single information resource will help you get more in-depth and detailed information.
Alternatively, you can make use of social networks such as Facebook or Twitter or some less common communication tools such as Telegram or Slack. One shouldn’t dismiss RSS sites, blogs, and various discussion forums, either. The official site of every cryptocurrency should always function as a dependable indicator and, in precisely the exact same time, a pertinent resource of advice. Employing the combination of all of the mentioned tools, you’ll be current about all inventions regarding individual monies and prepared to satisfactorily respond.
The dark aspect of the company is there is always some bad news profoundly impacting the marketplace that youpersonally, in the function of a little and uninformed dealer, can barely absorb and exploit punctually. As an instance, after shutting down Segwit2x the cost plummeted within a couple of hours by 10%. Unless watching information about cryptocurrencies is the only job it’s very hard to maintain and use such rapid changes on your trading.
News portals
News portals are a fantastic option primarily for dealers utilizing services of big portfolio exchanges i.e. portals like Coindesk, my favourite CryptoPanic or even Cointelegraph, publishing additional pertinent news. This is precisely the sort of information that’s beneficial for dealers whose portfolio isn’t defined rigidly and concentrates on what’s covered in the most recent news. The portals are a excellent selection for traders to pick the ideal money for trading.
The principal shortcoming is the lack of a news portal to supply the traders together with all critical information punctually. So far as fiat currencies are involved, this portal site exists. Professional solutions within this subject are offered for example by Reuters.
Combination of agent information stations and information portals
It’s always great to check at either side when crossing the street. The same is applicable to listening to this information. To watch both the official and unofficial channels pays . Furthermore, it’s wise to maintain an image by not dismissing some of these hearsay news emerging on the sites. A fantastic strategy is to specify a particular area of cryptocurrencies and also to always keep up with the newest trends and progress.
Originally, shoot blank ammunition.
The best evidence of every concept is its functional application. But this practical program may wind up in significant losses of your hard-earned cash. To prevent it happening, we recommend you study each of reports in detail and if you go searching for the first-time use blank ammunition, in other words, examine your plan on a demo accounts.
Trading cryptocurrencies Using a demo-account are accessible with Plus500 or IQ Option. The latter provides to exchange of most popular cryptocurrencies (bitcoin, litecoin or ripple) either through presentation and actual (live) accounts. You could begin from as low as USD 10 by sending the amount for your account by card, bank transfer or digital wallet (e.g. Skrill).
Get enrolled with IQ Option