We are officially in a (legacy) Bear market.

The stock markets worldwide dropped at rates never seen before. This Coronavirus market crash already outpaced even the Great Financial Crisis in 2008. Back then the prices saw a more gradual drawdown. That is a very fascinating example of how the euphoria can turn quickly into a widespread panic selling. 

Economies all over the world going into complete lockdown provide the perfect example of an unexpected black swan event. That refers to the event that no investor is taking into account in his trading strategy. When this happens, it completely changes the current and future scenario and requires new assessments for asset allocation.

Looking at the long-term chart of the SP500 Futures, we can notice that the 200 MA market clearly shows the divide between periods of Bear and Bull market. Last week the value of the index that gauges better than anyone else the state of the global economy broke this key level, ending, technically speaking, the longest Bull market of all times.

How long can it last?

In 2008, it took around one year from the price to breach the 200 MA and to reach the bottom. Of course, considering the magnitude of the current initial sell-off, it may take less to start a recovery. On the other side, the more severe drawdown might also indicate that this time the events unfolding could affect the economy even harder.

The truth is that no investor has a crystal ball to predict the future. These are the times when technical analysis can provide only little guidance, but it’s essential to keep an eye on the fundamentals. Currently, markets are pricing the lockdown of entire Europe and some areas in the US. Likely, investors are not yet considering the option of complete paralysis of the US economy. It’s still early to imagine footage of empty streets all over 50 states in the US. That’s what’s happening in Italy and other countries like Spain and France.

If that would happen, the consequences could be really ugly. Just as a comparison, during the worst recession since 1929, the US GDP fell at an annualized rate of 6.3% for three quarters, before starting its recovery. A complete shutdown of the economy could likely cause much worse figures. Early forecasts see the US GDP fall around 20-30% in Q2 2020 alone.

What can we expect after this Coronavirus market crash?

The panic spread quickly among investors. Before the first significant outbreaks in Europe, the general mood of the market was very complacent, and the Coronavirus seemed like a problem confined to China and nearby regions. When it was clear that the situation would have had a significant impact on China’s economy and other economies were about to suffer the same damages, the panic selling started a real Coronavirus market crash.

The drop ignited a rush for safety, but no asset class managed to provide the role of safe haven. 

Even the gold price plunged. Investors tried to sell whatever liquid asset to raise cash and liquidity. The crypto market experienced no less stress. The market still perceives cryptocurrencies as a risky investment and times of uncertainty pose significant selling pressure on prices.

Central banks stepped in with a massive coordinated action to inject liquidity to arrest the panic. These bold and proactive actions likely will bring short term relief in the markets. Yet, volatility is here to stay for quite a long time, new outbreaks and news about the development of the pandemic will cause further stress.

During the next phase, investors will assess the outlook accurately and will rebalance their portfolios accordingly. That will generate further turbulence among the asset classes.

The key element to keep an eye on will be the release of data about the state of the global economy. Unemployment, debt, and default rates are all doomed to increase. Nevertheless, the scale of the increase will dictate the long-term effect of this crisis.

Which asset classes could outperform?

The theory teaches us that in times of crisis, investors tend to sell risky assets, such as stocks, to rebalance their portfolios in bonds, gold or cash. This time the reality could be slightly different. 

Bonds are currently not the safest option as they have historically been. And that’s because of three main reasons: 

• Ten years of ultra-accommodative monetary policies inflated the valuation considerably. Trillions of Dollar worth of fixed income instruments already trade with negative interest yields.
• The level of indebtedness of both corporates and government is at all-time high values, which is atypical for pre-depression times.
• Inflation is not in sight in the short term, but eventually, unprecedented liquidity injections will have consequences on price levels in the long-term. Longer-dated bonds (those not yet trading at negative rates) should underperform with such expectations.

What about gold?

The safest asset by definition underperformed in these early stages. The sharp price drop in the stock markets urged investors to raise as much cash as possible to cover losses and very likely also positions in gold were caught in this vicious cycle. Again, no inflation expected soon is not pushing investors to hedge from that risk by buying precious metals such as gold. Nonetheless, gold could be a reliable option for the long term, when inflation concerns arise. 

Cash is king. 

In times of uncertainty, those that hold liquidity usually are those able to protect their portfolio better and can catch the best opportunities. In particular, the Dollar is by far one of the best-performing assets among the legacy asset classes. The dollar-index jumped in the past days to values close to 20 years-high.

This trend will likely continue for the foreseeable future as a widespread shortage of Dollars is hitting large corporations. This issue is so meaningful that the FED had to introduce swap lines with other major central banks to prevent the situation from further deterioration.

How to take advantage of these opportunities?

The good news is that also for you trading crypto nowadays it’s relatively easy to diversify your holdings across different asset classes.

Gold, for example, has historically proved to represent a solid hedge in troubled times. You can easily invest in gold using PAX Gold, which is tradable on Kraken. A coin pegged to the price of a troy ounce of the precious metal and backed one-to-one to real bullions. 

Speaking of stable coins, they already surged in interest in 2019, and likely their role in the ecosystem will strengthen further in the future.

There are plenty of options to hold digital Dollars — Tether, DAI, USDC, BUSD, PAX USD and more. What is very interesting is that in a world where interest rates are moving into negative figures, holding these coins and depositing them allows investors to achieve significant returns. 

Passive income strategies are very popular, and investors can decide to use centralized or decentralized facilities according to their preferences and degree of trust towards the different protocols. The recent crypto market crash served as a severe stress-test, especially for the decentralized protocols. Market volatility is still the single biggest threat to lending platforms, but as always, the market never provides returns without any risk involved. All you should do is to pick an investment with the best risk/reward profile according to your preferences.

Renewed volatility in the FX market

Apart from the Dollar, keeping an eye also on other Currencies could provide interesting opportunities. Central banks are on the move, the race to devaluation has started, and new currency wars will take place. All this will ignite volatility and, as you know, that generates the best opportunities.

It’s probably not a coincidence that Kraken exchange recently introduced FX trading, adding nine currency pairs with more to follow in the future. That means that soon you will be able to diversify your holding into many different currencies also via Coinrule.

What about Crypto?

The crypto market took a severe hit last week. The general risk-off shift impacted cryptocurrencies hard. The relatively low liquidity worsened the drop and liquidations on leverage positions accelerated the downtrend. 

The valuation of the broad crypto market fell back to key long-term levels. Looking at the crypto ecosystem alone, that could represent a buying opportunity to accumulate more. However, the broad economic landscape is very uncertain and could affect prices for more extended periods.

Since February, the correlation between Bitcoin and stocks has increased, and it’s now relatively high. Bear in mind, that the value is currently at around 0.1, which is still a relatively low correlation compared to other traditional assets classes. The notion of crypto as a hedge to a crisis of the legacy system seems to be not happening just yet. After all, that is reasonable as cryptocurrencies are not a broadly acknowledged asset class for investors. 

It is better to keep an eye on this in the coming weeks to see if the perception of investors shifts as new events unfold.

The best strategies for these challenging times

Coinrule can help you get through these uncertain days, turning the stressful short term volatility into opportunities. 

Rules like this allow you to catch small price moves without building large positions that can expose you to significant losses in case of sharp drawdowns. 

Instead, if you see this as a good buy opportunity and you are willing to trade in a longer-term time frame. You could accumulate more of your favorite coins. In our template library, you will find many examples of setups that fit different trading styles. 

Bonus tip: the weekly 200 MA for Bitcoin’s price provided support during the 2018 Bear market and is still playing a crucial role these days. Coinrule added technical indicators to the trading engine in the past weeks, and you could use them to build a rule like the following.

Of course, never forget to add a stop loss to your trades to protect yourself from unexpected losses.

Rethink your investment strategy

The new global economic scenario requires a new assessment of the risk of your portfolio and an in-depth evaluation of the positioning in the months to come.

Cryptocurrencies are probably the asset class with the best risk/reward profile for the future. The broad concept of crypto was designed precisely for periods like this. This Coronavirus market crash will be the real stress test of its underlying philosophy. Moreover, crypto teams are well-positioned to continue their operations remotely with no discontinuities. Even if our team is spread across four different countries, no quarantine restriction is impacting our development process.

The single most threatening element is that cryptocurrencies experienced multiple crypto bear markets but never a legacy broad bear market. Keeping an eye on how the correlation between Bitcoin and stocks evolves will give a clue about how investors will actually perceive cryptocurrencies’ risk.

Meanwhile, the best way to react to this Coronavirus market crash is to diversify your portfolio. Add new defensive asset classes like gold, currencies and stable coins to your wallet to reduce the overall risk.

In times when adapting to new scenarios and acting proactively makes the difference, Coinrule also takes the challenge and is becoming a multi-asset trading platform.

Stay tuned…

and trade safe!

DISCLAIMER

I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. You should independently verify all information in my post. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware that trading cryptocurrencies involve a significant degree of risk.

The post The Coronavirus Market Crash In 2020 – How To Protect Your Portfolio? appeared first on Coinrule.

We are thrilled to announce that now you can build your automated trading bot in a few steps and run it on Moving Averages and Relative Strength Index (RSI) indicators. 

How Do Technical Indicators Work?

Using technical indicators means to adopt the theory that prices move with recurring patterns. Therefore, these patterns incorporate all the information required to operate a trading plan. Technical indicators don’t take into account any “fundamental value” of the asset. That fits well with cryptocurrency trading since so far there aren’t any reliable models capable of predicting their price. 

Watching a chart and looking at the price moving up and down could often lead to the idea that it moves randomly without a clear trend.

At a closer look, though, it’s possible to spot predetermined behaviours that already happened in the past. This is precisely what technical analysis tries to catch. It’s impossible to foresee with a 100% degree of confidence where the price will move next. It’s possible to gauge some clues about it, though. 

The crucial aspect to keep in mind at this point is that it’s always a savvy choice to employ techniques to mitigate the risk and to manage your assets in a way to prevent significant losses that could compromise your liquidity and your capability to trade in the long term.

That said, the calculation of any technical analysis requires historical prices. The time-frame of the indicator defines how the price is aggregated. In the rule page, you can select the time-frame that fits best for your trading system. 

For example, if you select a time-frame of 1 day, that means that the bot will calculate the indicator using a daily price frequency. Using as an example, the Moving Average (50) with such a time-frame will correspond to the average price of the latest 50 days.

How To Use Technical Indicators?

There are different types of indicator and each of them has a specific purpose and utility. Understanding in which conditions one indicator performs better, and what signals it provides, allows users to take much better decisions while trading.

One thing to keep in mind when deciding which indicator to add to your strategy is the intrinsic lagging nature of every technical indicator. Given that the bot calculates them starting from historical data, by definition, they can provide a signal (buy, sell or some other price confirmation) only after it happened. I wouldn’t consider it a proper limitation, but just one aspect that every trader should always consider when analyzing the signals. 

There are some ways to reduce the lag-effect of an indicator, but that increases the chances of getting false signals. Choosing between a smaller lag and lower precision of the indicator is a crucial trade-off the trader should assess. 

Testing a strategy before launching it live to the market can help fine-tune the parameters to reach the balance that fits your needs. Remember, technical indicators are not perfect tools, and they shouldn’t be either. After all, catching the absolute top or bottom of each price swing is virtually impossible. Interpreting the right direction and employing the proper risk management tools makes a trader into a Pro.

How To Add Technical Indicators To Coinrule?

Creating an automated trading strategy has never been easier!

Technical indicators appear in the condition block. At the moment, the rule triggers on signals from Moving Averages and RSI. 

Add up to three conditions for each block, allowing maximum flexibility to achieve any trading strategy traders would need.

You may want to buy whether the Moving Averages point at a specif pattern.

Sell on sharp price increases if the RSI indicates that the trend is overextended.

Accumulate more of your favourite coins when the price is oversold.

Or you could protect your wallet from drawdown if the price crosses a long-term moving average on high volume. 

Whatever is your perfect trading strategy, you can now build it with Coinrule. Then, if you are curious to discover more ways to use technical indicators for your crypto trading, check out our new templates!

Your next step into automated trading is here! 

Trade safe!

The post Technical Indicators Added To Coinrule – The Most User-Friendly Trading Bot Is More Advanced Than Ever appeared first on Coinrule.

Manual, also called discretionary trading, requires a trader to place, manage, and close all the positions directly on the trading platform.

That means that the trader should spend a lot of time on:

• Analyzing the market, checking how market conditions evolve
• Evaluating the impact of the market moves on the profit and loss of his positions
• Waiting for a specific event or scenario to occur 
• Execute the order to react to the price action
• Update the profit and loss following the most recent order executed
• Assessing the results and looking for potential improvements or optimizations
• Constantly review market analysis

If that wasn’t per se a very challenging and time-consuming activity, the profitability of the trader is often directly proportional to the time spent trading. Of course, the more time the trader can analyze the market, the more opportunities he can catch. That translates into more opportunities for profit.

The relation between time spent trading and trading outcome is also not linear. If the trader is not using an appropriate trading strategy, or stress (just like other emotions) is impacting his decisions, the time allocated to trading would result in considerable losses.

What is needed for manual trading?

The main assets that every trader can count on to reach satisfying trading results are:

• Available Capital
• Time
• Trading skills
• Stress management skills.

For many, the available capital is the harshest constraint and the most crucial variable to work with. At the same time, the other variables in this list are not easy to grow. 

The best traders are those that spend a reasonable amount of time running a profitable trading system and avoiding the influence of emotions.

How can a non-pro trader improve his returns?

If you are an experienced trader and you can get constant gains in all market conditions without spending a meaningful amount of time in front of your computer or looking at the charts, the chances are that you are already in a privileged spot. You probably don’t require any further advice.

Unfortunately, statistics state that around 80% of traders lose money or underperform the market. So how can you improve your profit?

A trading bot is an automated trading system that runs without the need for manual intervention. You can plan the bot only once, without employing a meaningful amount of time. The bot will trade for you according to the instruction 24/7 regardless of any stress or emotional interference. 

All the trades that the trading bot generates are based on decisions taken on your behalf following the logic that you’ve set up.

It takes a very advanced trading bot to beat the best traders, but on average, using trading bots can hugely simplify the lives of ordinary traders and beginners. It allows everyone to start trading, catching the opportunities that the market offers every day.

Related: Why Algorithms are so important for trading Cryptocurrencies

Advantages of Trading Bots

Algorithms and trading bots already trade trillions worth of assets every day in traditional financial markets. Banks, Hedge Funds and large investors use them for their multiple benefits and efficiencies. Financial markets witnessed the advance of trading bots vs humans years ago, and nowadays algos traded almost 80% of US stocks.

Day after day, more investors are also deploying trading bots in the Crypto market to take full advantage of its volatility.

Here are the main features that make a trading bot a radically better solution to trade cryptocurrencies.

They never sleep. 

Just like markets run 24/7 with no pause, a trading bot can react to any market move at any time. It’s unpredictable when news can impact prices. A new regulation in Japan can have severe effects on the Crypto market for a long time, and, given the time zone difference, US investors could be at a considerable disadvantage while Japanese investors are reacting to the news. 

They are fast. 

Not only does it take no time for a bot to execute an order on the market, but the algorithm can decide on sending the order in a fraction of a second. A prompt reaction to price moves provides to algo-traders an advantage on manual traders. Time is money, and that applies strongly also when it comes to trading. Sometimes, just a few seconds of delay can turn a profitable trade into a loss.

They are smart. 

Trading bots can analyze a massive amount of data each second. That represents one of the greatest advantages of using an automated trading bot. Even the most experienced traders can keep an eye only on a handful of charts at the same time. A bot can screen the market constantly looking for a specific pattern, and it reacts promptly when the right conditions are met. More potential opportunities increase significantly the probability of being profitable in the long term.

They don’t have feelings. 

Feelings are the worst enemy of every trader. The first rule of trading is to buy low and sell high. That implies that the best times for buying are when the price drops and the best for selling is when the market moves higher. That seems to be a pretty logical approach. Unfortunately, our brain tends to advise the other way around. In times of drawdown, the trader tries to cut losses and often misses the price rebound. In times of euphoria, the trader starts to believe that the uptrend can last longer and falls into the FOMO trap.

A trading bot is not affected by fear or greed. It will only execute the assigned trading plan.

Related: Security First – How To Protect Your Crypto From Scams And Hackers

Are trading bots better than humans?

It’s probably impossible to beat a professional trader. Experience plays a crucial role in managing stress and developing an advanced trading system. Sadly, traders that reach these high levels of proficiency are very few. Only a very low percentage out of millions of people trading cryptocurrencies or traditional assets every day are professional.

One of the main advantages of using a trading bot is to be able to stick with the preset rules of your trading system. Here you can read about some tips that can help you boost your returns. These advice sometimes are difficult to follow but if you incorporate them into an automated trading strategy, the bot will follow your instructions precisely without biases.

A trading bot especially a crypto trading bot may not be perfect but significantly helps those who don’t have the proper attitude or enough time to invest in trading. Trading is very challenging and needs adequate tools to tackle the market and get the best of it. The challenge of trading bots vs humans continues but watch out for a rise of machines in the future.

Conclusion

The debate between trading bots and human traders is not about which is inherently better, but rather about which is more suitable for specific trading scenarios. Trading bots excel in speed, efficiency, and emotion-free trading, making them ideal for high-frequency trading and markets that operate around the clock. Human traders, on the other hand, bring adaptability, intuition, and the ability to consider qualitative factors, which can be invaluable in dynamic and unpredictable market conditions. Many successful traders and institutions use a combination of both approaches, leveraging the strengths of trading bots for automated execution and the expertise of human traders for strategic decision-making and risk management. The key is to understand the strengths and limitations of each approach and to deploy them in a complementary manner to maximize trading performance.

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The post Trading Bots vs Humans – Can Machines Beat Traders? appeared first on Coinrule.

The initial recovery started in April 2019, but it took over six months for investors and traders to regain the confidence lost during the previous two years of Bear Market. Many Crypto are now starting to look very promising. But which are the most promising crypto in the next bull run?

Bitcoin Dominance Flashes Recovery Signs

The chart that synthesises best the current state of the Crypto Market is the one that shows Bitcoin Dominance over the last two years. 

In January, after a long period of depression, the broad Altcoin Market started overperforming Bitcoin, and this pushed Bitcoin Dominance below a key trendline. The trendline began precisely from the top of the Crypto bubble when the Altcoin buying-hysteria was at its apex. 

This is a clear sign of long-term reversal. It’s quite difficult to estimate the magnitude of the next price move. While it’s challenging to say what to expect from the Crypto Market in the coming months, it’s safe to assume that buying Altcoins in a diversified portfolio could be an attractive option compared to just holding Bitcoin. 

Many Altcoins already doubled in price in the past month, but some are lagging, and it could still be a good time for buying. Here are the most promising crypto in the next bull run.

Monero (XMR)

The chart seems to provide evidence for a reversal. The price marked a neat double-bottom, and from there it’s now up around 35%. 0.0077 BTC was a clear resistance, and Monero managed to trade above it for a couple of weeks now. We could see a retest that would provide even better entry prices, but the risk/reward is very appealing. 

Strong supports now provide a low downside risk, and the first target is now around an area of 0.012 BTC, which represents a potential upside of over 40% from current prices.

Ravencoin (RVN)

Ravencoin could be one of the most promising Cryptos for the next bull run. The coin is down 80% from the high in March 2019, and that represents a massive upside. Considering that the coin is up only 25% from its low versus Bitcoin, the risk/reward of buying around these levels is very favorable.

The price has been stuck in an accumulating zone since July 2019, so it’s obviously tough to predict when it will move higher. On the other hand, looking at the series of lower highs and at the price compression going on, we can expect some volatility when the verge of the triangle will approach in around one month.

The first significant support area is at 330 satoshis, and the volume increase is a sign of growing interest. Speaking of the volume, the fact that it keeps increasing on up moves and decreasing when the price retraces is a further positive sign to keep an eye on.

Basic Attention Token (BAT)

The token is up roughly 70% from the lows in September 2019, but the price range between 2.2K and 3K satoshis has historically offered a significant upside of around 90%, making of it clearly one of the promising crypto in the next bull run.

Last week the volume printed the second-highest figure since April 2019, when the price topped at its all-time high. The price is now attempting a new breakout. It will be worth keeping an eye on the next weekly close. If no significant retrenchment occurs in the short-term, that will be the sign that the accumulation phase is over.

Solid fundamentals also back basic Attention Token, and it was included in our watchlist of the coins with the highest long-term potentials.

NEO

The so-called Chinese Ethereum has been heavily hammered hard during the Bear Market and the price traded for long in a steep downtrend. The coin is currently up 60% from the bottom but still has an upside of about 800% to reach the top again.

At the end of October, the price broke above a major trendline with a remarkable volume, and since then ranged between 0.00144 and 0.1160 BTC. The volume decreased on the pullback and started to pick up again when the price approached the upper bound of the range. That’s a very positive sign.

It’s also interesting to notice that the price is forming a cup-and-handle pattern around the bottom. That is a generally bullish structure that could provide further evidence of a reversal.

0x (ZRX)

The token has a structure that resembles NEO closely. The price currently doubled since the lows but has an upside potential of about 700% to the all-time highs reached in May 2018. It’s worth noticing that the price topped while the market was struggling with a severe Bear Market. Traders should take this into account as that is an index of potential decorrelation with Bitcoin and the rest of the market.

The price double-bottomed at 1400 satoshis and the rebound lead to a breakout from the long-term downtrend. Also in this case, the move was coupled with a significant volume increase that validates its importance.

From the fundamental point of view, the token trades on all major exchanges and the team has a solid connection into the Crypto community. On top of that, 2019 saw a parabolic growth of the DeFi environment and the token could play a prominent role among the most promising cryptos in the next bull run.

How To Take Advantage Of These Setups?

Depending on the strategy that you prefer to pursue, different approaches could prove profitable in the current market conditions.

• Buy The Dip: Catch every price drop to buy at better prices. When the market is broadly trending higher, the risk/reward of buying is always more profitable, and buying in times of downturn amplifies the potential gains. This strategy involves attention and a prompt reaction to eventual price reversals. 
• Buy The Breakout: When the market volatility decreases, and it becomes uncertain what will be the direction of the next price move, it is safe to wait for the breakout of key levels and then buy the coin.
• Accumulate: This strategy consists of buying periodically one or more specific coins. Splitting the opening of your position across multiple orders gives you the possibility of buying also at a lower price, lowering your average cost of purchase and increasing the profit when the price moves higher.

Choose the strategy that fits your need and expectations of the market best and never forget to apply the basic rules of Risk Management.

Trade safe!

DISCLAIMER

I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. You should independently verify all information in my post. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware that trading cryptocurrencies involve a significant degree of risk.

The post The Most Promising Cryptos To Buy In The Next Bull Run appeared first on Coinrule.