In this article, we’ll explore what RSI is, how it works, its formula, interpretation, and tips to get the best out of this powerful trading tool.

Key Insights

• The Relative Strength Index (RSI) is a widely used momentum oscillator that measures the speed and change of price movements in crypto trading. Ranging from 0 to 100, it helps traders identify overbought or oversold conditions in the market, making it a valuable tool for predicting price reversals.
• RSI values below 30 indicate an oversold condition, suggesting a potential upward correction, while values above 70 signal an overbought condition, hinting at a possible downward reversal. Understanding these thresholds allows traders to make more informed buy and sell decisions.
• Divergences between RSI and price action provide reliable signals of potential trend reversals. A bullish divergence occurs when the price forms a lower low, but the RSI shows a higher low, indicating a weakening downtrend. Conversely, a bearish divergence signals a weakening uptrend.

What is RSI? Understanding the Basics

The Relative Strength Index (RSI) is a widely used momentum oscillator that measures the speed and change of price movements. Developed by J. Welles Wilder, RSI helps traders identify overbought and oversold conditions in an asset, making it a key tool for technical analysis.

RSI values range from 0 to 100 and are typically calculated over a 14-period timeframe. Traders use these values to gauge whether an asset is likely to experience a reversal or continuation in its price trend.

How the Formula Works

The RSI formula compares the magnitude of recent price gains to recent price losses over a specified period. The result is a number that indicates the relative strength or weakness of an asset’s price action.

Here’s the basic formula:

Where RS (Relative Strength) is the average of gains divided by the average of losses over the given period.

This formula gives traders a clear numerical value to assess the current market conditions, helping them identify whether an asset is overbought or oversold.

How to Interpret the Values

Understanding how to interpret RSI values is crucial for making trading decisions. Here’s a breakdown of what the values mean:

• RSI Below 30: Indicates that an asset is in an oversold condition. This suggests that the price has experienced significant downward pressure and may be due for a relief rally or upward correction.

• RSI Above 70: Signals that an asset is in an overbought condition. This means that the price has experienced substantial upward movement and may be at risk of a reversal or downward correction.

However, while these signals are helpful, they are most effective in sideways or range-bound markets. In trending markets, relying solely on it can be misleading.

Using RSI in Different Market Conditions

RSI performs best in range-bound markets, where the price moves within a consistent range. In this scenario, traders can use it as a contrarian indicator, meaning they sell when the RSI is above 70 (overbought) and buy when it drops below 30 (oversold).

But what happens in strong trending markets?

In trending markets, the RSI may remain above 70 or below 30 for extended periods, reducing its effectiveness as a simple buy or sell signal. In these cases, traders need to look at RSI divergences for more reliable signals.

How to Spot the Divergences

The divergences occur when the price action and the RSI indicator move in opposite directions. These divergences are often strong indicators of potential trend reversals.

There are two main types of divergences:

1. Classic Divergence

• Bullish Divergence:
  Occurs when the price makes a lower low, but the RSI forms a higher low. This indicates that the downtrend is weakening, and a reversal to the upside may be imminent.

• Bearish Divergence:
  Occurs when the price makes a higher high, but the RSI forms a lower high. This signals that the uptrend is losing strength and a downward reversal could be approaching.

2. Hidden Divergence

• Hidden Bullish Divergence:
  Occurs when the price makes a higher low, but the RSI forms a lower low. This is often seen as a continuation pattern in an existing uptrend and suggests that the bullish momentum will continue.

• Hidden Bearish Divergence:
  Occurs when the price makes a lower high, but the RSI forms a higher high. This indicates that the bearish trend will likely continue.

Spotting these divergences requires careful observation of both the price chart and the RSI indicator. When identified correctly, they can provide high-probability trading opportunities.

How to Get the Best Out of RSI

Using it effectively goes beyond just identifying overbought and oversold conditions. Here are some tips to maximize the indicator’s potential:

1. Combine with Other Indicators

RSI works best when combined with other technical indicators, such as moving averages or Bollinger Bands. This multi-indicator approach can provide more accurate signals and reduce false positives.

2. Look for the Divergences

Pay close attention to the divergences. These patterns often precede major trend reversals and can give traders an edge in predicting future price movements.

3. Adjust the time frame

RSI can be applied to different timeframes. Longer timeframes, like daily or weekly charts, provide more reliable signals, while shorter timeframes may offer more frequent but less accurate signals.

4. Use Dynamic Analysis

Instead of focusing solely on the values, analyze how it evolves. This can give insights into the momentum and strength of the current trend, helping traders make better-informed decisions.

How to spot divergences?

We can divide divergences into two groups, the Classic and the Hidden.

A classic bull divergence happens when the price makes a lower low, and at the same time, the indicator is posting a higher low. This pattern is usually a sound indication that the downtrend is weakening and there are good chances of a reversal. On the other hand, a price’s higher high together with an RSI’s lower high indicates that the trend is weakening and that could represent an opportunity for selling.

A hidden bullish divergence on the other hand happens when the price forms a higher low, while the RSI makes a lower low. Here is a visual recap of the main Bullish divergences, usually they represent very interesting buying opportunities.

Why it is a Powerful Tool in Crypto Trading

In crypto trading, volatility is a given. RSI helps traders navigate this volatility by providing insights into the strength of price movements. It offers a simple yet powerful way to spot potential reversals and avoid emotional trading decisions.

Additionally, platforms like Coinrule allow traders to automate RSI-based strategies, ensuring they never miss a trading opportunity, even in a 24/7 market.

Using RSI with Coinrule for Automated Trading

Coinrule is an automated trading platform that allows users to create custom trading rules based on indicators like RSI without requiring any coding knowledge.

Here’s how Coinrule enhances RSI-based trading:

• No-Code Rule Creation: Build trading strategies using RSI without any programming skills.
• Backtesting: Test your RSI strategies on historical data to ensure their effectiveness before deploying them live.
• 24/7 Automation: Automate your trading rules to monitor the crypto market round the clock.
• Risk Management Tools: Set stop-loss and take-profit levels to manage your risk effectively.

By combining the analysis with Coinrule’s automation tools, traders can improve their decision-making, reduce emotional biases, and optimize their trading strategies.

Conclusion: Mastering RSI for Profitable Trading

Understanding what is RSI and how to use it effectively can significantly enhance your trading success. While no indicator guarantees perfect results, RSI provides valuable insights into market trends, momentum, and potential reversals.

For traders looking to streamline their strategies, combining the analysis with automated tools like Coinrule can take trading to the next level. With features like no-code rule creation, backtesting, and 24/7 automation, Coinrule makes it easier to stay ahead in the fast-paced world of crypto trading.

Start leveraging the power of RSI and automated trading to maximize your crypto trading potential today.

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Below are key tips to help ensure your new crypto business is successful, from building trust with customers to implementing effective marketing and maintaining regulatory compliance.

1. Develop a Crypto Robust Marketing Strategy

Marketing is an important aspect of any successful business, and the crypto industry is no exception. In an environment filled with competitors, having a strong and unique marketing strategy will help your brand stand out and attract customers. Crypto marketing presents its own challenges, as many traditional marketing platforms—such as Google Ads and Facebook—have strict regulations around cryptocurrency advertising. Because of this, many new crypto businesses opt to hire professional marketing agencies to help develop a dedicated crypto marketing strategy that pinpoints marketing strategies specific to the industry. An experienced agency can boost websites and take a crypto business to the next level. Whether hiring a professional or doing it yourself there are a plethora of marketing tactics to try. 

Content marketing is a powerful tool in your arsenal. Publishing high-quality content that educates and informs your audience will help establish your business as a thought leader in the crypto space. This could be in the form of blog posts, case studies, whitepapers, or even podcasts. By consistently providing valuable information, you’ll position your business as an authority in the industry, which can enhance your credibility and attract new users.

Another key tactic is influencer marketing. Crypto influencers have large and loyal followings, and collaborating with them can expose your brand to a broader audience. Whether through interviews, sponsored content, or partnerships, tapping into influencer networks can help your crypto business gain visibility and trust.

Email marketing remains a highly effective tool for engaging users and driving conversions. Create targeted email campaigns to inform your users about new product launches, updates, promotions, and educational resources. Keep in mind that personalization is key—tailor your emails to the specific needs and interests of your audience for better results.

2. Focus on Building Trust and Security

One of the most significant challenges in the crypto industry is building trust. Many people are still skeptical about cryptocurrencies, largely due to concerns about security, fraud, and market volatility. For your crypto business to succeed, you need to focus on creating a trustworthy brand and prioritizing security.

Start by ensuring your business complies with all relevant legal and regulatory requirements. Depending on your location, this could involve obtaining the appropriate licenses, registering with financial authorities, and adhering to anti-money laundering (AML) and know-your-customer (KYC) regulations. Transparency is key—being upfront about your business model, the technology behind it, and the risks involved will go a long way toward building customer confidence.

Security is equally critical. Given the nature of blockchain technology, safeguarding users’ assets and data should be a top priority. Implement robust cybersecurity measures, including encryption, multi-factor authentication (MFA), and regular audits to detect and address potential vulnerabilities. In a market where even large exchanges have experienced hacks, prioritizing security helps differentiate your business as one that customers can trust with their investments.

3. Invest in Education and User Experience

The crypto world can be daunting to those unfamiliar with the technology. To succeed, especially if your target audience includes beginners or casual users, you need to make the experience as user-friendly as possible. Educating your customers about cryptocurrencies and blockchain technology, as well as the benefits and risks associated with them, will be crucial for your business’s growth.

Create an educational hub within your platform or website, featuring blog posts, tutorials, FAQs, and even video guides that explain how your products work. Offering step-by-step guides for tasks like setting up wallets, trading crypto, and understanding blockchain will help demystify the process for users. This not only increases their confidence but also enhances customer loyalty, as people are more likely to engage with a platform that helps them learn.

4. Stay Ahead with Innovation and Adaptability

The cryptocurrency industry is evolving at a rapid pace. To ensure your crypto business remains competitive, it’s essential to stay ahead of the curve with innovation and adaptability. What worked six months ago might not be effective now, so continuously seeking improvements and staying updated with the latest developments in the market is crucial.

Start by keeping up with emerging technologies. For example, the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs) has transformed the crypto landscape. Understanding these trends and incorporating them into your business could give you a significant advantage. Whether that means offering DeFi services like staking and lending, or creating your NFTs, embracing these innovations can attract new customers and provide additional revenue streams.

Be prepared to pivot when necessary. The regulatory environment around cryptocurrencies is still in flux, and new rules could impact how you operate. By staying adaptable and being prepared to make changes, you’ll be in a better position to navigate regulatory shifts and maintain a compliant business model. Consider hiring legal and compliance experts who understand the crypto industry to help you stay ahead of regulations.

5. Cultivate a Community

One of the most valuable assets a crypto business can have is a loyal and engaged community. The decentralized and collaborative nature of cryptocurrency lends itself well to building strong communities around your brand. Cultivating a community of passionate users and advocates will help you grow your business organically through word-of-mouth and user-generated content.

Leverage social media platforms; Twitter, Reddit, LinkedIn, and even specialized crypto forums like Bitcointalk are widely used in the crypto community. These platforms allow you to engage directly with potential customers, answer questions, and build trust in real time. Actively participate in discussions about the latest trends, offer valuable insights, and share news about your products and services. By engaging with your community regularly—whether through updates, answering questions, or organizing events—you’ll build a sense of trust and loyalty. provides invaluable feedback on how to improve your offerings.

You can also incentivize participation by launching referral programs or offering rewards for community members who actively promote your business. These strategies help turn satisfied customers into brand ambassadors, further driving growth.

Conclusion

Launching a successful crypto business requires a combination of strategic planning, strong marketing, innovation, and customer trust. By focusing on building a secure and user-friendly platform, educating your audience, and staying adaptable to industry changes, you can carve out a thriving space in the rapidly growing crypto market. With the right approach, your crypto business can flourish, gaining the trust and loyalty of a global audience.

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What draws people’s attention to Bitcoin is that it could be a diversifying vehicle in portfolios and also a hedge against inflation. However, investing in Bitcoin is not for the faint of heart. The vast majority of investors who get lured in by stories of overnight fortunes plunge into the market unprepared. It can end up causing a long list of wrongs, from failing to pay attention to security to making some rash decisions based on market hype.

Anyone who’s interested in success in navigating Bitcoin’s dynamic market must understand the common mistakes made by Bitcoin investors. In this article, we will tackle key pitfalls to avoid while making strategic decisions by offering some tips. Investors can learn from the errors of others and be able to mitigate risks and maximize the potential of Bitcoin as an investment.

Lack of Research and Understanding

A common mistake when investing in Bitcoin is investing without doing your research, which could result in significant financial loss. While there is much to learn about the complexity and ever-changing nature of the crypto market, investors need to understand the fundamentals of Bitcoin and the overall crypto ecosystem first. In other words, you need to familiarize yourself with the basics and the simple things about Bitcoin.

The first thing is to learn how to purchase Bitcoin and where to trade it or store it. One helpful guide on that subject can be found on Webopedia, especially if you are new to crypto. Furthermore, by learning more information, you can understand its underlying technology, what is blockchain, and all the things surrounding crypto. Bitcoin is built on blockchain technology, which is a decentralized and transparent ledger that records all transactions. Investment in this technology may be lost due to a lack of understanding about how it works. To illustrate, investors who do not understand the implications of network security, scalability issues, or a lack of forks may be completely caught off guard by market movements. Furthermore, without this, it is difficult to tell between promising projects and potential scams.

At one point, you will reach a new level, where you will play the trading game – constantly reading and gathering information to stay on top of market trends, regulatory changes, and any potential risks with any crypto on your portfolio. Responsible trading practices are crucial for minimizing risk. It encompasses everything from learning the technology and the market environment well enough, setting reasonable expectations, and creating a comprehensive investment strategy. Educating yourself is the best way for investors to stay up to date and make sound decisions, avoid market hype, and manage their portfolios in the volatile crypto environment.

Emotional Decision-Making

The problem of emotional decision-making in Bitcoin investing is common: emotions like fear and greed can weigh heavily on someone’s investment decisions. Unfortunately, the emotions associated with the volatility of the cryptocurrency market can make decisions that do not fit with long-term financial goals even more common.

For instance, fear makes us immediately panic sell when the market moves down. If Bitcoin is experiencing a sudden price drop, some inexperienced investors will try to sell their holdings in fear of losing more. It can crystallize the losses of such companies, curdling the possibility of potential market recoveries. However, greed could also force investors to buy into a rally without giving thought to fundamental value or potential risk and end with overinvestment and exposure to large meltdowns.

Investors must avoid becoming upset and try to go by a data-driven approach in their investment strategy to avoid these pitfalls. That means we must conduct market research, understand what is going on in the markets, and understand the factors that influence prices and how this translates into decisions, rather than making them based on emotion. Investors can learn to stay informed and remain grounded to better navigate the market volatility and make market strategy choices that are in line with their long-term goals.

Ignoring Security Measures

First and foremost, any Bitcoin investor is concerned with securing digital assets from being stolen or hacked. Crypto being a decentralized space, the chances of recovery are close to none if you lose your crypto, which is why security is such an important thing. Hardware wallets are one critical practice that store cryptocurrencies offline and away from online threats to give the highest level of security compared to software wallets. On top of this, two-factor authentication (2FA) also comes in handy, which involves having another way to prove who you are besides just your password. These are security practices that will help secure assets from unwanted access and cyberattack. Investors can protect their investments from the increasing risk of crypto theft through security.

Timing the Market

Buying low and selling high with Bitcoin when trying to time the market is a risky endeavor. The cryptocurrency market is notorious for its instability and unpredictability, and it’s incredibly difficult to accurately predict price moves. If investors seize on the market’s unexpected rallies, they may miss out on potentially huge gains if they stay on the sidelines. On the other hand, if you enter the market when perceived lows persist, you will lose a lot of money if prices keep on falling. A better alternative is to invest without trying to time the market—thinking long-term and spreading your money around.

Failing to Diversify

Investing all in Bitcoin is by no means a secure thing to do given the cryptocurrency’s high volatility and market unpredictability. What makes Bitcoin prices so volatile is the fact that they can swing greatly over very short periods, meaning that anyone completely exposed to its swings can incur huge financial losses. While investing solely in Bitcoin, you risk missing out on other asset classes with more stable and diverse returns.

Diversification is vital to pulling these risks down. By blending investments among different assets, or asset classes, such as stocks, bonds, other cryptocurrencies, and even commodities, investors can lower the total risk of their portfolio. Diversification helps to even out market swings by taking some of the heat out of exposure to a particular asset when it declines and mitigating some of the impact of a gain in a different asset.

Overlooking Fees and Costs

When it comes to investing in Bitcoin, there are costs and transaction fees that you can easily overlook that can seriously affect how profitable your investment will actually be. Investors pay fees at different stages when buying or trading Bitcoin: while depositing and withdrawing and when exchanging on exchanges. The fees, however, can vary from platform to platform and will be a percentage of the transaction or a flat rate. One simple example: whereas a 1% trading fee may not seem like a lot, if you do 10 transactions, the amount you pay is 10% of your purchases or sales—which could be significant over time.

Furthermore, the network transaction fees to transfer Bitcoin from one wallet to another can fluctuate due to network congestion. Cumulative fees take away from overall profits, especially when the size of your investment is small or for frequent traders. The key to maximizing net gains is to be aware of these costs and to pick platforms that have lower fees.

Lack of a Clear Exit Strategy

There is nothing more important than having a clear exit strategy when you are getting into Bitcoin investing because it will help you decide when and how to sell your positions to achieve your financial goals. When the criteria for exiting are based on specific price targets, time frames, or market conditions, investors’ ability to make emotional decisions decreases. Investors tend to hold assets for too long, only to sell them and lose the opportunity for maximum profit at the right time on the market if they do not have a clear plan.

Another pitfall is that panic selling during downturns can also occur out of a lack of strategy, and you can end up locking in losses because you have to ride out the dips. Investors can set up predefined exit plans that protect gains, manage risk, and guarantee that action takes place in line with long-term financial goals.

Falling for Scams

The crypto industry is filled with scammy things, like Ponzi schemes and phishing. Ponzi schemes work by paying early investors with participant money to recruit more investors, which eventually collapses because they can’t recruit new investors as quickly. Phishing attacks are fake websites or emails that masquerade as legitimate services to trick people into revealing private keys or login information.

Do be skeptical of promises that seem too good to be true with little risk and are trying to pay you big bucks fast. Be thorough and research any platform or opportunity before you invest, and check credibility with a credible source. Do not go through links in emails or messages; go to official websites directly. Further, allow security, such as two-factor authentication, and never disclose sensitive information. It is imperative you stay informed and stay cautious.

And we conclude that investing in Bitcoin has a great potential for rewards, but there are a lot of challenges and risks. Big pitfalls include no research, no understanding, emotional decision-making, forgetting about security, trying to time the market, not diversifying, not considering fees, having no exit strategy, and falling for scams. Understanding these common mistakes and not making them helps investors make better, less risky decisions and possibly make more money in the process.

The Bitcoin investor who succeeds in this business needs to undergo continuous education. To tackle the ever-changing volatile crypto landscape better, you need to stay up-to-date on market trends, tech innovations, and security norms. When it comes to cryptocurrency trading, you should remember that responsible investment practices are a must to manage the inherent risks.

For those ready to take the next step, start your Bitcoin journey by learning how to purchase and securely store Bitcoin. Invest wisely, and always invest what you can afford to lose.

The post 8 Common Mistakes Bitcoin Investors Make appeared first on Coinrule.

Such people prefer trading as a side hustle because trading comes with many uncertainties whereas a full-time job provides you with security. If you want to trade at all, there are a few things you should learn. Even trading as a hobbyist requires you to invest a significant amount of time because, if you want to keep doing it, you cannot afford to make rookie mistakes.

So, for those considering taking up trading as a hobby, here are 5 tips that you need to know in order to protect your capital and maximise your profits in the least amount of time.

1. Trade Only What You Can Afford to Lose

Trading is a game of probabilities. No one wins all the time and you will inevitably have to take some losses. Please learn to embrace this because it is not a big deal. In fact, it’s a good thing because the quicker you take your losses, the smaller your losses will be.

To properly manage risk, protect your capital, and stay in the game, all you have to do is never invest more than what you can afford to lose, on any single trade. According to research, most successful traders risk less than 1% or 2% of their trading capital on any single position. That means you cut losers long before they can become significant problems.

Overall, ensure that the money you trade with has no other important obligations like paying your mortgage or your kids’ tuition fees. It should be your extra money. If you don’t have extra money, keep saving until it reaches the safe amount you need to start trading.

Trading can be addictive and needs high discipline levels if you don’t want things to get out of hand. The moment you win, you may be tempted to invest more in your next trade, hoping to get a larger return. This is because risking money and winning gives you a dopamine rush, which makes you want to take bigger risks in the chase for bigger dopamine rushes.

Therefore, ensure that you set your risk budget in advance and then stick to it strictly.  Also, initially, avoid anything that has an infinite loss potential, such as leveraged accounts.

2. Learn the Essentials

Trading has its own rules and language. Before investing your hard-earned money, ensure that you know all the rules and market structures. What appears to be a simple task at first glance includes hidden risks, expenses, and consequences.

Ensure that you know the best trading times and conditions, since there are specific scenarios when your strategies will work and they won’t. Since financial markets are highly volatile and public sentiment changes rapidly, ensure that you look at the current state of the market before trading.

To avoid confusion, it is also important to learn the important terms used in trading, like the different types of orders. These include market orders, stop-limit orders, stop orders, and limit orders, among others. Ensure you know how each of them executes and their advantages and disadvantages. Therefore, when the market does fluctuate, you will know which order types to use and which to avoid, and how to handle your investments and assets like a professional.

Essentially, your risk profile and profit potential will be healthier if you know more about the market. Don’t enter the market blindly if you have no prior trading experience. And watch out for trading commissions charged by exchanges – overtrading is one of the biggest mistakes beginners make.

3. Be Patient

Patience, discipline, and consistency are key if you want to succeed in the financial market. Trading is not as simple as buying and selling. The financial market is very complicated under the surface and there is no magic formula or pill to help you instantly understand it. Therefore, be prepared to put in time to learn it.

It is important to understand that you simply cannot win all trades. Most traders aim to win on about 50% to 60% of their investments. This is more than enough because they earn more on their winners than they lose on their losers. Therefore, you need to be patient before you see results and you need to accept that taking losses is the cost of doing business.

It is also highly advisable to start small if you want to trade as a hobby. It is exciting and rewarding to see your small investments growing with time without compromising your savings or long-term financial objectives. You should not be thinking about trading if you don’t already have long-term financial stability.

Moreover, the financial markets are dynamic. To stay on top of your game, you have to invest your time and keep learning.

4. Know the Risks of Trading as a Hobby

Overall, there are various risks in trading. If you are a beginner who trades in low-volatility/low-risk securities, you may quickly lose your money in transaction fees if you overtrade. On the other hand, you may also lose money by failing to monitor the market regularly, thereby missing out on important moves/reversals.

Different types of investments have different risk levels. Investing in managed securities can provide a steady and predictable income stream. They’re ideal for prudent financial planning because a team of specialists monitors the portfolio and makes decisions daily.

Cryptocurrencies, spreads, pairings, currencies, and Contracts for Difference (CFDs) are popular among hobbyist traders. These vehicles are fascinating because they are volatile. Furthermore, brokers provide leverage and margin, accelerating both gains and losses. Clearly, these come with many risks since you may lose everything in a matter of minutes.

5. Seek Guidance from Reputable Sources

Everyone appears to have trading tips, especially in bull markets. Some of these people and their tips are genuine while most are not. If you are trading a little money for entertainment, you might not be too bothered about the trade’s quality. However, if you have decided to invest a significant amount, it is good to seek advice from reputable sources and, most importantly, to do your own research.

If you want to learn more about trading, start by reading the classics on trading. Then speak with your financial advisor since they can help you figure out the best approach for your personal circumstances. You won’t wake up tomorrow as an experienced investor with an offshore investment portfolio, but that shouldn’t worry you because trading is a continuous learning experience. Your financial advisor can also help you understand how your money may perform better once you’ve established your financial objectives, stability, and long-term investment plan.

It is also a good idea to research cryptocurrencies before investing your money. Coinmarketcap is a highly recommended website where you can get information on every cryptocurrency and token available. The information includes capitalisation, supply, and trade volume, among other things.

Another good way to learn more about cryptocurrencies is to read crypto-related news in major blogs and publications. Sometimes you may find valuable information on social media like Telegram and Quora conversations.

Final Words

Cryptocurrencies have become one of the major vehicles for trading. For some people, trading has even become a hobby and something they spend a few hours a week on. However, before jumping in head first, take time to learn about trading to avoid making losses. Select the most effective exchange and wallet, as well as benchmarking and asset management tools.

The post Trading As A Hobby – 5 Tips For Beginners appeared first on Coinrule.

One thing about financial markets is that prices can experience significant swings. This year alone, there have been several fluctuations in the crypto market. 

Despite this, experienced traders translate volatility into opportunities thanks to these seven tips. This article will take a deep dive and provide a straightforward guide to trading crypto in the 2021 bull market. 

Bull and Bear market

In a bear market, prices trend down. This often happens because there is a negative market sentiment and traders feel less confident about the market. When this happens, more people are selling. This subsequently causes a decrease in prices, which leads to more pessimism and, therefore, more selling.

Conversely, a bull market is a condition in which market prices trend up. A bullish trend occurs when there is a significant, sustained increase in market prices across the board. However, it takes proper insight to predict an impending bull market. A bull market is marked by trader/investor confidence about the market – it describes a state of overall optimism about prices, leading to price rises and even more optimism.

Did you know? Both names are derived from the direction from which that animal attacks. The bull thrusts its horns upward, while the bear clamps down on its prey.

The 2021 crypto market is an excellent example of a bull market as there has been intense upward market activity. However, unlike traditional markets, the crypto space is influenced by several factors. Understanding these factors can help you become a better trader. 

This article will be going through 7 tips for trading in the 2021 bull market.   

1. Follow Trends, Not Pumps

Trading is not about getting rich quickly off the markets. Many people have learned this the hard way this year. However, you do not have to. Seasoned investors and the top 1% (those that have the highest stakes) are the ones who profit from others chasing pumps.

Also, bull markets are noisy because of the excitement, and you must sift through the daily noise. The market fluctuations this year have happened for several unpredictable reasons. Elon’s tweets, Binance’s FUD, and China’s ban had a major role in how the price moved over the recent months. There’s no need to feel bad about missing out on previous and even future rallies. Instead, please pay attention to the trends and play it smart. New opportunities come every day!

In bull markets, it is best to ride the trends. Automated strategies can help you keep tabs on the market and enter the right trades while limiting losses.

2. Don’t be Tempted to Margin Trade

Margin trading is a great way to multiply your position sizes by increasing your leverage. However, often the risks offset the benefits of margin trading. You can suddenly face huge losses when liquidation hits. A liquidation occurs when the exchange closes the position, leaving the trader with a loss that he won’t recover if the market rebounds back higher.

Many newbies make the mistake of over-leveraging their positions in margin trading. The fear of losing everything and seeing your portfolio go down to zero should be enough reason to avoid margin trading right now. 

For a rough example, with 10x leverage, a 10% move against you wipes you out, and with 100x leverage, a 1% move against you liquidates your entire capital. The actual numbers are even scarier once you factor in trading commissions and liquidation fees.

You can trade using leverage with Coinrule to increase your returns potentially, but never forget always to use a low degree of leverage.

3. Have a Trading Strategy

That may sound like something many give for granted but it’s likely the most important among these seven tips for trading.

Trading without a plan is planning to fail. Success in the crypto market is about understanding market patterns and then using them to make the right trades. Patterns help you predict moves, and you can only see these patterns when you have a defined trading strategy.

A strategy or plan helps you do your due diligence before entering into trades. It is also a great way to limit the number of losses, prevent catastrophic losses, and make outsized gains. 

One of the main advantages of using an automated trading system is that you can easily adhere to the initial plan without stress or emotions interfering with your trading decisions.

4. Do Your Own Research

There is a lot of noise about crypto these days on the internet and mainstream media. For most, it is not easy to shift between what’s valuable and what is not. This is why we suggest that you always do your own research before entering into any trades, especially for lower-priced cryptos with small market cap coins.

Beginners often look to others for crypto recommendations and end up losing money. When you do your own research, you understand each coin better and are more knowledgeable about entering and exit trades. 

Don’t confuse genuine advice with a shilling. Don’t forget that many are interested in adding hype to the coins they have large stakes in.

5. Watch for Reversals

The truth is that there are tons of available information, guides, and recommendations out there. However, to make sense of it all, you need to apply what you know correctly.

In a bull market, you need to be on the lookout for sharp reversals constantly. This helps you determine the best time to exit trades or take some profits off the table.

It is also crucial to have price targets and stop losses as part of your trading plan. Getting a good entry is only half the work. You also need to know when to exit the trade strategically, whether the trade goes for you or against you.

6. Don’t Trade based on Emotions

The markets are highly volatile and, when it comes to trading, it is best to deal with facts and data instead of feelings. Traders regularly have to deal with emotions like fear and greed. It is essential to be ready for any possible scenario. You cannot afford to trade based on your feelings. 

To make money in a bullish market like the one we currently have, you need discipline. That’s why you need to always stick to your trading plan. 

Bots have no feelings. They execute trades in cold blood based on the setup of your trading system. By setting clear, logical rules into algorithms, you can cut your losers and ride your winners much more effectively, efficiently, and emotionlessly.

7. Diversification is Crucial

Diversification is one of the best tips for any investor in today’s crypto market. You can reduce risk by allocating funds across different assets. This way, you don’t have to depend on the performance of a single asset.

Furthermore, for diversification to be more effective, you should try holding assets uncorrelated from each other. 

To take it one step further, Coinrule helps you diversify across strategies. The pros don’t tell you that they are never just buying or just selling – they are often doing both simultaneously to trim the risk at any time.

You can run multiple strategies at the same time with Coinrule. One may be buying dips on your favorite coin, another may scalp short-term trades, while another is rebalancing your portfolio. You have maximum flexibility to manage your wallet.

Rounding Up

Cryptocurrencies are reshaping the financial world, and every day, more people are looking to trade them. That is excellent news for the whole ecosystem because it means more market activity, liquidity, and efficiency. 

However, volatility is the primary concern with the crypto market, especially during unprecedented times like these. If you pay attention to these seven tips for trading, you ensure that you make the best of the market trends.   

At Coinrule, we help you make the best trades. We provide a holistic view of the markets and help you to trade better. 

DISCLAIMER

I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. All information contained in my post should be independently verified and confirmed. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware of the risks involved with trading cryptocurrencies.

The post Seven Tips For Trading In The 2021 Bull Market 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.

2018 and 2019 have been very tough years for traders. Across this time, only during three months, the crypto market has traded in a clear uptrend, between April and June 2019. Traders and investors have been depressed for so long that many threw in the towel, giving up. You need solid management of the risks involved and of your emotions to survive such difficult conditions.

Are you still here? Do you still trade Crypto? Do you still think that Bitcoin is here to stay?

Well, kudos to you! You survived the longest crypto bear market so far, so you well deserve the best from the coming Bull market.

They say that what doesn’t kill you makes you stronger. That applies to Biology, Business, Financial Markets and for sure also Crypto.

2017 attracted traders whose only goal was to get rich quickly. They became greedy and got trapped buying the top, instead. But their biggest fault was not to have experienced the previous bear markets. More experienced traders knew that it takes years to reach the top, and it could all burst in a matter of days.

Treasure your experience because this will represent a valuable edge you will have on those that will approach trading crypto for the first time in the coming months.

On the other hand, if you are one of those making the first steps into Crypto, here are some advises and trading tips you will find useful.

Are we already in a Crypto Bull market?

There are many technical signs pointing at Looking at the Bitcoin chart from the lows in December 2018, we can clearly recognise an initial phase of accumulation, a sustained and rampant uptrend ignited from the breakout of the critical resistances at 4000 and 6100 USD, and a prolonged downtrend from the local top at 14000 USD.

The price retracement started in July 2019 is a shakeout for all those that FOMOed the first breakout in April. Nevertheless, the price didn’t even come close to where the price was in March, and barely reached the previous resistance at 6100 USD. This is significant proof that we can still safely assume that a new crypto bull market started in April and that this cycle is still going on on the right path.

Is this an Alt-Spring?

When it comes to the broad Altcoin market, it feels like it is still at an earlier stage of the cycle than Bitcoin. On average, the price of most of the Altcoins lagged significantly, especially during the second half of 2019, but that also means that the margin for potential price growth is larger. In particular, some coins looks solid both from a price and fundamental perspective.

Here you can read more about our favorite coins in 2020.

The Bitcoin dominance broke below the trend line that starts back from the top of the previous bull market in January 2018. This signal represents a fascinating clue of what will likely come next. As soon as the price momentum for Altcoins consolidates, and traders and investors gain confidence in the trend, that will ignite a heavy buying pressure. This fear-of-missing-out will be fuelled by three main elements.

• all those that sold suffering significant losses now will try to avoid buying back at higher prices. As the price will move up increasingly faster, unfortunately, many will be forced to buy back at sub-optimal prices.
  
  
• new-comers will be tempted by the great potential for price growth and quick gains. This high confidence in a sustainable uptrend will make them less price-sensitive and therefore willing to pay higher prices.
  
  
• Fewer sellers will be available on the market. Price resistance will be weaker as no many sellers will be willing to trade. As the price moves sharply higher, there will be more incentive in buying than in selling. Less offer of coins and stronger demand are the perfect ingredients for a crypto bull market.
  

When MOON?

All that said, making profits in a crypto Bull market is probably easier than during a bear market, but that doesn’t mean that everything will be smooth and chill.

The idea that Cryptocurrencies will reach the moon finally, using more appropriate trading jargon, means that the price will reach the target of this market cycle. That will allow traders to cash out their profit, quitting their job and retiring on tropical beaches sipping margaritas. Unfortunately, that is pure utopia!

Even during the most optimistic phase of a crypto bull market, the temptation of selling to secure the profit will be strong. Price shakeout and sudden dropdowns will be scary, and that temptation will push you to sell. It’s always worth noticing that during 2015 and 2017 the price of Bitcoin dipped over 30% 6 times between 2015 and 2017 while surging around 900% over the same period.

Selling is a savvy approach, also during a strong uptrend. All you need to do is to plan when to do it in advance, so you don’t need to rush into fire-selling when conditions are not optimal. Building an automated trading plan can help you with that.

Excluding the emotional elements from your trading plan can only improve your results.

Enjoy the ride!

Also, take profit periodically on your gains. It’s the right way to manage the risk of your portfolio during a crypto bull market. You can reinvest later in times of price drop or simply cash out to repay some debt or invest in other assets.

The most important thing to keep in mind is the amount of your investment you are going to sell. Based on your risk-aversion and needs, schedule in advance the amount of the capital exposure you want to keep investing in Crypto and how much, instead, periodically you want to sell when specific price targets are reached.

Never forget that the more you stay invested in Crypto without selling, the more the amount of overall gain will grow thanks to the compound effect. At the same time, there is more risk of remaining stuck with a relatively large bag of coins whose price dropped too quickly to allow you to realise some profit on your position.

Quite interesting time await Crypto traders in the coming months. The market will provide great opportunities to those that will be ready to catch them. Read here about five more trading tips about how to get the best of a Crypto bull market.

You can put in practice these trading tips building an automated trading strategy with Coinrule. Create your rule now!

Trade safe!

The post The Crypto Bull Market is Here – Trading Tips For A 2020 Run appeared first on Coinrule.

2020 looks like a promising year for cryptocurrencies, so why not approaching it in the very best way to catch the best of it?

Here are some resolutions you should absolutely include in your Crypto not-do-do list.

1) Avoid risking more money than you can afford to lose.

You may already have this in your mind, but you can never stress enough how important it is to have clear rules on money management in your strategies.

That applies not only to the overall capital you decide to invest. You also should make sure that none of your trades could cause such a loss that would destroy your entire portfolio. Remember, it takes a 25% profit to balance a 20% previous loss, and a 100% gain to break-even from a 50% price drop. If you see it from this point of you, it gets clear how not losing money is an even higher priority to making money itself.

The higher the exposure is, the more you could feel pressured and stressed. The idea of losing more money than you can afford would compromise your decision process and directly impact your trading system.

One tip could be to start trading with very low amounts and then increase the size of the orders gradually. Don’t rush into large profits too soon. Be cautious. Trading is a marathon, don’t quit after a few miles!

2) Never act without a clear trading plan.

Would you be able to do your daily job without a schedule or any structure? All the human activities, one way or another, must be organised and should work according to a more or less defined plan. Trading is no less subject to this general rule.

In a previous article, I defined step-by-step, which would be the elements that every trader or investor should take into account before making his or her investments decisions.

First, you need to analyse market conditions and understand the peculiar aspects of the asset you are going to trade. Also, at this stage, it would be crucial to assess which would be the variables that could have an impact on the asset you are going to trade. Predicting these factors in a clear way gives you a better understanding of the “big picture” you are going to play in.

You have to set the strategy you believe can represent the best fit for the trading scenario you defined in the previous step. It’s worth noticing that the Four-Season rule doesn’t exist and a trading plan could return high profits in some periods yet produce losses in other. Not only is it important to know how to implement a plan, but it’s essential to recognise when to use it. Just like you know when it’s more appropriate to use a screw or a hammer.

When you chose your strategy, one additional step would be to backtest it so you can make the final adjustments based on results coming from historical data. Tweaking and optimising some parameters could improve your results significantly.

Finally, you are ready to run your strategy on the market!

3) Don’t try many different trading strategies.

Getting lost in the number of available strategies is also among the most common mistakes crypto traders make. There are dozens of technical indicators nowadays available to traders, only to include those most popular. There are endless possibilities of strategies that traders could implement.

You should stay focus on a limited number of trading strategies observing carefully how they work, and what returns they yield. Bear in mind that the first results might not provide definitive evidence on the reliability of the strategy.

As we said, if the rule produces a loss, that doesn’t necessarily mean that it’s a poor strategy. Maybe the timing was wrong, and you could still use it in different market conditions. Also, no trading strategy has a 100% rate of success. Assessing a strategy too early without a proper analysis could be misleading.

Additionally, trying out many strategies could lead you to trade more than necessary. Overtrading is a common mistake, especially for newbies. Know your trading strategies better, leverage their strengths and improve their weaknesses!

4) Don’t follow blindly someone else’s trading advice.

Given the massive flood of news we are exposed to every day, it’s common to receive trading pieces of advice or investment suggestions from many different sources. You can get trading signals and price targets through tweets, Telegram groups, and comments in forum discussions, just to name a few.

You should filter these ideas to focus only on those that could be actually useful for you. There are two main aspects to take into account:

1. Not all trading ideas you will read or see are produced by experienced traders. There is no guarantee that there could be a sound basis backing that trading strategy.
2. Even if the strategy has a solid foundation, it does not mean it would be savvy for you to apply it blindly.

Each trading strategy comes with specific considerations related to the position sizing, risk management, time horizon of the investment and target profit. Often, all these variables are not explicit and most of the time you get an entry price and a target price. In the best case, you also get a stop loss level, but there could be other aspects that you are still missing and that could be essential for the success of the plan.

5) Don’t allow feelings to ever lead your decisions!

By their own nature, humans tend to be driven by emotions and feelings. These elements are by far the worst enemies for a trader.

Every cryptocurrency trader has a different reaction to the same price movement. Fear, despair, euphoria and greed are feelings that each of you experiences even within the same day. This roller-coaster of emotions will have a negative effect on your ability to make rational decisions.

That’s why trading bots, like those you can build with Coinrule, have the potential to improve your trading results significantly if you are already an experienced trader, or it can provide an easier way to get into trading as a beginner.

One of the best ways to overcome the risk to be overwhelmed by our own emotions is to follow strictly all the previous tips presented in this article. Implementing a precise risk management approach and laying out a rational trading strategy will help you improve your trading performances significantly.

Avoid the 5 common mistakes crypto traders make and you are on a path to success in 2020! Ready to put in place all these tips? Create your automated trading rule now!

Trade safe!

The post 5 Common Mistakes Crypto Traders Make appeared first on Coinrule.

In this article, we described in details what are the best tips to manage the cycle that started in the crypto market in April. Everyone was waiting for the Great Bear market to end, but most realized that also trading in a Bull market is not that easy as it seems.

For each of the tips, I will explain how Coinrule can help you improve your trading experience.

Buy LOW, sell HIGH

Reacting promptly to fast price moves, both up or down, can be very difficult and requires spending a lot of time in front of a screen ready to send out the order. With Coinrule, you can create a strategy to automatically sell or buy coins when the price drops or rises significantly. You only have to select what are the parameters you are looking for and Coinrule will trade for you.

Sometimes cryptocurrencies are very volatile, so there can arise great buying or selling opportunities on your coins. Whether it’s about accumulating your favorite coins or taking profit on a position, the best approach is to plan the strategy and let the bot execute it immediately on the market.

Look at the big picture

With Coinrule, you can set up the time frame that fits better your trading strategy. You can schedule orders up to once every four weeks so that you can plan a very long-term accumulation strategy.

Before launching your rule, you can define how many time you want the rule to be executed. The maximum number of times the rule can is 10000, that means that you can plan your strategy for a long-term time horizon without worries.

Discipline! Discipline! Discipline!

Well.. when you give to your trading strategy the right RULES, this will bring discipline into your method, and the results will improve significantly.

The size of the order, for example, is an essential component of your trading plan. The size of the order has a direct impact on the risk of your trade. Sometimes you can be tempted to increase the amount to buy as your confidence in the trade is high. Wrong! Overconfidence is one of the most dangerous mistakes a trader can do.

With Coinrule, you can define the USD value of the order or limit the amount as a portion of your available funds. In this case, if you are selecting the BTC wallet and a setting a certain percentage to buy, the algorithm will calculate the amount accordingly.

Don’t get Enchanted by Mermaids

Adding new coins to your portfolio is very appealing. Every time you discover a new coin with high potentials and a disruptive business model, you would like to catch that opportunity. Unfortunately, we know that only a small percentage of cryptocurrencies survive in the long term, especially among those that are relatively at an earlier stage.

Of course, adding new coins to the portfolio brings more opportunities and increase diversification, so it’s not a bad strategy in general. You should always perform your due diligence and research.
Coinrule allows you to trade only those coins you already own in your wallet. In this way, you don’t run the risk to buy some shitcoin and regret it later! You have full control of the asset that the algorithm trades.

Be ready to get bored, or NOT!

The more boring is for you to buy and sell your coins, the more you are detached from your emotions, and that will increase your profitability.

On the other hand, trading, in general, shouldn’t be boring! Coinrule adds the “healthy” entertainment to your activities.

You can always test new strategies with our Demo Exchange and soon with our Backtesting tool. You can share your strategies and returns with our Trading Community. We are also planning to introduce challenges and competition that will aim to learn more about trading and increase your skills!

Stay tuned and
Trade safe!

The post 5 Tips To Trade (not only) In A Bull Market. appeared first on Coinrule.