The Best Setups For Day Trading Cryptocurrency

In the last year or so, even the least tech-savvy among us have been hearing all about cryptocurrency. Rather than being trendy buzzwords in the tech industry, currencies like Bitcoin have moved front and center in the investment game. Since cryptocurrency is still in its early days, relatively speaking, you still have plenty of time to buy in and start trading. Here are a few tips for getting the best possible setup for day trading.

Why Do You Need a Trading Setup?

If you already own a computer and have a few screens, you’re probably wondering why you need to add equipment for trading crypto. Trading setups refer to the tools you’re going to be using to predict movement within the market, not to hardware like tough laptops. These tools allow you to gauge when you should be making moves so that you can turn the best possible profit. Not only do trading tools show you how the market behaves, but they’ll also clue you into how traders are thinking and how they’re reacting to situations.

Over time, you’ll be developing your own trading strategy. While a lot of practical skills and experience are involved in strategy, trading setups can help you get some amount of certainty about the market. Just like in any other industry, data and statistics are necessary to make predictions and move with certainty towards the future. Here are some of the most popular setups and why each might be the right choice for you:

1. Flag Trading Pattern

The flag trading setup tends to be popular because it utilizes trading psychology. It’s called the “flag” because it forms on the “pole” of a strong move within the market, with the “flag” as a noticeable uptrend in market value. The flag indicates the continuation of a current trend, meaning that you can be relatively certain that buying now will only continue to profit over time. Flags are a relatively low-risk setup and are one of the easier ones to understand without a ton of background knowledge, so the flag pattern is popular among beginning day-traders. You can trade in this pattern by identifying three things: entry, stop loss and profit target. 

2. Cup and Handle Pattern

Within investing, the term “bullish” refers to investors who believe a stock or market is going to go higher. The cup and handle pattern is a “bullish” pattern, much like the flag trading pattern, because you’re acting on a belief that the stock is going to spike consistently. Cryptocurrency trading is a great place for bullish patterns because they’re currently riding an upward trend. In this case, the market forms the round “cup” and the “handle” is the consolidation period after a breakout. The idea is to buy after the “handle” has been completed and the market continues its upwards trend.

3. Triangle Setups

Cryptocurrency is a highly volatile market, and triangle setups work well with volatility. On the screen, triangles look a lot like flag patterns, but you’ll buy only when the triangle pattern has been broken and the trend resumes. The three types of triangle patterns, ascending, descending, and asymmetrical, tend to form during the off-market hours (usually around lunchtime in the U.S.).

4. Breakout Patterns

Breakout patterns are a highly profitable way to trade because they provide a guide for when to buy and when to sell. Essentially, you’ll be looking for resistance and support levels in the market. If the market exceeds the resistance level, you’ll buy. If the support level is exceeded, that’s when you sell. For traders who prefer strict boundaries for buying and selling, breakout patterns are a solid strategy.

The volatility and consistent upwards trend of cryptocurrency make it an exciting and profitable market to trade in. If these setup descriptions confused you, don’t worry. You’ll pick up vocabulary as you learn and they’ll begin to make more sense. Get in now to start day trading and perfecting your crypto setup today. 

Source: https://cryptoverze.com/the-best-setups-for-day-trading-cryptocurrency/