In this volatile cryptocurrency market, if you receive any piece of advice or suggestion, it is very much valuable. This is the reason why cryptocurrency trading signals have become popular among investors and traders. Trade signals are mostly beneficial for inexperienced traders so that they can make profits in this highly volatile market.
The trading signals can be based on various factors like news, market situation, analysis, etc. The crypto trading signals are provided regularly, hence, you can take complete advantage of them. To know what crypto trading signals are and how to understand them, read on this blog.
Crypto Trading Signals – Meaning
Crypto trading signals are trading ideas, advice, and suggestions to enter a trade. They help you to determine whether you should buy or sell a particular crypto coin at a specific price and time or not. Such signals are either generated by a professional trader manually or by trading algorithms and bots that automatically send alerts.
Trading alerts can be generated by any of the 3 main types of market analysis i.e. technical, fundamental and sentiment. However, using fundamental and technical analysis together generally turns out to be the most efficient. Also, algorithms are programmed to deliver signals based on particular technical indicators. The final aim of any tool or analysis is to give signals to investors to help them identify whether they should buy or sell a cryptocurrency or not. Trading signals usually have a take profit and a stop loss attached to them so that you are protected from all sides. Many crypto trading platforms allow for copy trading these days. You can make use of this if you are really confident about your trading abilities. At these crypto trading platforms, you can share your trades with others and earn an extra profit.
Elements of Trading Signals
By understanding the elements of a trading signal, you will know what all parts in a crypto signal mean. Given below 5 major elements of a good cryptocurrency trading signal:
The very first element of a common trade signal will indicate the action you are required to take. There are two types of action that you may receive when trading cryptocurrencies i.e. either to buy or to sell. If your trading signal is showing ‘Sell’, then you will have to sell your crypto coins. And if it shows ‘Buy’, then you will have to buy more cryptocurrencies.
Which Crypto to Buy/Sell?
The next element indicates which coin you need to buy or sell. Trade signals can be issued for any cryptocurrencies such as Bitcoin, Ethereum, Ripple, Litecoins and other crypto coins that signal provider finds right to provide.
After informing which crypto to buy or sell, signal providers tell you the price at which you have to purchase or sell the crypto. The price can be either the present market price or price higher/lower than the current market price. If the signal provider sends you a crypto coin that needs to be purchased/sold at the time of providing a signal, then you need to act quickly to get the same price.
Take Profit and Stop Loss Orders
Although all signals don’t provide a take profit and stop-loss order, they should come with it. With take profits and stop-loss order, you will be able to leave the trade to work on its own for you, without your need for monitoring it all the time. Using a prefixed stop loss is a great way to reduce the loss related to unfavorable changes in crypto price.
Providing additional information related to your analysis depends on your crypto trading signal provider. This information may include incorporating time elements and information to close the trade by a specific hour etc. The signal provider gives some management advice as well.
There are many crypto signal providers available in the market today. Still, the most popular type to generate trading signals is by performing technical analysis. If you want to be an independent and successful cryptocurrency trader, you can make use of crypto trading signals. There are free crypto trade signals available, but if you want it to be more reliable, you can pay a subscription fee to a signal provider. They will send you trade alerts directly through email, phones or any other means of communication.