Professional traders are always good at analyzing market data. They never take drastic steps because they know the potential outcomes of such actions. Due to these unique personality traits, professional traders are also doing well in cryptocurrency trading. But in the crypto trading industry, regular technical analysis is not going to work like a charm. Advanced factors like chart pattern analysis are required to perform well.
Today, we are going to teach you the exact way by which you can master the chart pattern trading technique. After going through this article, you should be able to curate a professional trading strategy with which to trade the cryptocurrency industry.
Selecting the time frame
You need to be cautious with the selection of the time frame to trade the major chart patterns. Most people think they know everything and thus they refuse to take the trades in a higher time frame. But lower time frame trading is extremely risky and can cause massive troubles to the retail traders. To offset this issue, professionals always suggest using a higher time frame. When you use the higher timeframe, you will also become good at analyzing the chart patterns. Moreover, the chart patterns identified in the higher timeframe give much more accurate data to the retail traders, and thus it provides them better profit-taking opportunities.
Instead of learning about the reversal pattern, we suggest the rookies learn about the continuation pattern. By doing so, they can take the trades with the existing trend, and thus they can become more confident in their actions. So, those who are new to the crypto trading industry, sign up for a free trial at Saxo. Use their demo trading account to determine how the chart pattern works. Once you learn about the basic pattern identification process, you should focus on the continuation pattern. By doing so, you will gain confidence in your actions and thus the trading process will be easier.
Support and resistance level
To trade the major chart pattern, you should have strong knowledge about the support and resistance level. Without having an in-depth analysis of the support and resistance level, it becomes tough for investors to find reliable trade signals. Moreover, you need to know when a support or resistance level is completely broken. If you are not aware of this fact, you will slowly become frustrated and leave the concept of chart pattern trading. Remember, higher timeframe trading always gives you access to quality trade signals.
So, draw the support and resistance levels in the higher timeframes only. But try to keep your technical analysis simple. Remember, complex technical analysis imposes great stress on your trades. Focus on the important market variables and try to find trade signals by using logic instead of being driven by emotion.
Trade with discipline
After learning the basics of the chart pattern trading method, novice traders often make things worse by increasing the risk profile. They do so because they want to make big money out of this market. But to survive in the retail trading industry, you have to trade the market with discipline. If you break the rules and try to earn more money in an aggressive way, you are just pushing yourself towards the edge of a cliff. Instead of making things complex, curate a simple strategy that will allow you to make wise decisions. And having a simple system also helps a trader to follow the rules of their trading strategy.
Analyze the news
While using the chart pattern, you will notice most of the breaks are taking place during the release of the news. So, you have to be aware of the high-impact news release. In the beginning, you will have some trouble looking at the news factors from a professional viewpoint. But once you become good at analyzing the news data, you will also become good at analyzing the news factors.