Trading cryptocurrency is no easy job.
Doing your own research is the best approach in the crypto market.
That’s unless you are applying the infamous strategy of buying high then selling low.
Voluntarily or involuntarily, if you find yourself selling at a lower price than you bought, you will eventually run of funds to trade.
Therefore, using crypto signals can enhance your trading experience and help you keep your portfolio on the green side.
But are they any good?
To that question, the answer is “not all of them are good and not all of them are bad.”
And let’s see why.
What are crypto signals?
Cryptocurrency signals represent a set of instructions a trader can use to adapt his trading strategy and activity.
A quality crypto signal will provide you with the crypto pair, indicate whether to go long or short, what’s the limit price, the stop-loss price, and where to take profit.
Behind this information should stand a team of experienced traders and analysts that have gone through comprehensive market analyses to reach their conclusion.
What isn’t a crypto signal?
The first thing you should know is that a crypto signal is not a guarantee of getting rich.
There is no way you can be right 100% of the time. But being wrong all the time is not good as well.
Therefore, a reliable cryptocurrency signals provider should have a success rate of around 82% if the data behind and risk vs reward rates behind the signals are well thought.
Furthermore, crypto signals should not FOMO you into trades, especially without providing additional information.
What to expect of the crypto signal provider?
And to decide if a crypto signal provider is offering you information that works you should first know what to expect of him.
First, as mentioned before, the signal should contain the crypto pair, indicate whether to go long or short, what’s the limit price, the stop-loss price, and where to take profit.
The crypto pair should name clearly what to trade for what. For example, the signal would indicate a pair like BTC/LTC. It needs to be specific so you can act on it quickly.
Since you have the pair, you must know whether to go long or short on this trade. If your crypto signals provider says to go long he believes the pair will increase in value, and you should place a buy order.
If the provider says to go short it means the pair might decrease in value, and you should set a sell order.
Of course, once you get into a trade based on a crypto signal, the provider should specify a limit order price. Reliable crypto providers will rarely advise to get into a trade via a market order, at the next available price.
And because a decent trading strategy must include goals, you should expect of your crypto trading signals provider to give you take profit and a stop loss values as well.
The take profit order should be a specific value to where you get out of a trade to be profitable. It may not be the peak of a cryptocurrency’s rise in value, but is a level you can achieve a decent profit.
Most of the time, traders that don’t have predefined goals may get into negative only because they waited for the price to go higher and it didn’t.
And, of course, for the situation where the price doesn’t go higher but lower, the stop-loss order should specify what is the lowest price you should sell at. That way, your loss wouldn’t be significant, even when the market goes against you.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.