Learn How to Understand the Market in Simple Steps

They say the market always gives you the opportunity to earn. If that is indeed so, the question immediately presents itself like this: how to take what you can get and learn to understand the market, not just go with the flow of the situation? Here are some tips to achieve that difficult progress.

Starting Point

Successful investment is work that consumes much of your time and attention. This includes ongoing investigation of market trends, visiting relevant forums, analyzing technical analysis, and creating a portfolio. The devil is in the details. What is more, investment goes hand in hand with risks and a formidable psychological burden, which is very difficult for newbies to withstand. It doesn't mean the investor doesn't take the wrong strategic steps. As you know, even the pros make mistakes, so the main thing here is ROI (return on investment).

First Steps

Charts

Exploring the mysterious crypto world, you will have to face charts. They can confuse anyone - they are full of candles, triangles, trapezoids, pentagrams… Of course, the rate of decentralized digital money is controlled not by geometry, but by reality. However, you can not do without preparation. Any financial market, let alone the crypto market, abhors a perfunctory approach delivering brutal justice. In order for a newbie to find an entry point, basic knowledge of economics, the rules of market price formation, and the technical analysis will be required (you can master the TA here). You don't need an economic education, but it wouldn't hurt if you have one.

Traditional Markets

Exchange trading has a long history behind it, while the crypto market is 10+ years old. Crypto fans can find a lot of useful information and answers to many questions on traditional markets. Familiarize yourself with the moving averages, "support" and "resistance" levels. It will be enough to understand some of the mechanics of the market. The basic concepts of investment portfolio diversification will be of great use to you (crypto portfolio is explained in our article).

Volatility

If you look at any virtual currency, you will notice a sharp rise and fall in its price. The thing is that magic Internet money is extremely volatile. It can rise or fall by hundreds of dollars in a matter of hours. Remember November 2020, when bitcoin collapsed to $3000, and on December 17 it rose to a record $23700.85. While other financial markets are carefully monitored and regulated, the crypto market is a whole different story - it’s decentralized. This is a very important concept that should not be underestimated if you are going to dive headlong into this market.

What Everyone Should Know

Here are some more simple truths that will be useful to the user before buying digital coins:

  • the market does not always go up, it goes in different directions. There is no infinite growth;
  • someone promises a high stable income, and asks to refer a friend in return? Don't buy it! Most likely, this is a scam;
  • have you read the description of the project, but didn’t understand anything because of incomprehensible technical terms? Don't invest. You will not be able to assess the prospects for such a project;
  • check the laws and regulations of your country relating to crypto;
  • have you created a portfolio, but a couple of projects (despite what you expect) are getting cheaper? "Probably, crypto is not my thing," you think? Drive away such thoughts! Even managers of multibillion-dollar funds don’t have a full growing value of the portfolio.

Final Words

Where the price will go is not known to any analysis. But you can learn to "feel" the market and increase the effectiveness of investing. This forces everyone and the result is worth trying! Study the cryptocurrency and the technology behind it to understand the way they work. Devote a lot of time to this - believe us, it will be amply and repaid in the future.

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