Buying and selling cryptocurrency can become a profitable business if you correctly calculate the moment for transactions. Trends (the direction of price movement of a currency pair in a specific period of time) can help with this. You can’t go against the trend. Otherwise, the deal will be unprofitable.
Types of Trends
There are three types of trends:
- Uptrend. It is based on price lows over a specified period. On the chart, these lows are connected by a special line. The trend ascends if each new low is higher than the previous one.
- Downtrend. It is determined by price highs. A trend descends if each new high is lower than the previous one.
- Flat (sideways) trend. In such a trend, prices are characterized by low volatility. Selling and buying cryptocurrencies is not the best option during this period since prices can jump or fall at any time.
Breakthrough is a sharp change in the type of trend, signalling serious changes in the crypto market. You also need to consider the level of support and resistance. The first value is the parameter below which the currency pair’s rate does not fall in a specific period. The second value is the parameter above which the rate does not rise.
When to Trade Cryptocurrencies
It is better to purchase the selected cryptocurrency on the uptrend. The basis is two points of price barriers, and the next one, the third point after them, reinforces the trend. The right time to buy cryptocurrency comes at the third point.
You need to sell cryptocurrency on a downtrend – also on the third point that reinforces the trend. On a sideways trend, you should wait for further changes.
You can buy a cryptocurrency and sell it on cryptocurrency exchanges and online exchangers.
Buying and Holding Cryptocurrency
Having bought a cryptocurrency, you can not sell it for profit but benefit from holding it. It is enough to replenish the crypto wallet with coins on the PoS algorithm, wait for the formation of blocks, install the software client on the PC and start the wallet. The activity and synchronization of digital storage are essential. At the same time, it will not be possible to use cryptocurrency for transactions for a long time.