Directional trading in cryptocurrency is the kind of trading where trading strategies are devised as per the trader’s assessment of the overall cryptocurrency market and within that the specific cryptocurrency direction. For example the very basic directional trading strategy is to choose between a long and a short position. As a cryptocurrency trader, one is always interested in knowing what the best to do directional trading is. Read below to get an insight.
How to Do the Best Directional Trading
For your directional trading to be profitable, you must have two things in place. One is a risk mitigation strategy and second is a strong market judgement. It is always better if you have the market judgement for the entire cryptocurrencies and then for the ones that you are looking forward to trade. Risk mitigation strategy is required because cryptocurrencies are inherently very unpredictable and volatile, which means that prices can move in the opposite direction as well.
Directional trading is no doubt challenging. It is difficult to judge which way the price would move with certainty. So buying with stop losses when the prices are speculated to rise is a better option.
Another thing that this required is being ahead of the market news. Even small news in the market can affect the cryptocurrency prices, and so it is good to know beforehand.
Take long decisions on the cryptocurrencies that you think will go up in price.
Take short decision on the cryptocurrencies that you think would fall in price.
Pay attention to the recent VWAP ratio, the recent ones from the last couple of days, and then last couple of months, correlate them to the any market news and how it affected the price. This would help you speculate the future market as a trader.
Use algorithmic bots and signals for directional trading, because even with directional trading, you are to make sure that you tap the market opportunity and make the buy or sell decision at the right time on the right day. Cryptocurrency algorithm bots and cryptocurrency trading signals come in handy for this purpose, once you have set your preferences in the piece of software.
Use SMA Charts to know when it is time to enter bullish or bearish trades, depending upon the movement of the chart.
Also decide whether you want to indulge in short term, long term, or medium term trade in terms of time frame when doing a directional trade, so that the directional trading strategies can be devised accordingly.
Fix Your Parameters in Directional Trading
While you indulge yourself in directional trading, it is better to fix your rules for some parameters beforehand so that you know when and how much you must trade. These include:
o Entry Trade
o Exit Trade
So on the whole, directional trading is a tough call, and it requires lots and lots of expertise and knowledge. So it is best to enter directional trading with the help of some advanced interface like an online consultant executium.com. Executium.com carries all the wisdom and know how required to become a successful directional trader.