Rumors play a very major role in deciding the trend of the cryptocurrency market or any other security. This is the reason for the price of an asset to rise or fall. This is why you will have heard the common saying in the trader’s community – buy the rumor and sell the news.
So what makes the professional traders stand out? Read this review to know more. Just for example think about the rumor that was around about Litecoin. Because of it being activated Segwit the price had rallied. When the day the announcement was made official the price dropped and then kept falling for almost a month. Traders panicked and did not know why the price fell for a month. This was because the rumor was already priced into the price of the security. Thus the professionals bought at the rumor and sold when the news was out. The amateurs did the other way round and lost money.
You should also take into consideration the whales when you trade cryptocurrencies. They are those big investors who have the capability to manipulate the size of the trade.
Why should you use trend lines?
There are coins that have good prospects in the long term. These, however, act very irrationally in the short term. This is because of all sizes of buying and selling as well as being influenced by what is known and unknown about the cryptocurrency. And with so much going on in this cryptocurrency market you should be able to find a price that is reliable in order to enter the trade.
This is where you need to use trend lines. The short, as well as the long-term price, will follow trend lines and this will let you identify what the trend is. You will also learn about patterns called Fibonacci Retracements and Elliott Waves when you go in depth about technical analysis. However, to start with you can go with the straight line trend.
Know before you trade
Before you start to use trend lines understand that the coin has no central price. The buy and sell price is specific to what exchange you are using. Thus there are chances that you could see differences in the price of the coin when trading through different exchanges.
There are prices quoted on the website which is either a reference price or the price is calculated based on price from various sources and it is then averaged.