10 Best Crypto Trading Indicators | You Should not Miss
Zafar Iqbal
Cryptocurrencies have been gaining a lot of popularity in the past few years. Today there are several hundred cryptos, and choosing which one to invest in can be overwhelming even for seasoned investors.
To make the process less daunting, we’ve made a list of 10 must-have indicators that you can use to help your research or decide what coin to buy next. You may use these crypto trading indicators for investment in digital currency.
List of Crypto Trading Indicators
1: Market Cap & Volume
This is probably one of the most critical parameters for filtering out cryptocurrencies to see market cap and volume.
Since these coins are often highly volatile (i.e., go up and down like crazy), we need to know which ones we want to follow and invest in over the long run.
We should only look at coins above 50 million USD (market caps of less than 50 million are highly speculative and very risky).
We should also be looking at volume since it gives us an idea of how much this coin is getting traded.
If the market cap is high, but there’s no volume, that means nobody is buying or selling this crypto – a red flag for potential future problems.
2: Activity on Social Media
Social media activity can give us a great insight into what’s going on around cryptocurrency.
We should look out for mentions on Twitter, likes on Facebook & Reddit, etc. The more active discussion around a cryptocurrency, the better it generally is as an investment opportunity.
In contrast, you should avoid those if you see coins with zero or tiny social media mentions.
3: Development & Roadmap
Another essential thing to look out for is development and roadmap progress. We want coins that are being developed and have a clear plan on how they will bring their ideas into reality.
If you don’t see any progress or advancement toward these goals, then the coin isn’t worth investing in (or at least not yet). Coins without good developer support will usually fail within a few months or years.
4: Technical Analysis
Technical analysis is one of the best ways to predict short-term price movements in this volatile market (if done correctly).
It involves looking at graphs and charts and analyzing patterns that suggest future price movements.
These patterns can be anything from past market movements (i.e., Bitcoin’s 200-day moving average crossing over its 50-day moving average) to volume changes to support and resistance levels.
If you’re not familiar with technical analysis or want to learn more, I suggest reading this guide.
Although considering that most people use TA for short-term predictions, it might be tricky when looking at long-term forecasts (1 year+).
5: Code Audit
Lastly, we’ll take a look at the coin code itself. This isn’t something everybody can do, but if you know how to read code & run some basic checks.
We want coins with vital code audits conducted by 3rd party companies like Zerocrypted.
An excellent example of one is Quantstamp which recently audited Request Network’s code.
Having vital code audits shows that the development team is taking themselves seriously, and they want to make sure the smart contract they’re using is safe for investors.
6: Number of Exchanges
This one can be significant for coins without a good market cap because it tells us how easy it is to get this coin.
For smaller coins, we should look at exchanges like Cryptopia & Novaexchange to buy/sell these altcoins.
However, for more giant coins such as Bitcoin or Ethereum, we don’t need to worry too much about exchanges. Still, the more sales a cryptocurrency is on – the better (because more people will have access to it).
7: ICO Ratings
Although we generally want to avoid ICOs as they’re unregulated and very risky ( 99% of them will fail ), if the coin you’re looking at has passed an ICO and raised money – then it’s worth taking a closer look.
We should be looking out for things like how much money was raised, what percentage of the coins were sold, and whether or not there is a pre-mine (i.e., coins mined before the main launch).
If ICO ratings are good, that’s another sign this cryptocurrency is legit.
8: Good Website & White Paper
In general, we want to see more of a professional website with clear descriptions of their team, plans, etc. In addition to this, having a white paper that clearly outlines how the technology works and their plans for the future are, is a must. If they don’t have white paper – stay away.
9: Active Community & Forums
Forums like BitcoinTalk can give us some valuable information about cryptocurrency.
We want to see an active community discussing the project and posting regularly (at least once or twice a month).
It’s also essential that these posts aren’t all spammy as it shows people legitimately support this cryptocurrency.
In addition to this, we should be looking at whether or not this cryptocurrency is listed on any popular forums such as Reddit. As with Twitter mentions, more is better.
10: Exchange Listings
Finally, we’ll look at exchange listings, which give us an idea of how easy it is to trade this cryptocurrency.
More exchanges listing a currency will allow us to access it (similar to exchange listings). We can also see which currencies are paired with this coin (i.e., you buy & sell using Bitcoin).
If one money dominates the trading pairs, then it could be problematic if that currency falls in value as you might have to convert it back into fiat before being able to exit your position.
Summary
Hopefully, now you have a better idea of what to look for when doing your research! As always, I suggest taking a closer look at coins yourself and performing thorough research before making any decisions.
This guide is just meant as an introduction, but it’s essential not to rely on these indicators because many don’t tell the whole story.
Always remember that ultimately it is up to you what you invest in – lots of people are making money from ICOs right now, but bear in mind that 99% of them will fail!
This article contains opinions only and should not be construed as investment advice. Please conduct thorough research before investing in cryptocurrency. The author holds no responsibility for your financial loss.
I am hopeful these crypto trading indicators would help you finalize your future plan.
However, you should make extensive research before diving into any investment.
