Is technical analysis useful for trading crypto markets?


#1

Some investors swear by technical analysis, others swear at it.
Are crypto markets too young, insufficiently understood, too small for technical analysis techniques ?
Are traders missing out if they aren’t watching useful indicators ?


#2

This evidence is going to be anecdotal, based on my conversations with a friend of mine who used to work as a derivatives trader at RBC, and now trades crypto.

What I understand:

  • Crypto markets are indeed young, but markets are markets, so the youth isn’t as much of a problem as much as liquidity. To combat this, my friend trades only LTC and ETH, and on GDAX. GDAX has 7-digit 24 hour volume on both of these, which might not be enough for an institutional investor, but it’s enough for him personally trading his own money.

  • I haven’t asked him why not BTC, but I suspect it’s due to competition - one thing he mentioned is that crypto TA is less developed and less sophisticated than the standard market, mostly because it isn’t big enough yet to attract the top talent. He said he was an okay trader at RBC, because he was working in a really competitive market, but he’s crushing it in crypto, because he believes most of the traders are pretty unsophisticated - learning TA from YouTube and not cutting their teeth on the stock market like he has. BTC accounts for over 40% of all crypto trading volume and is the biggest, together with trading in BTC futures, it would make sense that there’s more competition in BTC TA.

  • Many traders in crypto are very likely missing out. Maybe this is from a lack of experience, maybe this is because they’re trying to apply TA to some altcoins that don’t have enough liquidity to be analyzed accurately/thoroughly. Even for LTC/ETH, my friend says that indicators as simple as RSI can be used to make money effectively, without needing to apply incredibly sophisticated indicators or algorithms.

tl;dr
Yes, TA can be used, but only where there is sufficient liquidity (think top 10 only). Yes, traders are missing out due to lack of sophistication/competition in crypto compared to TA in the stock market.

Hope this helps!


#3

Technical analysis is not able to take many aspects into consideration so I would not rely on this type of forecast only.


#4

I always read TA but it seems that the predictions are not always correct


#5

Today I’ve come across one post on bitcointalk where someone says that TA can be manipulated as well so there is no surprise it does not reflect the reality sometimes


#6

The all crypto market and related things are manipulated and I think it is a big problem for the industry, and that’s why some people call for regulation


#7

Oh, manipulated by whom, the company? You mean, they just present graphs that are beneficial for them?


#8

We’ve made a start, using stock markets as a place to begin. If there’s demand, we’ll look at adding crypto assets.

TradePath is a mobile-first web application for non-professional stock market traders who want to identify opportunities without watching charts.

It’s easy to find trading systems. The real challenges are implementing your system, testing your system on specific stock and using your system objectively.

With TradePath you can build a trading system in seconds without coding. Combine SMA, EMA, RSI and price indicators with hammer, doji, spinning top and marubozu patterns. Tap and drag to tune them to your exact requirements.

Test in milliseconds on any NASDAQ or NYSE stock. See every opportunity your system identified in the past before you let the system tell you when the markets deserve your attention.

Feel free to give it a go and tell me what you think - in return some feedback would be useful :

  • Which indicators, patterns, exchanges and assets would you add ?
  • Do you know anyone who would find this useful ?
  • What would be a fair monthly subscription price ?

Thanks !
Neil


#9

By the influencers, I guess, like whales, you know, corporations can be among them as well


#10

I see. Well, the volatility of the market allows for such influence, unfortunately


#11

Sure, unfortunately, the volume is not equally spread among the holders, so that’s why…


#12

Agree. Do you think there is any chance that when governments start buying crypto, the volum will be more equally spread?


#13

There are many technical analysis that is useful. but it takes time to study it. Me also study it for months and still gives me some losses, so i decided to look for free and no subscription needed cryptosignal app. and i finally found a worth one. check redlinecoin.com to ease your pain. it helps me grow my profit more. Thanks. hope it helps.


#14

I think it should be ordinary people who should get involved in crypto in all the places


#15

But ordinary people will trust crypto more if institutions show their trust in the first place IMHO


#16

Looking from many traders on twitter (whom i follow) everybody of them uses TA and I think without good analysis you are bound to have more bad trades than good ones, even more if you use leverage trading on platforms like Primexbt or Bitmex - then the risk gets even bigger.

So i don’t think that you will fare good in trading or investing without some kind of proper TA or analysis on the projects and movement. If I knew about market cycles i would have shorted the top from a year ago, i didn’t had this knowledge and good analysis skills like now.


#17

Agreed. But the analysis doesn’t always work well. In addition, I make my own investigation about the project


#18

Yep, spot on
People read the news and make their own conclusions based on it.


#19

What kind of an investigation? I mean there is nothing to be 100% sure


#20

I’d like to know about investigation as well