The crypto market is highly volatile and traders need advanced strategies to succeed. Understanding momentum trading with Bitcoin can be the first step to creating a working strategy that will make crypto trading profitable.
What is momentum trading?
Momentum trading is a strategy used by traders that involve buying an asset when the price is on an upward trend and selling it when it has reached its peak. The reasoning behind this strategy is that there is always a strong force behind an upward trend that will continue to push the price high until it reaches an assumed peak.
There are two types of momentum trading in crypto, i.e. absolute and relative.
- Absolute momentum trading is when a crypto trader considers just one coin like Bitcoin. The trader analyzes its performance and predicts its future price.
- Relative momentum trading involves the comparison of different coins to predict future trends. For example, a trader may compare and analyze the performance of both Bitcoin and Ethereum and choose one that looks more promising.
How does momentum trading work?
Momentum trading relies on several factors that are influenced by technical analysis and price movements. Therefore, you will need to know to predict its price. You can rely on the following factors:
How volatile the market is will determine the size of price swings, which is a key factor for traders using momentum trading.
When looking at this factor, you need to consider the activity of a specific coin on the crypto market in the last 24 hours. If the volume is high, then you can be confident that there can be a significant price change. However, traders also need to be aware of whales who can manipulate trading volumes by buying large amounts of cryptocurrencies at once.
Momentum traders also look at the time frames when analyzing price movements.
How TradingView can help in momentum trading with Bitcoin
If you are new to crypto trading, the information on momentum trading might be too much for you to understand at once. This is why you need a reliable platform such as TradingView to help you decide your trades. Luckily, highly rated broker easyMarkets is now available on TradingView. This means that Bitcoin traders using an easyMarkets account for trading Bitcoin price movements can get all the help they need from TradingView.
TradingView offers customized charts that are specific to your trading needs. If you are trading Bitcoin, you can get specific information about Bitcoin in a set period of time then decide if you want to become a momentum trader with the information.
Social network and great support
You can also get ideas from other traders to imitate your momentum trade. Furthermore, if you are trading using the easyMarkets account, you can get extra help from customer support in case you don’t understand something about the trade.
Momentum trading can work well if you have the right strategy, which you can either generate yourself or simply use the charts offered on the integrated platform of TradingView.