5 Ways to Manage Risk and Take Responsibility When Trading Crypto | And More in This Weeks Crypto Update.
Get up to date on the latest analysis and trading tips with our Crypto update week 48
- When Will XRP Bottom Out? 3 Key Things to Watch!
- This Logarithmic Chart Shows Fantom at Key Intersection
- 5 Ways to Manage Risk and Take Responsibility When Trading Crypto
When Will XRP Bottom Out? 3 Key Things to Watch!
While Ripple’s (XRP) price is holding above its mid-June low, it’s too early to call a resumption of the long-term bullish trend. Short-term XRP’s price may be prone to more consolidation as we’re heading into the end of the year, but for the long term, there are 3 key things to watch.
#1 True Support Level at $0.17
Ideally, before we call a bottom, XRP’s price should see a retest of the $0.17 support level. This is the most significant long-term support level, as, since 2018, this level has kept the downside in check. On a monthly closing basis, we never close below this level, and if the current bear market extends through 2023, we can retest this level.
#2 RSI Oscillator
The monthly Relative Strength Index (RSI) has held above the 40 level reflecting the primary bullish cycle that the XRP price has experienced since its inception. However, this also leaves the door open for the RSI to decline into oversold readings, which means that the XRP price can also drop from the current level.
At the same time, if the monthly RSI regains the 50 level, the bottom may already be in place.
#3 Key Resistance Still Intact
The $1 mark remains a big psychological level that, since 2018, has kept the upside in check. Only in 2021, for a brief period, did the XRP price break above the $1 mark. Naturally, a break above the $1 mark can pave the way for a revival of the XRP bullish supercycle.
This Logarithmic Chart Shows Fantom at Key Intersection
The weekly Fantom (FTM) chart exposes a massive logarithmic channel that shows the FTM price at a key intersection between the bottom of the channel and a multi-year support level. An analysis of the FTM price action behavior within the logarithmic channel may reveal its next move.
FTM Logarithmic Channel
Long term, the FTM price remains locked in a logarithmic ascending channel. By connecting the previous peaks and bottoms, we can outline a clear ascending channel that shows potential future directions of FTM price.
In the short-term, FTM is already bouncing off the bottom of the channel. The bottom of the channel also aligns with a multi-year support zone between $0.15 and $0.16, which adds more confluence to this price area.
FTM Bullish/Bearish Cycles
The channel’s middle boundary played a major role in delimiting FTM’s bullish and bearish cycles. When the FTM price broke below the middle of the channel, we entered a bearish cycle.
We can also note an almost perfect symmetry between the length of the bullish cycle and the length of the bearish cycles. On average, FTM price has experienced a 60 week cycle.
If we project the same 60-week cycle into the future, we can expect FTM price to break the middle of the logarithmic channel by mid-2023, which would also be the start of the next bullish cycle.
RSI Oscillator
The Relative Strength Index (RSI) has the tendency to call the breakout of the middle channel in advance. A break above the 50 midpoint can potentially signal that the bottom is set in place.
Looking forward, the first resistance level comes near $0.42 level followed by the $1.0 big psychological level.
5 Ways to Manage Risk and Take Responsibility When Trading Crypto
Risk management and controlling risk is probably the most important skill you need to learn as a trader. If you don’t want to suffer unnecessary losses, we’re going to share 5 risk management practices that will protect your account and help you stay in the market for the long run.
#1 Only Trade a Size that You’re Going to Be Comfortable With
What is going to determine how much money you’re going to make or lose in trading is risk management. Trading with too much capital on a single position often creates too much risk. Make sure you only scale up your position size to a level that matches your trading skill level.
#2 Limit the Use of Leverage
Leverage in trading involves using borrowed funds that allows traders to increase their exposure beyond the initial deposit. While leverage increases the potential profits, it also increases the potential loss. Even a small mistake can cause a significant loss if you misuse leverage, especially in the highly volatile cryptocurrency market.
#3 The 2% Rule
The 2% rule means that you’re not going to risk more than 2% of your available capital on any given trading idea. It can be easy to get greedy, especially in the cryptocurrency market, but you need to develop the discipline of following the 2% rule. You can’t control the outcome of a trade, but you can control how much you’re going to lose if the trade goes against you.
#4 Have a Stop Loss
Emotions can quickly take over our trading decisions when we’re in a trade; that’s why using a stop loss every time we take a trade can help us not only limit the potential loss but also to bypass any poor decision-making.
#5 Trade Quality over Quantity
The quality of your trades is more important than the number of trades you take. Overtrading is often the cause of poor risk management, leading to unnecessary losses. The key to effective risk management is to choose quality over quantity. This implies grading your trade setups and only taking A-graded trades that will be conducive to your strategy.
Bottom line
When it comes to trading cryptocurrencies, there is no such thing as a guaranteed profit. However, by managing risk and taking responsibility for your own trades, you can increase your chances of success and avoid making costly mistakes. By following the tips in this article, you will be on your way to becoming a more responsible and profitable cryptocurrency trader.
Read our latest blogs this week!
Top Blockchain Technology Trends in 2023 That Will Have a Lasting Impact
Blockchain technology has introduced new trends and innovations every year since its inception, including decentralized finance (DeFi), non-fungible tokens (NFTs), Play-to-earn (P2E) games, and smart contracts. Everyone is excited to see what 2023 has in store for the blockchain space.
What beginner traders should know about portfolio management
Cryptocurrencies are known for their volatility and instability. The unpredictable nature of cryptocurrencies can make it a risky investment, but it can also help investors earn huge profits in a short period. To take full advantage of the market, investors need to use certain tools and strategies to minimize risks and maximize profits. One such tool that helps investors track their investments and maximize profits is portfolio management.
In this article, we review what portfolio management is, and why it’s so important for crypto investors.
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