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Novice cryptocurrency traders have to learn many things including trading strategies, analysis types, trading psychology etc. This is not an easy way to do. Moreover, this knowledge and those skills do not guarantee that a trader will succeed.
Some investors try to start earning even without knowledge. They find cryptocurrency trading signals and follow them hoping that those alerts will give them instant and constant profit. This article is related to crypto trading signals and their features. We are going to cover several aspects including the advantages and disadvantages of free and premium signals.
Types of cryptocurrency trading signals
Before we start to classify trading signals, we would like to pay attention to their nature. There is nothing mysterious about this phenomenon as many newcomers thing. Cryptocurrency trading signals are the result of traders or machine analysis.
How do they appear? Let’s suppose a trader has conducted his own analysis and realized that BTC/USD is going to rise in the next couple of days. He issues this signal to the community or sells it to his or her subscribers.
As for machine signals, they are coming from automatic trading systems. Those algorithms forecast future price fluctuations.
Let’s get down to free and premium signals. The first group involves fees meaning traders have to pay some amount in order to receive signals. There are several providers currently and traders can choose one of them or even a couple. Everything depends on the fee that one has to pay to get access to the signals.
Some investors (especially newcomers) think that premium signals are a kind of trading Grail and they will be useful in all market situations. Those traders think that they pay for services and will receive high-quality signals. However, the truth is that those premium services cannot guarantee 100 percent results in all situations. Why?
The main reason is that they are provided by humans and as we know, “errare humanum est.” No one can predict markets in all situations and without errors. Moreover, there are many scam signal projects that promise to provide iron-clad results for their subscribers.
We recommend traders learning everything about markets and price fluctuations but if you want to use those signals, we can give some advice on how to choose them.
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The first sign of a good and quality service is an open chat group where users can discuss signals and the beginners are able to see whether they are worth their attention.
Another way to choose such products is to test them on a demo. Some providers offer trial periods allowing users to find out if their system is really working and is profitable.
The next thing to pay attention to is testimonials from those who have already used this or that service. However, you need to understand that some providers spend a huge amount of money to promote their products and they do their best to “buy” their reputation. They purchase first places in different ratings and pay bloggers to write positive articles about them.
Free cryptocurrency trading signals are also provided and you can find them easily on different websites and social media. However, they have even lower quality than premium ones. The most important thing you need to understand is that nobody is in charge of those services. They have no obligations towards their users and make even more mistakes.
Where to find cryptocurrency trading signals
Those who want to use such opportunities are frustrated sometimes as they don’t know where to find signals. We are not going to provide you with websites and social media groups here, but we are going to prompt how to look for them.
The first place to find those alerts is special websites issuing trading signals to their subscribers. They are both premium and free. You can also look through some closed communities. However, they are mostly premium meaning you will have to pay for membership.
There are also several forums where you can find entry points. They are free to enter and to look through. Sometimes, traders share their opinions there and those who look for crypto trading signals may find some interesting ideas.
Another way to get help in trading is to use professional analysis services. They can be found on different special websites.
Finally, you can use special software and bots in order to improve your trading results. Those bots and other algorithms gather information from different sources and provide users with useful data.
Telegram and crypto trading signals
This is a rather new source of crypto trading signals. There are several Telegram groups providing entry points to subscribers. Special bots allow traders to receive signals. Subscribers may use them for free, but there are also some premium bots.
The good news here is that there are many bots in Telegram. The bad is that only a few of them are worth your attention. We are going to give some recommendations on how to choose a Telegram bot or signal group:
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Before you enter the group, pay attention to the source, where you have found information about it. This website should be trustworthy.
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The next step is inner channel analysis. Pay attention to bot’s activity, the number of subscribers and their behavior.
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Look at the number of subscribers as compared to the number of views. If those figures are increased artificially, the number of views will be significantly lower than the total number of subscribers.
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Another important criterion to pay attention to is whether the team of the project makes reports after they issue signals. Professional signal providers issue such reports so that subscribers can understand whether alerts work or not.
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Finally, pay attention to the possibility of contact providers.
The main advantage of Telegram signals is that they are issued frequently and you can find alerts for different currency pairs.
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Cryptocurrency pump trading signals
This is another type of crypto signal. Pump strategy is known for its risks. However, profits also may be significant and some traders look for crypto pumps in order to significantly increase their profits.
What is a pump and how to find it? This is artificial price growth of any coin. Currency is pumped in order to attract other traders’ attention to it. The more coin is in demand, the higher its price will be. Pump&Dump requires high trading volumes and is often organized by a group of traders.
The pump is considered a scam, however, there are different points of view. Let’s see how traders organize it. The pump has two main stages – informational attack and exchange activities. Pumpers release news on the coin they want to pump in the future.
That news looks like insider information and includes recommendations on which currency to buy and when.
An informational attack is done via social media and messengers like Telegram. The main idea of such activities is to attract attention to the coin and to trigger demand growth. When investors' interest is high, the price goes up.
In order to support the coin, pumpers make a kind of “wall” preventing cryptocurrency from declining. When targets are reached, pump traders start to dump the price meaning they sell the coin and earn money. As for ordinary investors, they are to get rid of their assets in a very fast manner. Otherwise, they risk losing their money.
Pump&Dump strategies may have several stages. When the price goes down, pumpers may start to buy the coin and support it. This will be another wave. Once targets are reached, pump traders sell crypto again. However, everything depends here on other players’ behavior. If they recognize a pump, they can leave the coin.
How to protect yourself from pump signals
As we have previously mentioned, pump signals may result in huge profits, but risks to lose significant funds are high as well. We are going to provide you with a brief guide on how to determine those pump&dump signals and how to avoid them.
Attention and caution are the keys. The cryptocurrency market is “young” and may suffer from speculative activities. The liquidity is low, which allows pumpers to conduct their activities. The main features of the pump are the following:
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This strategy is often used for cheap and low liquidity cons. It is almost impossible to pump and dump Bitcoin due to high volumes.
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Pay attention to different exchanges. If the price of the coin remains almost unchanged in other trading places, the risks of a pump are higher.
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The pump can be detected when you read news about this or that coin. If one group promotes crypto, this is one of the features of a future pump.
How to read cryptocurrency trading signals
We have described already types of signals that can be used in crypto trading and warned readers about pump&dump. It is time to find out, how to read crypto signals properly.
A typical trading signal in the cryptocurrency industry has four keywords – Buy, Sell, Term, Link.
Buy means the price at which you purchase the coin. This is the first part of every signal, which is based on the analysis. Sell is the exit point, meaning the level at which it is better to get read of the coin.
The term is an approximate term of reaching the target. As for the link, it connects with exchange and coin.
Below we offer some recommendations that will help traders to read signals and how to react to them properly.
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You need to see the situation on the chart. It is recommended to avoid buying a coin if its growth is less than five percent.
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It is better to avoid buying a coin if its growth surpasses 15 percent. This recommendation is less important than the first one as altcoins may show huge uptrends.
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Go through different social media in order to find signals from experts in the crypto market.
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Finally, it is recommended to check the coins rate at coinmarketcap. Higher ranked coins are better to trade as they have higher liquidity. They are also better protected from pump&dump due to higher volumes.
Should novice traders and investors use cryptocurrency trading signals
Before we place the full stop in this article, we are going to give some more advice for beginner traders. Many beginners want to start their careers using trading signals. However, we advise learning more about trading first.
Why is it important to get knowledge? If you want to do trading or investing professionally, you need to learn about the crypto market and coins’ price fluctuations first. You can use trading signals, but it is important for you to understand what is going on before taking any decision.
Alex Dovbnya
Dan Burgin
Vladislav Sopov