By: Mickael Mosse – Blockchain and Cryptocurrency Expert
Let’s demystify the next three myths about crypto trading by Mickael Mosse’s explanations.
The stop-loss configuration is a not needed tool. False.
The configuration of the “stop-loss” is a vital order that traders can determine into their trading plan. Its function is to protect against losses of funds.
Mickael Mosse says, in the case of cryptocurrencies, this order is paramount thanks to their volatility. It means that the price of cryptos can go up right now, and in one hour, it could drop in a flash because of the market movement.
For example, you buy Bitcoin, and you place a stop-loss of 5% below the original purchase price. If Bitcoin drops during your operation, that stop-loss order gets activated. That crypto will sell as that order avoiding the loss of your bitcoins.
We agree that it is better to take a small loss today and continue trading “slowly but surely” tomorrow, than holding crypto that is losing value over time.
Technical analysis VS fundamental analysis, both are useful tools. True.
According to Mickael Mosse, traders use two different points of view to make their market movements:
- Technical analysis, which involves knowing how to read a variety of indicators and market statistics.
- Fundamental analysis refers to being informed about financial news and company numbers to make decisions from there.
Technical analysis is a way to evaluate investments and identify trading opportunities regarding price trends and patterns charts. In simple words, it is about analyzing statistics and data from the market to know when is the perfect moment to buy and sell assets and get profit from it, says Mickael Mosse.
Fundamental analysis is a method to determine if a stock’s value is fair enough compared with the market price. With this, a trader studies any factor affecting the asset’s security from the economic facts and flash financial or political news.
These elements can be contrasted or considered complementary to having a global perspective of the market, knowing the historical price patterns and stock trends, and reviewing a company’s financials and world economic view.
Take-profit set up is an additional. False.
Take-profit is a trading limit order that indicates the exact price to close out an open position to profit from it. It is a limit order because it closes when it reaches the specified profit level. It is, says Mosse, an excellent tool for traders who want to profit from a quick market bump in the short-term. In general, traders can decide about a stop-loss or a take-profit order depending on their level of training, experience, trading plan, and risk management, according to Mickael Mosse.