Volatility. It is perhaps the singular word that best encapsulates the cryptocurrency market and how people look at it. For crypto skeptics, volatility is their indicator to stay clear of risk. However, for crypto enthusiasts, volatility is the number one sign that faster and more meaningful returns are close at hand. Indeed, both of these groups of people are correct, as the market’s fast-paced and relatively wild nature lends itself to a lucky few seeing good returns while an unlucky few see massive losses.
Perhaps the primary way that successful traders go about ensuring profits in this volatile market is through the variety of external trading tools that are available. An external trading tool is perhaps a very broad and rather simplistic term to use for these aides, which can offer anything from alerts when a cryptocurrency is about to spike, or notifications as to which exchange currently has the best price for a given coin or even analysis of social sentiment across multiple channels.
What links them together is that they are a must for cryptocurrency traders looking to get better returns from their crypto trading, as well as avoiding trades that could spell doom for an investment.
How Tools Make Profit in a Bull Market
While a bull market is excellent news for crypto investors, due in no small part to the incredible price spikes that cryptocurrencies can see during these times. Merely hodling or employing another simple trading strategy will see good, but not significant, returns. Despite the optics looking good and the returns being tangible, profits during this time are not above market if you use hodl or a similar strategy.
With external crypto trading tools, however, the minute dips that bull markets routinely experience, whether they be for five minutes or five hours, can be capitalized on. Tools, especially the advanced ones that are newly released or being released soon, can show indicators that will tell the trader when one of these small dips will happen, as well as when one of these dips is reaching its conclusion.
This can be thought of as a smaller and less noticeable version of the overall market trends we frequently see in the cryptocurrency market. And the goals and strategies are still undoubtedly the same. Buy low and sell high are still the cornerstones of trading strategies, but these small dips go unnoticed and not capitalized on if trading tools are not at a trader’s disposal.
Even more important is knowing when the bull market is reaching its highest peak as selling at that point will earn the most profit.
How Tools Make Profit in a Bear Market
While making profit in a bull market is doable without trading tools, experts agree that making money in a bear market requires heavy use of essential cryptocurrency trading tools. Bear markets are conducive to smaller periods where profit is available, as well as tricky and somewhat unpredictable times when the market turns bullish again. For the average trader, they are at risk of losing a considerable amount of money during these periods if they continue to attempt to trade.
George Soros, one of the world’s most successful investors, has a saying about markets that can certainly apply here:
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
This is excellent advice, but betting on the unexpected can be a futile and potentially costly task for the average investor, as the crypto market tends to follow very few observable trends on a micro level. This is where the real value of crypto trading tools in a bear market is seen.
Everyone wishes they got in and gambled heavily on the cryptocurrency price spikes of late 2017, but significantly fewer had the insight and ability to recognize that this spike was going to occur (or they got lucky). Crypto trading tools give the average trader the ability to capitalize on these unexpected fluctuations in the market by offering insights that the naked eye struggles to see.
The current cryptocurrency trading tools certainly aren’t perfect, as many are limited in scope or do not work quite as intended. That being said, the devices that are being consistently released show that this is a promising area, as newer and newer tools have more and more functions that can help traders make a profit.
Upcoming tools show significant promise in the outstanding technical advancement of crypto trading tools. Many experts believe that the tools that are coming through the pipeline are the ones that will revolutionize crypto trading.
This is especially true for both advanced and beginner traders alike. Newer tools with better, more streamlined interfaces lower the learning curve so that traders can utilize their benefits readily. Take it from Warren Buffett, investing is about doing it smartly (despite his negative convictions in the world of crypto), not about being the smartest:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
Buffett is spot on here since trading is significantly more complicated than a test of intelligence. What you certainly could say, however, is that cryptocurrency investing is a game where the person with the trading tools that show the market and social analytics, as well as buy and sell signals, beats the person who is trading with no tools.