Technical analysis sometimes sounds like a random crypto guy telling you that you can make big money by drawing a few lines on a chart. Simplified like this, crypto technical analysis does sound like a joke.
So, can you indeed make money trading crypto with TA, or is technical analysis close to astrology?
In crypto trading, being cautious is a good idea
It is not unreasonable to question any trading system at all. After all, it’s money we’re talking about. And you absolutely can lose money with technical analysis.
However, you can also approach technical analysis as a system for market investigation. If you choose your crypto technical indicators and tools well, you can build a tailor made market screener that fits your style and goals.
The thing is, a lot of TA pundits don’t actually see that professional traders really utilize their technical toolset as a sort of screener that helps you make informed trading decisions.
Let’s first break down what technical analysis in crypto is to set you up for a successful start.
Technical analysis does not rely on history as much
Perhaps the most wide-spread dismissal of technical trading goes along the lines that past prices do not predict future prices.
As a crypto trader though, keep in mind that people were trading on technical analysis right from the start. The first crypto trading platforms came soon after bitcoin was released as the first ever cryptocurrency. Back then, people were trading crypto without any price history at all!
The only difference was in the technical indicators that were used to read the crypto markets. And that is where your skill as a trader comes to play: Some trading strategies and indicators are suitable for slow markets, others for trending markets.
Good trading tools will help you anticipate future moves on the crypto markets and practice will help you discern which tools and indicators fit your trading style the best.
Technical indicators just plain make the charts readable
Choosing technical indicators that you can use totally comfortably is critical. You will never be any good at analyzing crypto markets until you get comfortable with your toolbox.
Maybe you are a genius and can read charts in raw candles, without any lines and indicators. All power to you then!
Vast majority of people cannot do that, though. Some of them are still successful traders.
The key is to pick a couple of indicators and become an expert at using them.
Technical analysis works with odds
For the record, investigating markets with the help of technical tools will never give you any kind of certitude.
As an expert power-user, you will not see technical analysis as an all-knowing crystal ball.
Practically speaking, technical analysis is an approach that helps you discover the most likely ways in which a market responds to an event.
Charts can’t make you foresee the exact price of bitcoin two years from now, but they can help you understand when is a good time to add to your position and when is a good time to exit the market altogether.
That holds true for crypto as well as other markets, just the nuances will differ market by market. The basic skill of technical analysis is still the same though, and that makes learning it so valuable.