How to Monitor the Cryptocurrency Markets Like a Pro Trader

Keeping an eye on the cryptocurrency markets can be a confusing process, for several reasons. First is that there are now 1,400—and counting!—cryptocurrencies. Second is that the price moves can be so incredibly drastic!

How do you keep an eye on all of this stuff, especially when you have so many other daily responsibilities?

Let's break down the basics!

1. Monitor the Market as a Whole at Coinmarketcap

Coinmarketcap is the best one-stop shop to get a broad overview of what the cryptocurrency markets are doing.

Here, you can immediately get a bird's eye view of all currently trading coins and tokens.

As you check out the charts, it's important to understand market cap, short for market capitalization. This means the current circulating numer of coins X the value of each coin in USD. Market cap, essentially, shows you how much money is currently circulating in that particular cryptocurrency. (Market cap is also used in stocks, where "large cap," "mid cap," "small cap" and even "micro cap" stocks are separated out by their total capitalization, and expected to perform differently from each other.)

Large capitalization of a cryptocurrency is a general indicator that the markets have faith in a project and that it will go up in the long term—however, it's certainly not a guarantee. As I write this, the top five cryptocurrencies by market cap are Bitcoin, Ethereum, Ripple, Bitcoin Cash and Cardano. That may change in a week or even a few days—the crypto markets move fast as new players come on the scene and price action occurs.

coinmarketcap

You can also sort the charts based on 24-hour price action and 24-hour volume (meaning the amount of USD that has moved through that currency in buy and sell orders in the last 24 hours), and check out simple charts on the right hand side showing the price action. This is a good way to check out coins to see what's going on, and you can always refresh the page as many times as you like for more recent data (just don't get addicted!). This should really be your entry point to monitoring the markets.

One word of warning: The data on Coinmarketcap is not real-time, it lags a bit. Don't make buy or sell decisions straight off of it.

Also: Just because you see a coin listed on Coinmarketcap, that doesn't necessarily mean you'll be able to easily find a place to trade it. While exchanges like Poloniex and Binance allow you to trade several altcoins, they by no means trade all of them.

2. Get Some Real-Time Chart Data at Cryptowat.ch

The next tool you need to start using is Cryptowat.ch. This is the best free charting software I've found for trading cryptocurrency (if you've found a better one, please let me know in the comments!)—unfortunately, it doesn't do everything, but it does do many of the most popular cryptocurrencies, and it also allows you to chart prices across several different exchanges.

It's also immensely customizable, allowing you to decide which cryptos you want displayed at the top level, and also allowing you to fiddle with lots of bells and whistles on the individual charts.

cryptowatch

Cryptowat.ch is free and paid (I stick to the free version for now). A paid membership gives you access to a lot of extra features—including the ability to hook it up to several exchanges via API so that you can make trades right off of Crypotowat.ch (which, given its level of detail, is likely a good idea). Not bad at all.

Let's take a look at the individual charts:

ethereum-cryptowatch

Here we can see the hourly charts for Ethereum. (It's currently been on a crazy tear upward while many of the other cryptocurrencies temporarily correct.)

I've currently got it set to display Japanese Candlesticks, which are those green and red bars. Since my chart is currently set to a 1 hour timeframe, these bars measure how much the price has moved during 1 hour increments. Each bar represents one hour. At the most basic, a red bar means it went down in that hour, while a green bar means it went up. (It gets more granular then that, but I'll have to cover that in a future post.)

Swing traders (people who buy and hold for several days before selling) and position traders or investors (people who buy for months or years) tend to stick to the hourly and daily charts. For people looking at the long term, zooming in further than that can just get too confusing—too much noise, too many signals to the nervous system that something is moving while the wide view may paint a very different picture.

Day traders (people who enter and exit positions within the timeframe of a single day) tend to stick to the 5 minute charts, where they can monitor price action within the window of a day, with the goal being to make a few quick dollars or BTC before exiting a position. You can zoom in even further, to the 3 and 1 minute charts, but this way lies extreme anxiety.

You should also be able to see that I haven't cluttered up my screen with too many technical indicators. Cryptowat.ch (just like professional platforms for trading traditional securities) allows you to add all kinds of lines, indicators, bells and whistles to your charts: MACDs, stochastics, Fibonacci lines, you name it. That can get quite confusing, and should really only be used if you have a specific working trading strategy that uses them. If you're new to crypto, chances are that you don't. So just ignore that stuff for now.

Here, I've kept it very simple. I've only added a few Exponential Moving Average (EMA) lines. EMAs average out the price action over specified periods of time, smoothing out the data and giving you a more even view of price action.

In the chart above, I've added four EMA lines: 9-day (orange), 15-day (blue), 60-day (red) and 200-day (green).

The 9 and 15 lines tend to show price moves in a given day. The price dipping to the 9 or 15 is standard even in an uptrend. (You'll be amazed to watch prices react to these lines as if they were actually "there.")

If the price starts to drop below those, it may be headed for the 60-day line before bouncing up again. And if it breaks that, it could be headed for the 200-day line before bouncing up. And if it breaks the 200-day line, chances are, that coin is going to be in freefall.

Conversely, if a coin is trending downward, and is trading below the 60 or 200 line, these lines can form "ceilings" that the price struggles to break, often having to come up to poke at them multiple times before breaking through (if it does).

These are just guidelines, however. There's nothing concrete or certain about them, but boy do they help with understanding price moves.

I'll cover further technical indicators in future blog entries.

3. Putting it Together

Using Coinmarketcap and Cryptowat.ch on a daily basis—checking in throughout the day—will begin to give you a sense of the cryptocurrency markets as a whole. That doesn't mean you should assume you're a professional trader and hop in. However, it's the beginning of an education in understanding how prices move in this game. Sitting on the sidelines for a long time—even making paper trades, by making hypotheses, writing out fictional trades on paper and then seeing how your picks would have done—can really help you understand the market.

However! The crypto markets are a wild place. While they certainly can follow technical indicators, you can't fully expect to port knowledge from the traditional securities markets into the crypto space. Even the wildest stocks can't touch many of the price moves in crypto, and so prepare to be surprised.

That said, understanding how markets move is a critical part of educating yourself on the cryptocurrency space, as is understanding the technology of blockchain itself. You can learn lots more about both—and start mastering cryptocurrency as a whole—in our Bitcoin Insider course, below. Get educated, get a plan, and get busy! :D

See you in class!

Become a Bitcoin Insider

Try out our complete master training in harnessing the power of cryptocurrency—and getting the inside track on the greatest financial event of our time


Bitcoin, cryptocurrency the blockchain are transforming the global economy—and this is just the beginning. Learn more in our complete master training on how the average individual—with no prior knowledge of Bitcoin, blockchain or even financial markets at all—can begin safely and wisely working with these potent technologies and ride the wave of the financial future. You'll complete the course having EVERYTHING you need to know to buy, sell, use and safely store Bitcoin and other cryptocurrencies—and you'll have a map of the road ahead to guide you.

Start Learning Now!
 
Jason Louv

Jason Louv

I'm an author and entrepreneur fascinated by the massive transformations our society is undergoing thanks to blockchain, automation, artificial intelligence and virtual reality. www.jlouv.com

Read More
How to Monitor the Cryptocurrency Markets Like a Pro Trader
Share this