How Should Retail Traders Approach Bitcoin And Ethereum Analysis?
When it comes to bitcoin trading, just like any other security trading,
there are 2 main schools of thoughts for valuation.
There is valuation by fundamental analysis and there is valuation by technical analysis.
I tend to prefer Bitcoin and Ethereum technical analysis and you will soon understand why - keep reading.
The fundamental analyst will based his decision on financial statements and reports.
In the bitcoin market, this could be the overall health of the leading crypto-companies, their revenues and their price to earnings ratio.
Basically the fundamental analyst is trying to keep track of the macroeconomic climate but there are so much news and data coming up on a daily basis, how can a retail trader truly monitor everything?
And how can you be sure that the report you are studying is actually relevant?
In my view, fundamental analysis can work but it requires a team effort. Lets say at least a team of 10 people, working in pairs. So we have 5 sub-teams and each team is watching over 1 particular section of the market. This is how most big firms works.
As a retail trader, I don't have a team of 10 people to scrutinize all aspects of the whole
Bitcoin investment market and feed me hundred of pages of reports that I would have to go through on a daily basis.
That's not the lifestyle I want anyway, time is precious and I love having the freedom to do what I want when I want. This is why I tend to read financial news and fundamental reports out of curiosity but all my trading and investments are based on technical analysis.
Technical traders believe there is no reason to spend so many hours reviewing financial statements because these are all accounted for in the stock's price
Also there is much less subjectivity in technical analysis than in fundamental analysis. This is because the technical analyst mainly focus on price, charts and statistics. To evaluate the current situation of a security, the technical analyst use a number of trading tools such as moving averages, price trends, volume and
For over 10 years now, this has been my preferred approach to analyze any markets. Therefore my trading judgment are mainly based on probability and not financial news. This approach has been very profitable for over a decade and I am confident that it will continue to
be profitable in the future.
So I mainly focus on bitcoin and ethereum technical analysis, but that's just me, this is my style. I tend to be 5% fundamental and 95% on technical. Other people might be 50/50 and another group of people might be 95% fundament and 5% technical.
Ultimately, there is not 1 style better than the offer.
You just have to find the one that is right for you.
The one that suits you character and the lifestyle you want to live.