Crypto analyst Nicholas Merten introduces strategies that investors can use to maximize profits and compound profits when trading altcoins.
In a new video, Merten tells its 377,000 YouTube subscribers that one way to pick the fastest horse is to analyze whether your coins outperform the competition.
He suggests using ratios where one cryptocurrency is compared to another asset.
“Most of the people on the surface will do one thing. You will be looking at ADA (Cardano) for USD. So they’re going to look at the price of Cardano in dollars … Another step people are also taking to get a little deeper perspective is to compare it to Bitcoin. So if you trade a pair of ADA for BTC … these are what are known as metrics. ”
In the case of Cardano, the analyst is tracking ADA’s performance against ETH (Ethereum).
“What we’re doing here is we’re taking the ADA / BTC pair to get as much price action as we can work here.” We take ADA / BTC, i.e. the performance of ADA against Bitcoin and divide it by the performance of Ethereum against Bitcoin (ADABTC / ETHBTC). This basically forms a custom ratio where BTC and BTC cancel each other out. And now we can get a long-term view of ADA’s price development versus Ethereum. “
Merten explains that a bearish ADABTC / ETHBTC chart means Ethereum is outperforming Cardano. A rising ADABTC / ETHBTC chart shows that ADA is outperforming Ethereum.
According to Merten, investors should focus on support and resistance levels using metrics to help them decide whether to enter a trade, take profits, or stay out of the market.
“That could be descending resistance lines and ascending support lines. It can be these types of flat resistance and support lines in general. We are basically looking, if it is generally the case, that in this case, for example, Cardano will receive a discount on Ethereum. Or it could historically be overwhelmed against Ethereum. This does not mean that these levels cannot be divided up or down, but that they generally differ from what we have seen throughout history. This is usually a good place to buy in, take profits, or maybe switch to the alternate currency. “
When using metrics to trade altcoins, Merten suggests that investors should take profits to avoid returning profits when the markets pull back.
“You can take partial profits with you on the way. How this works in general is sometimes such that you know, for example, that you don’t just want to wait for a key, even when you may not hit it. A lot of people say, “Oh, you only use limit orders and you get disciplined and take profits.” The problem is, if your limit orders aren’t hit, you will be rich on paper and then the market pulls back and you never really realize any of those gains. Here, too, I would say, in this case, to take so-called partial shares or partial profits at various different levels or ascending levels of the quota. “
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