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) to 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, to swap a pair of ADA for BTC … these are so called metrics. ”
In the case of Cardano, the analyst is tracking ADA’s performance against ETH (Ethereum).
“So we’re taking the ADA / BTC pair here 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 performance against 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. It doesn’t mean that it can’t break up or break down these levels, but that it generally deviates from what we’ve 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 like knowing that you don’t just want to wait for an even key because 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 met, then you get rich on paper and then the market pulls back and you never realize any of those gains. Here, too, I would say that in this case one takes so-called partial shares or partial profits at various different levels or ascending levels of the ratio. “
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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency, or digital assets. Please note that your transfers and trades are at your own risk and that any losses incurred are your responsibility. The Daily Hodl does not recommend buying or selling any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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