Spoiler Alert!!, this post is not to say who is better, or more useful, so if you are looking for your daily dose of violence here, then we are happy to disappoint you. Crypto trading in Nigeria is already hard enough, we need all the help we can get. So we are just going to be sharing some differences between these two trading styles, and to help new traders know where to settle in (we might just sprinkle some stray bullets in between just for fun sha)
Also, known as technical analysis, technical traders study the charts to predict price movements, they focus more on the study of price and volume, using different tools to carefully follow market segments (wahala) tools like MCAD, tradingview, Fibonacci retracements, and coinmarketcap. Here it doesn’t really matter what cryptocurrency exchange they use as long as they can do their analysis They can predict or at least attempt to predict movements (cause crypto no be anybody mate)
Benefits of Technical Trading.
- No need for fundamental data: technical trading focuses on fluctuations in the share price and trading volume of assets, so there is little to no need for background knowledge of economics, finance, or accounting.
- Chart interpreting: technical traders spend a lot of time studying and interpreting charts and this allows them to develop strategies and notice patterns that can work for multiple assets at a time (when Bitcoin goes up other coins are likely to follow so you can profit off various coins at the same time)
- The right time to buy and the right time to sell: as mentioned earlier technical traders spend a lot of time studying charts so this also allows them to know the exact time to buy an asset and exactly when to sell it.
NOTE: one important thing to note about technical trading is that it is not jazz or making prophecies, predictions are not 100% accurate and things do not always go to plan.
Also, known as fundamental analysis, here, traders focus more on data and information. They believe to understand cryptocurrencies we need to understand where they draw their value from. Fundamental traders generally want to know if a certain Asset/coin is overvalued or undervalued (is it just being hyped? Or does it have actual potential). Here they are also concerned about what cryptocurrency exchange they use, as they will only want to use the best app for crypto trading. They follow business metrics such as earnings per share, price-to-book ratio, etc.(all these ones are scholars)
Benefits of Fundamental Trading.
- Long-term investments: since fundamental analysis focuses on studying the asset source (market share, inventor, purpose, social environment, etc) it can predict what asset has a solid foundation and can stand the test of time.
- Fishing out fraud: unlike technical trading which focuses on charts and tools to work, fundamental trading does in-depth research on assets and is good at finding out what assets are tangible and which is a scam coin that is only here to pump, take the money, and then crash.
- Information gathering: in fundamental trading, while studying one asset and its source, you may just be gathering information that even if it does not prove helpful now, will prove useful in the future, as crypto assets tend to have a lot of similarities.
NOTE: one thing you also need to know about fundamental trading is that it looks at things from a traditional business perspective, and cryptocurrency is not a traditional business, so sometimes your studies may be wrong (coin way you no believe in if come shock you late)
Now that we know who our traders are, wouldn’t it be great if we could all collaborate and help each other out, so we can all have a profitable crypto story?
If you want to join the conversation, you can use the hashtags #technicalvsfundamental and #Breetblog.