Importance of Analysis & its Types - Tips and Suggestions (V3)
Hi, dear Community so here in this part I will cover the things related to trading such as trading analysis and types. Based on my experience I will try to cover it as easily as possible. The importance of analysis can be considered after going through the details given below. I
Next part Links
1. New to Trading - Tips and Suggestions (V1) Getting Started Full Guide
2. CEXs vs DEXs & Spot vs Future - Tips and Suggestions (V2)
3. Analysis & its Types - Importance of Analysis in Trading (V3)
4. Tips for Descriptive and Sentimental Analysis (V4)
Table of Content
► What is Analysis & Analysis in Trading Market
► Why Analysis is Important?
► Types of Analysis Explained
► Tools Which can Help in Analysis
What is Analysis & Analysis in Trading Market
Analysis, the term defines a person who is an analyst who is trying to figure out some sort of solution and valuable information from a large set of data to create a useful decision and then deploy that solution for different purposes.
►So coming up next to analysis in any type of trading market analysis helps to understand how to proceed in the market. Taking a simple example for explaining how analysis works consider I am new to bitcointlak and I don't know anything I will o through different sections but I can't understand what going on then I will calm down my mind up then I will try to find the basic information required as How to Use Forum? What is this Forum and its Working? and What type of service it provides? and what are the Rules here? After all this I will know what to do and how to do it. If I don't analyze the forum and randomly post in any section it could result in a violation of rules damaging my reputation and loss of value (Reptation, Trust Bad Impression). Similar to this Analysis in any type of market helps to understand the foundation of the market, Market behavior, market basics,s and How to proceed.
►In any type of trading market or any field of life, the analysis should be our first priority before performing some action it will increase the efficiency of the results.
Why Analysis is Important?
Generally, I have explained the analysis importance above but that is a bit off-topic and just explains the term analysis and its basic importance now here I will just explain its importance in the trading market and its benefits.
Trading market Analysis Helps you to understand the market strategies, and market behavior and provide you with a mindset to make decisions. A risk trading market such as crypto requires good analysis to be successful, During analysis In the crypto market you understand the behavior of the particular asset and you evaluate some figures, and then review the history of the asset. After doing an analysis it helps you create your own strategy that you should invest, trade, and make good profits. The analysis is extremely important to trade because if you don't consider the analysis of any particular asset before investment it can cause severe losses as a person new to trading in the crypto market and jump into the market and invest in an asset that is not in demand and poor fundamentals and Reputation because he didn't consider the analysis he didn't know these things before and now he is going to bear the loss.
► Analysis increases your understanding of the market and assets
► It helps in Decision making
► Analysis Improves the efficient of the Results
► Analysis helps to control emotions while trading or investing
Types of Analysis Explained
There are different types of analysis on the basis of data and your working model such as Descriptive, Prescriptive, Predictive, and Diagnostics with their value. But as we are here just Discussing the Trading market and specially Crypto Trading Market so in the crypto trading market, there are 3 common types of Analysis;
► Descriptive Analysis
► Technical Analysis
► Sentimental Analysis
Descriptive Analysis is the type of analysis in the crypto market in the analyst or trader uses to go through the basic information of the assets such tokenomic of asset, Demand & Supply, Historical data such as ATH (All Time High) and ATL (All Time Low) and value of the asset in the particular timeframe or current market value. We can keep on adding things here but our priority is to understand the topic so in Descriptive analysis we go through all the descriptions related to assets.
Technical Analysis is the type of analysis that plays an important role in trading in the crypto market in any timeframe. Technical analysis includes analyzing the assets on the basis of their historical patterns and behaviors of the assets. Analyzing Onchain available data and predicting the future market value. In technical analysis, we actually try to predict the future market value of the assets by using different approaches. The market behaves similarly in Similar conditions and rebates its patterns. Technical analysis involves analyzing the Relative Strength Index RSI and Moving Average Convergence Divergence MACD etc.
Sentimental Analysis involves analyzing the investor's sentiments in the market and then predicting the future behavior of the investors. Sentimental analysis is based on the market trend, News, and Recent Developments. In this type of analysis, User Simple analyzes the behavior of the other and then responds in the market according to the analysis done on others' strategies.
Tools Which can Help in Analysis
I have already provided some useful tools in my first topic you can visit for the links to the tools.
Market Tracker: Helps the user in tracking current market value and provides easy access to descriptive analyses such as CMC and Coingecko.
Fear and Greed Index: It helps in sentimental analysis by providing the score on the basis of market updates, investor behaviors, and market trends. The score is dived into 3 zones Red = Market in Pressure (BEar Trend). Yellow = Market in recovery mode or naturally moving (Neutral) and Green = Greed (Market is at its peak and highly Bullish).
Tradingview: Helps in Technical analysis and provides indicators, and tools to easily analyze the market.
A lot of tools and Applications can be recommended according to the user's need and the most commonly used are given in my first topic you can visit.
This topic is based on personal experience and information I can be wrong but the information provided here is to guide and provide a general overview to the new ones and recommend them with some tips. Put your valuable feedback below.
Upcoming Topic: Tips for Descriptive and Sentimental Analysis (V4)