why is it difficult to apply TA on altcoins with low marketcap

Silberman

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Quote from: cafucafucafu on November 19, 2021, 03:49:38 PM

Not just on altcoins with low marketcap, but just everything in general.

TA is notoriously unreliable because of the fact that most markets are efficient and therefore there is no reliable way of making sure that patterns repeat themselves.

If you want to do analysis on a coin, I much prefer fundamental analysis as that actually involves the evaluation of the underlying blockchain technology.

It is all about the liquidity, if there is no interest and demand by investors it means the market volume will depend on the few whales in low marketcap altcoins. The TA is possible for top cryptocurrencies, otherwise, it is totally waste of time on small altcoin markets.

This, TA can be a very effective tool but it needs to be used on markets with enough volume otherwise it is not going to work at all, markets with low market caps and volume are too susceptible to manipulation, and whales will take advantage of it, we may think it is unfair but that is just the way things are and we need to accept it and adapt to it, and one of the ways in which this can be done is by not using TA on those markets and use fundamental analysis instead.

cafucafucafu

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Not just on altcoins with low marketcap, but just everything in general.

TA is notoriously unreliable because of the fact that most markets are efficient and therefore there is no reliable way of making sure that patterns repeat themselves.

If you want to do analysis on a coin, I much prefer fundamental analysis as that actually involves the evaluation of the underlying blockchain technology.

Silberman

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

You gave the answer yourself, if you take the time to study TA, whether this is by using books, articles on the internet, YouTube videos or a mentor, you will get the same information, TA does not work on markets with a low volume, and why is that? Because TA is based entirely on what happened on the market already and making conclusions about it, however when the market cap is low a whale or pump and dump groups can manipulate the coin easily and until this happens it is impossible to predict it with TA, so if you are still interested in trading those coins I will recommend fundamental analysis instead.

Coyster

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

The reason being that most altcoins are short term/pump and dump projects that can pump and dump spontaneously, most Investors do no research when they want to invest in some altcoins, they just buy when it's low and hope on luck for an appreciation in price so they can make profits. The reason why its movement is unpredictable, is the same reason why it is regarded as being very risky. Having said that, many of such altcoins can be manipulated quite easily, that's cause sometimes an individual could own more then 50% of the coin, and whenever such person dumps, that's the end of such project. But that is not the case with Bitcoin, it is a long term project with a very valid use case and a demand that will continue to grow, that is why if you're not making profits on the Bitcoin network the time you invested, you're advised to hodl, as more often than not, you'll make profits along the long run.

Little Mouse

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Project with lower marketcap can be manipulated by anyone. This doesn’t need a huge amount of fund even. With $50k-$100k, anyone can pump the price or even dump the coin price. So, you can't apply TA there of course.

FanEagle

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Well, altcoins with a low market cap, like you said, are prone to manipulation. But, I don’t think that would be why your technical analysis is not working on them, because it’s not every time that the market is being manipulated. So, the analysis simply didn’t work, maybe it wasn’t accurate. You’re forgetting that an analysis doesn’t have a 100% chance at predicting what the market would turn out to be.

It’s mostly thing of chance, it goes two ways. But if you think that low market caps are not working out for you, then you should just go with coins that has huge market cap, so that you wouldn’t have to keep losing your money. Although investing in coins with bigger market cap doesn’t come with any less risk, there is still the same risk involved.

el kaka22

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Simplest reason is already given, it is basically just a situation where you end up with not enough data to back that up with TA. Things about the current situation is that if you have liquidity so low would mean that there is a good chance you could literally just fail to get enough data to pick it up and find the right chart direction.

The low liquidity means that you could literally have one rich person that end up with changing the whole system and then something that looks like it will go up could end up going up just because one rich person could end up selling, or it could look like it will go down but one rich person could end up increasing the price by buying it. This is not really possible with the high cap coins because they have a lot of volume which means you are not going to end up with a drop or increase just because of one rich person buying or selling.

mdzahed134

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Low marketcap coins and listing on the small exchanges, Most of the time it seems risky investment because low trading volume coins will gradually low if they've no interested buyers and hold to long term. And if team haven’t enough fund to listing bigger exchanges than investors will go leave.

thesosorr

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Not everything that happens because of manipulation in my opinion. Altcoin price movements so far are very difficult to predict.
Unlike the market conditions in 2017, almost all Altcoins move simultaneously with the movement of Bitcoin. But for now, when Bitcoin movement is increasing, only a few Altcoins are experiencing an increase.

Mabel908

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In my opinion, altcoins with low market cap are difficult to analyze because the market is very easy to manipulate. someone buys it not because the price is in the support area, but anytime they are able to play with the price, on the other hand because there are still few investors in it, so the trading volume is still low, so trading seems unhealthy without being interfered with by various points of view from many traders.

aprilnot

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

whether this is all related to manipulation or there are other reasons that make it difficult to predict.

most of it is due to market manipulation. Low market cap is very vulnerable to manipulation, therefore TA cannot be expected for such a coin. the only way to make an analysis for a coin with a low market cap is to look at its fundamentals. this method is better and proved to be more accurate. Broadly speaking, when there is a positive update, the price will go up. if you follow this, you will find it easier to analyze.

michellee

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Quote from: khiholangkang on October 23, 2021, 10:52:01 PM

It's true, altcoins with low market cap are very easy to be manipulated by one or a few whales, it causes technical analysis to not apply to altcoins with low market cap.
Technical analysis can be applied to coins whose fundamentals are already good.

The whales can play pump and dump as they want, making the analysis may not work. Maybe you can follow where the price goes. For example, if the price is down, you buy. And if the price is up, you sell. But there is no guarantee when the price will move or the sign for the coin to increase or decrease. That makes the analysis hardly to apply and maybe you can only use your feeling based on the coin situation, which will be too difficult to guess the movement.

kryptqnick

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

I'm not a TA believer in general (and you should know that it's considered scientifically dubious), but if TA works for you with big coins, why not profit from them instead of bothering with low marketcap ones? As for potential reasons why unpopular coins are less predictable, I think it's largely due to a high risk of the price being manipulated by big players. Trying to manipulate the price of a coin with huge marketcap and trading volume requires immense resources that almost nobody possesses. But playing a pump and dump game with a coin that's barely traded is a different story.

Gayong88

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In my opinion, The general analysis commonly used in the money market world is usually easier to see BTC and ETH, because the reference is only to BTC and ETH if those 2 go up, other coins also go up and one more thing the crypto driving factor is not only fundamental but the determinant of price increases mainly because there is demand/daily transactions for these coins/tokens not only because of fundamentals.

asriloni

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You can pick some low cap coins from the market and then try to make a comparison between the chart of those coins and you will be seeing the differences. There are lots of factors that were affecting it. Some people have been mentioning the correct factors like

- supply
- demand

You must remember that if it's not only caused by that. When the coin has no liquidity in the market and it will create a huge spread between buy and sell orders. that means this will make the price of coin will be very volatile compared with the major coins that have low gap of slippage. It will also affecting the result of your prediction in small marketcap coins. Manipulation was making the market becomes more volatile. it can also be driven by external factors like the news that come from the big parties.
Someone with big chunks of coin can make the bullish trend to turn into the bearish trend instantly. TA was not working on the small cap altcoins. it lack of liquidity and it was affecting the stability of the trend.

khiholangkang

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It's true, altcoins with low market cap are very easy to be manipulated by one or a few whales, it causes technical analysis to not apply to altcoins with low market cap.
Technical analysis can be applied to coins whose fundamentals are already good.

martina14

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

Technical analysis is not hard to those traders who understand it, but for the people who don't know how to get the catch, it will surely hard too for them to get it. But the only thing I can suggest to you is always start with the basic in trading then you will not going to notice that while the time is passing by little by little you will understand what TA analysis.

harizen

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

So you mean to say that bitcoin and any other major altcoins are easy to predict? I think you end up thinking like that because you don't have a good run analyzing the altcoin's behavior. After all, it's just common not to predict easily the movements of some low cap market cap coins since they don't have a decent trading volume in the first place so what do you expect?

And besides, 90% of traders I believed are trading with their instinct and TA are secondary and will just act as a reference.

Anyways, what coins are you referring to that can consider having a low market capitalization?

chaser15

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Quote from: caffu chino on October 23, 2021, 01:32:31 AM

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

It's not went the way you like that's why you think TA can't apply on low market cap coins.

Just continue using TA and apply it on your future decision. Once you are now using it, you can ask yourself again if it's really difficult to apply technical analysis on some altcoins.

Experience will teach you to use it.

agustina2

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It's because altcoins that you consider having a low market cap are prone to manipulations.

And besides, reading charts don't tell you what exactly you need to do. It's showing you instead the current happenings on a certain coin.

In trading altcoins, it's been proven and effective to rely on guts compare to technical analysis.

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