Relative Altcoin Strength / weakness chart & tips

Summary

In this video, the speaker explains how to use a relative strength chart to compare altcoins to Bitcoin, helping traders identify which assets are outperforming or underperforming. The chart is especially useful during market dips or periods of expansion, guiding decisions for long or short trades. The speaker shares a practical example using Roon as a strong performer post-sell-off, demonstrating how the chart can pinpoint volatility and provide valuable insights for trading strategies. Links to the chart and referral code for FTX are included for further engagement.

Takeaways

• 😀 A relative strength chart compares the performance of altcoins against Bitcoin, helping you track their relative movements over time.
• 😀 To use this chart, simply add an altcoin comparison to a Bitcoin chart by selecting the 'compare' option and choosing your altcoin.
• 😀 Both assets start at zero on the chart, which allows for easy tracking of their relative performance from that point.
• 😀 Zooming in and out on the chart helps visualize changes in the relative strength between Bitcoin and altcoins over time.
• 😀 The chart is particularly useful during large sell-offs, as it highlights altcoins that are recovering or outperforming Bitcoin.
• 😀 By examining the relative strength after a market dip, you can identify altcoins that are likely to rebound faster, providing trading opportunities.
• 😀 For example, MATIC often shows significant volatility and strong rebounds, making it a potential coin to watch for long trades during market corrections.
• 😀 The chart can also be used to spot coins with high volatility, helping traders decide on short positions, especially after strong price increases.
• 😀 The speaker shares personal trading strategies, such as shorting Roon (ROON) after it outperforms Bitcoin in a rally, highlighting the importance of relative strength in predicting market movements.
• 😀 A practical tip: when looking for trading opportunities, examine which coins are showing strength during dips or weaknesses during rallies to make more informed decisions.
• 😀 The speaker offers resources in the video description, including a link to the relative strength chart and a referral code for FTX, encouraging viewers to engage further.

Q & A

What is the purpose of using a relative strength chart in cryptocurrency trading?

The relative strength chart helps traders compare the performance of altcoins against Bitcoin. It shows how different assets perform over time, helping traders identify which altcoins are performing better or worse, especially during periods of major market movements like sell-offs.

Why is it important for both assets to start from zero on the relative strength chart?

Starting from zero allows for a fair comparison between the assets. It ensures that the chart is not skewed by past performance, making it easier to analyze their relative performance changes over time from the same baseline.

How does zooming in and out on the chart affect the analysis?

Zooming in or out changes the perspective of the chart, potentially altering how the relative strength of the assets appears. This is crucial because zooming can show either short-term fluctuations or long-term trends in the performance of the altcoins compared to Bitcoin.

What does the speaker mean by 'huge sell-offs' and why are they significant?

A 'huge sell-off' refers to a large-scale price drop in the market, typically affecting all assets. It is significant because such events often create opportunities to identify which altcoins show strength and may recover quicker, offering potential trading opportunities.

How can traders use the relative strength chart after a major sell-off?

Traders can use the chart to identify which altcoins have shown strength coming out of the sell-off. These coins are typically the most volatile or resilient and may provide good opportunities for long positions as the market recovers.

What is the strategy behind shorting coins like Roon after a sell-off?

Shorting coins like Roon after a sell-off is based on their recent strong performance. Since they have already gained significantly, the idea is that they may correct or experience a pullback, making them suitable for a short position.

What role does volatility play in the relative strength chart analysis?

Volatility is a key factor in the analysis, as the relative strength chart helps identify which altcoins are more volatile or have higher beta values. These assets often show large price swings, providing traders with potential opportunities to capitalize on large market movements.

How can traders identify which coins to invest in after a sell-off?

By using the relative strength chart, traders can see which coins are showing relative strength and resilience during the recovery phase. These coins may be good candidates for long positions, as they are likely to outperform others in the short term.

What is the significance of using Matic and Roon as examples in the video?

Matic and Roon are used as examples because they represent two types of behavior in the market: Matic often shows strong recovery after a sell-off, while Roon’s strong performance makes it a candidate for shorting after a period of high gains.

How does the speaker use their personal trading experience to explain the strategy?

The speaker shares their experience of anticipating a sell-off in Bitcoin and positioning themselves in a short position on Roon, which had been performing strongly. This real-world example helps demonstrate how the relative strength chart can be used in practical trading decisions.