Strategies for trading cryptocurrency during a correction, explained
A correction refers to a rapid price decrease, which traders can use to their advantage with the assistance of cryptocurrency trading bots.
Although the definition for a correction differs, it is most often used to describe a rapid decrease in an asset’s price, usually at least 10% and up to 20%. If an asset falls more than that, the price dip is classified as a market crash.
Corrections are often the result of a minor event, such as low trading volumes or other technical factors. They, therefore, occur fairly regularly, lasting a few days, weeks and, in some cases, months. The term correction is then used since the price will often return to its expected value. However, the alternative may also be true. A correction may lead to a larger decline, a bear market.
As most know, the cryptocurrency market is defined by its volatility, making it normal for prices to move up and down fairly regularly.
Looking at the 2021 year alone, the cryptocurrency market was subject to four market corrections and another market event.
For this reason, analysts will also recommend market corrections as a great opportunity for investors to buy assets “on sale.”
The main concern here is that it can be hard to determine when a correction might occur. For this reason, crypto trading bots can play a crucial role in helping traders determine when to buy and sell using signals and indicators and also just not to miss that moment while being away from the screen.