March 1, 2024

Trend Trading with AI

This is the second article in a four-blog series about trading strategies that you can leverage with the Scopechat AI-powered crypto trading assistant. For the first part, read this article on Signal Trading with AI.

Trend trading is a strategy where traders make decisions based on current market narratives and trends. Crypto traders who follow trends generally focus on the price directions of the tokens they are trading, instead of trying to forecast the tokens' top or bottom prices.

In this article, we will discuss how you can execute trend trading with the help of crypto + AI technology. We will also understand the advantages, risks, and important factors to look into for trend trading.

Pros and Cons of Trend Trading

Trend trading is applicable for traders who look at trading from either a short-term or long-term point of view, with different types of advantages for both:

- Short-term traders, including day traders and swing traders, can focus on the token's price movements to enter and exit the market quickly with small positions, capturing profits in small fluctuations.

- Meanwhile, long-term traders such as blue-chip investors and fundamental traders, can analyze factors such as narrative heat and technical aspects to identify more sustainable trends for their trading decisions.

However, there are some risks involved with trend trading, such as:

- Trends can reverse suddenly, so it's crucial to manage risks promptly with actions like profit-taking and stop-loss.

- Market noise from news and rumors might disrupt trend trading decisions, as these factors can interrupt the continuous price movement that trend traders usually rely upon.

AI-Powered Trend Trading: Dashboards to Watch

Your awareness of the advantages and drawbacks of using trend trading will inform your decisions by the time you start looking for crypto tokens to trade. Searching for the next hot tokens is usually time-consuming, but thanks to AI advancements, there are Web3 solutions like the Scopechat crypto trading assistant, which can streamline this process for traders.

Under Scopechat's Trend Trading strategy dashboard, there are three recommended lists to check for your next crypto discovery:

1. Top Gainers

This is a list ranking the top 300 tokens by market cap with the highest daily gains over the past 24 hours. This is suitable for finding the next promising crypto token with a notable upward price momentum.

2. Top Losers

The inverse of the Top Gainers rankings, this list highlights tokens that suffered the biggest price falls throughout the day. Trend traders who like to short underperforming tokens will find this list useful. Both the Top Gainers and Top Losers lists are more aligned towards short-term traders.

3. Trending Narratives

This ranking shows which major token categories have undergone the largest gains over the past day. Instead of tracking individual tokens, traders can focus on token categories with major momentum and figure out their strategy from there. This list is very useful for long-term traders who are more likely to take on multiple token investments.

AI-Powered Trend Trading: Filters to Use

To further refine your alpha hunting quest as a trend trader, the dashboards on Scopechat feature various filters that you can use to zero in on the types of tokens that you prefer.

We recommend the use of the following filters for the Top Gainers and Top Losers lists.

1. Market Cap Range

Pick tokens in different market cap ranges. Choosing the Top 1000 might include smaller-cap tokens with higher risks and more significant price fluctuations.

2. CEX

Filter tokens listed on specific exchanges. This way, you can focus on tokens from platforms you know and trust.

3. Perpetual Markets

If you have requirements for long or short positions, filter tokens available for perpetual trading for more flexibility in your trading strategy.

Please note that the Trending Narratives list does not have a filter function. However, you can gain more information about narratives by clicking on each narrative to generate a leaderboard of the top-performing tokens under that category

We also have additional tips for long-term trend traders:

- If a specific narrative catches your eye, try to get a closer look at the top gainers and discover potentially undervalued tokens. You can click on each token to check their bullish, neutral, and bearish signals.

- Diversify your investment risk by considering tokens from different narratives when optimizing your portfolio. In Web3, multiple narratives and categories have a chance to generate profit on any given day, so remain open to your options.

Watchlist and Alerts: Advanced Portfolio Tracking

Aside from dashboards, leaderboards, and filters, Scopechat also has a game-changing Watchlist and Alerts feature that lets you monitor your favorite crypto tokens & their market actions.

Scopechat provides many signals you can base your trades on, such as:

  • Price Change
  • Centralized Exchange Data (Deposit & Withdraw)
  • VC/Whale Position Changes
  • Smart Money Buy/Sell
  • Volume Change - Spot/Perpetual
  • Funding Rate/Open Interest Data

You can also set up and receive real-time alerts on these tokens, straight to your Discord or Telegram.

(Note: The Watchlist and Alerts feature is exclusive to Scopechat Pro users. Subscribe to Scopechat Pro to gain access to this feature.)

For more information about Trend Trading and other trading strategies made easier by Scopechat, check out the Scopechat Trading Dashboards guide.

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