Development of volatile market trade strategy: Cryptographic trade guide
The world of trading of cryptocurrencies has become more and more popular in recent years, with decentralized scholarships (DEX), margins trading platforms and other innovative tools. However, as with any investment strategy, risks are involved. One of the biggest challenges is the relocation of volatile markets, which can quickly convert profit in loss.
In this article, we will discuss how to develop a commercial strategy for volatile markets in the cryptocurrency trade. We will study the basic principles, risk management techniques and reducing the risk of reducing high grade markets.
Understand volatile markets
Before developing a trading strategy for volatile markets, it is important to understand what makes them so volatile. The volatile market describes:
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High price flucations
: prices can change quickly in response to market news, mood and other factors.
- Limited liquidity : Commercial volumes can be low, which makes it difficult to enter or get out of its functions quickly.
3
Risk of loss : High volatility markets often cause higher potential losses.
The principles of development of a volatile market trade strategy
When developing a trading strategy for volatile markets in the cryptocurrency trade, keep in mind the following basic principles:
1
Diversification : Distribute the investment in several cryptocurrencies and asset classes to reduce risks.
- Determination of the size of the position : Set the realistic suspension levels and take profit objectives according to the size of your position.
3
Risk management
: Use suspension orders, stops and other methods to limit possible losses.
- Trends as follows : Look for price trends, but note that even the most powerful trends can run quickly.
Risk management techniques
To reduce the risks associated with high volatility markets, consider these risk management methods:
1
Determination of the size of the position : Define realistic stop levels and take profit objectives according to the size of your position.
- Orders stop-loss : Define the stop controls at a fixed price or as a percentage below the entry price to limit the possible losses.
3
Standing the stands of the stands : Use the detention stops to adjust the suspension order when prices move for you, which limits potential losses.
- Light management : Consider using attracted funds (like 2x or 3x) to improve the advantages but aware of the increased risk.
Trend of these strategies
To obtain a trend in such strategies, focus on identifying and moving the price trends of cryptocurrencies:
- Identify the main levels of support and resistance : Look for areas where prices have historically changed or modified management.
- Use technical indicators : Use technical indicators (for example, modifying the average, RSI) to confirm the trends and identify possible coups.
3
Focus on long-term trends : although the following trend can be effective in the short term, focus on long-term trends (like 6 to 12 months).
- Be informed of the mood of the market : Supervise the mood of the market and adjust your strategy accordingly.
Example of trading strategy
Here is an example of a commercial strategy for volatile markets:
- Define the size of the position according to risk management methods (for example, 2% of the value of the account).
- Choose a cryptocurrency with a strong trend in favor of you.
- Identify the main levels of support and resistance using technical indicators.
- Enter the trade with the loss of stopping below the price of the inputs set by a fixed percentage of lower input price.
- Adjust the suspension control as the prices move for you.
Conclusion
For the development of a commercial strategy for volatile markets, the cryptocurrency trade must carefully assess the basic principles and risk management techniques.