Trading in the cryptocurrency market can yield substantial profits, but the risks are also significant. Right now, the market is very volatile, making it difficult to achieve profits during this period. Combining methods and strategies to optimize profits and risks for the account is essential. Being well-equipped with knowledge and clear strategies is also a solution that yields good profits for us. So today, let's analyze and propose some top trading strategies in the cryptocurrency market with Trading Insight!
Dollar-Cost Averaging (DCA)
This is also a fundamental strategy that has the greatest effect in the investment process of investors in the short or long term, especially inBitcoin. This is also the strategy I want to share in detail with you about this strategy. First, let's understand the concept of strategy and the most basic way it works.
Dollar-cost averaging (DCA) is an investment strategy that involves regularly buying a specific asset with a fixed amount of money, regardless of market price fluctuations. Instead of investing all at once, DCA spreads the investment over time with smaller amounts.
This approach can help manage risk by continually adding to one's portfolio. For example: regular investments allow buying more assets when prices are low and less when prices are high. An effective long-term investment strategy aimed at minimizing risk, ensuring profits, and steadily growing your cryptocurrency portfolio over time.
This strategy is particularly effective in highly volatile markets, exactly as the current timing is quite reasonable. DCA minimizes the impact of short-term price fluctuations, providing a more stable average purchasing price over time. This is conveniently suitable for beginners investing in cryptocurrency as it reduces the risks associated with trying to time the market and provides a more consistent investing experience.
Advantages of DCA (dollar-cost averaging)
Better buying price: DCA allows you to buy more when prices are low and less when prices are high, aligning with the long-term growth trend of the market.
Reduce risk during market volatility: DCA helps you 'buy when prices drop,' seizing the opportunity to buy assets at a low price with the expectation that prices will recover in the future.
Diversify risk: By investing over time and diversifying the portfolio, DCA minimizes the risk of large losses when an asset performs poorly.
Avoid emotional investing: This strategy helps you not to be influenced by psychology such as fear (panic selling) or FOMO when the market is volatile.
No need to time the market: DCA removes the pressure to guess the market's 'peak' and 'bottom,' saving time and focusing on long-term investing.
Disadvantages of DCA (dollar-cost averaging)
Missing out on short-term profit opportunities: DCA makes it difficult for investors to take advantage of significant price fluctuations or high profits from investing a large amount at the right time. Profits may be lower if the market rises sharply after a large initial investment.
Low risk, low profit: The safety of DCA also means that the potential profits are lower, especially in a steadily growing market.
Higher transaction costs: DCA requires frequent investments, resulting in more trades and increased commission fees, especially on centralized exchanges.
Inflexible during market fluctuations: This strategy requires discipline and adherence to a schedule, making it hard to react quickly to good buying or selling opportunities.
Running out of capital early does not maintain DCA if holding long: This is also a drawback of DCA in the long term for any coin, when running out of capital or not having reserve funds is not allowed.
Advice: The DCA strategy helps reduce risks in long-term investing by spreading purchases over time, but remember that it is most suitable when the market is volatile and has stable growth. Patience and discipline are key to success.
Scalping strategy combining Scalping and Swing Trading
Combining Scalping and Swing Trading helps maximize profits from both short-term and medium-term price fluctuations. This strategy not only increases the opportunity to earn profits but also helps minimize risk through flexibility across different time frames. However, it also requires analytical skills, trading discipline, and a steady mindset!
Scalping - Short-term Trading
Characteristics: Focus on quick trades to earn small but consistent profits in a short time frame.
How to implement:
Time frame: 1-minute to 15-minute charts to detect immediate price fluctuations.
Supporting tools:
RSI (Relative Strength Index): Identify overbought or oversold conditions to find ideal entry points.
Bollinger Bands: Used to detect price levels hitting upper or lower bands, signaling potential short-term reversals.
Volume: Monitor increasing volume to determine strong price momentum in the short term.
5 and 9 period EMA: Use short-term moving averages to identify crossover points, signaling entry/exit opportunities.
Profit and risk objectives:
Profit objective: Raise to 3%–10% for each quick trade.
Stop-loss: Maintain a level of 2%–5% to avoid large risks.
Trading frequency: Focus on a small but accurate number of trades to accumulate profits.
Psychological factors when Scalping:
Scalping requires quick and decisive reactions. Don't let greed make you hold on longer or hesitate when taking profits.
Maintain high alertness and discipline to exit trades as soon as the target is achieved, avoiding getting caught up in strong fluctuations.
Do not trade continuously when losing; maintain a calm mindset to avoid 'revenge trading.'
Swing Trading - Medium-term Trading
Characteristics: Capture larger price trends and hold positions for several hours to several days to maximize profits.
How to implement:
Time frame: 1-hour to 4-hour charts to analyze medium-term price trends.
Supporting tools:
9 and 21 period EMA: EMA crossover points signal new upward/downward trends.
MACD (Moving Average Convergence Divergence): Detect market trends and momentum.
Fibonacci Retracement: Identify potential support and resistance zones to place reasonable orders.
ADX (Average Directional Index): Helps measure the strength of the current trend.
Profit and risk objectives:
Profit objective: Set higher targets, from 5%–20% for each medium-term trade.
Stop-loss: Maintain a level of 3%–10% to ensure risks are tightly controlled.
Be patient in holding positions: Monitor news, market sentiment, and technical factors to maximize profits from major trends.
Psychological factors when Swing Trading:
Patience: Swing Trading requires the ability to wait; do not panic over minor market fluctuations.
Confidence and discipline: Set clear goals and stick to the trading plan. Do not 'cut losses early' when the profit target has not been reached.
Emotional management: Avoid being influenced by FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt).
Benefits of combining Scalping and Swing Trading
Diversify profit opportunities: Scalping takes advantage of small fluctuations, while Swing Trading exploits larger trends.
Optimize profits: Increase profit targets from short-term (3%–10%) to medium-term (5%-20%).
Diversify risk: When Scalping is unsuccessful, profits from Swing Trading can compensate and vice versa.
Flexibility: Trading across multiple time frames helps adapt to different market conditions.
Final advice:
Combining Scalping and Swing Trading requires discipline, analytical skills, and a steady mindset. Always adhere to risk management principles, set clear profit targets, and do not let emotions dominate. This is an effective strategy to both 'earn quick money' from short-term trading and 'profit significantly' from medium-term trends.
Asset Protection and Profit Maximization Strategy in a Volatile Market with Binance Earn
During periods of extreme volatility and high risk in the cryptocurrency market, the important strategy is to not trade and maintain composure. However, you can still seek profit by using flexible tools from Binance Earn. Here are the specific strategies:
Do Not Trade When the Market is Highly Volatile
Reason: When the market is highly volatile, the risk of losses is high, especially with short-term trades like day trading or scalping.
Action: To protect your assets, do not participate in trading during these times. Instead, switch to a sustainable profit-making strategy using Binance Earn products.
Profit from Binance Earn
While waiting for the market to stabilize, you can still increase your assets through flexible saving methods at Binance Earn.
a. Flexible Earn (Flexible Savings)
How to do it:
Access Binance > Earn.
Choose stablecoins like USDT, BUSD to deposit into a flexible savings account.
Stable interest rates and the ability to withdraw at any time, helping to protect assets while still earning daily interest.
Staking
How to do it:
Go to Earn > Staking.
Choose coins that support staking such as BNB, USDT, or ETH.
Participate in staking to receive daily rewards with attractive interest rates without having to sell coins while the market is volatile.
Maintain a Calm and Patient Mindset
Reason: The market may recover after strong fluctuations, and with the Binance Earn strategy, you can continue to earn interest while protecting your assets.
Action: Stay calm, adhere to the strategy of not trading during unstable market times, and let your assets grow through passive profit-making products.
Advice: During times of high market volatility, instead of risking trading, use Binance Earn products like Flexible Earn and Staking to earn safe profits. This helps you protect assets and increase profits without worrying about short-term market fluctuations.
Summary:
Investment strategies that help you protect assets and optimize profits in all market conditions, minimize risks, and take advantage of opportunities from both short-term and long-term fluctuations. Therefore, be patient, control your emotions, and adhere to an investment plan that fits your financial goals and risk tolerance. This article provides official information for reference; you can discuss this information and your views with Trading Insight about Bitcoin in the future.
