Investing in cryptocurrencies is always a risk, but the right strategy can help reduce it and provide potentially high returns. One of the key aspects of the strategy is the allocation of funds between different types of trading.
For those just starting out in cryptocurrency trading, it can be difficult to determine the optimal allocation of funds. In this article we will look at one of the possible strategies for allocating funds using the example of investing $1000 for seven days.
In this article, we will look at a trading rule that will help you form a reserve bank and average out your margin positions over the long term.
To make money on cryptocurrencies, traders use various tools and strategies. But for successful trading, you must not only be able to correctly analyze the market and choose entry and exit points from positions, but also be able to manage your capital.
The proposed rule for trading allows you to form a reserve bank and average positions on margin in the long term. It consists of four investment options: fast-high, fast-low, slow-high and slow-low.
Fast-a-lot means investing in futures for 10% of the bank. This is the fastest and riskiest way to make money, but the potential profit can also be high.
Fast-little represents margin trading of 30-50% of the bank. This is a less risky option than futures, but the potential profit is also lower.
Slow-A-Lot includes investing in #Defi , NFTs and GameFi for up to 30% of the pot. This is a less risky way of making money that requires more time and patience.
Slow-low means holding spot cryptocurrencies for up to 30% of the pot in #USDT , #BTC or ETH. This option is the most conservative and less risky, but the potential profit is also lower.
The rule is to transfer 50% of the money earned on futures every day to margin and transfer 20% of the balance (50%) to spot. Thus, a force majeure bank is formed, which allows averaging positions on the margin in the long term and forming reserve capital.
Let's say we have $1,000 that we are willing to invest in trading for seven days. We can use a strategy that will allow us to distribute this money among different types of trading.
According to this strategy, we can choose the following distribution of funds:
10% ($100) on futures trading
50% ($500) on margin trading
30% ($300) on DeFi/NFT/GameFi trading
10% ($100) per Spote holding in USDT/BTC/ETH
Now let's look at the specific numbers for each type of trade.
Futures: If we allocate 10% ($100) to futures trading, then we can use it to execute trades with maximum speed and profitability. Considering that the cryptocurrency market is quite volatile, you can expect high risks and possible returns.
Margin Trading: If we allocate 50% ($500) to margin trading, then we can use these funds to open positions with greater leverage and therefore greater potential income. However, there is also a high risk of losing the entire amount in case of unsuccessful trading.
DeFi/NFT/GameFi: If we allocate 30% ($300) to trading in DeFi/NFT/GameFi, then we can use these funds to participate in decentralized financial projects, buy and sell digital assets and game items. This is a slower type of trading but can also have high income potential.
Holding Spot: If we allocate 10% ($100) to holding Spot USDT/BTC/ETH, then we can use these funds for long-term investing in cryptocurrencies. In this case, we do not expect quick profits, but also the risks of losing funds are not as high as in the case of margin trading or futures trading.
Thus, when using this strategy, we allocate our bank to different types of trades, with different levels of risk and return. It is important to remember that this strategy does not guarantee profit and all investments in cryptocurrencies involve risks.
If we apply this strategy to specific numbers, then for each day of our trading we can distribute funds as follows:
Day 1:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 2:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 3:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 4:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 5:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 6:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Day 7:
Futures - $14.28
Margin trading - $71.43
DeFi/NFT/GameFi - $42.86
Holding on Spot - $14.28
Thus, we can use this strategy to manage our bank in cryptocurrency trading more efficiently.
Using this fund allocation strategy can help you reduce your risks and increase your potential profits in cryptocurrency trading. However, do not forget that the cryptocurrency market is highly volatile, so you need to be prepared for possible losses. Remember also that any strategy must be suitable for your individual goals and financial capabilities.
This strategy is completely my own, and I personally use it, but for about 5 months now I have stopped going to Futures altogether, mostly I am accumulating on Margin, and I am completing tasks for Retrodrops and staking and minting #NFT or I play GameFi.
Remember to do your own research (DYOR - Do Your Own Research) before making investment decisions. Use only verified sources of information and do not rely on the opinions of other people. The crypto world is changing quickly and often involves risks that may not be obvious at the beginning. So be vigilant and remember to practice risk management in your investment decisions.
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