How to take advantage of the volumes of the market for investment strategies in cryptocurrency
The world of cryptocurrencies has attracted significant attention in recent years, with many investors and traders trying to capitalize on potential yields. One of the main factors that can contribute to the value of a cryptocurrency is the volume of the market. Although some may see the volume of the market as irrelevant or even an obstacle to invest in cryptocurrencies, understanding how to exploit market volumes for investment strategies can be a precious resource.
What are the volumes of the market?
The volume of the market refers to the total amount of currency transferred within a certain period of time (usually one day). It is calculated by multiplying the number of negotiations per minute (negotiation volume) in 1,000. For example, if a cryptocurrency has a commercial volume of $ 10 million and there are 1,000 companies per minute, its market capitalization would be $ 100 billion.
How to take advantage of the volumes of the market
Although market volatility can certainly make a challenge to predict price movements, understanding how to exploit market volumes for investment strategies can help. Here are some ways to do it:
Use the depth of the market for your advantage
The depth of the market refers to the number of negotiations per minute within a certain period of time (usually one day). A deeper market can be used to buy or sell a currency at a lower price, making it cheaper to enter and exit.
* Buy low, high selling : one of the easiest ways to take advantage of the volumes of the market is to buy the bass and sell strong. This involves using the market depth to buy cryptocurrencies at a lower price and therefore sell them when they reach a higher price.
* Transit following : another approach is to use the following trendy strategies that exploit market volatility, such as lowering during a slowdown and high sales when the market recovers.
uses the decay of time
The decay of the time refers to the loss of value of an investment over time due to the differentials of the interest rate. This means that the value of a cryptocurrency can decrease as it becomes more liquid or as there are less new negotiations.
* Cover strategies : A way to exploit the volumes of the market is to use coverage strategies, such as the purchase of sales options or the sale of future contracts.
average of the cost of the dollar : another approach is to implement the average cost of the dollar, in which there is a fixed amount of money at regular intervals, regardless of the market performance.
Use Leva
The financial lever refers to the use of the capital borrowed to increase potential returns. This can be done by negotiating the margin or using derivatives such as contracts or future options.
* MARGIN SCOOKING : The negotiation of the margin provides for the loan of money from a broker to buy more actions than you in your account.
* Breaks of options : the use of options spread allows you to enjoy the decay of the time, also hiding against possible losses.
Avoid Over-Type type
Although market volumes can be an effective tool for making investment decisions, it is essential to avoid excessive optimism. Market conditions are intrinsically unpredictable and can change quickly, leading to significant losses if they are not carefully managed.
* Keep disciplined
: it is essential to be disciplined and focused on your investment strategy, even in the face of market volatility.
* Diversify your portfolio : diversify your wallet by investing in a series of activities can help mitigate the risk and facilitate adaptation to the variations of market conditions.
Conclusion
The financial leverage of market volumes is only one aspect of successful cryptocurrency investment. Understanding how to use the depth of the market, the decay of time, the lever and avoid excessive optimism, you can create a solid investment strategy that helps you achieve your financial objectives. Remember to remain disciplined, diversify your wallet and adapt to changes in market conditions to maximize returns.
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