Range trading cryptos
Cryptocurrencies are a new and exciting investment asset class that has seen substantial growth in recent years. While there are many different ways to trade cryptocurrencies, range trading is one of the most popular.
Range trading is a strategy where an investor buys and sells security within a predetermined range. You can do it with stocks, options, or, as we will focus on in this article, cryptos.
The main advantage of range trading cryptos is that it allows investors to take advantage of price volatility while limiting their risk. By buying and selling cryptos within a predetermined range, investors can effectively reduce the amount of money they could lose if the market moves against them (check this here).
The benefits of range trading cryptos and how you can use them
Volatility is defined as a measure of price change over time. Cryptocurrencies are known for their high levels of volatility which can cause a significant amount of uncertainty and risk for investors. For example, on January 7th, 2018, bitcoin had a daily volatility rate of 3.06%. It means that the price of bitcoin could rise or fall by 3.06% in a single day. Compare this to the S&P 500 Index with a volatility rate of 0.8%, and you can see why some investors may shy away from investing in cryptos.
However, range trading allows you to trade with less than 5% volatility which can be a great way to reduce risk when investing in cryptos. By buying and holding security over time, you eliminate the need to track the market and make quick decisions constantly. It can be beneficial if you are new to the cryptocurrency market and don’t have the time or experience to trade on a short-term basis.
Although range trading cryptos can be a great way to reduce risk and take advantage of volatility, it is not the only investing tactic you should use. When used correctly, diversifying your cryptos portfolio can help you maximize returns and minimize risks. It requires having a firm understanding of both short-term and long-term investing strategies and how they work together.
Range trading cryptos have grown in popularity due to their ability to reduce risk and take advantage of high volatility in the market. Thanks to its ability to minimize risk and reward investors, range trading cryptos is a great way to diversify an investment portfolio. If you are looking for ways to invest in the cryptocurrency market but don’t have enough experience or time to trade actively, range trading could be the right fit for you.
Here are a few things to keep in mind when range trading cryptos.
First, investors need to be relatively confident in their chosen ranges. These are not arbitrary numbers that you can change every day—they must reflect the current market sentiment.
Secondly, crypto prices are highly volatile and can move several per cent up or down daily. Therefore, it is best if range traders have stop-loss orders to get out of the market quickly should there be any sudden movements against them. It will minimize their losses because these range traders could limit their downside risk to just a few per cent by taking quick action.
Finally, it is crucial not to rely too much on technical indicators while trading cryptos since these charts are not helpful for this strategy. Instead, investors should focus on chart patterns and other forms of fundamental analysis to make their trading decisions. It will help them avoid getting into trades based on incorrect assumptions or trends that do not exist in this market.
While there are many different strategies for trading cryptocurrencies, range trading is among the most popular because it offers many benefits while minimizing potential risks. As long as an investor has a strong understanding of how markets work and is confident in their chosen ranges, they could potentially limit their profits and losses compared to other types of trading strategies. It could benefit both new investors looking to get involved with cryptos and more experienced traders who want to take advantage of this exciting asset class.