Abstract: With the advent of blockchain technology, one interesting product we see is the cryptocurrency market. The blockchain has spawned a new market for investable digital assets. Like other existing traditional markets (such as stocks or bonds), the cryptocurrency market is mature enough to provide opportunities for those who can use them. People can adopt a variety of different trading strategies to "beat the market", here are some of the most common trading strategies.
Moving brick arbitrage
Arbitrage trades can be described as buying and selling assets at the same time in order to profit from their price differences. In other words, arbitrage traders will buy assets in one market and then sell the same assets at a higher price in another market. In encryption currency in the context of the market, the carry trade may resemble the following methods:
The price of the test bitcoin is $5,000 on the Coinbase, while it is trading at $5,100 in Binance. Arbitrage traders can buy Bitcoin on Coinbase and immediately sell their bitcoin to Binance for profit
Moving bricks as a trading strategy is a strategy that can be profitable if done correctly. Trading tools such as cryptocurrency trading robots can be used to automate and increase the execution time of transactions, however, as the cryptocurrency market develops, it will become increasingly difficult to take advantage of price differences that exist in the market.
Fundamental analysis
Individuals who execute transactions based on asset fundamentals will look at certain indicators to determine if the asset is undervalued or overvalued. For example, a fundamental analysis related to a company's stock price may involve an assessment indicator.
Such as:
P/E ratio - price to profit ratio
Earnings per share - EPS ratio
ROE - Return on equity
Fundamental analysis is a methodology first proposed by the late US investor Benjamin Graham. Later, Warren Buffet carried it forward, and Warren Buffett is currently one of the world's most famous value investors. Fundamental analysis is a common concept for companies, but it can be easily applied to digital assets such as Bitcoin. In addition to P / E ratio and other indicators, the following factors may be used with any encryption currency associated with a portion of the fundamental analysis
NVT ratio - network value to transaction ratio
Encrypted asset value claim
Team quality
Trading based on the fundamental value of digital assets means that people should hold assets for more than 10 years. Therefore, encryption currency daily market fluctuations may be encountered should not be related to the individual being deployed this trading strategy.
Band trading
The cryptocurrency market is well known on the one hand, and that is price volatility. The price ofBitcoin or any cryptocurrency can rise by 20% in a few hours and by 20% in the next few hours. In the end, some traders use this volatility to try to make a profit. One strategy that allows this is band operation.
Band trading involves individuals who hold cryptocurrencies for a period of time , usually days or weeks. The band operator will then attempt to determine the overall trend of its cryptocurrency holdings and executions based on its overall up or down trend. The success of band trading depends to a large extent on the individual's ability to judge the market. Considering the speed of the cryptocurrency market, this is a very difficult feat. Therefore, band trading is undoubtedly one of the more risky trading strategies.
in conclusion
The cryptocurrency market is an unpredictable and unpredictable trading environment. Its volatility may be a gospel for some people and a curse for others. However, it is obvious that people can use various trading strategies to "beat the market." Regardless of the strategy chosen, the risks associated with trading in this market must be recognized. Therefore, it is important not to invest more than one venture capital and to ensure that thorough research is always conducted before any transactions are executed.
Source: Chain to Finance
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