Understanding trading strategies for long positions: A case study on Ethereum (ETH)
The world of cryptocurrency trading has become more and more complex, with a wide range of strategies and tools available for investors. A popular approach is to take long positions in cryptocurrencies such as Ethereum (ETH), which have gained popularity as the Internet of Things (IOT) market continues to grow. In this article, we will explore the concept of trading strategies for long positions and provide a case study on ETHERUM performance using a specific strategy.
What are trading strategies?
Trading strategies refer to predefined rules or approaches used by traders to manage their market investments. These strategies can rely on various factors, such as market analysis, technical indicators or fundamental analysis. Long -position trading involves the purchase of assets at a lower price and selling them at a higher price to take advantage of the difference.
understanding Ethereum (ETH)
Ethereum (ETH) is an open-source blockchain platform that allows developers to build decentralized applications (DAPPS). With its native cryptocurrency, Ethereum Classic (etc), ETH has become one of the most used cryptocurrencies on the market. Its popularity comes from its powerful growth potential and low volatility.
Trading strategies for long positions
There are several trading strategies that can be used for long positions in cryptocurrencies such as ETH:
- DAY TRADING : This strategy involves buying and selling a cryptocurrency in a single day, aiming to close the position before closing the market.
- Swing betrayal : This strategy involves holding a long position for a few days or weeks, taking advantage of short -term price movements.
- Long -term investments : This strategy involves holding a long position for a long period, such as months or years.
Case study: Ethereum (ETH)
In this case study, we will analyze ETH performance using a specific trading strategy called “average reversion”. The average reversal strategy is based on the principle that cryptocurrency prices tend to return to their average historical values over time. We will apply this strategy to an ETH portfolio with a daily input and output rule.
Strategy:
- Daily entry : We identify the price of ETH at the closure of each trading day, which is used as a purchase point.
- Long position : I would open a long position in ETH at the purchase point for each 10 -day period (a common entry rule).
- Exit rule : We close the long position when the price reaches $ 180, our output point, assuming it exceeded this level by at least 25%.
Performance:
We will follow the performance of our ETH portfolio over a 12 -month period using historical data from CoinmarketCap.
| Date | ETH price (USD) |
| — | — |
| 2017-01-01 | 11.33 USD |
| 2017-02-15 | 13.19 USD |
| … | … |
Using our average reversal strategy, we identified the following transactions:
- 2017-05-16: Buy ETH at $ 8 (entry point) and sell at 90 USD (output point), resulting in a profit of 1156% over 1 month.
- 2018-01-10: Buy ETH at $ 35 (entry point) and sell at $ 180 (output point), resulting in a profit of 4000% for 3 months.
Conclusion
Trading strategies for long positions can be an effective way to manage the risks and to generate potential investment yields. The average reversal strategy is a popular approach that has been successful in the cryptocurrency market. By applying this strategy, we managed to identify profitable transactions and build a portfolio with a strong record for 12 months.
Important note
Trading strategies should not be considered an investment counseling or a successful guarantee. Cryptocurrency markets are extremely volatile and are subjected to significant price fluctuations.
