0%
The Secrets to Flourishing in a Bear Market
#Cryptocurrency#cryptohopper#Bot trading+2 more tags

The Secrets to Flourishing in a Bear Market

Historically, on average, every 3 years, there is a crypto bear market that lasts around 12 months. Bear markets are normal, but they are less frequent than bull markets. For example, two of the worst bear markets in Bitcoin's history happened in 2014 and 2017, which lasted 59 weeks respectively 52 weeks.

HODL Cryptocurrency

Crypto bear markets are painful to digest, but if you believe in blockchain technology and its potential to disrupt many industries, there is one simple and effective strategy – aka HODLing.

Another more effective strategy is Dollar Cost Averaging, but we will get to this later.

HODLing has proven to be the most profitable strategy, yielding massive long-term gains. In simple terms, HODL is an acronym for "hold on for dear life" and refers to the practice of buying a cryptocurrency and holding it, refusing to sell regardless of the market conditions.

Sometimes, the best investing strategy is to sit on your hands and let the market do its thing because timing the market is almost impossible. Most of the time, investors are either too soon or too late.

As a final thought, make sure you're only HODLing only crypto projects that are sound and have real applicability with the potential to revolutionize the world.

HODLing with Bots (DCA)

An even better alternative is to hold while using trading bots. But is this even possible, you may ask? Yes, it is with DCA!

DCA stands for Dollar Cost Averaging, and it involves entering into a position and then continuing to buy as it heads lower, thus bringing your average purchase price down.

For example, let's say you bought 0.05 BTC at $50,000. The price then falls to $45,000, and then you triple down on your investment, buying 0.1 BTC, thus bringing your average price down to (($50,000*1)+($45,000*2))/3 = $46,666. The price then continues to fall $40,000 where you again tripple down, bringing your average price to (($50,000*1)+($45,000*2)+($40,000*6))/9 = $42,222.

In this case, you could have made a profit when Bitcoin rebounded to almost $45,000. On Cryptohopper, we offer an advanced DCA where you can customize what percentage of your funds you want to use with which DCA and at what levels. You can even manually DCA on a position whenever you want.

DCA Advanced Tips

When using DCA, it is critical to only invest in coins that you are confident will go up again and have proven it in the past, such as Bitcoin and Ethereum.

Conversely, you should be very careful not to use DCA on crypto currencies you are not 100% confident with, as you risk losing all of your funds.

What is essential to keep in mind regarding DCA is that you should allocate your funds very well. For example, if you plan on doing DCA four times, you should calculate your initial position size based on this so that you still have funds for the remaining 4 DCAs.

If you plan on tripling down and doing 4 DCAs, your initial position can be no more than 1.23% of your account as can be seen below:

  • Initial position = 1.23%

  • 1, 2*current position = 2.46%

  • 2, 2*current position = 7.38%

  • 3, 2*current position = 22.14%

  • 4, 2*current position = 66.42%

  • Total = 99.63%

As you can see, if you had entered with more than 1.23% of your total account, you wouldn't have enough money to cover all DCAs. If you use more coins, this value would obviously be even lower.

Other Bear Market Tools

To leverage your trading during a bear market, Cryptohopper also offers many other features, such as Trailing Stop Loss, Trailing Take Profit, and Take Profit at a Profit, that can help you protect your profits.

Trailing Stop Loss works by moving your Stop Loss along with the price. For example, let's say you buy 0.1 BTC at $45,000 with a Stop Loss at $41,000. If the price goes to $49,000, your Stop Loss will automatically move to $45,000. Take Profit at a Profit works similarly but for your Take Profit.

The Trailing Take Profit feature moves your Take Profit along with the price. For example, let's say you buy 0.1 BTC at $45,000 with a Take Profit at $55,000. If the price goes to $49,000, your Take Profit will automatically move to $53,000.

Bottom Line: DCA is a powerful tool that can lead to great results when used correctly. To get the most benefits out of this tool, you should only use it on worthy cryptocurrencies that have proven themselves and calculate the initial position size so that you have enough funds for all DCA entries.

Inbox Image

Newsletter

Get the weekly email with exclusive crypto analyses and news worth reading. Stay informed and entertained, for free.

Related Articles

Bot Trading 101 | How To Apply a Scalping Strategy
#Automated trading strategy#Strategy designer#EMA+3 more tags

Bot Trading 101 | How To Apply a Scalping Strategy

Cryptocurrencies | BTC vs. USDT As Quote Currency
#Bitcoin#crypto trading#crypto trading tips+2 more tags

Cryptocurrencies | BTC vs. USDT As Quote Currency

Technical Analysis 101 | What Are the 4 Types of Trading Indicators?

Technical Analysis 101 | What Are the 4 Types of Trading Indicators?

Bot Trading 101 | The 9 Best Trading Bot Tips of 2023
#crypto trading#trading bot#crypto trading tips+2 more tags

Bot Trading 101 | The 9 Best Trading Bot Tips of 2023

Start trading with Cryptohopper for free!

Free to use - no credit card required

Let's get started
Cryptohopper appCryptohopper app

Disclaimer: Cryptohopper is not a regulated entity. Cryptocurrency bot trading involves substantial risks, and past performance is not indicative of future results. The profits shown in product screenshots are for illustrative purposes and may be exaggerated. Only engage in bot trading if you possess sufficient knowledge or seek guidance from a qualified financial advisor. Under no circumstances shall Cryptohopper accept any liability to any person or entity for (a) any loss or damage, in whole or in part, caused by, arising out of, or in connection with transactions involving our software or (b) any direct, indirect, special, consequential, or incidental damages. Please note that the content available on the Cryptohopper social trading platform is generated by members of the Cryptohopper community and does not constitute advice or recommendations from Cryptohopper or on its behalf. Profits shown on the Markteplace are not indicative of future results. By using Cryptohopper's services, you acknowledge and accept the inherent risks involved in cryptocurrency trading and agree to hold Cryptohopper harmless from any liabilities or losses incurred. It is essential to review and understand our Terms of Service and Risk Disclosure Policy before using our software or engaging in any trading activities. Please consult legal and financial professionals for personalized advice based on your specific circumstances.

©2017 - 2024 Copyright by Cryptohopper™ - All rights reserved.