CryptoKraze here
In this post I am going to discuss and explain Averaging Technique that I am using in Crypto Trading. You can use it to maximize your profits as well as cut your losses specially in bearish market we are just going through. This is really powerful and relieve lots of stress.
Basic Rule of Averaging Technique
There is no hard and fast rules for this technique and you can get hands on practice in just 1 day. So what you have to do ?
- Whenever you want to buy any coin, you should not buy all of it in 1 shot.
- Suppose, if you want to buy a coin with 1000$ you will split in 3 or 4 parts.
- Buy with $250 at current price that will be your 1st Buy
- Price dips 10% you should buy with another $250 and it will be your 2nd Buy
- You can set you Profit target on your 1st Buy level or even higher.
- In this way your 2nd Buy will yield profit and 1st Buy can be closed at No Loss
- On the other hand, if price dips 10% more you should buy with another $250 or even $500 and it will be your 3rd Buy
- You can set you Profit target on your 1st Buy level or even higher.
- In this way your 2nd Buy and 3rd Buy will yield profit and 1st Buy can be closed at No Loss
Latest Example on Ethereum
Lets have a look how we could have applied it on Ethereum to make profit in this recent market move.
- If you look at the above chart, 1st buy was at $675 and price dipped. A normal trader would have set stop loss and it would be hit
- We will add 2nd Buy at $600 to average our 1st Buy
- If you notice price pulls back to $675 and we can close both our Buy positions and it would be 12.50% profits in the bag.
- If you missed selling at this pull back and seeing price just crashed to $500, there is no need to panic.
- Look at the chart to note 3rd Buy at $520
- Look at current price now back to our 1st Buy
- Let's do some calculation of profits if we sell all our 3 Buy Positions.
- Our 3rd Buy have yielded 30% profit and 2nd Buy have yielded 12.50% profit. 1st Buy was closed at No Loss.
This is the Power of Averaging Technique that made me profits in this dump. Normally traders set stop losses at 10 to 20% below entry and it would have been hit. Some traders just buy and hold if price dump and in this case that trader would be just sitting at breakeven with no profits.
Averaging made me Profits in this worse case scenario
Have a look on my other Posts
Bitcoin Correction Almost Done - Get Ready for Boom
If you like my posts and analysis and want me to add analysis on more cryptocurrencies, let me know in comments and I will add analysis
Disclaimer
Crypto Trading is risky business and you can loss partial or full amount of money. Trade at your own risk with that money only you can afford to lose.
