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코인픽:ver.2021년 비트코인 마진,선물거래소 순위 및 추천 사이트

Investment Strategy for Novices

2021.11.29 16:20

UNICORN 조회 수:55

Hi It's Unicorn

 

Before investing, you need to figure out your living reserve and how much money you need to set aside to meet your life needs. You can do moderate investment, and don’t let investment cause any pressure in your life.

 

Here I will briefly introduce novices the most suitable and least suitable investment strategies.

 

The most suitable investment strategy.

 

1. Buy and hold for a long time. It’s an investment paradigm called value investing. Warren Buffett is one of High-profile proponents in value investing.

 

2. Dollar-Cost Averaging/ Periodic investment. Salaryman with fixed salary income are preferred group for periodic investment. Due to they have stable income, they can make the investment plan continue. Huge fortune was accumulated from a little amount at primary stage.

 

3. Grid trading in cryptocurrency. It’s a trading bot that automates the buying and selling of futures contracts. The technique is designed to place buy and sell orders in the market at preset intervals within a configured price range. For instance, the price of BTC is 50,000 currently, and meantime you start to use grid trading. You set a price range and and set grid automatically executes high-price selling and low-price buying. When the price of BTC falls to 49,000, the system will purchase automatically. When BTC goes to 50,000, the system will sell it automatically. You can earn profits from fluctuations and you don’t need to watch the market all the time. The pro of grid trading is that you don’t need to forecast market direction and it can be easily automated. However, If you don’t comply with stop-loss limits, it may incur large losses. The price moves in a sustained direction, the position gets bigger, and more profits you earn. If the price act with high fluctuation, it could trigger buy orders above the set price and sell orders below the set price. Therefore, the trader must determine when to end the grid, exit the trades, and realize the profits. Otherwise, the price could reverse and those profits will disappear.

 

The most unsuitable investment strategy.

 

1. Frequent trading. Manual trading are often affected by psychological factors. When you trade frequently, it will cost more transaction fees of buying and selling and reduce your profits. In addition, you are unable to comply with the trading disciplines you made. For instance, the investment target has risen by 10%, you may expect it can go up to 15% so you don’t sell it to settle the profits. However, the result is that it fell by 20 to 30%, you have no choice but to sell it to stop loss.   

 

2. Leveraged trading. Leverage is an investment strategy by using debt/borrowed capital as a funding source  to increase the potential return of an investment. Daily interest rate for margin trading is around 0.001-0.004% per hour according to the cryptocurrency you trade. The daily interest of borrowing is at least 0.024%, which does not include the amount charged in buying and selling 0.2%. It’s easy to lose funds for novices.

 

3. Contract trading. It’s a high risk trading like leveraged trading. It is a legal agreement to buy or sell a particular commodity in advance at a predetermined price at a specified time in the future. The exchange usually offers ultra-high leverage ratios(0-100x) on contract trading. The higher leverage ratio, the risk is higher. It’s easy to lose funds, , and will lose more quickly than leverage.