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Cryptocurrency market is very unpredictable and with just a quick dump, you might end up losing a huge amount of money in your trades making you feel pressured or even depressed that can lead to panic selling of the coin you bought.
We need to have good and reliable strategy for our trades especially right now that we are in a bloody market. So I'll share to my strategy that you might find helpful especially in today's market.
Diversifying and taking risks little by little is one of the best ways to avoid possible losses when the market doesn't go as you have expected.
It's better to start with a little amount or 10-20% of your funds first when buying a certain cryptocurrency. This is a good way to cover up small losses just in case the cryptocurrency market is going down. This is called Dollar Cost Averaging.
We should remember that a 20%, 30% or even a 50% correction in the market is just normal so we can keep going up. And this is where DCA or Dollar Cost Averaging can be helpful. When you still have an extra funds (USDT, BUSD or other stablecoins), you can have a better opportunity to make an entry at a much cheaper prices.
Let's have an example:
Let's say you have 100 USDT in your trading account. And you bought $50 of Bitcoin Cash (BCH) at a price of $1,000 per coin.
After some time, BCH went down to $900 per coin, which means -10% from the price of BCH that bought making you have a loss of $5. This is where you apply the Dollar Cost Averaging strategy.
The extra $50 that you have will be used to buy BCH again at a cheaper price. You bought $50 of BCH with a price of $900 per coin.
Days passed, the price of BCH went back to $1,000 per coin and this means that you already have a break even from your first purchase and profit of of $5 because the $50 worth BCH that you bought from $900 price of BCH went up to +10%.
So from using the DCA strategy and the price of BCH goes back to the price you first purchase it, your $100 is now $105 worth of Bitcoin Cash (BCH).
Take a look at first both the all-time high and all-time low of the cryptocurrency you want trade. With this, you will have an idea whether it's good to have an entry to it especially when the market is stable.
If you think that the coin is already consecutively breaking it's all-time and currently overbought, it's better to stay away from it or just wait for it to have a correction of -20% or -30% then you can make an entry in it if you think that coin has potential to go up again.
And if you want to be a long time holder, Bitcoin Cash is one of the best coin to buy now (not a financial advice).
An all time high of $3,785 and an all time low of $76.93, BCH is currently sitting around $500 market price showing that it has more room for it to grow.