HBD - A Stablecoin "Trade" That Puts The Odds In Your Favor
Trading Stablecoins?
Trading stablecoins for profit is not really much of a strategy, as any fluctuation in price is usually rather minuscule. However, if you are able to find a stablecoin that fluctuates within a specific range from time to time, you just might have discovered one of the most “guaranteed” trades in the marketplace. However, these fluctuations need to move within a certain range and meet certain criteria.
When it comes to trading, volatility creates opportunities, but it’s the unpredictability that makes it difficult to discern the short to medium-term direction of the market. This becomes an issue when the asset you are trading has been stuck within a range, and then suddenly loses that range. You now have to wait until that range is regained, or you got stopped out if you chose to make use of a stop-loss.
In such a scenario, either outcome is unprofitable and can become rather frustrating, especially if you are waiting for the asset you are trading to regain a specific range. In such cases, traders will often exit a trade once the range has been regained, and they are at break even. So, not only did they miss out on alternative trades, but they made zero profit.
This is a typical response… traders are just so grateful to no longer be in the position of a floating loss, that they exit the trade as soon as it is in the black. In a perfect world, a guaranteed and predictable range would simplify matters quite substantially. It might not be perfect, but HBD tends to trade in a rather predictable range, which creates regular trades, and ultimately, long-term profitability.
One Of Two
As a trader, you ideally only have two options or approaches to achieving profitability:
Identify significant returns
Identify small and predictable returns
The latter provides consistency and is often overlooked by more greedy traders. However, consistently securing a 4% gain more frequently is actually a safer way of building your account. For example, you might secure a return of 40% on an altcoin trade. However, the next trade you open, sees the market collapse. In such a scenario, you are not really getting anywhere, especially if the market collapses further.
On the other hand… in a scenario where the fluctuations are lower, more predictable, and more frequent, there is a higher success rate. It’s simply a case of buying the floor of the range and selling the ceiling. Yes, often these floors and ceilings are broken. However, it is usually only a matter of 24 to 48 hours. In the case of HBD, the range tends to be between $0.97 and $1.01.
However, taking a look at TradingView’s data reveals a somewhat larger zone. Regardless of the data sources, HBD offers consistent opportunities that are significant enough to provide profitable short-term trades.
Choosing to take advantage of this “market dynamic” can be extremely profitable over the longer term. Many Hivers look to sell on the massive pumps HBD experiences from time to time. However, these moves are less frequent, and also somewhat unpredictable. This trading idea is about capitalizing more frequently, and with more predictability.
Final Thoughts
If one decides to zoom in, the frequency increases, which ultimately creates additional opportunities. However, the profit margin simultaneously shrinks. Choosing to trade lower volatility levels will ultimately shrink the profit margin of each trade to approximately 1.5% to 2%, which is still extremely profitable, provided you are able to achieve two or three successful trades a day. At the end of the day, there are so many creative ways to extract gains from the market.
This is just another idea that may perhaps come in handy, or even spark some creativity, in relation to your existing strategies. Until next time, all the best!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
