Bitcoin has come a long way since where it was in 2010. It was able to make significant progress since and had another fantastic point in 2020. It was able to breeze past $20,000 at that point in time and move on to $30,000 before touching $50,000 at one point. People wondered how high it would go, and they made their bets accordingly. It moved up quickly and no one sought to miss the boat.
But individuals were able to see similar movements in the bitcoin price as it came up from zero dollars in value to $1,000 in value. It was able to get to $1,000 in value after quite a while, and then it was able to skyrocket to $20,000 over the course of a year. The truth is that while cryptocurrency asset prices can go up, they can also go down. It is fun to be on the ride while it is going up but not so much fun when it is coming down.
Traders seek to guess what any particular coin is worth right now and what it should be worth in the near term. They want to bet long. Let us find out more about how this plays in the markets. What is the essence of crypto long positions and how does long trading work?
The Long Strategy in Bitcoin and Cryptocurrency
Investors across the world are investing and looking at different strategies to play the market. You quite likely fall into this segment of people who are trying to pick up the pieces, learn about this situation, and seek to continue to have the right value to move around within your life.
Many people have called for $100,000 and $150,000 Bitcoin price targets. The asset might move up in this direction. It may even go higher over the long-term. This is why you want to see how to execute long positions and how to ensure to play in the cryptocurrency market in a long tactic. But what is a long-tactic and why should you be interested in the long position when it comes to bitcoin and other crypto assets?
That is what we will dive into further today and ensure to take into account to make the best decisions when it comes to our cryptocurrency portfolio.
The most basic difference between Long strategy, as opposed to Short strategy, is seen at the start of the trade process itself.
How does it work?
The first aspect to think about when you are looking at the long strategy is what is it all about and why does it matter to you. The long strategy is all about betting on the upward price movement of the crypto asset. You can apply this strategy to bitcoin, ethereum, stocks, bonds, and other assets.
Remember that going long is merely ensuring that you or your automated bot helper are all about buy strategies. We can talk about going short or selling an asset later but now we are talking about the nuances of the buying and holding.
“Going long” an asset means that you are going to purchase the crypto, or that you have made a play and are in a decent position with the asset. You do so because you think it will go up for a long time or a short time. You believe that the price is just about to rise and is quite certainly on the upswing.
Further, if you are utilizing a bot helper when it comes to your cryptocurrency trading, it is certain that you will input instructions to where your algorithm will enter into the position or has already done so. The idea is to purchase your intended asset at a minimum price and then sell at a higher level.
When you are executing the asset movements yourself, you do so in a manual fashion. You have the same strategy or tactic, get it for a very low price and then sell it as it reaches a certain threshold.
How a Long Strategy Looks Like With an Automated Bot
The strategy is simple and will be so when one looks at within the confines of the automated algorithm. You could merely go into the settings, obtain a specific digital asset pair (BTC – XMR), and set up a take-profit point (say, around four percent or more). You would also make sure to input a specific order volume number as well, you could note it to be 10 XMR or 7 bitcoin.
With 1 purchase unit, you would buy a set amount of the other pair, the number of units you would purchase would depend on your value, the overall fees, and the current price point at the time of the transaction. Then the bot would wait until your specific target gets to a certain level, like the four percent target level. When you sell your purchased asset, you get the other part of the pair back. Well done! You have captured a profit if everything goes by taking a cryptocurrency long strategy.
Wow! That was very simple! Anyone can do this right? Woah! Hold on! You do not want to go out there and rush into different positions just yet. Remember that a portion of your pair might experience issues, for instance, if you are going with BTC and XMR, then XMR might see a dip. If that happens, that is not good for you at all and could eat into your profits.
If either crypto does drop in price range, what should you do? Should you close it or cross your fingers and pray that XMR goes up? There’s always three possibilities, it can go up, it can go down, or it can trade sideways.
How do you make sure that you are prepared for what is to come?
Analyze Trends
The first step is to ensure that you are having the right information at your disposal. That means that you should study cryptocurrency charts. When you look at the charts, study the trends, and then look at what the different points, candles, and other indicators are telling you. This is how you can enter into a long position and find yourself with higher chances of success.
Trends will not always offer a crystal clear picture of your situation and crypto movement. You must also look at the trend from a time perspective, is it going to be for a while or is it going to be a very short move in one direction?
Always look at the situation based on what you consider your style and overall time horizon. If you are only going to be trading per day, then you can adjust accordingly. If you are going to trade for the long term, then you should position yourself in such a manner.
One might look at a chart and see that it looks like it will go up in one way for a day but if they were to look at it over a longer horizon, then it might show a different trend.
Remember that volatility reigns supreme in the cryptocurrency sector, asset prices may move up and it may move down really quickly. Why it may do so in a manner of seconds or even minutes.
You might also notice that if you were to look at a seven day chart timeframe, the price behavior might show it going down in a negative fashion. If you were to study it and check it out for longer, then you may not position yourself to “go long” for the whole week.
That is why you must understand how you will approach the situation. Will you do so from a day trading or from a swing trading or even high frequency standpoint?
Decisions are what will rest upon your shoulders and you must choose wisely.
Leverage
The next aspect that you must think about is that component of leverage. Remember that leverage boils down to debt. How much debt do you want to rely on?
The more you want to borrow, the more you will be able to control but the more risk that you will undertake. For instance, with debt, if the cryptocurrency market moves with you, then you can gain significantly, but what happens if it moves against you? That is where the risk factor comes into play and will affect your bottom line.
Say you have two BTC long with 100x leverage, you will notice that you are investing just a fraction while borrowing a significant portion. In this scenario, you will put up 0.02 BTC while obtaining the rest from the entity you borrow it from.
Individuals love leverage because it is all about magnifying profits and increasing your overall position size with simple utilization of present capital. A larger position indicates more exposure and more risk but it can be beneficial if everything happens as it is supposed to.
What should you do if you are going to use leverage? Always practice risk management.
A Great Trader Studies and Makes Decisions Accordingly
It is necessary to summarize the current concepts that we were able to discuss. A confident trader will look at the charts and study. They will not make moves in a willy-nilly fashion. They are stable and will not go crazy with the markets.
A valuable speculator will ensure to study, understand the charts, and make moves in such a manner to minimize risk. It is all about entering into a position when it seems just about right and then riding the crypto asset price roller coaster up. Then the wise speculator will get out of the roller coaster as it is heading down.
See, a wise trader knows that the asset price in the digital realm, if it is moving up in a rapid fashion, it can go down in a similar fashion as well.
Next, we must ensure that as we are looking at the situation, we are reading it in a way to look at empirical evidence for a specific timeframe, it can be for a day, a week, a month, but there will be an end to the trend. Remember that reversals happen and that you must be ready for when that reversal takes place.
Individuals that do not pay close attention will find themselves in a world of hurt. You must always look to see if the trend is within your favor and act within reason in a manual fashion or within an automated fashion.
The decision will rest upon your shoulders and the answers lie within your brain, mind and style. Are you a crypto long position trader or a short term trader? Are you a scalper or someone who does swing trading? Depending on how you act, you will either think about your position from an hour(s) or from a week or month standpoint.
The Long option is about the period and the trends and betting that everything will be good a certain timeframe. It is about purchasing the cryptocurrency when you feel that it is about to go up in price and then selling as you see that it could go down.
Finally, you can use margin if you please but make sure to do so only if you know what you are doing and can manage your risk in the right manner.
Have fun trading and good luck!