Many investors and traders ask a similar question at the first stages of their acquaintance with crypto assets. How to achieve greater efficiency and profitability of investments – conducting a large number of transactions during the day/month/year with a high percentage of successful operations or choose a set of several assets that increase their value over a long distance?
It is important to understand that there is no such “calm” in trading crypto assets, which is in the stock and classical currency markets. The cryptocurrency market is a free market beyond the control of regulators and governments. Therefore, its unique feature is the high volatility of asset values and rapid trend changes. It will not be easy for traders who come here from the stock or FOREX market and try to apply standard technical analysis, because the cryptocurrency market has its own specifics. First of all, it is necessary to trade here, based on fundamental analysis. And technical analysis, patterns, indicators, various tools, etc. play only an auxiliary role. They will help to make decisions “at a short distance”, but with long-term investment in this market, such tools will be ineffective.
The trading frequency in the cryptocurrency market depends on several factors:
- your long-term or short-term investment strategy;
- the chosen trading system or strategy;
- rates on high or low-risk assets, or their combinations in the portfolio;
- the chosen trading tactics and type of trading (scalping, day trading, swing trading, medium-term trading, etc.);
- trading on the spot market or margin market with leverage;
- risk and money management;
- indicators RR (Risk Reward – the ratio of risk to reward), Sharpe Ratio (showing how much return the investor receives per one unit of risk), ROI (return on investment), etc.
As you can see, the frequency of trading and the number of transactions will be dictated by the chosen strategy and tactics, as well as the investor’s expectations regarding the payback period of their investments.
For example, a scalper (a trader focused on making a small profit with a large number of transactions in a short period of time; the expiration time is most often an hour or several hours) can close up hundreds of transactions per day. And a swing trader can carry out no more than 5-10 transactions in a few weeks and will also be pleased with the result and such a frequency of trading. In algorithmic trading, operations are not at all entrusted to a person, but to a trading robot (bot). It, using instructions, settings and taking into account a huge number of conditions and parameters for opening and closing transactions, can carry out tens and even hundreds of transactions in a second (!) operations on exchanges.
It turns out that the important criterion when trading crypto assets, is not the number of transactions or the frequency of their execution, but the positive results. However, it will be so for any business or investment.
It often a situation when with sharp movements in the rate on large volumes, it will be a more rational step not to enter new positions, not to rush to open as many trades as possible following greed (FOMO) or fear (FUD), but simply to stay out of the market. This should be done for later success when the excitement subsides and the rate stabilizes. And you could find the right entry point to a position that will bring great profit. In this business, it is not the one who often clicks the “Buy” or “Sell” buttons on the stock exchanges that wins, but the one who adheres to the trading plan, first of all, to increase the return on the investment portfolio.
Thus, in professional trading, with each transaction, it is important to improve the rate of return per unit of risk, and not just randomly increase the number of opened positions.
Yes, it will be difficult for a beginner or an inexperienced trader to analyze the market, determine the time when to trade actively, and when to completely refrain from transactions for a while because this comes only with the experience accumulated over many years. Therefore, only professionals in their field are able to consistently earn in the cryptocurrency market.
Any investor can receive stable passive income from trading crypto-assets on the world’s largest trading platforms on a regular basis due to cooperation with FOBS Asset Management, an asset management company.
Algorithmic trading of crypto assets from FOBS Asset Management allows, without direct access to the investor’s funds, using API Management, to successfully close transactions with profit, diversify risks and reduce losses, maximize profits, and exit transactions at the most favorable moment. This gives all investors an increase in the return on an investment portfolio over a long time.