successfull trading strategy with near to zero liquidation chance even at 100 , 200 x or move .
What is a good investment? It depends on a person’s wealth and what they can afford to lose. Investment can be lost in any business, and Bitcoin is not the only one. Normally, to invest in any business, a feasibility report is prepared, which projects the profit based on the investment. Similarly, if one calculates the potential loss and profitability in advance, then they can make Bitcoin or any other financial market a proper earning source. Investment will depend on desired profitability/earning.
Trading Types: Spot or Margin Trading
Margin trading seems appealing because it allows for both buy and short options, enabling trades in both rising and falling markets. In margin trading, cross margin is better than spot because it includes the whole portfolio, unlike isolated margin, where only the amount used to open a position will be lost or earned. In isolated margin, besides losing the invested amount, the trade is also closed if the price goes against the opened position. In contrast, in cross margin, the loss is deducted from the balance, and the trade remains open until the loss of the whole portfolio.
In margin trading, a significant concern is liquidation. Normally, the liquidation price comes close when using 100x or 200x leverage/margin, depending on the investment used to open the position. To avoid liquidation, 10x leverage at 100x margin is usually employed, which keeps the liquidation price far away, but at the same time, the profitability also diminishes. However, by using 0.5–3% of the portfolio, one can still achieve the desired earning target.
Understanding 10x and 100x Margin:
If the Bitcoin price is $60,000, at 100x margin, the liquidation price will be $60,000/100 = $600. This means that with a price change of $600, the buy position will be liquidated at $59,400, and the trade will be closed if isolated margin is used. Typically, people use 10x leverage. For example, $60,000/10 = $6,000. If the price goes against the position, a change of $6,000 will result in liquidation. Conversely, if the price goes in favor, the invested amount will double after every $6,000 change in price. This effect can be brought closer with 100x margin, but only with cross margin and not isolated. For instance, if the price moves in favor of the position, after every $600, the investment amount will be added as profit.
The liquidation price for a $100 portfolio can be calculated as follows:
Invested $ = 1
$1 will be liquidated with a price change of $600, and $100 will require a price change of $600/1*100 = $60,000.
This means that for a $100 investment, a Bitcoin price of $120K would be needed to lose 100% of the investment. Is it likely to reach $120K in a single day? Consider this, it’s unlikely to happen in a single day. But normally, the price changes between $1,500 to $3,000, and a profit of $1 can be earned just after the price hits $60,600. With a $1,500 change, almost $3 can be earned with an investment of 1% of $100. If it changes by $3,000, then $5 and $15 can be earned in the case of using 3%.
How to Take a Trade:
Usually, a 1- or 5-minute timeframe is suitable for this type of trade. The indicators needed are Bollinger Bands and Relative Strength Index (RSI). Make 3 trades of $1 each to open three different positions. Buy with 1% of the portfolio when the RSI is below 15 and the price is at the bottom line of the Bollinger Band, and sell when the RSI reaches or touches the 70 line. To take a sell trade or short the market, wait until the RSI is above 85. If the price continues to go down or up, use the other 2%. If the price keeps going down, do not use the fourth percentage of your portfolio. Wait, because in a one-minute timeframe, the momentum indicator can go down near zero or reach 100% at the top. Once the RSI is below the 30 line, its next target is to hit 70 or above, which typically happens within one to four hours. By following this, I am earning as I’ve explained. This is not financial or investment advice, but rather what I use personally. If someone decides to earn $1 daily from the Bitcoin market, then a $100 investment is a good start. Losing the investment or earning depends on the trading type and strategy.
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