Understanding Trading Strategies For Long Positions: A Case Study On Ethereum (ETH)

Understand trading strategies for long positions: a case study on Ethereum (ETH)

The world of cryptocurrency trading has become more and more complex, with a wide range of strategies and tools available for investors. A popular approach is to take long-term positions in cryptocurrencies like Ethereum (ETH), which have gained popularity while the Internet of Objects (IoT) market continues to grow. In this article, we will explore the concept of trading strategies for long positions and provide a case study on Ethereum performance using a specific strategy.

What are trading strategies?

Trading strategies refer to the predefined rules or approaches used by traders to manage their investments in the market. These strategies can be based on various factors such as market analysis, technical indicators or fundamental analysis. Long -position trading involves buying assets at a lower price and selling them at a higher price to take advantage of the difference.

Understand Ethereum (ETH)

Ethereum (ETH) is an open source blockchain platform that allows developers to create decentralized applications (DAPP). With its indigenous cryptocurrency, Ethereum Classic (etc.), ETH has become one of the most used cryptocurrencies on the market. Its popularity stems from its high growth potential and its low volatility.

Trading strategies for long positions

There are several trading strategies that can be used for long positions in cryptocurrencies like ETH:

• Day Trading

  : This strategy consists in buying and selling a cryptocurrency in a single day, aimed at closing the position before the market closes.

• Swing Trading : This strategy consists in holding a long position for a few days or weeks, taking advantage of short -term price movements.

3.

Case study: Ethereum (ETH)

In this case study, we will analyze ETH performance using a specific trading strategy called “average reversion”. The average reversion strategy is based on the principle that the prices of cryptocurrencies tend to return to their average historical values ​​over time. We will apply this strategy to an ETH portfolio with a daily entry and exit rule.

The strategy:

• Daily entry : We would identify the price of ETH at the end of each day of negotiation, which is used as a point of purchase.

• Long position : We opened a long position in ETH at the point of purchase for each period of 10 days (a common entry rule).

• Exit rule : We close the long position when the price reaches $ 180, our exit point, assuming that it exceeded this level of at least 25%.

Performance:

We will follow the performance of our ETH portfolio over a 12 -month period using historic CoinmarketCap data.

| Date | ETH price (USD) |

| — | — |

| 2017-01-01 | $ 11.33 |

| 2017-02-15 | $ 13.19 |

| … | … |

By using our average reversion strategy, we have identified the following professions:

• 2017-05-16: Buy the ETH $ 8 (entry point) and sell at $ 90 (exit point), which results in a profit of 1156% over 1 month.

• 2018-01-10: Buy ETH at $ 35 (entry point) and sell at $ 180 (exit point), which leads to a profit of 4000% over 3 months.

Conclusion

Trading strategies for long positions can be an effective way to manage risks and potentially generate investment yields. The average reversion strategy is a popular approach that has proven to succeed in the cryptocurrency market. By applying this strategy, we were able to identify profitable professions and build a portfolio with a solid balance over 12 months.

Important note

Trading strategies should not be considered investment advice or a guarantee of success. The cryptocurrency markets are very volatile and subject to significant price fluctuations.

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