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

Understanding Trading Strategies of Long Positions: Case Study on ETHEREUM (ETH)

The world of cryptocurrency trade has become increasingly complex, with a wide range of strategies and assets available to investors. One of the popular approaches is to fill long positions in cryptocurrencies such as Ethereum (ETH), which are becoming more popular as the Internet (IoT) market is further increasing. In this article, we examine the concept of trading strategies for long positions and prepare a case study on Ethereum’s performance with a specific strategy.

What are trading strategies?

Trading strategies apply to predefined rules or approaches that merchants apply to manage their investments in the market. These strategies can be based on various factors such as market analysis, technical indicators or basic analysis. Long position trade includes buying assets at a lower price and selling at higher prices to obtain the difference.

Understanding Ethereum (ETH)

Ethereum (ETH) is an open source blockchain platform that allows developers to make decentralized applications (dapps). With its native cryptocurrency, Ethereum Classic (ETC), ETH has become one of the most widely used cryptocurrency in the market. Its popularity comes from strong growth potential and low volatility.

Trading strategies for long positions

Many trading strategies can be used for long positions in cryptocurrencies such as ETH:

• Daily Trade : This strategy includes buying and sale of cryptocurrencies within one day with the aim of closing the position before the market is closed.

• Swing Trading

  

  : This strategy includes a long position for a few days or seven, using short -term price movements.

• Long -term investment : This strategy involves keeping a long position for a longer period of time, such as months or years.

Case Study: EThereum (ETH)

In this case study, we analyze ETH’s performance with a special trading strategy called “Mean Reversion”. The average reversion strategy is based on the principle that cryptocurrency prices tend to return to historical meanings over time. This strategy is applied to the ETH portfolio with daily entry and exit rules.

The strategy:

• Daily Entry : The price of ETH would be identified at the end of each trading day used as a purchase point.

• Long position : We would open a long position at ETH at the purchase point every 10 days (a common entry rule).

• Exit Rule : We would close the long position when the price reaches $ 180, our exit point, assuming it was at least 25%higher than that level.

Performance:

Using the historical data of Coinmarketcap, we track the performance of our ETH portfolio over a 12-month period.

| Date ETH Price (USD) |

| — —

| 2017-01-01 | 11.33 USD

| 2017-02-15 | 13.19 USD

| … …

Using our average reversion strategy, we identified the following trade:

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

• 2018-01-10: Buy ETH at $ 35 (entry point) and sell it with $ 180 (exit point), resulting in a profit of 4000% in 3 months.

Conclusion

Trading strategies for long positions can be an effective way to manage risk and potentially return on investment. The average reversion strategy is a popular approach that has been shown to be successful in the cryptocurrency market. By applying the strategy, we were able to identify profitable trade and build a portfolio that has strong results in 12 months.

An important note

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

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