crypto bussiness plan chapter 3

 

Full guidance for Beginners in Cryptocurrency Trading 2022

crypto business plan chapter 3

Chapter 3 -

 Business and Investment Plans

What is a business strategy?

A trading strategy is the only plan you follow when doing business. There is no right way to do business, so any strategy will largely depend on your business profile and preferences.

Regardless of the business, planning is important - it sets clear goals and can save you from drowning. In general, you want to decide what you trade, how you trade it, and which pips you go in and out.

In the next chapter, we will look at some examples of joint venture strategies.

What is portfolio management?

Portfolio management involves creating and managing investment groups. The portfolio itself is a collection of assets - it can be anything from baby rabbits to real estate. If you only trade in cryptocurrencies, this may include bitcoins and other digital coins and tokens.

Your first step is to consider your expectations for the portfolio. Are you looking for a relatively volatile investment basket or is there any risk that could provide you with high returns in the short term?

The way you think about managing your portfolio helps a lot. Others may choose a passive strategy, which you just separate after leaving your investment. Other people can use this method, always buying and selling products for profit.

What is risk management?

Risk management is key to business success. It starts with identifying the types of hazards you may face:

Market Risk: If the value of the asset rises, you may incur potential losses.

Liquid Risk: Potential losses of volatile markets, where you cannot easily find buyers for your assets.

Operational Risk: Potential losses due to operational failure. This could be due to human error, hardware/software failure, or intentional employee fraud.

Military risk: Potential losses due to bankruptcy of players in the industry that do this, which affects all companies in the sector. In 2008, the collapse of Lehman Brothers had a major impact on the global financial system.

As you can see, risk identification starts with the assets in your portfolio, but both internal and external factors must consider their impact. So you might consider these risks. How many times should you try? How hard are they?

By assessing the risks and determining their potential impact on your portfolio, you can test them and develop appropriate strategies and responses. Systemic risk can be reduced, for example, by diversifying different investments and using a stop loss to reduce market risk.

What is the business of the day?

Day trading is a strategy that involves buying in and out of venues on the same day. The word inheritance comes from the markets because they are open only at certain times of the day. Outside of this period, day traders are not expected to keep any of their positions open.

The cryptocurrency market, as you know, does not have the option to open or close in time. You can trade on any day of the year. However, day trading refers to the cryptocurrency trading process in which a trader moves in and out within 24 hours.

In day trading, you often rely on technical analysis to decide which products to trade. Since profits can be limited in the short term, you can choose to trade multiple products to maximize profits. However, some can do business with a partner for several years.

This approach is obviously a very effective trading strategy. This can be a huge benefit, but it's also a big risk. Likewise, day trading is generally good for people with a business background.

What is alternative work?

In a changing business, you still try to take advantage of market trends, but the time frame is long - opportunities usually last from a few days to a few months.

Often your goal is to identify a resource that is undervalued and whose value can increase. You buy this commodity and sell it when the price rises to make a profit. Or you can try to find a more expensive and probably less expensive source. You can then sell some of them at a higher price, hoping to get them back at a lower price.

As with day trading, most volatile traders use technical analysis. However, since their strategy has been in place for a long time, fundamental analysis can be a valuable tool.

Swing business is a very useful strategy for beginners. This is mainly because it is not related to the stress of fast day trading. While the latter features quick resolutions and multiple screen times, business changes mean you can take your time.

What is the job function?

Trading by location (or trend) is a long-term strategy. Traders buy assets for long-term storage (usually measured in months). Their goal is to make a profit in the future by selling these assets at a higher price.

What distinguishes spatial trading from long-term variable trading is the trading rationale. Local traders worry about long-term visible trends - they try to take advantage of all aspects of the market. On the other hand, volatile traders usually look for 'disadvantages' that are not associated with a broader trend in the market.

It is not uncommon for local investors to support fundamental analysis, as their time advantage allows them to see important events. This does not mean that technical analysis is not applied. While site traders assume that the trend will continue, the use of technical indicators can warn them of the possibility of a change.

Like swing trading, position trading is also the best strategy for beginners. Once again, the long-term horizon gives them plenty of opportunities to reflect on their decisions.

What is scalping?

All strategies discussed will be expanded as soon as possible. Speculators try to make small changes by chance and often get in and out of their positions within minutes (even seconds). In most cases, they use technical analysis to predict price changes and use scattered RFP and other inefficiencies to make a profit. Due to short-term frameworks, speculative operations often result in a small percentage of profits - usually less than 1%. But scalping is a numbers game, so small wins can be added that can be repeated over time.

Speculation is not the first strategy. Success requires in-depth knowledge of the markets and platforms they trade and technical analysis. For companies that know what they're doing, he said, identifying the right patterns and implementing short-term changes can be very beneficial.

What are wealth distribution and diversity?

Asset distribution and diversity are terms that are used interchangeably. You probably know that you don't have to put all your eggs in one basket. Keeping all your eggs in one basket is a major point of failure - and this is especially true of your net worth. Investing in life-saving assets carries similar risks. If the assets in question are shares in a particular company and that company closes again, you will lose money quickly.

This applies not only to individual assets but also to asset classes. In a financial crisis, you expect to lose all your shares. This is because they are interconnected, which means that they all follow the same direction.

A good variety of wallets will not fill you with hundreds of different digital currencies. Consider the case where governments around the world banned digital currencies or quantum computers in violation of the public key cryptographic systems we use. Each of these events has a profound impact on all digital content. Like securities, they form a single asset class.

At the same time, you want to divide the assets into several categories. So if a person performs poorly, it will not affect the rest of your portfolio. Nobel Laureate Harry Markowitz introduced the idea through Modern Portfolio Theory (MPT). In short, this theory is a portfolio investment

Why is Dory?

Dow Theory is a financial system funded by Charles Dodge. Dow co-founded the Wall Street Journal and helped create the first U.S. stock index, known as the Dow Jones Transportation Average (DJTA) and the Dow Jones Industrial Average (DJIA).

Although Dovory has not been formalized by Dow, it can be seen as a set of market principles incorporated into his actions. Here are some important points:

Everything Has Been Reviewed - Dow Jones defends its effective market theory (EMH), which assumes that marketers display all available data about the value of their assets.

Why Market Trends are often provided with the idea of ​​market trends because we separate them into primary, secondary, and tertiary trends.

Primary Trends Stages - The Dow Jones Index consists of three main trend stages: collection, public participation, distribution, and distribution.

Regulatory dependence - Why believe that a trend in one indicator can only be confirmed if it can be observed in another?

Volume is important - the trend should also be confirmed by higher sales volume.

The trend will continue until the opposite trend changes - if confirmed, the trend will continue until the major change.

Keep in mind this is not a valid science - it is a theory and probably is not. However, this is still a very influential theory and many traders and investors see it as an integral part of their approach.

What is Elliott Wave Theory?

Elliott Wave Theory (ETC) is a theory that assumes that market behavior is similar to the psychology of market participants. Although it is used in many technical analysis strategies, it is not a clear indication or trading technique. Rather, it is a way of analyzing the market structure.

The Elliott wave pattern can usually be found in a series of eight waves, each of which is a continuous wave or correction wave. You have five floating waves that match the general trend and three correction waves move against it.

The patterns also have a fractal feature, which means that you can zoom in on one wave to see a sample of the D Eliot wave. You can also zoom in to see if the pattern you're testing is a large Elliot waveform wave.

There are different interpretations of the Elliott wave theory. Some argue that the method is very subjective, as traders can explore the wave in many ways without having to worry about rules. Like Dow Theory, Elliott Wave Theory is not wrong, so it should not be considered a valid science. However, many merchants have achieved great success by combining EWT and other technical analytics tools.

What is the Wyckoff Method?

The Wyckoff Method is a comprehensive trading and investment strategy developed by Charles Wyckoff in the 1930s. His work has been widely recognized as the basis for the latest technical analysis methods in many financial markets.

Yakov proposed three basic laws: the law of demand and supply, the law of cause and effect, and the law of action and effect. He also devised a comprehensive human theory, which is consistent with Charles Dow's analysis of the trends of the elements. His work in this field is of particular interest to cryptocurrency traders.

In practice, the Wyckoff method is a five-step method for trading itself. It can be broken down as follows:

Estimate the trend: What does it look like now and where is it going?

Identifying Strong Assets: Do they go with the market or vice versa?

Pursuing Power for a Good Purpose: Is There a Good Reason to Run for Office? Is the risk worth the potential reward?

Potential Traffic Evaluation: Do the items on the Walk-of-Buy and Sell test show potential actions? What do cost and volume mean? Is this property ready to move?

Arrival Time: How does the asset compare to the overall market? What is the best time to visit a leisure tour?

The Wyckoff method was introduced nearly a century ago but is still very important today. The Wyckoff study area was extensive, so the above should be a very comprehensive review. A detailed review of his work is recommended as it provides the necessary information in the field of technical analysis.

What are a Buy and Sell?

Perhaps not surprisingly, the strategy of buying and holding assets is to buy and hold assets. It is a long-term game in which investors buy assets and go it alone, regardless of market conditions. A good example of this

This can be beneficial for those who prefer to invest "no intervention" because they don't have to worry about short-term returns or capital gains taxes. On the other hand, it requires patience from the investor and assumes that the assets will not be completely liquidated.

Who is an index investor?

Investing in an index can be viewed as a buy-and-hold scenario. As the name suggests, traders want to take advantage of the movement of assets within an index. They can do this by buying assets on their own or by investing in index funds.

This is another passive strategy. Individuals can also benefit from diversifying across multiple assets without the stress of active trading.

What is stock trading?

Trading securities can be any strategy, but trading is all about buying and selling assets. This is something that you can consider as a beginner (or experienced trader) without having to invest your money.

For example, you might think that you have come up with a good strategy for a downturn in bitcoin and want to try to capitalize on that downturn before it happens. But before risking all your money, you can opt for a paper contract. It can be as simple as entering the value you "open" in your abstract and again after closing it. You can use a similar type of simulation that mimics a common working interface.

The main advantage of trading securities is that you can test the strategy without losing money if something goes wrong. You can learn to make your moves without risk. Of course, you should understand that commercial documents only give you a limited view of the actual environment. It's hard to recreate the real feelings you have about your money. Spreadsheet trading without a realistic simulator can give you the wrong idea of ​​costs and fees if you enable them on certain platforms.

Binance offers several options for trading securities. For example, Binance Futures Testnet offers a complete interface. If you create a production or program download yourself, you can access it through the Spot Exchange TestNet API.