Cryptocurrency assets have attracted significant interest from investors because of their unique profit potential. The returns can be enormous, but at the same time, digital asset trading is a world that’s fraught with danger. By entering the crypto trading space without a strategy, investors are skating on extremely thin ice and run the risk of falling into the abyss at any second.
Experienced traders will warn that there is no perfect trading strategy, but a lot of them have had considerable success with tried-and-tested methods that can be fairly simple for beginners to learn.
Popular Trading Strategies
One of the best known “easy trading strategies” is dollar-cost averaging, which works well for investors who are in for the long haul. The concept is very simple. Instead of investing all of your capital at once into a particular digital token, you split it into smaller amounts and only invest at regular intervals.
Let’s look at an example. Dave has $10,000 and wants to invest in Algorand. But instead of buying up $10Ks worth in one go, he will invest in the token at 20 intervals, using $500 each time. So every Monday he will add $500 worth of Algorand to his wallet, and keep doing so each Monday until he has invested the entire amount. This technique helps to reduce the impact of market volatility, and likely means Dave will get more Algorand than he would have, had he bought it all at once.
Another popular strategy is the Golden Cross/Death Cross, which relies on two moving averages, which are chart indicator lines that show the mean price of an asset over a specified timeframe. With this strategy, investors look for crossovers between the 50MA (the average of the previous 50 days) and the 200 MA (the average of the previous 200 days). In this way, they can consider the price activity over a longer time span.
Convergence is when the 50 MA crosses above the 200 MA, while Divergence is when the 50 MA crosses below the 200 MA. Investors can take the convergence as a signal that short-term momentum has exceeded the asset’s long-term momentum, and is a strong buy signal, because buyers will likely return to the market and push prices even higher. Divergences are the opposite, and arise when the short-term momentum is declining compared to the long-term momentum. This is generally seen as a sell signal, and will arise when many traders exit the market and sell their assets, putting downward pressure on the asset price.
Some investors go even further on the technical analysis with the RSI Divergence strategy, which can help to time trend reversals even before they happen. They rely on the Relative Strength Index, which measures momentum by calculating the average gains and losses over a 14-day period. It helps to highlight when an asset is overbought or oversold, and indicates that the current trend (up or down) will soon be reversed.
The Importance Of Asset Management
These strategies are all well and good, but crypto is especially volatile when compared to other kinds of assets and so the margin for error is incredibly slim. Crypto trading strategies can yield very healthy profits, but only if they’re done right. The problem is that most investors are inexperienced and lack the technical know-how to study asset prices effectively and make split-second decisions. It requires a lot of skill and timing to execute any trading strategy to perfection.
In the traditional financial world, investors can always rely on a skilled investment fund manager to make these decisions for them. For instance, the best hedge funds are actively managed by professional traders to ensure profitable returns. But hedge funds have significant barriers to entry, with a large investment required, zero transparent and no custody of funds.
Actively-Managed Non-Custodial Investing
The good news is that crypto investors can now turn to Kunji Finance, which uses human asset managers with a strong track record of delivering higher yields.
Kunji launched earlier this year in beta and is currently focused on a single Alpha Blue Chip Focused Strategy. It’s an actively managed strategy that anyone can invest in, consisting of investments in DeFi protocols and metaverse tokens. It’s believed that DeFI and the Metaverse will eventually become key drivers of growth in the crypto industry, and the strategy enables investors to benefit from this.
As Kunji’s platform evolves, it will offer additional, actively-managed strategies including a Top Cap Digital Assets strategy that will mostly invest in the top 15 cryptocurrencies and aim to achieve optimal returns for investors through capital appreciation. It will use time-tested methodologies in the spot and derivatives markets, with strict risk-based parameters.
Kunji’s Arbitrage Opportunities and Balanced Strategy meanwhile will seek to deliver optimal returns by capturing the arbitrage potential that exists due to anomalies that exist across the fragmented spot and derivatives markets.
Strong Reassurances
Anyone can apply to become an asset manager on Kunji, and the community will vote to determine which applicants are selected. The beauty of Kunji’s protocol is that asset managers are just as exposed to risk as investors are. Thanks to Kunji’s concept of Principle Cover, asset managers are required to stake 5 KNJ tokens for every $100 of capital they have under management. This acts as a safeguard and reassures ecosystem participants that the asset manager knows what he or she is doing. It means everybody’s goals are aligned.
For investors, the process is extraordinarily simple. They proceed to Kunji Finance, connect their wallet and then select the investment strategy they wish to participate in. Users can read about each strategy before selecting the one that best meets their investment goals and appetite for risk.
Once done, the investor chooses how much they wish to invest, and they’ll be assigned a share of that fund based on their commitment. The investor’s funds will then be allocated to the asset manager for trading. Users can keep track of how their investment portfolio is doing in real-time through the Kunji app, which also provides data on the health of the strategy itself. In this way, users can still make an informed decision about whether to persevere or withdraw their allocated funds.
Fewer Risks, More Rewards
Crypto trading has always been an extremely risky and stressful business, and these are precisely the kinds of headaches Kunji aims to eliminate. It provides novice investors with the opportunity to invest in the crypto market and benefit from the expertise of knowledgeable asset managers, safe in the knowledge that their assets are protected by smart contracts.
