For many traders, one of the more difficult things to do is to figure out how to make money in a downtrend. What you have to do is figure out how to profit while the price is going down. There are a few different ways this can be done, and we'll highlight a few of the ways we use to earn when the markets are not doing so hot.
Sitting In Cash
There is a saying in the trading world that no position is sometimes the best position to be in. There is no shame in sitting on the sidelines in the trading world. You may miss a little move here or there, but at least you don't lose money.
Many traders who are starting out mainly focus on long-only trades. This is when you only buy assets in hopes that the price goes up and then sell when it gets to a target price you want to sell at. This is the best way to start out trading honestly as our next method can get a bit tricky.
Long Trading on Short Term Recorrections
This is for those traders that only want to focus on long trades and don't necessarily want to get into short trading. There are short-term opportunities to buy low and sell higher in a downtrend, so finding these short-term corrections can be a great way to make some money in a downtrend. Finding these corrections can be a bit tricky and can often lead to 'catching a falling knife' so you have to make sure you are paying attention and taking profits instead of riding the wave down.
Short Trading
Futures Trading
Trading an asset to the short side means that you are selling an asset at a higher price and buying back at a lower price, most of the time using margin or leverage trading. In the crypto markets this is mainly done using futures contract trading. This is when you select an amount of leverage you want to use and the asset you are wanting to trade. Let's take BTC/USDT for example, as this is our main trade.
We usually sit in USDT and when we want to short the market, what is happening is that the exchange loans the amount of BTC you are using for the trade and holds your USDT in exchange. Then when the trade is done, you get the difference between the opening sell price and the closing buy price of BTC as your profit. In crypto and FOREX, this is done using 'Futures' exchanges, basically meaning you are betting on the future price of the asset.
You can trade futures on Bitcoin, Ethereum, BNB, ADA, and other top cryptocurrencies using a decentralized exchange on BSC called ApolloX. That is our current exchange of choice because it works on smart contracts where you always have control over your assets unlike a centralized exchange.
Put Options
In the stock market, to short a stock, you will have to trade what are called options. This is when you buy a contract that gives you control over 100 shares of a stock, for a fraction of the spot price. Think of it as the equivalent of flipping a house before closing.
When you are betting on a stock to go down, you are going to want to purchase a PUT option which is when you are betting on the price to be below your 'strike' price at the time of the option closing.
You can trade options with us on our stock brokerage of choice, Robinhood. We trade here because we can trade options, as well as spot trade cryptocurrency, and invest in dividend paying stocks all at the same time.
Stablecoin Yield Farming
Yield farming is a form of DEFI that lets users provide assets on both sides of the trade in exchange for a percentage of the trading fee. In many DEFI exchanges like Pancakeswap, which is where most of our yield farming happens, they also offer additional token rewards in a specific token, most likely an exchange token. In the case of Pancakeswap, you earn the CAKE token, that can then be exchanged for any other asset on Binance Smart Chain, or used to add more funds to your yield farms and compound your gains.
You will have a more secure and stable investment if you are providing liquidity to stablecoin-paired markets. Some yield farming platforms like Cubdefi.com also offer stablecoin pairs like USDC/bHBD, so that both sides are actually stable and you are farming a nice yield of their CUB token.
Hive Backed Dollar Savings
The Hive Backed Dollar, or HBD, is the algorithmic stablecoin on the Hive blockchain. There is no issuer other than the blockchain protocol, which makes it arguably the most decentralized stablecoin in the industry. The beauty of the Hive blockchain is that you get paid in both the Hive and HBD tokens when you make a post, upvote, or comment. You can then put the HBD token into your savings wallet where it will earn 20% APR currently. So getting active in the community is a great way to stack stablecoins and earn passive income in a downtrend.
These are just some of the ways that people can earn money in a down market. Of course, this is just here to give you some tips based on our experience and what we do here at the Coin Logic trading desk. Make sure you are always doing your own research and never invest more than you can afford to lose.
Nothing said is financial advice.
This is for educational and recreational purposes only!
Stay safe in these volatile markets and don’t get rekt!
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Posted from my blog with Exxp : https://coin-logic.com/how-to-trade-in-a-downtrend/
A lot of investors are currently sitting on the sidelines waiting for an entry price in BTC, it all depends on what they think is the bottom and the truth is, a lot of people believe we are not near the bottom. Time will tell if sitting on the sidelines pays them off or if they will regret not getting back in on crypto right now.
In the meantime, posts like this one are very educational for the uninitiated, great article!
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Thank you for the feedback! Just trying to out as much value in the world as possible.
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My previous @v4vapp proposal has expired. I have a new one which is running but unfunded right now. I'm still running @v4vapp and all my other services but I may have to increase the 0.8% fee to 2.0% if I continue to be unfunded.
Please consider asking your friends to vote for prop #244 or consider unvoting the HBD stabilizer explained below.
For understandable reasons in the current crypto climate it is harder to get funded by the DHF, I accept this so I'm asking a wider audience for help again. I will also redraft this proposal with more details (coming soon). I'm also looking for other funding sources.
Additionally you can also help with a vote for Brianoflondon's Witness using KeyChain or HiveSigner
If you have used v4v.app I'd really like to hear your feedback, and if you haven't I'd be happy to hear why or whether there are other things you want it to do.
I have no problem supporting your proposal and actually I do under a different account, but I do not like spam comments on my posts, as this does not have anything to do with the subject of my post, thank you.
I apologise: I don't use automated comments often or without thought and the vast majority of responses I've had have been positive and thankful for bringing this to their attention but I understand your sentiment.
I'll try to make sure I don't do this to you again (I shouldn't I try to track this).
Thank you. Again, I support the project, just not the marketing tactics. I have seen others do it as well and just not a fan. I would rather see actual engagement around the topic that I spent time working on writing versus and auto comment wanting me to support someone else...As someone who runs multiple projects on this blockchain, I understand it's hard to get noticed, but let it come out in a natural manner than just outright spam. Just my opinion. But then again, I may be wrong. Just putting out feedback.
I understand your view. However I have to say (and possibly because I'm very carefully choosing where to place comments) the reply/action rate is very very high, 20% type high. It's hard not to do this when I really do need all the votes.
Hopefully the upvotes I'm giving your comments will help ameliorate the spam!
We’re good bud. That’s a good rate of engagement actually.
Honestly it's amazing. And I have read your post now and upped my vote.
I was expecting more negative responses and honestly after leaving 100s of comments I've had yours and one other.
This really does prove the power of a really targeted message. And up voting for a few cents means at least you're rewarded!
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