Understanding Dual Investment Strategies
Cryptocurrency prices can fluctuate based on factors such as current demand, supply, trading activities, and macroeconomic events. These prices often follow trends within specific timeframes. For instance, weekly price movements are influenced by short-term trading activities, while monthly price movements are affected by long-term events such as regulatory changes, the introduction of new cryptocurrencies, and shifts in investor interest.
In dual investment strategies, you first select a specific timeframe and execute a Buy Low strategy by setting a target low price for your investment. If you successfully acquire the cryptocurrency at this target price, you can then use the Sell High strategy to sell the crypto once the price increases to a predetermined target. Analysing price trends around a mean point can help in setting these targets.
To automate this process, Binance offers the Dual Investment tool, which includes two separate products: Buy Low and Sell High. The Buy Low product allows you to acquire cryptocurrency at a specified low price, while the Sell High product lets you sell crypto at a targeted high price.
Selecting the Right Coins
While BTC is a prominent cryptocurrency for both short-term and long-term investments, it may not always yield the highest returns. Some cryptocurrencies perform better within specific timeframes compared to others. For instance, a new cryptocurrency with a rapidly growing value might be a good investment over a monthly timeframe. In the early stages, you might use the Buy Low strategy to acquire a certain amount of this crypto and sell it at a higher price after a few months, once it has gained substantial value. However, its value can also decrease over time, making it less suitable for ongoing dual investment strategies.
On the other hand, BTC can be a good asset for shorter timeframes, such as weekly investments. It may experience price fluctuations within a week, with potential peaks and troughs. For example, BTC might have weekly price fluctuations between $58,000 and $62,000, with a mean price in that range. Its stability and liquidity make it a viable option for dual investment strategies in shorter timeframes. For example, if a user invests 0.5 BTC, they could use the Buy Low strategy when the price is $58,000 and the Sell High strategy when the price is $62,000, potentially making a profit of $2,000 based on the price difference and the amount invested.
Selecting the Right Parameters
While you cannot edit the target price once you’ve selected a product, you can choose from various positions with specified APR, target price, and settlement date. Once subscribed to a specific position, you cannot alter these parameters. Besides profits from price volatility, you also earn additional rewards.
You can select the amount of crypto you want to buy or sell. Additionally, the auto-compound feature can help by automatically re-subscribing to the same product if the target price is not reached. Auto-compound comes with two plans: Basic and Advanced. The Basic Plan re-subscribes to the same product with the next available settlement date if the target price is not achieved. It also re-adjusts the target price based on the changing market conditions. For instance, if BTC is currently priced at $58,000 and your initial Buy Low product has a target price of $56,000, the Basic Auto-Compound will re-subscribe to the product if the target is not reached. If BTC’s price drops to $56,000, which was the original target, the target price will be automatically re-adjusted to remain lower than the market price.
The APR listed next to each product includes not only the investment return but also includes additional rewards offered by Binance.
Boost Returns with Advanced Auto-Compound
Advanced Auto-Compound works the same as Basic Plan if target is not reached and creates an opposite investment position if target is reached. This allows more automation in dual investment strategy. For example, if Sell High position sells your crypto at target price, then Advanced Auto-Compound would create a Buy Low position with next available settlement date. Similarly, it can create a Sell High position right after Buy Low position acquires crypto for you, allowing to generate profit without your intervention.
However, it’s important to monitor your current investments and stay informed about crypto market trends, as Advanced Auto-Compound can create new positions even in declining markets. You can disable Auto-Compound up to 30 minutes before the settlement date if needed.