Trading Long Volatility Vs Short Volatility In Crypto

Hey Jessinvestors

As the crypto bull run is in its formative stages as we move into what is predicted to be one of the craziest market moves yet people are rightly excited about the prospects of making unrealistic gains in a short space of time. There's just something about wealth without work that gets every person's blood racing, getting to strike it lucky once and find themselves on easy street.

Are there examples of this in previous bull runs? Absolutely, crypto has made its fair share of millionaires in the last 12 years, and that trend is not going to stop any time soon, in fact, it's only going to increase as the asset class continues to expand.

Picking up pennies in front of a steam roller

As an investor it's easy to get wrapped up in the moment, especially if you haven't been in it for a long enough time frame to see cycles come and go and understand that there are small cycles, larger cycles and macrocycles all at play, that's what generates volatility.

I am by NO means an experienced trader, I have only been buying crypto since 2015/16, and in that time I've lost plenty and learned a bunch more. I am pretty sure the market is going to hand my ass to me many times over, and all we can hope for is a strike rate above 50% and then hope that half the time you get it right is enough to profit big time.

Any trade you make you have a 50/50 chance of it going your way or going against you, yes there's reasons and fundamentals that can tilt it one way or another and adjust those chances but essentially 50/50 is something we can all agree on for simplicities sake.

Each time you make a trade, layer on leverage, diversify your trades you add more complexity, you try to tap into short term spikes, you try to trade time gains for volatile gains, and if you don't measure your risk in shortening your time frame, you'll end up doing more harm than good.

I've never had much luck trading

I opt to trade long volatility over short volatility because I am no expert trader, I also don't have large sums of capital to take advantage of smaller swings, nor do I feel comfortable utilising leverage. For all these reasons, I tend to opt for long volatility trades.

Trades where I take positions for years, and happily sit on them, review it, add to it, diversify it as I learn more, as I see cycles unfold and as I naturally earn more capital to invest.

Going long on volatility is also the reason why I am bullish on the asset class over the individual assets. Yes, I am a Bitcoin bull, but I am not too hung up on any one coin. Can they go up in the short term more than BTC, sure, can you make gains in alts sure, but it's not just about making gains, it's about securing the gains.

Going long vol doesn't mean you're a sure-fire winner, you still need to remove greed and emotion, set your exit levels, rebalance your portfolio and no try to catch the absolute top or bottom.

It's not without its pitfalls, I am not saying even I will get it right this time around, but I sure do hope not to make the same mistakes I made in the previous run.

I wouldn't even call these 4/5 year bull run cycles long vol, they are part of a bigger cycle that is still to play out, but it doesn't make it any less important. As capital shifts from weak hands to those with conviction in each cycle, so too does the market reward the most efficient and patient traders.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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