Trading Strategies

Overview Crypto Basics Prediction Markets Live Dashboard Trading Strategies Tools & Resources

1. Dollar Cost Averaging (DCA)

Risk Level:
Low

Buy a fixed dollar amount at regular intervals, regardless of price. This strategy reduces timing risk and smooths out volatility.

DCA Example: $500/month into Bitcoin Month 1: BTC at $40,000 → Buy 0.0125 BTC Month 2: BTC at $35,000 → Buy 0.0143 BTC Month 3: BTC at $45,000 → Buy 0.0111 BTC Result: 0.0379 BTC for $1,500 Average price: $39,578 (better than $45,000)

✓ Pros

  • No timing stress
  • Automatic discipline
  • Great for beginners
  • Reduces FOMO

✗ Cons

  • Misses big dips
  • Slow gains in bull markets
  • Requires patience
  • Transaction fees add up

2. Swing Trading

Risk Level:
Medium

Hold positions for days to weeks, riding medium-term price swings. Requires technical analysis skills.

Swing Trade Example: Ethereum 1. Identify support at $1,800 2. Buy when price bounces: $1,850 3. Set stop loss: $1,750 (-5.4%) 4. Target resistance: $2,100 (+13.5%) 5. Exit at $2,080 after 8 days Result: +12.4% gain Risk/Reward Ratio: 1:2.5 (good)

Key Indicators for Swing Trading

3. Prediction Market Arbitrage

Risk Level:
Low-Medium

Exploit price differences between platforms or related markets. Requires multiple accounts and quick execution.

Arbitrage Example: Election Market Kalshi: "Biden wins" = 62¢ (38¢ for NO) Polymarket: "Biden wins" = 58¢ (42¢ for NO) Trade: 1. Buy YES on Polymarket at 58¢ 2. Buy NO on Kalshi at 38¢ 3. Total cost: 96¢ 4. Guaranteed payout: $1.00 Profit: 4¢ per $1 (4.2% risk-free)

Types of Arbitrage

4. Market Making

Risk Level:
Medium

Provide liquidity by placing limit orders on both sides of the market. Profit from the bid-ask spread.

Market Making Example: Kalshi Fed Rate Market Current mid-price: 75¢ Place buy order: 73¢ (100 contracts) Place sell order: 77¢ (100 contracts) If both fill: Revenue: $77 Cost: $73 Profit: $4 (5.5% on $73) Repeat multiple times per day

5. News-Based Trading

Risk Level:
High

Trade on breaking news before markets fully price it in. Requires fast information sources and quick execution.

News Trade Example: Tesla Earnings Prediction Market: "Tesla beats Q4 earnings" at 45¢ 4:01 PM: Earnings released early by mistake 4:02 PM: You see record deliveries, buy YES 4:05 PM: Market adjusts to 78¢ 4:06 PM: You sell for 73% gain Key: Speed and reliable news sources

Risk Management Rules

Position Sizing

Never risk more than 1-2% of your total capital on a single trade. Use the Kelly Criterion for optimal sizing.

Kelly Formula: f = (p × b - q) / b f = fraction to bet p = probability of winning b = odds received on bet q = probability of losing (1-p) Example: 60% win rate, 1:1 payoff f = (0.6 × 1 - 0.4) / 1 = 0.2 Bet 20% of bankroll (max)

Stop Losses

Portfolio Allocation

Psychology & Discipline

Common Emotional Traps

Building Discipline

  1. Write a trading plan before markets open
  2. Journal every trade with reasoning
  3. Review performance weekly
  4. Take breaks after big wins/losses
  5. Never trade drunk, tired, or emotional

Next Steps

Explore the tools and platforms: Tools & Resources →

Or practice with live data: View Live Dashboard →