A decentralized networking technology called Polkadot links formal or informal blockchains and enables content and currency transfers between them. Built on multichain system topology, It can handle several operations on numerous channels at once. These separate para chain spaces are limited, and programmers compete for them in a decentralized market using the DOT currency.
With a market valuation of approximately $17 billion and a price of $20.2 on the digital platform Bityard, it is now ranked sixth on the list of cryptocurrencies.
Polkadot trading strategies
Polkadot has a high degree of volatility, thus you must compile a toolbox of exchange tactics that are appropriate for cryptocurrencies in general and Polkadot in particular. You can modify or include the following methods in your trading plan:
HODL strategy
Among cryptocurrency traders, the “HODL” (hold on for dear life) method is quite common. This tactic entails purchasing and retaining your coin. To apply this technique, you must, however, have a favorable opinion of the stock’s long-term price.
Hedging strategy
By taking a stance that is opposed to the one you have already taken, you would hedge Polkadot to reduce your vulnerability to risk. Let’s imagine you possess currencies and are worried that the market will move against you and cause a short-term decline in their worth. In this scenario, you would use CFDs to open a short position on this virtual money. And if the price of DOT declines, the money you make on your short position would partially or entirely make up for the losses on your holdings of crypto coins.
Trend trading
When trend trading, your position will be in line with the direction of the crypto sector. If you keep an eye on the coin’s progress and notice that these patterns are decelerating or heading in the wrong direction of what you want to happen, you might think about selling your stock. The next step is to create a new position that is in line with the current trend.
Day trading
By day trading, you avoid having overnight market risk to the commodity by opening and closing a position within the same business day. The advantage is that keeping your trade open beyond dealing hours will not incur overnight fees. If you’re seeking short-term exposure to price swings, you can think about employing day trading.
How to trade DOT CFDs?
A CFD is a sort of agreement wherein one participant promises to pay the other the disparity in the price of investment between the establishment and closure of the trade. Generally, these contracts are made between an intermediary and an investor. Purchasing a cryptocurrency on an intermediary is different from buying and selling a CFD in the cryptocurrency industry. In contrast to trading CFDs, where your agreement is kept in your account with an investment advisor that is governed by a financial body, purchasing cryptocurrencies is saved in a digital wallet.
You can trade DOT in both ways when you engage in DOT CFDs. If you believe the price of DOT will increase, you can take a long-term strategy; alternatively, if you believe the price will decline, you can go for the short-term. Therefore, whether you have a favorable or unfavorable outlook on the price of a cryptocurrency, you can still attempt to benefit from both rising and descending movements.
Why is Polkadot important to traders and investors?
Designers of blockchains for non-fungible coins are interested in Polkadot’s Substrate platform because of its compatibility between blockchains and fast reaction times for processing payments (NFTs). Its relay chain employs a consensus algorithm that enables the seamless processing of payments, blocks, and chain blocks. Its on-chain management and updating methods are favored by programmers.
A rising community of developers is transitioning to Polkadot from competing protocols that do not provide the same level of flexibility across blockchains.
