Typically, financial brokers and platforms in other industries do not give their clients advice on how to profit. Their number one objective is to get your money and the result of your trades is not important to them. At YouHodler, we’re different. When you profit, we profit. Hence, it’s in our best interest to provide you with new tools and strategies that result in your financial success.
Today, this strategy is lock trading. An old concept to many from traditional investment communities but we’ll show you how to use it in a new way on YouHodler to create an innovative profit methodology.
Before we dive into the history and tangible examples of lock trading, let’s first examine the chart above. Trading charts are a wonderful tool for a very specific purpose but there is one important fact we should all know about trading charts. Trading charts do not predict the future. They are good for analyzing past trends to help you make an educated guess for the market’s behavior in the future. Even the expert technical analyst cannot fully predict the market, especially in the case of cryptocurrency which is extremely volatile and unpredictable. Hence, lock trading is an effective strategy to cover our losses and hedge your investments far better than making a decision based solely on chart analysis.
In the traditional market, a locked position is when a trader doesn’t exit a losing trade as most people typically do. Instead, they open a position of the same exact size in the opposite direction, either simultaneously or slightly after opening the first position. For example, let’s say you open a buy position for Tesla stock at a price of $5/share. The price then goes down to $4 but instead of closing the position, you open another position, this time a sell position at a lower price without closing the already opened buy position.
As a result, you’ve fixed your current loss, and the trade is not closed. So if the price goes up, then your “buy” position improves while the “sell” position gets worse. If the price goes down lower, then the loss from the buy position is covered from the profit earned on the sell position. To put it in simple trading terms, lock trading is essentially the same as a delayed stop loss. It gives the trader more time and options to wait out uncertainty.
Now, going back into the crypto world, let’s examine how you can do this quickly and easily on YouHodler with the platform’s Multi HODL tool.
As discussed earlier, it’s nearly impossible to predict which direction the price of your assets will go, especially in the crypto market. However, using the lock trading example we just showed you, it’s possible to mitigate some of that risk. Think of the crypto market as the teeth of a saw or a roller coaster. There will always be ups and downs. It is a natural part of the market. Therefore, by opening up two Multi HODL positions simultaneously, you have a 50/50 chance of profiting because you know the market will either go up or down.
Take a look at the chart above. If you opened just an "up" position at the point of figure 1a. then you would have experienced significant loss on that massive "Black Thursday" crash from March 2020. However, if you opened both an "up" and "down" Multi HODL position, you are essentially hedging your risk. When you close both positions at the bottom of that drop, your profits from the "down" position would offset that losses from the "up" position. Additionally, you could have close the "up" position manually if you were available during this even but if not, this simultaneous lock trading approach is a fantastic way to hedge your Multi HODL.
Another possible method is to open up two simultaneous positions and wait for them both to be profitable (as seen in figure 1b)YouHodler charges just a 1% commission over the course of 10 days so you'd just need to wait for your "up" deal to hit a minimum of 2% profit to close it and then do the same later for your "down" position if that all occurs. With daily crypto market movements often going up or down 2% - 5% (or more), this leaves plenty of extra room to cover those commissions. Simply wait until a moment when one deal is profitable, then wait until the second deal is profitable. It's all about capitalizing on market movements in both directions. Of course, there is no guarantee you will profit from both slides but lock trading in this manner simply gives you more chances by diversifying your Multi HODL positions.
YouHodler is fortunate enough to allow this sort of behavior while many other platforms are against lock trading. At YouHodler, our clients profit when we profit so it’s in our best interest to help everyone benefit as much as possible. Furthermore, this strategy works better on YouHodler than in traditional markets because our platform has:
- NO rollover fees
- NO additional commissions or hidden fees
- No daily, hourly, monthly fees
We simply charge a 1% fee for the 10 days so you can have more funds to properly increase your crypto portfolio.
Lock trading is truly a fantastic way to hedge your risk on the market. If we experience the “Black Thursday” event as we did in March again, you won’t have to worry about large losses if you’re lock trading. Having two positions open at once compensates your loss and if you manage to close the unsuccessful Multi HODL deal early enough, then you can potentially double your earnings.