Traders can hedge their risks by trading in multiple time periods because each time period provides a different level of information about market conditions. The shorter time periods, such as 15 minutes and 1 hour, are more sensitive to market noise and short-term fluctuations, whereas the longer time periods, such as 4 hours and daily, provide a broader view of the market and are less affected by short-term noise.
By trading in multiple time periods, traders can get a better understanding of the market trends and make more informed decisions. For example, they may use the shorter time periods to identify short-term opportunities for profit, while using the longer time periods to confirm the overall trend and determine the best entry and exit points.
Let us illustrate with an example. Trader John wants to trade coin X. He believes in the long term potential of X and would like to have a very Long position on it. However, he would also like to trade the short-term volatility to get some profits (hopefully) along the way.
John sets up 1 DCA and 2 Advanced Bots in CryptoHero with the following configurations:
Bot 1 – setup on 4 hour Frequency. DCA bot.
Bot 2 – setup on 1 hour Frequency. Advanced bot.
Bot 3- setup on 5 minute Frequency. Advanced bot.
Bot 1 ensures that John is always buying coin X on a dip and aligns with John’s long term goal of accumulating coin X.
Bot 2 allows John to trade more frequently but with lesser risk.
Bot 3 gives John the ability to trade intra-day swings at a 5 minute trading frequency.
With the above setup, John is able to implement his trading goals with CryptoHero. Over time, his experience and understanding of how X behaves would allow you him to conjure a “secret sauce” of settings that would give John a high Win/Loss ratio and hence a greater chance of profitability.
In summary, by setting up a strategy with multiple crypto trading bots multiple trading frequency, it can help a trader to:
- Get a better understanding of market trends and conditions
- Identify short-term opportunities for profit
- Confirm the overall trend and determine the best entry and exit points
- Diversify their trades and hedge against risks in different time frames.