ONECENT News - Averaging Trades - Day 5

The @onecent account has had a quiet couple of days. The ONECENT token is in a consolidation period as holders take stock of their positions and the price is sandwiched between 0 and 16 cents. With no new tokens being bought, for now, there has been little financial activity. The rewards will only start to trickle in on Friday and then rise on Saturday. So, the only thing left for the game account to do is post some advice.

Which is all rather lucky as... well... I'm on a family holiday this week and... forgot my keys at home! Not all of them, just the game ones. Don't worry, they are not lost or stolen, just half a day away at home. Hence, as I have been managing the ONECENT freebies to MAPX members, it makes sense that I should do the posting.

All rewards from these "ONECENT News" posts will be sent to @onecent when they pay out.

So, let's look at some strategies for playing this game profitably. The new entrants to the game, with a handful of freebies, may well stimulate the trading. The total number of tokens in the game is currently 13,270 and the average price is estimated at 8.7 cents (down slightly from the previous quote of 9.1 cents). This will obviously rise as rewards start coming in, but is also an opportunity for some token-holders to lower their own average price. And it is the subject of averaging that I wanted to discuss today.

There is a trading cliche' of "buy low, sell high". It's simple, obviously true yet taken at face value also narrowly naive. It is rare if trading any market to buy low at one price and then sell high at one price. Even traders in physical goods give discounts on their products. In a digital market where the only trade is price, one should really have a strategy of buying into a rally and then slowly selling if a dip starts. By averaging both the buys and the sales, one is also managing one's funds in case the price changes direction suddenly.

I mentioned this in the most recent post and now wish to give one simple yet concrete example. Using the numbers within the ONECENT game, imagine you buy 3 tokens at 10 cents each, then 2 tokens at 11 cents and finally 1 token at 12 cents. You have paid a total of 64 cents for 6 tokens at an average price of just under 10.7 cents.

Now, imagine the price comes back down again and you sell 3 tokens at 12 cents, 2 at 11 and 1 at 10. Your total sale price becomes 68 cents, a profit of 4 cents. Not much, you may think, but that's a 6.25% profit, possibly done in hours!

One might now ask, why bother? All you've essentially achieved is bought 2 tokens at 10 cents and then sold them at 12 cents. Why not just do that as your strategy? Sure, it works just as well with these numbers, but what if the price rises to 15 cents? Then in the first averaged example you have 6 tokens staked whereas in the simplified version you have only 2.

Also, and perhaps most importantly, if you had decided to stake 6 tokens at the start then you would have bought 6 at 10 cents - great if they end up in profit but if the price suddenly turns you need to quickly sell 6 tokens rather than just 3 in the first example. You are not just planning for profits but also protecting yourself from potential losses.

There are many permutations one can use, the key thing is to have a plan. Don't just follow the FOMO on the way up. How much can you afford to stake? Decide that first, then split it into three trades in the same approximate ratios as above.

You don't have to sit there watching the token prices all day, just plan the prices and open the trades; if the price doesn't rise, then those trades do not get executed and can be cancelled. The options available to create multiple trades will be discussed in another post.

Sure, it's very simple and experienced traders may even tell you it's dumb, but it's the start of doing planned trades with known entry points and exit points. If the price starts to go against you, you haven't staked your whole pot, if it carries on going higher then repeat the same method with your profits.

There are traders who are more like investors and like to "buy on the dips". What they are really doing is bringing down their average cost price in the hope that at some point they can cash in their holdings for a higher profit margin. Even if the dips seem painful, if you have confidence in the eventual rise then this is a sensible long-term strategy.

Lots of other topics to talk about regarding game theory, but I think that's enough for now.

Any questions, please ask.