Making 2x profit from the crypto market when trading either spot, futures, or meme coins, is often common, especially during the bull market.
However, while many investors make a profit trading crypto, many also lose their hard-earned funds or narrowly preserve their wealth after weeks or months of holding their assets in the hope of favorable market movements. Increasing your investment by 2x in crypto trading could make one of the most rewarding experiences for traders when the market conditions are right.
In this review, we explore the idea of making 2x in crypto trading, the involved risks, and other viable factors influencing the 2x potential. Then we’ll answer the big one, “How common is a 2x in crypto trading?” to approximate anyone’s average chances of doubling their funds by investing in virtual assets.
What does “2x” mean in cryptocurrency trading
Investors use “2x” to describe earnings that double the value of one’s initial investment. For instance, if you invested $500 in a coin, a 2x return means your investment is now worth $1,000.
Such an increase could either occur because the asset’s price increased proportionally or leveraged trading strategies amplified gains to double the trader’s initial capital. Here’s how either option works.
Suppose you purchased Ether (ETH) at $300 per coin, and its value rose to $600 per coin, you’ve earned a 2x profit. In a 2x leverage, you borrow funds to increase your investment’s potential returns. For example, with a $50 capital and a 2x leverage, you’ll trade with $100 for a chance to earn larger profits. However, using a 2x leverage also means facing a heightened risk of losing more than your initial investment.
How common is a 2x in crypto trading?
The definitions show that a 2x couldn’t be rare in the volatile crypto world. However, how frequently this profit margin occurs depends on various factors.
1. Market conditions
Crypto prices skyrocket, and optimism soars in a bull market, creating highly favorable conditions for a 2x return. For instance, Bitcoin’s price spiked from $1,000 to nearly $20,000 in its famous 2017 bullish – offering many investors nearly 2,000% profit within a year. Bearish trends, on the other hand, are marked by falling rates, making it tougher to achieve significant gains.
2. Strategy and timing
The time an investor purchases or sells cryptos plays a huge role in determining a trading session’s outcomes. For instance, using strategies like swing trading (holding assets for a few days or weeks) or day trading (short-term trades within a day) allows traders to latch onto market fluctuations. However, things can quickly turn around in the highly volatile market to the surprise of even seasoned traders.
3. Type of cryptocurrency
High-cap coins (such as Bitcoin and Ethereum) often provide more stable conditions with fewer opportunities for swift 2x gains. On the other hand, low-cap coins (newer or smaller projects) can be more volatile, often demonstrating dramatic price swings that either yield massive gains or great losses.
Commonality and risks of 2x leverage on crypto exchanges
Most top crypto exchanges offer leverage options to help traders amplify their trading positions. Binance, for instance, offers up to 10x leverage on margin trades and a massive 125x on futures. Meanwhile, platforms like MEXC and Bybit go even extra length, offering up to 200x leverage on perpetual futures.
However, there’s no doubt that a 2x leverage can be a highly attractive option for many investors, as it provides a mid-point between opportunity and risk. This mid-ground feature that allows 2x leverage traders fancy a doubling potential while absolving them of the risks involved in high-end leverage.
With such moderation, both beginners who are new to the field and seasoned pros optimizing their strategies can find a relatively predictable leeway to flex their investing knowledge.
While a 2x leverage can be highly attractive to traders, it comes with undeniable risks. Here are some of the common risks of using a 2x leverage.
- Liquidation risks: A 50% contrary move can wipe out an investor’s position, even at 2x.
- Market volatility: Crypto prices can be highly unpredictable. Adding leverage to the mix means that the slightest drop can feel like a giant’s fall to the trader’s position. For instance, only a 5% fall immediately imparts a 10% loss on a trader’s leveraged position.
How to maximize your chances of making a 2x in crypto trading?
The answer to the question, “How common is a 2x in crypto trading?” varies from trader to trader, especially depending on their experiences. Here are some top strategies that pros use in maximizing their chances of getting a 2x profit trading crypto.
1. Properly understanding the market
Pros have mastered market cycles enough to delineate between bullish and bearish trends to refine their timing. They’ve also learned to leverage tools like technical analysis and trend indicators to enhance their decision-making processes.
2. A diversified portfolio
Expert traders have also learned to invest in a large spectrum of assets. Usually, a mix of high-cap, relatively stable coins like Bitcoin and less stable altcoins would make a formidable portfolio. With this approach, the trader balances risk and potential reward while protecting themselves from heavy losses in one asset.
3. Getting clear entry and exit Points
Pros also know to decide ahead of time when to sell or buy. They’ve learned to avoid emotional decisions driven by the fear of the unknown, the fear of missing out (FOMO), and the fear of panicking during price drops.
4. Proper research
Highly profiting traders conduct proper research on each coin before staking their trust. Adequate research explores various factors like the technology, team members, and market use cases. Most times, the focus is on projects with viable long-term potential.
5. Learning to manage risks
Here’s where highly profitable traders have mastered the use of stop-loss orders in maximizing losses, investing only in what they can afford to lose. They’ve also learned to avoid leveraging excessively, as it significantly increases risks.
Common pitfalls to avoid in crypto trading
Trading can be profitable or risky, depending on how much an investor has learned to manage their actions. Let’s see some common errors to avoid when trading cryptocurrencies and put oneself at a higher chance of getting a 2x gain.
- Overleveraging: Borrowing too much magnifies an investor’s losing potential – the same way it potentially amplifies gains.
- Chasing hypes: Trading to catch up with speculative surges without conducting thorough research could cost an investor their capital. Speculative surges could stem from rug pulls (crypto scams), seasonal/political, and crypto-related events that threaten to alter market indices. Speculations may be right, but they may also be completely unfounded. You want to stay abreast with all-around crypto news and compare suggestions from various top experts before making a sudden trading decision.
- Holding too long: Greed can lead an investor’s gains down the drain as they hesitate to withdraw gains while hoping for additional profits. The best traders don’t delay locking in profits gained as soon as they deem necessary – either based on experience or just share contentment.
Identifying and maximizing 2x potentials in crypto trading
Doubling your crypto investment may sound difficult, especially for newer traders. However, with the right tools and tricks, it’s completely achievable. The best way to achieve this is to understand the market via price action analysis and (where applicable) verified expert insights. Here’s how price action analysis works.
1. Price action analysis
Price action analysis observes how a coin’s price moves over time. The analyst merely tracks the raw price movement of the asset – without consulting too many other complex indicators – and typically notices patterns and trends that signal potential 2x gains.
Ultimately, a thorough price action analysis helps a trader figure out when to purchase, sell, or hold a coin. For instance, if you observe an asset’s price bouncing off a specific level multiple times, it’s a “support” sign. Conversely, if the price keeps struggling to break above a defined point, you’ve highlighted the “resistance” point.
Appreciating these levels gives a trader a roadmap for predicting future price movements, which is vital in identifying larger opportunities.
2. How to read chart patterns
Many verified crypto platforms and experts assist traders with helpful chart setups to provide clear insights into a market’s short and long-term prospects. Often, price action analysis informs much of these charts. Here are some handy tips on how to maximize crypto chart patterns.
One of the most popular features is the breakout pattern, where the price pushes above a strong resistance level, indicating it might spike further. Another common pattern involves recognizing trend continuation patterns like flags or wedges, which suggest the price is building momentum to keep its current direction.
In a support bounce, the price repeatedly bounces off a support level, indicating that buyers are active at the point. Often, it suggests a high-probability upward move as long as the support holds.
Meanwhile, if a level that previously acted as a resistance begins acting as support following a breakout, it’s called a resistance flip to support. Here, chances are that the price may now build momentum to move higher, creating a new potential for 2x gains.
Should you find a narrowing price range forming during consolidation, it’s a wedge pattern. Breakouts from wedges often result in sharp moves in the breakout’s direction.
Conclusion
So, how common is a 2x in crypto trading? There are various factors that determine how frequently you could double your crypto investment, from market conditions to your strategy and the cryptocurrency itself. However, by learning price action analysis alongside pro tips from this post, reliable platforms, and other experts, you’re better prepared to identify and possibly make a 2x trade confidently.