Profitability of Holding Versus Day Trading Newly Listed Coins

Freshly listed coins on Binance often gain a lot of attention among traders and investors. In general, with the hype and stir in the market, two major strategies will pop up: holding on to these coins for a long time and day trading to take advantage of really wild fluctuations.

Understanding the Binance Listing Effect

Historically, newly listed cryptocurrencies on Binance have seen extreme price movements. According to Binance Research, the average coin increases in value by about 25% within the first 24 hours of its listing. This initial volatility after listing is very attractive to day traders looking to make quick profits. However, in subsequent days, the price might stabilize or correct, which could be more attractive for long-term holders that bank on future appreciation.

Short-Term Gains

Day trading new Binance listings involves taking advantage of the fast, sometimes very dramatic, changes in the price during the first hours after listing. According to CoinMarketCap, almost 60% of newly listed coins have their peak price volatility within six hours. Day traders will look to take advantage of this volatility by buying into the token when the price has bottomed and selling at a spike. This requires close monitoring, fast decision-making and the ability to act rapidly while markets change.

The main attraction of day trading is the immediate profit potential; however, it is also worth mentioning that not all of the next listings on Binance will turn out to be profitable. It has empirically been found that about nearly one-third of newly listed coins move in negative directions by the end of the first 24 hours, which is considered highly risky.

Long-Term Holding

On the other hand, newly listed coin holding entails early buying and holding onto those coins for months or even years. The idea is no different from any form of traditional investment, whereby you would imagine that with time, the demand for utility and coin adoption will increase along with market demand, hence increasing the price.

The same report by Messari, for instance, estimates, that coins held for more than a year following listing on Binance averaged a value increase of 120%. While this goes a long way to reduce some of the risks associated with possibly violent volatility, it does require almost an extraneous degree of patience and faith in the long-term viability of your chosen project.

Comparing Binance Listings’ Past Performance

Research by TokenInsight considered the first 24-hour day trading of 50 recent Binance listings and found that the average return from day trading in the first 24 hours is about 18%, while the average return from holding the same coins for six months is around 78%. This means that while day trading offers quick gains, long-term holding has provided higher returns historically for many new listings on Binance.

But individual coin performance can vary a great deal: some can have exponential growth, while others can lose value over time, further emphasizing the importance of doing your due diligence on the project behind each listing.

Factors Affecting Price Movement After Listing

The following are some of the major factors that may influence profitability to holding and day trading of the listings on Binance:

• Market Sentiment: Coins that perceive positive pre-listing sentiment tend to experience extremely rapid price increases.
• Project Support and Use Case: Tokens created by respected developers with well-articulated use cases would have a greater probability of success in the longer term.
• External Market Conditions: The general hue of the crypto market at large impinges upon new listings. Any bearish condition diminishes the gains for even promising projects.

Such factors can influence the next listings on Binance, making it quite important to keep posted with news and fresh developments.

Managing Risk in Day Trading

Trading day Binance listings bear greatly increased risks due to extreme price volatility. Comments may consider setting pretty strict stop-loss orders to avoid extreme losses. A 5-10% stop-loss is effective in protecting gains and limiting losses. One can also risk-manage their trade and avoid huge losses when there is an abrupt turn using a position size, where only a meager portion of your portfolio is involved in a single trade.

The Role of Technical Analysis in Short-Term Trading

Technical analysis will, in most cases, be imperative to a day trader’s quest to make eloquent profits from newly listed Binance coins. Tools such as the RSI, moving averages and levels of support and resistance will always assist a trader in making informed entry and exit decisions. An analysis recently done by Binance Academy itself has revealed that those coins whose RSI was below 30 before listing usually bounce back with a lot of energy after listing, thus providing buy opportunities for a day trader.

Both holding and day trading have their own possibilities regarding the newly listed coins on Binance. It’s all about the goal, risk tolerance and current market conditions that the investor needs to deal with. With a lot of foresight and strategy in mind, traders will be able to optimize their approach to fit their investment style and their market view.