Six common strategies in the currency circle
1. Trend strategy
Features: chasing ups and downs, operating with the trend, low trading frequency, long holding period, low winning rate, and high profit-loss ratio.
Common in medium and long-term manual trading
Difficulty: low
Yield: high
Retracement: Larger
The fluctuations in the digital currency market are relatively large, and the fundamentals of digital currencies themselves are not as clear as stocks. It is almost impossible for users to measure the value of digital currencies through fundamentals and judge whether they are overvalued or undervalued, which can promote the rapid rise of the currency circle. The good thing is the rise itself, and the same goes for the fall. Therefore, in the bull market of the currency circle, it is common to see an increase of more than 100 times, and it is also common to see a decline of more than 90% or even zero in the bear market.
Therefore, in terms of profitability, trend is the most suitable strategy for manual trading in the currency circle. If it can be used in the main rising and falling sections of the market, the profits are very generous, but the shortcomings of the trend strategy are also very obvious: it needs to be first Determine the trend through a period of market, and wait until the trend is clear before entering the market. At the time, the price is often not very appropriate, and it is easier to stop losses continuously in the volatile market. This requires users to have the ability to judge large-scale market conditions. , actively avoid the volatile market, or have strong execution ability, you can insist on trading according to the trend in the volatile market with repeated losses, until the market style returns to one side, and you can turn losses into profits.
Commonly used indicators: MA, DC channel, BOLL channel (breakthrough order chasing), etc.
2. Shock strategy
Features: Sell high and buy low, operate against the trend, high trading frequency, short holding period, high winning rate, and low profit-loss ratio.
Common in short- and medium-term manual trading
Difficulty: Moderate
Yield: Moderate
Retracement: Moderate
Shock strategies are also common in manual trading, because the style always switches back and forth between unilateral and shock, so there are many shock trading opportunities, and the shock method is to go short at high positions and long at low positions, which is more humane, so It is also relatively popular. If it can be used accurately in a volatile market, the winning rate will be very high. However, the single profit is not as good as the trend strategy. It also requires users to have the ability to judge the market style and the execution ability to stop profits and losses in a timely manner.
Commonly used indicators: DC channel, BOLL channel, BIAS, trend channel (reverse order opening), MACD, TD sequence and grid trading, etc.
3. Currency selection strategy
Features: Select the most suitable currency to hold at the moment to hold a position. After the position period is over, close the position and re-select the currency for the next round of positions.
Common in quantitative trading and long-term spot trading
Difficulty: high
Return: high
Drawdown: moderate
The currency selection strategy will screen all varieties in the market, and has high requirements for data processing capabilities. It usually appears in quantitative trading and is also widely used in asset management institutions such as funds. By selecting varieties, better trading results than the average market volatility can be obtained.
4. Neutral strategy
Features: Similar to currency selection, but it is necessary to hold equal amounts of long and short positions of different varieties at the same time to hedge the overall market volatility (beta) and earn excess profits (alpha) brought by currency selection.
Common in quantitative trading
Difficulty: high
Return: moderate
Drawdown: small
Take the current currency circle as an example. In a bear market, the decline of small currencies often exceeds BTC. Then, by holding small currency short orders and BTC long orders at the same time, you can build the simplest neutral strategy and earn the extra profit of small currencies compared to BTC in addition to the general market decline.
5. Arbitrage strategy
Common in quantitative trading
Difficulty: low
Return: low
Drawdown: small
Similar to the neutral strategy, it uses long and short positions to arbitrage the price difference, such as the price difference arbitrage between contracts and spot commonly seen in the currency circle, arbitrage between contracts of the same product with different delivery periods, arbitrage between funding rates, and cross-platform arbitrage.
6. High-frequency strategy
Common in quantitative trading
Difficulty: high
Return: moderate
Drawdown: small
The strategy with the highest requirements for network speed, software and hardware support requires real-time monitoring of data such as the market and transaction by transaction, discovering subtle trading opportunities and operating them in a timely manner, and the holding time generally does not exceed 1 minute.
