1. Fixed investment strategy
The fixed investment strategy is a strategy that diversifies the risk of one-time large transactions by trading a fixed amount at fixed time intervals, and maximizes returns by using the time compounding effect. This strategy is particularly suitable for long-term holders and aims to reduce the psychological pressure and trading risks caused by market fluctuations.
Data Sample
By analyzing the fixed investment returns of Bitcoin in different halving cycles, the results show that the winning rate of the fixed investment strategy in each cycle is more than 50%, especially during the second to third halving period, the fixed investment strategy's return rate reached 170.03%. However, this return rate is still inferior to the overall increase in the Bitcoin market. For the fixed investment data sample of the past four years, the fixed investment return rate in 2022 is -48.75%, which shows the risks that the fixed investment strategy may bring in a bear market.
Advantages and Disadvantages
•Advantages: The fixed investment strategy reduces the impact of market fluctuations by spreading out trading time, and is suitable for traders with low psychological stress tolerance. It is easy to operate and has low risks, and is especially suitable for long-term traders.
•Disadvantages: The fixed investment strategy cannot maximize returns in a sharp market rise, and requires long-term persistence. When faced with a longer market downturn, the returns may be lower.
StrategyStrategy Summary
The fixed investment strategy provides a relatively stable trading method in a volatile market, but when the market trend is clear, the fixed investment strategy may not be able to capture the maximum increase. When using this strategy, traders need to adjust it according to the market environment and personal trading goals.
2. Grid strategy (spot and contract)
The grid strategy is a strategy that divides multiple grids within a preset price range and executes buy and sell operations when the price fluctuates. This strategy is mainly suitable for volatile markets and can achieve stable returns through frequent small transactions.
Data Sample
In the actual test of neutral contract grid and spot grid, the data showed that the neutral contract grid had the highest return rate in the oscillating upward market, reaching 33.91%, while the spot grid had a return rate of 19.05% under the same market conditions. However, in the oscillating downward market environment, the spot grid suffered losses, showing its limitations in the falling market.
Advantages and Disadvantages
•Advantages: Grid strategies perform well in volatile markets, especially neutral contract grids, which achieve higher returns by leveraging leverage and frequent trading. They are highly flexible and adaptable.
• Disadvantages: Grid strategies do not perform well in one-sided markets, especially spot grids, which are prone to losses in falling markets. In addition, although the contract grid strategy has high returns, it is accompanied by higher risks.
Strategy Summary
Grid strategies provide an effective way to generate profits in volatile markets, especially neutral contract grids, which perform well in different market environments. However, traders should use leverage with caution and pay attention to the potential impact of unilateral market trends on strategies.
3. Martingale strategy (spot and contract)
The Martingale strategy is a high-risk strategy that spreads the cost by doubling the size of the trade after a loss, hoping to make up for all losses through the final profit. This strategy is suitable for traders with strong capital strength and performs better in volatile or rising markets.
Data Sample
Under different market environments, the measured data of spot martingale and contract martingale show that both can obtain considerable returns in rising markets, especially contract martingale, which performs well in sideways and volatile markets. However, in a falling market, both face a greater risk of loss, especially contract martingale, where the risk is more significant due to the use of leverage.
Advantages and Disadvantages
•Advantages: The Martingale strategy reduces the average cost by continuously adding positions, and has a higher profit potential in volatile and rising markets, especially the contract Martingale strategy, which amplifies profits through the leverage effect.
• Disadvantages: The main risk of this strategy is that it may lead to huge losses when the market continues to fall, especially the risk of liquidation in leveraged trading. In addition, the Martingale strategy requires strong psychological endurance and financial support.
Strategy Summary
The Martingale strategy can bring significant returns in the appropriate market environment, but its high-risk characteristics determine that only traders with sufficient risk tolerance and financial strength can effectively use it. In a one-sided down market, traders should use this strategy with caution or consider adjusting the strategy to reduce risk.
4. Funding arbitrage strategy
Funding arbitrage strategy is a strategy that makes profits by taking advantage of the difference in funding rates between futures contracts and spot prices. This strategy is suitable for markets with less market volatility and significant funding rates, and aims to achieve stable returns by locking in funding rate differences.
Data Sample
The actual test of the funding arbitrage strategy under different market conditions shows that the strategy can achieve stable annualized returns when the funding rate is high. However, when the market fluctuates greatly or the funding rate fluctuates abnormally, the returns of the strategy may be affected.
Advantages and Disadvantages
• Advantages: The funding arbitrage strategy provides a relatively stable way to earn income by locking in the difference in funding rates, especially when the market volatility is small. It has relatively low risk and is suitable for long-term transactions.
• Disadvantages: This strategy is highly dependent on market conditions, and performs well in markets with low funding rate fluctuations. However, it may be difficult to achieve expected returns when funding rates fluctuate greatly or abnormally.
Strategy Summary
Funding arbitrage strategy provides a stable way to earn profits in a low-volatility market, suitable for risk-averse traders. However, traders need to pay close attention to changes in the funding rate in the market and adjust their strategies when necessary to cope with the risks brought by market fluctuations.
5. Time-weighted and iceberg order strategies
Time-weighted strategy and iceberg order strategy are two common trading strategies suitable for splitting and executing large orders. Time-weighted strategy reduces market impact by spreading large orders over a specified period of time; iceberg order strategy hides the actual size of large orders by placing orders in batches to avoid drastic fluctuations in market prices.
Data Sample
The time-weighted strategy reduces market impact by buying in batches in a bull market, and obtains better returns; in a bear market, by setting a limit price for taking orders, it avoids taking orders at too high a price, thereby reducing the risk of losses. The iceberg strategy effectively hides the large purchases in a bull market.