Crash course on Smart Portfolio
Bitget
2023-09-22 04:00
1. What is a Smart Portfolio?
A Smart Portfolio is a bot that intelligently and dynamically rebalances positions within a user-selected portfolio of coins. Dynamic rebalancing helps maintain a constant proportion of each coin within the user's portfolio. Users can choose between two rebalancing modes to initiate these adjustments: based on a fixed time interval or based on changes in the coin's market capitalization.
The advantage of this bot is that it can leverage exchange rate fluctuations between different coins to earn while holding a well-picked portfolio.
There are two rebalancing modes: percentage-of-portfolio rebalancing and calendar rebalancing.
• Percentage-of-portfolio: Balancing is triggered by changes in the market capitalization of one or more coins. That is, when the percentage (by market capitalization) of one or more coins deviate from the preset percentage by a set threshold of equal or greater than 1, balancing is triggered. (In order to avoid excessively frequent rebalancing, after each rebalancing, checks will be repeated at 5-minute intervals.
• Calendar balancing: The degree of deviation is detected at a certain interval and balancing is triggered accordingly. After the preset time interval, the system checks whether the percentage (in market capitalization) of one or more coins have deviated from the preset percentage by a threshold of equal or greater than 1. If such deviation occurs, rebalancing is triggered. (In order to avoid excessively frequent rebalancing, only a deviation exceeding 3% will trigger a rebalance)
2. In what scenarios is Smart Portfolio used?
There is often a correlation between different coins or sectors in the market. When a few coins that have risen start to decline, simultaneously, other coins may begin to rise. If you simply hold onto these coins without taking action, you are likely to miss out on significant profiting opportunities during these alternating cycles. However, if you seize profits in a timely manner as the first few coins rise and use those profits to purchase other coins at lower prices, you can also secure potential profits. By doing so, you can get more from a single portfolio.
3. The benefits of Smart Portfolio
Smart Portfolio offers new opportunities for HODLers to potentially increase the returns on their digital asset holdings by taking advantage of rapid price fluctuations. When the price of an asset in the portfolio rises to reach a threshold, the bot allocates part of the profit to other coins in the portfolio. Even when the price of the asset drops later, the rebalancing mechanism would have secured the profit and the bot would have managed to increase the total quantity of assets in the portfolio.
4. What is the trading strategy of the Smart Portfolio bot?
Assuming you have 100 USDT and you wish to invest in a portfolio containing BTC and ETH with a 1:1. Using the Smart Portfolio bot, 50 USDT of BTC and 50 USDT of ETH will be bought. The bot will then monitor the exchange rate between the two coins every 5 minutes to see if there are any fluctuations in the exchange rate between the two coins and adjust the positions as needed, ensuring that the values of the two coins are consistently maintained at a 1:1 ratio.
When the value of your BTC holding rises to 60 USDT, while the ETH remains at 50 USDT, the bot will sell 5 USDT of BTC and buy 5 USDT of ETH. This will ensure that the portfolio ratio remains at 1:1. Consequently, your position will be 55 USDT worth of BTC and 55 USDT worth of ETH.
Compared to the HODLing bot, Smart Portfolio enables users to set rebalance trigger conditions and capitalize on price fluctuations of different tokens for arbitrage opportunities.
Due to reasons such as delisting, suspension, risk control, etc., selecting Sell at Termination may not be effective. The assets in the bot will be directly returned to the spot account.
Disclaimer
Smart Portfolio is a trading tool. The abovementioned information should not be regarded as financial or investment advice provided by Bitget. Profits from Smart Portfolio may be impacted by one-sided market conditions or improper price intervals. You can adjust your Smart Portfolio bot according to market conditions. Your use of this tool is subject to your unconditional acceptance of all the Terms and Conditions of Bitget. You should be fully aware of the risks associated with cryptocurrency investments and proceed with caution. You agree that all investments conducted on Bitget.com reflect your genuine investment intent, and you unconditionally accept the potential risks and gains of your investment decisions.
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