Strategy Trading Scenarios Explained
Bitget
2023-04-11 12:37
Global Bitgetters,
Volatile market / range trading — Grid trading strategy
In most cases, market price fluctuates within a certain range and breaks into the next one to start another round of movement. The pattern goes on repeatedly. It is a rule that applies within different time frames (week/day/hour, for example). In this sense, many traders are range traders, who buy/long low or sell/short high as a way of arbitrage. And when the price moves beyond a certain range, they go on to execute the trading strategy in the next one. These small ranges, when combined together, can be seem as a larger one. That is to say, traders are actually arbitraging by leveraging the price movement across different small ranges within a bigger range. Grid trading is a tool to help users automatically execute the strategy of range trading, with the highes t price and lowest price defining the big price range where the strategy operates and the number of grids defining the number and scope of smaller ranges.
Spot normal grid: used when the price is estimated to rise while fluctuating. The strategy will first execute buy orders and then sell orders (as the price goes up). By repeatedly buying low and selling high, it will eventually earn more stablecoins through arbitrage.
Futures long grid: used when the price is estimated to rise while fluctuating. Traders will enter the market with long positions, close them when the price hits high, and continue to open more when the price goes down.
Spot reverse grid: used when coin holders predict that the price will go down while fluctuating. Traders will sell the coins and buy them back when the price hits low to earn more through repeated arbitrage.
Futures short grid: used when the price is estimated to drop while fluctuating. Traders will enter the market with short positions, close them when the price hits low, and continue to open more when the price goes up.
Increase investment at a specific price when the price is expected to rise in the long term — DCA strategy
DCA strategy is a strategy to keep investing money when the price goes down to reduce the average cost. It is suitable for users who are bullish on a coin for a long time but have difficulty in determining the timing of entry and are afraid of missing the opportunity, and for users who have a need to withstand floating losses. For example, if you buy a coin at the market price of 50 USDT, and you think the price will reach 100 USDT, but there may be a drop, then you can set to increase investment each time when the price drops by 10 USDT. When the price hits 100 USDT, you will be able to earn profits with lower average costs and more holdings.
Spot Normal DCA: suitable for users who are bullish on after-market but expect the price to drop before rising. After placing the base order, more safety orders can be placed at the pre-set intervals and multiple.
Futures Long DCA: suitable for users who are bullish on the after-market but expect the price to drop before rising. After opening long for the base order, the margin for long positions will be implemented at the pre-set intervals and multiple.
Spot Reverse DCA: suitable for coin holders who are bearish on the market but fear a rebound. After investing in the coin, users will sell part of the investment and continue to sell as the price goes up to maximize the profit.
Futures Short DCA: suitable for users who are bearish on the after-market but expect the price may rebound first. After opening short for the base order, the margin for short
Strategy Trading Scenarios
With positive prospects, open more positions at intervals - Auto-invest strategy
An auto-invest strategy is a trading strategy where you make regular crypto investments of a fixed amount without having to consider the timing of purchases. This type of regular investment at intervals mitigates the price risks of a lump sum purchase, counteracts the instinct to follow trends, and is efficient, simple to perform, and user-friendly.
For example, you want to long BTC, but its price is largely determined by the market. As the market constantly fluctuates, you can set up an auto-invest strategy to open a new position every 24 hours. Here you need to decide an interval. It can be as short as an hour, or as long as a year. The strategy is suitable for investors who are confident in a bullish prospect crypto market and do not want to rely on the timing of investment.
Spot auto-invest strategy: It is suitable for investors who are confident in a bullish crypto market and are not concerned about short-term volatility. After an initial order, the strategy runs and invests the preset amounts at the preset intervals, mitigating both risk and costs.
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