|
|
Friends who have invested before should not be unfamiliar with "grid trading."
I started using grid trading to invest in cryptocurrencies several years ago. At that time, the exchange software did not have similar trading functions, and I did not write quantitative trading programs to execute automatically, so I could only place orders manually, one grid at a time. Because it was manual operation, it was not possible to follow up very promptly, and the number of grids could not be too large.
Later, the software of many trading platforms has developed the function of grid trading. Users only need to set some basic parameters with a few taps to start grid trading automatically. The main parameters to be set are price range, number of grids, geometric progression or arithmetic progression, trigger conditions, stop-loss, and take-profit.
For many investment targets, prices tend to be volatile over a long period. The advantage of grid trading is then apparent. For such investment targets, if you adopt a long-term holding strategy, years later, when the price returns to the original point, you neither gain nor lose, but waste the time cost of capital. However, grid trading can automatically and strictly execute low-buying and high-selling according to the strategy. The more violent and frequent the oscillation, the better the effect of grid trading.
Of course, the drawbacks of grid trading are also significant. On the one hand, since only a few grids are traded each time, more funds are always waiting. If the price fluctuates insufficiently, this part of the funds will always be idle.
On the other hand, if a one-sided market is encountered, such as a sharp rise in prices, breaking the grid (exceeding the highest grid set), then you will miss the direct investment returns it brings. Similarly, when the price drops sharply, after each buy order is executed, the waiting for the matching sell order is delayed (of course, this situation is actually not bad. Because grid trading buys in batches, the average cost is actually lower than one-time buying).
Let's take cryptocurrencies as an example and talk about how to use grid trading strategies well to maximize strengths and avoid weaknesses.
First, let me present my personal value judgment: First, I am optimistic about the long-term investment value of Bitcoin, especially after this spot ETF is approved. A group of cryptocurrencies led by Bitcoin will usher in a long-term bull market. Second, Ethereum is the second cryptocurrency after Bitcoin. From many practical application scenarios, Ethereum even surpasses Bitcoin.
Based on the above two points, combined with previous experience data, we can further speculate: First, as the digital gold, Bitcoin, its value is long-term bullish and difficult to estimate. This wave of market trends may directly push the price of a single Bitcoin to $100,000 or even $1 million. Second, as the second cryptocurrency, Ethereum, its price often closely follows Bitcoin's fluctuations. There should be no major problem in taking Bitcoin as the price anchor for Ethereum.
Therefore, it is not difficult to see my conclusion: Do not easily exchange Bitcoin for USDT (a token equivalent to the dollar, simply understand it as the dollar) for grid trading, but directly choose Ethereum trading pairs priced in Bitcoin. Such grid trading is essentially automatically conducting high-frequency rebalancing between Bitcoin and Ethereum.
This also avoids the two major drawbacks of grid trading I analyzed earlier: First, the funds are not idle. Regardless of whether the transaction is completed, I still hold Bitcoin or Ethereum and will not miss their bull market trends. Second, Ethereum priced in Bitcoin is less likely to experience long-term one-sided trends and always regresses to the Bitcoin price. |
|
Post time 26-2-2024 20:55:55