OKX and high-quality data platform AICoin launched a series of classic strategy research, aiming to help users better understand and learn different strategies through data measurement and strategy characteristics and other core dimension analysis, and try to avoid blind use.
Martingale strategy, full name Dollar Cost Averaging (dollar cost average), referred to as DCA, is a trading method that focuses on position management. The core concept is "loss increase position to pull average price, profit reset", the main feature is to double the transaction amount after each loss until a victory is achieved. The basic assumption of this strategy is that as long as the capital is large enough, the final victory will make up for all previous losses and bring profits. As a higher-risk strategy, Martingale is suitable for traders who have sufficient capital and can withstand potential huge losses.
This strategy is mainly divided into two application forms in the cryptocurrency market: spot Martingale and contract Martingale.
The 03rd issue introduces the Martingale strategy, and uses the 3 big data models to test [Spot Martingale and Contract Martingale]:
Model 1: Contract DCA and Spot DCA in a 5-minute operation cycle of rising market
Model 2: Contract DCA and Spot DCA in a 5-minute operation cycle of falling market
Model 3: Contract DCA and Spot DCA in a 5-minute operation cycle of sideways fluctuation
This issue's data test operation standard:
Long DCA: Open a buy position when the market starts, and cover the position when the market falls. You can cover the position up to 5 times, and set a stop loss line when covering the position for the 5th time. When the market rebounds and rises to the target price, sell it once to obtain profits.
Contract DCA: Based on the logic of long DCA, the operation of opening and selling is added. Open a position and sell when the market starts, and cover the position when the market rises. You can cover the position up to 5 times, and set a stop loss line for the 5th time. When the market pulls back and falls to the target price, buy it once to gain profit.
Spot Martingale and Contract Martingale Summary in one sentence:Contract DCA is more suitable for sideways and volatile markets; spot DCA is more suitable for markets with clear upward trends, but both need to be wary of risks.
Both forms of Martingale follow the same basic principle: increase the size of transactions when losing money, lower the average price, and expect the final profit to cover the previous losses. However, they differ significantly in specific operations, risk characteristics, and applicable scenarios. The choice of strategy should be dynamically adjusted according to the trader's risk tolerance and market trends, and reasonable risk control measures should be taken to reduce potential losses.
Both spot and contract Martingale are considered to be strategies that focus on position management. The spot Martingale strategy reduces the average cost by doubling the purchase, so we need to be wary of the risk of continued decline; while the contract Martingale strategy amplifies the returns and risks by doubling the opening positions, so we need to be wary of the risk of liquidation.
The model is: contract DCA and spot DCA under the 5min operation cycle of rising market
Image 1: Contract DCA under the 5min operation cycle of rising market; Source: AICoin
The model is:Contract DCA and spot DCA under a 5-minute operating cycle in a falling market
Picture 3: Contract DCA under a 5-minute operating cycle in a falling market; Source: AICoin
Image 4: Spot DCA in a 5-minute operating cycle during a falling market; Source: AICoin
This model is: contract DCA and spot DCA under the sideways fluctuation of 5min operation cycle
Picture 5: Horizontal Oscillation5minOperation Cycle ContractDCA; Source: AICoin
Picture 6: Horizontal Oscillation5minOperation Cycle SpotDCA; Source: AICoin
Surge and plunge are not conducive to the contract DCA strategy, which is suitable for volatile markets. Among them, the contract short DCA is suitable for volatile & falling markets, and the contract long DCA is suitable for volatile & rising markets. Spot DCA can be obtained in rising markets.
The contract DCA strategy shows strong adaptability in different market environments, especially in the sideways volatile market. Spot DCA performs well in the rising market, but performs poorly in the sideways volatile and falling markets. Contract DCA gains profits through more frequent transactions and higher winning rates, but it may also bring higher risks. Spot DCA trades less frequently and may be more suitable for long-term traders or risk-averse traders.
In general, when their position-scaling parameter is set to 1, they behave very similarly to grids. But when the position-scaling parameter is set to 2 (or more), they may cause a sharp increase in capital requirements and bring great psychological pressure to traders. Contract Martingale, in particular, is more risky due to leverage and may lead to liquidation.
Specifically:
Choose a strategy based on risk tolerance
High risk tolerance: You can consider contract DCA, especially in a sideways market.
Low risk tolerance: You can choose spot DCA, especially in a market with a clear upward trend.
Combined with market trends
Uptrend: Both strategies can be considered, but be careful to stop profit in time.
Downtrend: Use with caution, you may need to adjust your strategy or wait and see for the time being.
Sideways: DCA may be more advantageous.
Dynamic Adjustment
Flexibly adjust strategies according to market changes, and do not stick to a single mode.
Risk Management
Set stop-loss points, control the amount of funds for a single transaction, and diversify transactions to reduce risks.
Combined Strategies
Consider combining DCA with spot DCA to balance risks and returns.
Continuous Learning and Optimization
Regularly backtest and evaluate the effectiveness of strategies, and continuously optimize trading strategies based on new market data.
Pay attention to external factors
In addition to technical analysis, pay attention to external factors that may affect the market, such as macroeconomics and industry news.
By using these strategies reasonably and adjusting them according to personal circumstances and market environment, traders can better manage risks and increase the possibility of gains. However, always keep in mind that the cryptocurrency market is highly volatile, and traders should only invest funds that can withstand losses.
Currently, OKX strategy trading provides convenient and diverse strategy varieties. The OKX spot version and contract version of the Martingale strategy have been optimized to a greater extent in combination with the habits and characteristics of crypto users. Two different creation modes are set for users with different experiences: manual creation and intelligent creation.
Manual creation is that traders set parameters based on their personal judgment of the market. This is mainly suitable for traders with rich trading experience and strong capital strength. Ordinary users are recommended to use the intelligent creation mode. Intelligent creation is that users select the parameters recommended by the OKX system to set the transaction amount and the rhythm of buying according to their personal risk preferences.
It should be mentioned that the parameters recommended by the system are calculated based on historical market conditions and asset fluctuations with the help of the OKX backend algorithm. They are authoritative to a considerable extent and can provide traders with reliable trading references. In addition, drawing on the practice of traditional securities trading to stratify traders, the intelligent creation model controls risks as much as possible, combines the user's asset status and tolerance, and recommends parameters of different risk levels to users according to the three levels of conservative, balanced and aggressive.
How to access more strategy transactions on OKX? Users can enter the "Strategy Trading" mode in the "Trading" section through the OKX APP or official website, and then click on the Strategy Square or Create Strategy to start the experience. In addition to creating strategies by yourself, the Strategy Square currently also provides "Quality Strategies" and "Quality Strategies with Strategy Leads", and users can copy strategies or follow strategies.
OKX strategy trading has multiple core advantages such as simple operation, low handling fees and security. In terms of operation, OKX provides intelligent parameters to help users set trading parameters more scientifically; and provides graphic and video tutorials to help users quickly get started and master them. In terms of handling fees, OKX has comprehensively upgraded the handling fee rate system, significantly reducing user transaction fees. In terms of security, OKX has a security team composed of top experts in the world, which can provide you with bank-level security protection.
How to access AICoin's DCA strategy?
Full-currency DCA strategy: Users can find the "Full-currency DCA" option in the "Strategy" option on the left sidebar of AICoin products. Click here, and on this interface, there is the full-currency DCA strategy recommended by AICoin based on the current market conditions.
Spot DCA strategy: Users can find the "Spot DCA" option in the "Market" option on the left sidebar of AICoin products. Click here, and on this interface, there is the spot DCA strategy recommended by AICoin based on the current user-selected trading pair.
Contract DCA strategy: Users can find the "Custom Indicator/Backtest/Real Trading" option in the "Market" option on the left sidebar of AICoin products. Click here and search for "Contract DCA" in "Community Indicators" to find the code for the fixed investment strategy.
Disclaimer
This article is for reference only and represents only the author's views, not the position of OKX. This article is not intended to provide (i) trading advice or trading recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. We do not guarantee the accuracy, completeness or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/trading professional for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations.
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