How to Survive Frigid Market?

Molecular Future always provide valuable things for you. At the end of November, we invited one of the fund managers from XBTING Foundation, Mark, to share with us in Molecular Future community about his unique opinion “how to survive frigid market.”

Mark is mainly engaged in summarization of big data information, financial risk modeling analysis management, and professional futures, virtual currency stock fundamentals and technical analysis.

As shown by the research conducted among our customers, people are concerned about what is crypto funds, how does it work to profit from trading, futures, quantitation, etc.

So we selected some featured answers from Mark as follows, hoping it may help your investment in bear market.

Mark: Hi, everyone. It’s quite happy to be here and make some sharing. I am one of the fund managers from XBTING Foundation.

Molecular Future: Let’s welcome Mark! As wee see, the market shows very poor performance recently. So how do you think about it?

Mark: Typically, high volatility products see much greater increase as well as decrease. So we must be psychologically prepared before we make the investment on it. To be honest, I personally do not recommend too much asset invested on high-volatility products, a small part of money instead will be better.

The bear market can be traced back to early 2018. BTC traded over the counter reached 130 thousand RMB per coin at that time. Makes you crazy before turning you into the dark.

When BTC failed to break the 20,000-USD line, the bearish market did not ever stop it pace, lasting for the whole year til now.

Plus the depressive polices in different countries especially in the middle of the year, BCH hard fork previously, and OKEX’s early delivery of BCH futures a few weeks ago, many investors have lost confidence in the market, which leads to the further collapse of the crypto market.

Molecular Future: Exactly. Investors’ belief counts a lot for the market trend. And you mentioned OKEX’s early delivery of BCH futures contracts. Could you please explain it a bit further?

Mark: OKEX announced that the price of BCH should be referred to that of BAB. But a massive drop off was observed later. BAB was 320RMB while futures was still 400RMB at the moment. So everyone was opening short while due to the price limit system on OKEX, open short is no more available two days before the delivery. So futures market was zero trading. As a result, OKEX announced the early delivery. What’s worse, the announcement was published after action, which caused great loss to institutions and individual users.

Molecular Future: As for the individual investors, what should they pay attention to and what’s the right strategy for bear market?

Mark: Individual investors must learn to stop loss. Set a price to stop loss and strictly adhere to it. Emotion will affect your decision. For example, you always believe that the cryptocurrency you are holding will rise, so you will most probably keep losing money in the bearish trend. 100% increase is required to cover 50% loss. But it’s still difficult to double the price even though the volatility is huge in crypto market sometimes. Short position is also an important strategy. You can hardly earn profits if you don’t know about short position.

It’s very crucial to learn more about finance in frigid market. Some even have no idea about derivative products, which is getting more popularity and can make more benefits for you.

For example, closed funds, opened funds, ETF, futures, share options, etc. It deserves more attention if you want to make more profits.

Molecular Future: Yes. There are more funds and derivative products coming up in the market. XBTING Foundation is also a specialist in this field. Could you please introduce it?

Mark: We have various products like fixed, current, hedge and quantitation. The first three kinds of products are normally seen on the market so I’m going to introduce quantitation for you here. Quantitation mainly consists of CTA strategy, high frequency trading and statistical arbitrage.

CTA is the most popular strategy of quantitation. We modify according to different index such as moving average, trading volume, MACD, KDJ, etc, and then make intersection or union.

High frequency trading always depends on API provided by exchanges, using coding languages like python to enable automatic high-frequency trading. Making orders via API is much quicker than human manipulation.

Statistical arbitrage asks us to find out the relativity among different products. And then open long for these products to profit from the price gap. Mean reversion is the most common strategy of arbitrage.

To introduce hedge, we can see the example here. We suppose there are 2 currencies in foreign exchange market, strong A and weak B. Then we open long for A while open short for B at the same time. If the price goes up, A will gain more increase than B so that we can profit from the rise of A.

On the contrary, if the price goes down, A will fall less than B so we can still profit from B.

This is hedge, an investment reducing the risk of adverse price movements in an asset and profit from it regardless of the market trend.

Molecular Future: Thank you very much Mark. It helps clear the notions for us. That’s the end for the first sharing about how to survive frigid market.

Please stay tuned for the next sharing.

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