In the cryptocurrency market, data has always been an important tool for people to make trading decisions. How can we clear the fog of data and discover effective data to optimize trading decisions? This is a topic that the market continues to pay attention to. This time, OKX specially planned the Insight Data column, and jointly with mainstream data platforms such as CoinGlass and AICoin, starting from common user needs, hoping to dig out a more systematic data methodology for market reference and learning.
The following is the second issue, in which the OKX Strategy Team and CoinGlass Research Institute jointly discussed the data dimensions that need to be referenced in different trading scenarios. It involves topics such as capturing trading opportunities and how to cultivate scientific trading thinking. We hope it will be helpful to you.
CoinGlass: CoinGlass is a global cryptocurrency data analysis platform dedicated to providing users with comprehensive market monitoring and in-depth data interpretation services. CoinGlass provides real-time market data, in-depth market analysis, futures and options position data, funding rates, liquidation data and other tools to help traders better understand market dynamics and risk conditions. Through intuitive charts and regular market reports, CoinGlass has become an important tool for global cryptocurrency market analysis.
OKX戦略チーム: The OKX Strategy Team is composed of a group of experienced professionals dedicated to promoting innovation in the field of global digital asset strategies. The team brings together experts in multiple fields such as market analysis, risk management and financial engineering. With deep professional knowledge and rich business experience, it provides solid support for the strategic development of OKX.
1. For novice users, how many types of data dimensions are of high reference value?
CoinGlass: Novice users usually lack trading experience and expertise, so they prefer to use simple, intuitive, and easy-to-understand data indicators. These indicators are usually of high reference value because they can quickly reflect market sentiment and trends. For example, the Greed and Fear Index, the Long-Short Ratio, the inflow and outflow of ETF funds, and the change in CMEs open interest are all data indicators that novice users can quickly understand. These indicators intuitively reflect the market sentiment and trader behavior, helping users quickly understand the market trend and make wise decisions.
So how can they quickly understand this simple data? Here are some tips:
First, always pay attention to these indicators, such as the inflow and outflow of ETF funds, the greed and fear index, and the long-short ratio. When these indicators change, use chart tools to intuitively analyze the relationship between indicator changes and price trends.
Secondly, look at the historical trends of these indicators and compare them with the price chart to understand how the changes in these indicators correspond to market trends.
Third, learn basic analysis methods, including mastering the principles and methods of basic technical analysis and market sentiment analysis.
Fourth, pay more attention to market news and analysis from cryptocurrency experts to accumulate more market knowledge and experience, which will help you to have a deeper understanding of the market background and market trends.
Finally, practice through simulated trading and use data for review to improve the ability to interpret and apply data. Through these methods, you can gradually improve your understanding and application of market data, so that you can be more confident and wise in trading decisions.
OKX戦略チーム: We have summarized the following four aspects and corresponding analysis tips for users’ reference:
First is the price trend data. Current price, historical price trend, moving average (MA), relative strength index (RSI), Bollinger Bands, etc. belong to this category of data. This data can help users understand the basic trend of the market and identify the timing of buying and selling. For the moving average (MA), when the price is above the MA, the market may be in an upward trend; when the price is below the MA, the market may be in a downward trend; and when the short-term MA crosses the long-term MA, it may indicate a trend reversal. In terms of the relative strength index (RSI), if the RSI is greater than 70, the market may be overbought and should consider selling; if the RSI is less than 30, the market may be oversold and should consider buying. In the use of Bollinger Bands, when the price is close to the upper track, it may face resistance and should consider selling; when the price is close to the lower track, it may get support and should consider buying; and when the bandwidth of the Bollinger Bands narrows, it may indicate that a major breakthrough is about to occur.
The second is the volume data. The volume data reflects the market activity and helps users judge the strength and sustainability of the trend. The basic principle of the relationship between volume and price is that an increase in volume and price indicates that the upward trend may continue, while an increase in volume and a decrease in price may indicate a deeper decline and a trend reversal. In the volume change pattern, if the market is relatively sluggish in the early stage, both the volume and price are at a low level, and the volume gradually increases and the price rises slowly, this may indicate that large funds are gradually entering the market and the market may be forming a new upward trend. When trading activity increases, more traders participate in the transaction, which may indicate a trend change signal. The huge volume of transactions after a deep decline may mean that the selling pressure is reduced, buying is pouring in, and the market may begin to stabilize, but it does not mean that the price will rebound immediately. The counter-trend volume of individual currencies in the overall market decline may reflect the special factors of the currency, and it is necessary to combine fundamental analysis to judge its sustainability and subsequent trend.
Then there are the fundamental data. Project announcements, partnerships, technological progress, token economics, and regulatory developments are all examples of fundamental data. This data provides information about the long-term potential and risks of a project, which helps make more informed trading decisions. Users should pay attention to important announcements to assess their potential impact on project development; understand technological progress, pay attention to the completion of development milestones, and assess technical feasibility; analyze token economics to understand the supply mechanism, inflation rate, and purpose of tokens; and track regulatory developments to assess the potential impact of regulatory changes on projects.
Finally, there is the market sentiment data. Social media mentions, the fear and greed index, and the funding rate of the derivatives market are all market sentiment data. These data can reflect the psychological state of traders and help to determine the possible reversal points of the market. A sudden increase in social media popularity may indicate short-term price fluctuations, while continued high popularity requires attention to whether there is excessive speculation. In terms of the Fear and Greed Index, extreme fear (0-25) may be a buying opportunity, and extreme greed (75-100) may be a selling opportunity. In terms of funding rates, a continuous high positive rate indicates that bullish sentiment is strong and may face a pullback, while a continuous negative rate indicates that bearish sentiment is strong and may rebound.
2. For advanced users, diversified asset allocation is important. How can it be helpful?
CoinGlass: We recommend that advanced users start from the following dimensions:
The first is the screening of potential coins. Through price, market value, circulation, exchange listing and other conditions, we screen out the coins with growth potential and make precise trading arrangements. This screening method can help traders find coins with higher potential and achieve better trading returns.
The second is asset portfolio matching. The key to asset portfolio matching is to use correlation analysis to select assets with low correlation for allocation. In this way, the risk of the trading portfolio can be effectively dispersed, and the overall stability and rate of return can be improved. Selecting assets with low correlation can ensure that when some assets fall, other assets may rise, thereby balancing the overall return.
The next is the derivatives arbitrage opportunity. Use the Funding Rate Arbitrage Calculator to find arbitrage opportunities and conduct funding rate arbitrage to increase the yield of the overall assets. Funding rate arbitrage is a relatively low-risk strategy that can generate stable returns in market fluctuations.
Next is trading portfolio monitoring. Using the trading portfolio monitoring tool, you can test the profits and risks of different trading plans, and review and adjust them regularly to optimize the configuration strategy. This method can help traders understand the performance of the trading portfolio in real time and adjust the strategy in time to adapt to market changes.
Finally, there are risk management tools. Use various risk management tools and techniques, such as stop-loss orders, hedging strategies, etc. to control trading risks. Effective risk management is an important means to ensure that traders can keep their assets safe in market fluctuations.
OKX戦略チーム: According to our observation, for this group of people, the choice of strategic products is very important. Generally speaking, commonly used tools include fixed investment strategy, combination arbitrage and large order splitting. Fixed investment strategy reduces the overall holding cost through periodic purchases, combination arbitrage reduces trading risks through hedging arbitrage, and large order splitting reduces market impact and transaction costs by splitting large orders into small orders. These strategies, combined with their respective characteristics, can help large capital users to diversify their allocations more efficiently and achieve stable trading goals.
The fixed investment strategy (multi-currency portfolio, regular purchase) is a strategy to reduce the overall holding cost through periodic purchases. Continue to buy in batches at low prices during the price decline, and sell at a profit when the price rebounds, repeating the cycle over and over again, and continuously circulating arbitrage.
Combination arbitrage is a strategy that helps users hedge and arbitrage and reduce trading risks. This strategy can choose to trade different or the same currencies/markets at the same time, and automatically and promptly help users take profits by taking advantage of market fluctuations and the price difference between various trading products. Combination arbitrage strategies can effectively help users reduce the potential risk of losses in response to future market uncertainties.
Large order splitting is also a convenient trading strategy for large traders. This strategy can help users split large orders into small orders and place orders in batches. Through the intelligent setting of the strategy, the impact of large orders on the market can be minimized, while maintaining a higher average transaction price level, thereby greatly reducing the transaction costs of large traders.
3. Timing is the key to success. How should traders identify the best trading opportunities?
CoinGlass: It is very important to seize the opportunity. In the previous question, we introduced some key data dimensions, which will play a vital role in helping users find the best time to buy and sell. Below we briefly describe the data and analysis methods that can be used as references in the two stages of position building and stop-profit and stop-loss.
During the position building phase:
The liquidation heat map shows that when the liquidation intensity is concentrated in a specific price range, the price may move to that area, and traders can build positions in the direction of the highly concentrated liquidation level. If there is a large inflow of ETF funds, such as the daily inflow of funds into the BTC ETF far exceeds the average, this indicates that the markets interest in BTC has increased, and traders can consider building or increasing positions. The long-term lower than the benchmark rate (0.01%) of the Bitcoin funding rate usually indicates that the market is in a consolidation or near the bottom stage, and it is suitable to establish a position at the bottom. A substantial increase in open interest indicates that the market has ushered in more funds and increased market activity. This situation usually occurs before an upward trend. For example, the sudden increase in the open interest of CME Bitcoin futures by 10% means that institutional traders are very confident about the future trend of the market and can consider building or holding positions.
Long-term low trading volume usually indicates that the market is in a consolidation or bottoming area, which is suitable for opening a position. Increased spot inflows indicate that the buying demand in the market has increased, which is usually a buy signal. In this case, you can consider opening a position to seize the opportunity of market rise. When the long-short ratio is low, it means that the shorts are dominant, which may trigger short covering, leading to price increases. It is a good time to open a position. When the Greed and Fear Index is below 20 for a long time, the market is in a state of extreme fear, prices are depressed, and there are opportunities to buy at the bottom. It is a good choice to gradually open a position.
In the stop-profit and stop-loss stage:
Liquidation heat maps can help traders find the positions of take-profit and stop-loss. Setting take-profit and stop-loss when the price is about to enter a large amount of liquidation areas can lock in profits more safely. If ETF outflows increase, such as the daily outflow of BTC ETF significantly exceeds the average, it may indicate that market sentiment is turning pessimistic, and you can consider reducing positions or stop-loss. High funding rates are warning signs. For example, the funding rate of Bitcoin futures exceeds 0.1%, indicating that the market is overly bullish. If the high funding rate continues for a long time, it may trigger a market adjustment or even a collapse.
On the contrary, a long-term low funding rate indicates that market sentiment is too depressed and there may be excessive selling. The market often reverses unexpectedly, bringing potential trading opportunities. For example, a sudden decrease of more than 10% in the open interest of Bitcoin contracts reflects a lack of market confidence, which is suitable for reducing positions or taking profits and stopping losses. A rapid drop in prices leads to a large number of liquidations, and the market may rebound quickly. Traders can enter the market when the market bottoms out. An increase in spot outflows indicates an increase in market selling pressure, which is a signal for taking profits or stopping losses. A large amount of selling may cause prices to fall. Taking profits can lock in profits before prices fall, while stopping losses can avoid greater losses.
When the long-short ratio changes significantly, it usually means that market sentiment is extremely volatile and prices are likely to fluctuate violently. Traders need to be vigilant, adjust their positions, and set up stop-profit and stop-loss orders to cope with drastic market changes. When the Greed and Fear Index is above 80 for a long time, the market is in an extremely greedy state and prices are artificially high. You can gradually reduce your positions or take profits because the market may face the risk of a correction.
These data dimensions can help traders build positions at the right time and adjust strategies in time to achieve better returns and risk management. However, it should be made clear that when we look for the best time, we should use multiple data indicators to help traders predict market changes more comprehensively, reduce the misleading effects of a single indicator, and improve the accuracy and efficiency of decision-making.
OKX戦略チーム: Regarding this issue, we recommend that traders use a combination of position propensity, basis, and technical indicators. Traders can more accurately grasp the best time to buy and sell, and then use profit/risk tools to objectively grasp the timing of taking profits and stopping losses.
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Long Short Ratio:
Position tendency reflects the long-short ratio of market participants. A high long ratio usually indicates that market sentiment is optimistic and traders tend to buy; a high short ratio indicates that market sentiment is pessimistic and traders tend to sell. By analyzing the position tendency, users can determine the main trend and sentiment of the current market, and thus choose the right time to open a position.
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Basis:
Basis refers to the difference between the futures contract price and the spot price. Basis can be positive (futures price is higher than spot price) or negative (futures price is lower than spot price). Basis reflects market participants expectations of future price changes. If the basis is positive, it usually means that the market expects future prices to rise (contango); if the basis is negative, it usually means that the market expects future prices to fall (backwardation). Basis can be used to monitor market sentiment and develop arbitrage strategies. For example, a rapidly rising basis may indicate bullish market sentiment, while a rapidly falling basis may indicate bearish market sentiment.
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Technical Indicators – Overbought/Oversold
Through technical indicators such as the Relative Strength Index (RSI) and the Stochastic Oscillator, users can determine whether the market is overbought or oversold. When the RSI is above 70, the market may be overbought and prices may pull back; when the RSI is below 30, the market may be oversold and prices may rebound. These technical indicators help users choose the right time to open a position when market sentiment is extreme.
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Return/Risk Tools
This tool can help users visualize and manage the potential gains and risks of each transaction. Users can set take-profit and stop-loss points, calculate the risk-reward ratio of each transaction, and formulate a reasonable exit strategy. By using this tool, users can better control risks and ensure the best returns in market fluctuations.
4. Overall, are there any underestimated data indicators?
CoinGlass: Different traders have different trading methods, risks they can take, and trading goals. So they will also choose different data indicators to analyze the market. Changes in market environment and market conditions will also affect the value of certain indicators, making them more meaningful in certain periods and less important in other periods.
Although each indicator has its unique role and significance, in actual application, a single indicator is often difficult to fully reflect the market situation.
Therefore, it is recommended that traders consider data indicators from multiple dimensions, conduct comprehensive analysis and comprehensive judgment, so as to more accurately grasp market trends and trading opportunities. The comprehensive use of multiple data indicators, such as fundamental data, technical analysis indicators and market sentiment indicators, can help traders understand the market more comprehensively, reduce the misleading effects of a single indicator, and improve the accuracy and efficiency of decision-making.
OKX戦略チーム: The following data indicators may be underestimated in the cryptocurrency market, but they are relatively important for market analysis and trading decisions:
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ETF Inflows and Outflows
The inflow and outflow of funds in cryptocurrency ETFs can reflect the market attitude of institutional traders. Large amounts of funds flowing into ETFs usually indicate that institutional traders are optimistic about the market outlook, while fund outflows may indicate that institutions have weakened confidence in the market. Analyzing the fund movements of ETFs can help users determine the medium- and long-term trends of the market.
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Options Market Data
Options market data include implied volatility, call and put options holdings, etc. These data reflect the markets expectations of future price fluctuations. Options market data can provide forward-looking indicators of market sentiment. For example, changes in implied volatility can foreshadow large price fluctuations, and an increase in call options may indicate bullish market expectations.
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Stablecoin Flows
The inflow and outflow of stablecoins (such as USDT and USDC) can reflect the capital flow in the market and the risk aversion needs of traders. When a large amount of stablecoins flow into the exchange, it may indicate that traders are ready to buy cryptocurrencies; on the contrary, the outflow of stablecoins from the exchange may indicate that traders are cashing out. Analyzing the flow of stablecoins can provide clues to the movement of funds.
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Network Effect Metrics
Network effect indicators include the number of active users, developer activity, social media attention, etc. These indicators reflect the network effect and ecosystem health of blockchain projects. Strong network effects usually mean higher project stickiness and growth potential, which is suitable for medium- and long-term trading decisions.
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DeFi Activity Metrics
Including total locked value (TVL), number of users of DeFi protocols, lending and liquidity provision, etc. DeFi activity indicators reflect the health and growth potential of the decentralized financial market. High TVL and active user participation generally indicate strong demand and growth potential in the DeFi market.
5. How to cultivate a more scientific trading mindset?
CoinGlass: When it comes to developing a scientific trading mindset, we need to improve ourselves through systematic learning and practice. First of all, it is crucial to remain objective and rational. Make a detailed trading plan and execute it resolutely so that we can be free from the influence of market sentiment. However, it is not easy to do this. Secondly, learning data analysis and risk management is an essential step. Mastering technical analysis and fundamental analysis tools, and learning to set stop loss and take profit points can help us better cope with market fluctuations and ensure the steady development of our transactions.
Of course, accumulating trading experience is also the key to success. Recording the reasons, processes and results of each transaction, summarizing and reflecting on them can help us continuously improve our trading strategies. However, the market is changing rapidly, and we need to keep an open mind. We should always pay attention to industry news and experts opinions, and continuously update our knowledge to better grasp the pulse of the market.
In addition, formulating clear trading rules and strictly abiding by them can effectively avoid making wrong decisions due to greed or fear. Through simulated trading, we can fully prepare, verify and improve our trading strategies before actual combat, thus reducing the risks and losses in actual combat.
Finally, regular review and adjustment of trading strategies is the key to continuous improvement. According to market conditions and experience, timely optimize our trading strategies to ensure that they always remain effective and adaptable. Through these efforts, we can gradually cultivate a more scientific trading mindset and improve the success rate and efficiency of trading.
OKX戦略チーム: From our experience, to become a mature trader, you need to improve the following three abilities:
The first is to master the basic data and indicators. For example, understanding macro trends is key, including understanding basic economic indicators (such as GDP, inflation rate, interest rate, etc.) and their impact on the market, paying attention to the impact of global geopolitical situations and major events on the cryptocurrency market, and understanding the cryptocurrency market cycle and long-term trends. Price and technical analysis are also essential. In-depth use of common technical indicators (such as moving averages, RSI, MACD, Bollinger Bands, etc.), mastering the identification methods of trend lines, support levels and resistance levels, and understanding the identification and analysis methods of market structures (such as highs, lows, trend channels, etc.). In addition, in-depth fundamental analysis is required, learning and analyzing the white papers, team backgrounds, and technical roadmaps of cryptocurrency projects, in-depth understanding of the principles of token economics, including supply mechanisms, deflation/inflation models, usage scenarios, etc., and continuous attention to industry dynamics, technological innovation, and changes in the regulatory environment.
The second is to develop analytical and decision-making skills. Maintaining critical thinking is an important part of this. Learn to question and verify information sources, especially market hot spots on social media, develop the ability to think from multiple perspectives, consider possibilities that are contrary to your own views, learn to identify signs of market sentiment and overreaction, develop independent thinking skills, and do not blindly follow expert opinions. Build a systematic trading strategy, develop a clear trading plan based on personal risk tolerance and trading goals, set clear entry and exit rules, including stop loss and take profit points, and learn to use different order types (such as limit orders, market orders, conditional orders, etc.) to execute strategies. Establish strict trading discipline, develop the habit of checking and analyzing before each transaction, avoid impulsive trading, strictly implement pre-established trading plans and risk management rules, learn to control emotions, especially when facing large profits or losses, and establish a trading log to record the reasons, results, and emotional state of each transaction.
Finally, practice and continuous improvement. Conduct systematic review and optimization, regularly review trading records, analyze the reasons for success and failure, use quantitative methods to evaluate strategy performance, such as Sharpe ratio, maximum drawdown, etc., continuously optimize trading strategies based on market changes and review results, learn to learn from failure, and regard each loss as an opportunity for improvement. Maintain learning and market sensitivity, pay attention to the views of industry-leading analysts, and cultivate the ability to independently verify, continue to pay attention to new financial technology developments, such as DeFi, NFT, cross-chain technology, etc., learn cross-market analysis, and understand the relationship between traditional financial markets and cryptocurrency markets.
結論
The above is the second issue of the Insight Data column launched by OKX, focusing on the different data dimensions that need to be referenced in different user scenarios. We hope to provide a systematic data methodology for traders with different experience values, so as to better grasp the pulse of the market and make wise trading decisions. In future series of articles, we will continue to explore more practical data usage/analysis methods to provide references for traders to learn trading.
リスク警告と免責事項
This article is for reference only. This article only represents the authors views and does not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. 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/investment professionals for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations
This article is sourced from the internet: Insight Data Issue 02 | OKX CoinGlass: How to mine valuable data and cultivate mature trading thinking?
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