【Strategy Q&A】Rate Arbitrage: When the rate changes, should you keep holding? 🧐 When opening a position, the funding rate is very high, but during the holding period, the rate changes, and the original arbitrage space also changes accordingly. So at this point, does this strategy still have value to continue executing? ——Question source: @一土·兑巾 @Gavin— @咖啡奶爸 ❶ First, look at the funding rate High APY is an annualized reference value calculated based on the current rate, which will continue to fluctuate. If the funding rate drops significantly, it means the funding fee income you can earn next will also decrease. ❷ Then calculate profits and costs After the strategy starts, first calculate the four transaction fees from spot buying/selling and contract opening/closing, which serve as the trading costs that this strategy needs to cover. ➡︎ Suppose an arbitrage strategy where both spot and contract values are 1000U. At lv1 level, spot maker fee is 0.08%, contract maker fee is 0.02%, totaling 2U in fees for four transactions. ➡︎ If the contract funding rate in this strategy is 0.1%, settled every 8 hours, expected daily funding fee income is 3U (enough to cover the fee cost). ➡︎ But if spot borrowing is also involved, then borrowing interest rate and holding time must be considered to calculate the interest generated during the same period. After deducting fees & interest, the net profit remains, and you need to evaluate how long it takes to become profitable. 👉 Therefore, after the rate changes, the core is to recalculate: how much more can you earn, how much more you have to pay, and how much will be left in the end. #新手必看：这里有你需要的一切

【Strategy QA Session】Question source @有 余 This question is actually asking: In extreme market fluctuations, buy and sell prices change rapidly, slippage increases, and arbitrage opportunities that initially look good may no longer be profitable after execution. In such cases, how can risk be minimized? 🔗Guide: https://oyidl.co/ul/DeHG7br 🧐 It can be divided into two stages: order placement and strategy operation ❶ At order placement: • Spread rate: First check if the current spread is large enough and if there is sufficient arbitrage space • Fees, borrowing interest, and other potential costs: Calculate if the remaining profit margin after deducting these costs is enough • Market depth and expected execution price: During volatile markets, order book changes quickly, so pay attention to whether the actual execution price deviates significantly from expectations • Settings like overprice, queue price, auto chase order, check interval, pause threshold: These affect whether orders on both sides can be executed smoothly and if execution prices deviate from expectations ❷ During strategy operation, focus on: • Arbitrage profit: How much has actually been earned so far • Fees, borrowing interest: How much cost has been incurred • Total profit: Combine profit and costs to see the overall performance of the strategy • Maintenance margin ratio, estimated liquidation price: Check if the current position risk is still within an acceptable range 👉 Simply put: Before placing an order, first assess if the arbitrage is worth doing; during operation, monitor actual earnings, costs incurred, and whether position risk has increased. #新手必看：这里有你需要的一切

【Strategy QA Special】Question source @玲珑骰子安红豆 —— Arbitrage strategies seek potential profit opportunities by exploiting price differences or rates (Guide: https://oyidl.co/ul/DeHG7br) In theory, as long as exploitable price differences or rates exist, arbitrage opportunities exist. However, profitability depends on whether arbitrage returns can cover the associated costs. 🔸 For example, price difference arbitrage: Trading fees are incurred during buy and sell processes, and the price difference itself fluctuates continuously with the market. Therefore, the strategy operation can focus on changes in the “price difference rate.” If the actual price difference rate keeps narrowing, it means the available arbitrage space is shrinking; at this point, combining data on fees and arbitrage returns helps determine whether the current opportunity is still worth pursuing. 🔹 Now consider rate arbitrage: The core source of profit is the funding rate, so attention should be paid to changes in the current funding rate. If the funding rate keeps declining, the theoretical arbitrage space also shrinks; then, combining fees, borrowing interest, and other costs helps judge whether the remaining profit margin is still sufficient. Therefore, it’s not about the strategy making a wrong judgment and then “intelligently correcting” it by some means, but first checking whether the current arbitrage opportunity still holds: price difference arbitrage looks at the price difference rate, rate arbitrage looks at the current funding rate, and by combining actual returns and trading costs, it judges whether the strategy is still worth running. 🌟 【Capture price differences or rates when opportunities exist, and promptly stop the strategy when the remaining profit margin is insufficient to cover related costs.】 #新手必看：这里有你需要的一切

【Strategy QA Session】Question source @Gavin— ——You can't just look at the win rate; you need to see if the long-term returns are sufficient to cover the risks. The performance of the Martingale strategy is influenced by factors such as position scaling parameters, market volatility, and market conditions. Therefore, a high long-term win rate alone is not enough to determine if the strategy is effective. What really needs to be observed is whether, under different market conditions, the strategy's returns can continuously cover trading costs and whether the risk remains within an acceptable range. 🔴 For example, key points to observe include: • Long-term cumulative returns: whether the strategy can still achieve positive returns after a sufficiently long period; • Maximum drawdown: the largest possible drawdown the strategy might experience under adverse market conditions; • The match between returns and risk: whether the returns from a high win rate are enough to cover losses caused by large fluctuations; • Performance under different market conditions: including sideways, sustained uptrends, and sustained downtrends. In other words, to judge whether a Martingale strategy is effective, you cannot just look at "whether the win rate is high"; you should see if it can continuously achieve returns commensurate with risk over a sufficiently long time, across different market environments, and under significant volatility. ➤ Win rate is an outcome metric but not the sole indicator for judging strategy effectiveness. #新手必看：这里有你需要的一切

【Strategy QA Session】Question source @一土·兑巾 The core of this question is not about looking at these parameters, but about when to stop. From the perspective of strategy goals, it can usually be understood as two situations: 1) Stop the strategy when the expected profit is reached. We can achieve this by setting two parameters when creating the strategy: 【Single Cycle Take-Profit Target】sets the target profit for each cycle. 【Preset Stop Condition】choose "After Cycle Ends" to automatically stop the strategy once the take-profit target is met within the cycle; choose "Price Trigger" to set take-profit based on your expected profit target price. 2) Stop the strategy when the maximum loss you can bear is reached. Provide a safety net for your strategy. If the direction is wrong, set in advance the "Stop-Loss Condition" to limit the maximum loss you can accept for this strategy, using "Market Price" or "Limit Price" for stop-loss. In this way, the so-called "when to stop" is actually: stop when the expected profit is reached; stop when the maximum loss you can bear is reached. In summary, when facing losses, the priority is not a specific indicator, but the risk boundary you set in advance. Once the maximum bearable loss is reached, the strategy should be stopped instead of waiting for the market to reverse. #新手必看：这里有你需要的一切

【Strategy QA Session】Question source @乐川Fight There is no best parameter that fits all market conditions, and parameter settings vary from person to person. How to set them depends on how much capital you are willing to allocate to this strategy and how much maximum drawdown you can tolerate. "Maximum number of add-on positions" depends on how many rounds of decline you are willing to endure for this strategy "Add-on amount multiplier" depends on how fast you want the subsequent positions to grow "Total investment cap" is the maximum amount of capital you are ultimately willing to invest in this strategy 📍 For example, if you have 10,000U principal, plan to allocate up to 2,000U for this strategy, and can accept a maximum loss of 600U from this strategy ➜ First, based on principal and risk tolerance, combined with add-on intervals, deduce the add-on amount per time and the maximum number of add-ons. ➜ Then, when calculating the add-on amount multiplier, consider whether the strategy’s funds can be preserved for later use under different market conditions. • If the multiplier is too high, the position size at low points grows quickly, the average holding cost decreases more significantly, but the budget may be consumed early, leaving no more funds to add positions if the market continues to decline. • If the multiplier is too low, funds can last longer, but the increase in position size at low points is limited. If the market drops rapidly, the maximum number of add-ons may be reached first, resulting in no new add-on space when prices continue to fall. Therefore, parameters are not set in isolation. Essentially, they decide: with limited funds, at what pace should you invest to balance average holding cost, capital occupation, and risk boundaries during varying degrees of market decline. #新手必看：这里有你需要的一切

Q: After deducting trading slippage, fees, and derivative funding rate wear, due to the existence of bankruptcy boundaries, the long-term mathematical expectation of the Martingale strategy is always negative. Is there a hedging solution to this problem? @咖啡奶爸 A: First, it should be noted that no strategy can guarantee absolute profit, but by setting parameters, you can control the strategy's maximum risk and leave enough room for market reversals. This is how the Martingale strategy works: it does not eliminate losses but lowers the average holding cost by adding positions at lower prices, so that the required rebound after a market reversal is smaller. At the same time, it controls the number of added positions and capital input to reduce risk. 💡 Suppose a long strategy is set at BTC-75000U: • Initial margin for opening a position: 1000U • Add position after a 2% drop • Margin per added position: 100U • Position size multiplier for adding: 1.5 times • Maximum number of added positions: 4 ➡︎ After completing 4 added positions, the total margin invested is 1812.5U. Since the new positions are bought at lower prices, the overall average holding cost further decreases. On this basis, combined with fees, funding rates, and other trading costs, the breakeven price is calculated. Once the market reverses and reaches above the breakeven price, the strategy enters the profit zone. However, during strategy operation, with each added position, capital occupation and potential losses increase. If the price continues to fall unilaterally, it is very likely to trigger liquidation before the price reverses. Therefore, parameter settings need to balance "lowering average holding cost" and "controlling capital and risk." Reasonably setting the spacing, amount, and number of added positions can reduce the rebound needed for reversal while keeping the strategy's maximum risk within an acceptable range. #新手必看：这里有你需要的一切