You can, but you need to understand the returns and capital allocation of contract trading versus spot trading.
Most people in the cryptocurrency space come in to trade high-leverage contracts, and after a few days of seeing the price rise, their positions are gone.
Taking last night's Bitcoin price as an example, at 9:33 PM, it suddenly dropped from 97,000 to 94,000 in a straight line. Most novice traders would have lost their positions, but by morning, the price had returned to 97,000, leaving many retail traders in despair.
However, this brings up the topic of spot trading. If you buy at 97,000 and ignore price fluctuations, strictly adhere to the trading strategy—like buying during a big drop and selling during a big rise—you could theoretically profit continuously.
But! Why do we say it's theoretical? Because as a trader, predicting trends is often the simplest thing, while the hardest part is managing one's emotions. Suppose Bitcoin drops from 97,000 to 94,000 again; do you think it's the best time to buy?
Thus, you can attempt to bottom-fish based on the last retracement trajectory, but this market is just like that—there's no bottom. You might see your spot trading position slide from 94,000 all the way down to 90,000; what will you do then?
From my years of experience in cryptocurrency trading, there has never been a shortage of courageous bottom-fishers. Why is it that no one can profit long-term using this method?
There are only two issues: first, the predicted trend caused by news does not meet expectations; second, market sentiment, which is essentially emotional trading caused by news among retail traders and even institutional traders—fear/greed.
Thus, I began to think about how to make trading programmatic and how to let the program take over trading.
No human interference/strict adherence to trading strategies/real-time market monitoring/rational stop-loss and take-profit; these are the advantages of a program, but they are also the disadvantages of programming because a trader's experience or greedy nature cannot be replicated for program execution.
So which would you choose, the fish or the bear's paw?
Is it the annualized return achieved through programmatic trading, or the thrill of participating in human nature's game?
The above views are based on my personal experiences in the cryptocurrency space. Currently, my self-developed quantitative trading program for cryptocurrency contracts has achieved over 50% annualized profit in six months. If you're interested, we can exchange ideas on its usage.
