At around 3 AM on March 3rd, I inexplicably opened a contract grid neutral strategy (it seems one really shouldn't make decisions at midnight, as the mind can easily short-circuit). After a small profit at the beginning, I now face a massive loss. I want to share my views on the contract grid to help my brothers avoid detours.
First, let me explain to the newcomers in the crypto circle, the ETH contract grid neutral strategy is actually about automatically buying and selling contracts within a set grid range in a volatile market, striving to achieve profit regardless of whether the coin price goes up or down.
However, from my practical experience, this strategy is not as stable as imagined. Take my recent trade for example, created on 2025.03.03, the returns now are truly dismal, with a total loss of 1677.52 USDT and a return rate of -27.96%! The annualized return rate is even as low as -3714.63%, it's like a roller coaster dive.
Although there is a paired profit of 1224.67 USDT, there is an unmatched loss of 2903.17 USDT. With one positive and one negative outcome, the loss is still painful.
I deeply reflected on the issue and would like to share with my brothers:
First of all, ideologically, one must correctly view the concept of the contract grid neutral strategy as not a strategy that profits from both sides, but rather a seemingly neutral strategy that fundamentally lacks hedging risk. At most, it is a directionless grid trading, which means you will incur huge losses in a unidirectional rise or fall. If the price keeps rising, you will continuously establish short positions until you exceed the grid or even face a short liquidation; if the price keeps falling, the strategy will keep buying until it exceeds the grid or even faces a long liquidation.
Secondly, the grid range must be as safe as possible, meaning it shouldn't easily exceed the grid. For example, if the normal volatility is around 20%, the grid range should be set at about 1.5 to 2 times that, ideally set the range at 30-40% or more; your grid density cannot be too high or too low; too high may not cover costs, and too low may result in insufficient transactions, failing to achieve the grid effect, approximately 0.5% or more is about right.
Finally, if there are no issues with the previous two points, you need to consider how long you can rely on the grid's profits to offset the floating loss in a unidirectional market. If the average daily pairing frequency is low, and the recovery is very slow, you might consider terminating the strategy and closing the contract; another situation is if you exceed the grid and predict that the market is about to turn, in this case, terminate the strategy but do not close the contract, leaving the position to wait for the outcome.
In general, the ETH contract grid neutral strategy has its advantages and theoretically can profit in a volatile market, but it is definitely not a magic tool that guarantees profit without loss. In the crypto world, no strategy is universal; everyone must operate cautiously, learn more, and research rather than blindly follow trends. After all, preserving the principal is the most important!
