Explore textbook modular strategies
Aiming to achieve value on a medium and long term time horizon
Bypass day-trading knife-fights
Vanilla Momentum
TLDR If the price goes up at an ever increasing pace, increase the weight of that token in the pool
Works best with: Large cap cyclical coins and tokens
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The father of this strategy once said far more money is made buying high and selling at even higher prices than buying low and selling high. Momentum trading is a staple of quantitative hedge funds and Commodity Trading Advisors. More recently, momentum ETFs have arisen as it can be argued that the level of active management needed is minimal.
Channel following
TLDR expect small deviations from a price trajectory to revert but act fast on larger movements
Works best with: Large cap cyclical coins and tokens
Often associated with weighted moving averages, this strategy expects a stable channel where prices can vary - allowing to buy low and sell high within the accepted range. However professional traders understand that a price trajectory can become stale and if the price exits the projected channel you need to act fast to exit a freefall position or increase weight of a now mooning token.
Power channel
TLDR ignore the noise of small price movements, act fast on large price movements
Works best with: Small cap tokens and coins.
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Somewhere between vanilla momentum and channel following, there is an argument that small price movement noise distorts or delays acting on a good momentum signal. This strategy addresses that by ignoring those small price movements. Modelling has shown this is a particularly good approach for small cap tokens and coins that can suddenly moon but whose day to day prices are erratic.
Minimum Variance
TLDR you want to hold the least volatile constituent
Works best with: Stable Coins
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Modern Portfolio Theory is a foundational economic theory of asset management proposed by
Harry Markowitz in 1952. Simply put, the theory uses statistical analysis comparing constituent properties to each other to meet a given statistical target. In this case the aim is to reduce the variance of the portfolio as a whole.
Mean Reversion
TLDR deviations will revert back to the mean. Buy below mean and sell higher than the mean.
Works best with: Tokens or coins in bear markets
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This economic principle states that given a long enough period of time prices tend to revert to the historic mean. This strategy involves identifying how long that period of time is and over what historic timeframe the mean should be calculated over. This is a much more refined strategy that can be considered market cycle specific and likely should not be used by itself.