Bybit Arbitrage is a trading tool that simplifies arbitrage trading by capitalizing on funding rate and price differences.

If you're seeking consistent returns with minimal risk, Bybit Arbitrage is the perfect ally.

 This robust tool empowers you to generate regular profits with minimal risks by capitalizing on price disparities across different markets. Its user-friendly interface lets you easily spot and exploit these differences, so that you can execute flawless arbitrage trading in the crypto market with confidence. Read on to learn how Bybit Arbitrage makes arbitrage trading an effortless way for you to achieve low-risk gains.

 is the buying and selling of the same or similar asset(s) at the same time across different markets to earn from slight price deviations. This act of purchasing an asset at a fixed price — while simultaneously selling it at a higher price — allows a trader to instantly make profits without any risks. 

While arbitrage trading has long been a staple in traditional financial markets, such as stock and forex, the advent of crypto trading has propelled arbitrage trading to new heights — thanks to the heightened volatility of the crypto market. Additionally, unlike traditional stock markets, crypto markets are traded 24/7, offering more opportunities for arbitrage traders to reap profits from the price gaps across exchanges and markets. 

 across exchanges or within a single exchange. Keep in mind that if you opt to arbitrage trade across different platforms, accessing your profits may prove to be complex, due to the need to transfer your assets between the exchanges, which can take up to several days to complete. On the other hand, arbitrage trading on a single platform is more straightforward — but more competitive as well.

There are multiple arbitrage trading strategies, but the most common ones in the crypto market include funding rates arbitrage, spot-futures arbitrage and futures arbitrage. 

Funding rates arbitrage allows traders to profit from variations in funding rates between 

 contracts. In contrast, spot-futures arbitrage enables traders to profit from price disparities between the spot and 

 for the same asset. Meanwhile, futures arbitrage involves profiting from price discrepancies between futures contracts with different expiration dates.

Bybit Arbitrage is a trading tool that helps traders identify arbitrage trading opportunities in two ways: funding rate and spread. 

The user-friendly interface organizes trading pairs based on either funding rates or spreads in different markets, so that traders can easily spot disparities in funding rate or price across the markets at a glance. 

Bybit Arbitrage is exclusively available to 

 mode. It facilitates arbitrage trading for USDT Perpetual, USDC Perpetual and USDC Futures contracts, thereby allowing you to enjoy arbitrage trading opportunities between USDT 

Spot pairs and USDT Perpetual pairs, or USDC Spot pairs and USDC Perpetual/Futures pairs. 

The Funding Rate Arbitrage feature exploits differences in funding rates between the Spot and Perpetual/Futures markets on the Bybit exchange. With the Funding Rate feature, traders can earn funding fees while simultaneously managing their positions in order to minimize potential losses and maximize gains through positive and negative arbitrage strategies.

Funding rates for the different trading pairs are listed in descending order. This helps traders to easily leverage the interest rate differential between Spot and Perpetual/Futures contracts.

The Funding Rate feature also allows you to 

 orders (with the same amount, but in different directions) in both Spot and Perpetual/Futures, which enables you to earn funding fees while mitigating potential losses (with potential gains).

holders in Futures/Perpetual contracts pay short position holders. You can leverage this situation by executing a positive arbitrage, which involves

 buying a Spot pair and taking a short position in 

Perpetual to earn steady funding fees. Alternatively, if the funding fee is negative, short position holders pay long position holders. In this case, you would perform a negative arbitrage by shorting a Spot pair and going long in a 

The Spread Arbitrage feature helps traders capitalize on price discrepancies between different markets for the same cryptocurrency asset. With this feature, you can easily compare the market prices of an asset traded across various trading pairs and contracts. While Spread Arbitrage may be similar to spot-futures arbitrage, it offers more arbitrage opportunities since it covers a broader range of markets, unlike spot-futures arbitrage, which targets specific markets

With Spread Arbitrage, the aim is to profit from the eventual price convergence as you buy the crypto asset at a lower price in one market (e.g., Spot) and sell it at a higher price in another market (e.g., Futures). 

As the futures price will eventually align with the Spot price when the contract expires, you’ll be able to take advantage of the simultaneous price disparity for the same asset.

In order to trade with Bybit Arbitrage, you’ll first need to 

. Currently, Bybit Arbitrage is exclusively accessible via the 

 for the web version, which will be launched soon!

Bybit Arbitrage offers multiple advantages.

Bybit Arbitrage is a powerful tool for traders seeking low-risk gains in the volatile crypto market. With its intuitive interface and exclusive features, traders can effectively leverage funding rate and price differences to maximize profits while minimizing risks. Bybit Arbitrage offers diverse benefits that make arbitrage trading more accessible and profitable than ever before.

Beginner

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How to Use Bybit Arbitrage to Achieve Funding Rate and Price Difference Arbitrage

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of Ether and allows investment through traditional stock markets. Learn more.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) gave the green light to a number of Bitcoin Spot exchange-traded funds (

), sparking optimism that similar approval might be extended to Ethereum Spot ETFs. Adding to the excitement, news of Ethereum Spot ETF approval in Asia’s first region has heightened anticipation for a potential approval and launch in the U.S. However, despite the buzz, some industry observers remain skeptical. This article explores the potential impact of Ethereum Spot ETF approval on the broader crypto market.

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of 

 and allows investment through traditional stock markets. It offers investors a way to invest in Ether without having to actually buy or hold the asset itself.

An Ethereum Spot ETF operates by pooling investor funds to purchase Ether, which is held in reserves by the ETF.

Rather than navigating the complexities of 

 and exchanges, investors buy shares of the ETF through regular brokerage accounts, just as they would with traditional stocks. These shares represent a stake in the Ether held by the ETF, providing a simple and regulated way to own Ethereum indirectly.

In order to create ETF shares, authorized participants — usually financial institutions — purchase Ether in exchange for ETF shares of equal value, which are then sold onto the market. An authorized participant can also redeem shares by buying enough ETF shares and exchanging them for Spot Ether and taking those shares away from the market.

As a result, the price of ETF shares tends to fluctuate in line with Ethereum's Spot market price. If it didn’t, there would be an 

 opportunity to profit from any mispricings in the ETF price. However, it’s still theoretically possible for the ETF to trade at different prices simply because of supply-and-demand factors.

ETFs as securities are regulated by the SEC, so an Ethereum Spot ETF provides a regulated product that investors can purchase. By contrast, Spot Ether is being investigated by the SEC to determine whether it should be classified as a security, and currently lacks regulatory clarity. 

This setup offers numerous benefits for investors. It simplifies the investment process, allowing anyone with a brokerage account to invest in Ethereum without setting up a crypto exchange account or managing storage. This can save time and give some investors greater peace of mind. An ETF structure also provides the regulatory clarity that institutional investors need, which can enhance liquidity and trading volumes.

Security is paramount in the realm of cryptocurrency, and the ETF provider takes it seriously. To safeguard Ether holdings, ETF providers employ a combination of 

 and insured custodial services. As a result, they could potentially minimize the risk of theft or loss that individual crypto investors may encounter.

The Ethereum Spot ETF bridges traditional finance (TradFi) and the exciting (but still growing) cryptocurrency space. It offers the security and ease of trading associated with traditional financial markets while opening up investment opportunities in Ethereum for a broader audience.

Both excitement and regulatory scrutiny characterize the current landscape of Ethereum Spot ETFs. Major financial institutions like 

 and Fidelity have submitted applications for these ETFs to the SEC. Still, decisions have been delayed, with the next 

If applicants begin updating their filings by April, this may indicate they’re incorporating feedback from the regulator, which could be interpreted as a positive sign. However, a lack of updates to filings could indicate that the SEC isn’t maintaining the same level of discussions with issuers that led to its 

Another challenge is that the SEC is still investigating whether Ether should be classified as a security, especially since it transferred its consensus mechanism to 

. Earning rewards through staking could meet criteria that determine whether an asset is a security. Ethereum also provides a foundation for 

 (DeFi), which could add to the complexity of the review. 

Analysts' opinions vary regarding the likelihood of ETH ETF approval. One Bloomberg analyst, for instance, 

 chance of approval by May. However, the SEC's recent silence might hint at a less favorable outcome.

The approval of Ethereum Spot ETFs is eagerly awaited because it could mirror the impact of Bitcoin Spot ETF approval, which led to an influx of capital in the market. It would mark a pivotal milestone, likely to attract increased investment and further validate cryptocurrency. The crypto community is closely monitoring these developments, as the coming months will be crucial in shaping the future of Ethereum investment opportunities.

 was recently given to the first Spot Bitcoin and Ethereum ETFs in one of the Asian regions. This landmark decision positions the city as a trailblazer in the Asian financial landscape, embracing the integration of popular cryptocurrencies into mainstream investment avenues.

This milestone has sparked excitement within the crypto community, indicating a positive reception toward digital assets in that region. Analysts believe this move could set a precedent for other jurisdictions to follow, potentially leading to broader acceptance and recognition of cryptocurrencies as a legitimate asset class.

These newly approved ETFs are expected to attract a wave of fresh investors — both retail and institutional — by offering a regulated and familiar investment option for exposure to cryptocurrencies. This growth of interest could increase stability in the crypto markets, possibly influencing the price movements of Bitcoin and Ethereum in the region.

The timing of this approval is noteworthy, considering that the U.S. could also be on the cusp of approval of an Ethereum Spot ETF. If this proactive approach inspires other financial centers beyond the U.S. to consider similar approvals, it will palpably contribute to the global expansion and maturation of the cryptocurrency market.

Current Impact of Ethereum Spot ETF Applications on the Crypto Market

The buzz surrounding Ethereum Spot ETF applications is noticeably affecting the crypto market, particularly Ethereum's price and overall sentiment. Submission of new ETF applications to the SEC has coincided with an 

, pushing it to around $3,700. This uptick reflects the market's optimism and positive sentiment regarding the potential for easier access to Ethereum. However, the market has exhibited some volatility as well, with Ether dropping over 14% in a week in early April. 

Despite these fluctuations, there's a general expectation that ETF developments would significantly impact Ethereum's price dynamics, similar to what was observed with the recent Bitcoin Spot ETF approvals. Moreover, the recent approval of cryptocurrency ETFs has further fueled optimism and positive expectations for increased investment inflows and a broader recognition of cryptocurrencies.

To sum up, the current impact of Ethereum Spot ETF applications on the crypto market is marked by heightened anticipation along with some volatility. Ethereum's price is responding to changes in the regulatory landscape and the potential for broader adoption of cryptocurrency-based investment products.

What Will It Mean if an Ethereum Spot ETF Application Is Approved?

The approval of an Ethereum Spot ETF application by the SEC would mark a significant milestone for the cryptocurrency market, especially for Ethereum. Following are some of the potential benefits.

Drawing parallels to the earlier Bitcoin Spot ETF approvals, some pundits expect an initial surge in Ethereum's price following the expected announcement, reflecting renewed confidence and interest in Ether as an asset. Over the long term, Ethereum Spot ETFs could contribute to growth and stability, similar to the impact that Bitcoin Spot ETFs have had on BTC’s price.

However, there are key differences to consider. The SEC's cautious stance on Ethereum — notably because of its PoS consensus mechanism — could influence the approval process and subsequent market reactions. In addition, Ethereum's unique ecosystem, including its role in DeFi and 

, could lead to different market responses as compared to those following the Bitcoin Spot ETF approvals.

The potential approval of Ethereum Spot ETFs is a crucial turning point for the crypto market, promising easier access, increased investment and greater legitimacy. Although short-term price fluctuations may occur, the long-term effects could echo the positive growth recently witnessed with Bitcoin Spot ETFs, promoting a more mature investment environment for Ethereum.

Intermediate

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Ethereum Spot ETF Approval: Its Impact on Crypto Markets

Grayscale Investments has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca.

Daily Top Performer — Automata Network (ATA)

The SPX index is up 0.02%, investor focus on earnings and U.S. interest rates continues. The broader cryptocurrency market is down, with Bitcoin and Ether dropping by 3.78% and 2.41%, respectively in the past 24 hours.

Today’s outperformer is ATA, which jumped 8.9% after Automata launched Multi-Prover AVS on Eigenlayer Holesky Testnet to boost decentralized security.

Automata Network (ATA), founded in 2019, is a Web3 platform providing private web services for decentralized applications, focusing on secure, anonymous transactions and governance. Key features include a private voting system and MEV minimization to enhance user privacy and security. Automata's Multi-Prover AVS, which utilizes TEE Coprocessors to enhance security, is now available on the Eigenlayer Holesky testnet. This system employs the TEE Prover as a secondary security measure in decentralized systems. Operators, restakers, and developers are encouraged to learn more about this advancement on their website.

Check Out the Latest Prices, Charts, and Data of 

Grayscale Investments, the world's largest crypto asset manager, has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca. This filing follows NYSE Arca’s application and is a crucial step in the regulatory process required for offering shares continuously upon approval. The shares will not be sold until the registration is declared effective, and this offering is subject to the Securities Act of 1933. Grayscale emphasizes that the trust, not registered under the 1940 Act, involves high risk and volatility, is focused solely on Ethereum, and does not offer direct investment in Ethereum.

BlackRock's spot bitcoin ETF, IBIT, has significantly impacted the firm's overall ETF flows, comprising 24% of its total. Eric Balchunas, Bloomberg's Senior ETF Analyst, highlighted the fund's success during a panel on Hong Kong's newly approved spot crypto ETFs. Since its launch in January, IBIT has attracted consistent inflows for over 70 days, accumulating more than $18 billion in assets under management and becoming one of the most successful ETFs in history. The IBIT fund is second only to Grayscale's ETF in terms of assets but has seen remarkable trading volume along with other spot bitcoin ETFs, totaling nearly $230 billion.

Gamium, supported by Parachain Ventures, DAO Maker, and Mr. Beast among others, has its token $GMM listed on major exchanges with a fully diluted valuation of around $43M. The platform is promoting a beta points airdrop to reward early users, where participants can sign up and earn points through various activities like launching an MST, trading, daily logins, and referrals. Details on point earning and distribution are available in a dedicated blog post. However, potential users are cautioned to research due to the inherent risks associated with DeFi protocols and trading.

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Grayscale Files for SEC Registration to Convert Ethereum Trust into a Spot ETF on NYSE Arca

Sharky is a Solana-based lending and borrowing DeFi solution that utilizes NFTs as loan collateral.

Cryptocurrency lending and borrowing has always been a prominent niche of the decentralized finance (

) industry, championed by platforms like Aave (

). A much rarer variant of DeFi borrowing and lending is based on non-fungible tokens (

Sharky.fi, or simply Sharky, is a Solana-based lending and borrowing protocol that uses NFTs as collateral to facilitate the DeFi processes on the network. By putting up NFTs as collateral, users can borrow funds via short-term loans in Solana's native SOL tokens. For lenders, the platform is also a great way to earn high APY rates in just 7 to 14 days, while having their loaned funds protected by the NFTs.

Having established itself as the leader of NFT-based lending and borrowing on Solana, the Sharky project has ambitious plans to integrate two more highly popular crypto asset types — Ordinals and real-world assets (RWAs).

 (SHARK) is a lending and borrowing app on the 

 (SOL) blockchain that lets users provide NFTs as collateral to access short-term loans in SOL tokens.

 Lenders can view NFTs offered as collateral, and make loan offers secured by their preferred NFTs.

Although Sharky's public launch on the Solana mainnet dates back to April 2022, the platform operated without its 

, SHARK, for its first two years in the market. The SHARK token was eventually launched in mid-April 2024.

Using its innovative business concept, Sharky quickly established itself as the leader of NFT lending. According to the project’s team, Sharky has a 90% share of the NFT lending market on Solana and has issued more than 1.4 million NFT loans.

Following the recent launch of its SHARK token, the project aims to integrate additional crypto asset types in the future. These include 

 (RWAs). Another ambitious product type considered for future implementation on the platform is uncollateralized consumer loans.

As a lender on Sharky.fi, you can browse NFTs from a variety of collections offered on the platform and make a loan offer for potential borrowers. The collections available on Sharky include the platform's own 

 collection, Mad Labs, Solana Monkey Business (SMB), Tensorians, Namaste and more. Lenders’ offers are shown to potential borrowers on the platform, who then choose the best offer based on their borrowing needs.

The NFT provided by the borrower is used as collateral, and the lender makes their funds available in SOL tokens. Lenders earn interest on the funds, with the loan duration typically between 7 and 14 days. Interest rates, naturally, will vary depending upon on-platform activity. Usually, 

 for active loans range between 120% and 220%, though they can go up to 360%. As such, Sharky loans are an excellent way for lenders to earn some serious interest quickly. If a borrower fails to repay the loan in full, the NFT used as collateral is transferred to the lender.

For borrowers, the Sharky platform is an excellent opportunity to access SOL funds for short-term needs quickly and flexibly using their NFTs, rather than cryptocurrency, as collateral. The best part of the platform's borrowing mechanism is that you remain in possession of your NFT during the loan period as a borrower. While your NFT is used as collateral, its ownership isn't transferred to the lender while the loan is active. The ownership transfer may only happen at the end of the loan period if you fail to repay the loan in full.

Maintaining the ownership of your NFT allows you to keep using it on various DeFi and other apps for purposes such as staking or satisfying 

 eligibility requirements, among other potential uses.

Sharx is the platform's own NFT collection. One of the most popular collections used in Sharky's lending and borrowing operations, sharx is made up of 10,111 adorable shark characters. Purchasing a sharx NFT not only opens up borrowing opportunities but also entitles you to upgrade or boost your Chowder points, rewards that are used in Sharky's loyalty program. 

As a sharx holder, you're entitled to the airdrop of Sharky.fi’s governance token, SHARK, and you can also stake sharx to earn FISHY tokens.

The newly launched SHARK token is envisioned as the platform's governance asset, with a total supply of 100 million. As of the time of writing in late April 2024, only some specific details on the actual governance processes powered by SHARK are available. Thus, the token's actual use in on-platform governance is expected to be outlined in the future.

SHARK will be airdropped in two phases, with 4.25% set aside for the first phase and 3.5% for the second. Of the former, 70% is allocated to its community, with the remaining 30% is distributed to partner communities. Meanwhile, the second phase is held as a staking pool event with a lockup duration of 30 to 60 days exclusively for OG, new users and sharx holders.

 of Sharky. Unlike the brand-new SHARK token, FISHY was issued back in 2022 at the start of the platform's operations. FISHY can be earned by staking sharx NFTs, accumulating reward points and participating in Sharky's social media campaigns. The token can be used to boost sharx NFTs, which in turn can earn you additional Chowder points. FISHY also gives you access to NFT raffles and auctions held on Sharky.

The SHARK token can be bought on Bybit through a Spot pair with USDT (

). Additionally, you can also take part in Bybit's current campaigns for the token for the chance to grab a share of the 

, which includes a Token Splash event featuring 456,000 SHARK through Apr 30, 2024, 9AM UTC, and a Lucky Draw with 58,000 SHARK in rewards through Apr 30, 2024, 9:59AM UTC.

Lending and borrowing using NFTs as collateral is a novel concept that has earned Sharky leadership positions in this niche. As more platforms adopting this business model emerge, the competition in the field is likely to intensify. However, as of now, Sharky remains the absolute leader of the Solana-based NFT lending and borrowing market. 

As NFTs experience a resurgence in popularity following the post-2021 dip, DeFi solutions that make innovative use of these assets, such as Sharky, stand to benefit. Later in 2024 and beyond, we’ll likely hear more about NFTs being used as legitimate collateral in crypto finance — a new trend helped to no small degree by the Sharky platform.

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Sharky.fi (SHARK): The Decentralized Platform for Instant NFT Loans

Bybit Learn

Trading

Turtle trading is a strategy traders can use to take advantage of sustained momentum in trading markets. Find out whether it works for the crypto market here.

Investors have been developing new strategies to guide their trading decisions for hundreds of years. Over time, new strategies are developed, intriguing investors searching for the right tool that allows them to corner the market and bring in high returns. 

One such strategy involves "turtle trading," which was first developed in the early 1980s and has since become popular among investors of all experience levels. Before you consider implementing this strategy, let’s learn more about how it works and whether it can be used for the crypto market.

Turtle trading is a strategy traders can use to take advantage of sustained momentum in trading markets. The goal is to follow set rules on making trades that limit the role of emotions during your decision-making process.

This strategy has been employed across a wide range of different financial markets. Traders who use this strategy attempt to find breakouts among various assets regardless of the price movement (up or down).

The turtle trading experiment was developed primarily by Richard Dennis

. Dennis trained 14 separate "turtles" on how to follow rules — instead of using their “gut feelings” when making decisions. The methodology behind this experiment, as well as the results that occurred, would lead to the development of turtle trading as a legitimate decision-making strategy.

Turtle trading’s extensive experiment began in the early 1980s. It was created by two commodity traders who wanted a more effective futures markets trading strategy. Here's a closer look at the origins of the turtle trading experiment, as well as how the experiment ended.

In the early 1980s, Richard Dennis was already an established commodity trader who had garnered a considerable amount of success. When he first started out, in the early 1970s, it's said that he borrowed $1,600 to make investments and reportedly earned $350 million in just six years. Dennis and his trading partner, William Eckhardt, would routinely discuss their success with commodity trading, and how to improve it.

Dennis believed that any individual could effectively be taught how to trade on the futures markets. On the other hand, Eckhardt believed that Dennis had a talent that allowed him to be successful as a commodity trader and to profit from his profession. Dennis decided to settle the debate by creating an experiment to prove his hypothesis.

The turtle experiment acquired its name after Dennis referred to his students as "turtles.” After a two-week training period during which he taught his students the rules associated with his trading system, he provided participants with his own money. The purpose of the experiment was to impart new investors with a completely mechanical technique for making investments.

Dennis’s rules were designed to assist traders in removing emotion from their decisions. The underlying concept behind both experiment and methodology was to ensure that traders would base their decisions solely on predetermined rules, without taking any other factors into account.

While Dennis knew that he could place all of these rules into a newspaper article, he understood that only a small number of traders would actually adhere to them. His many years of experience in the industry had shown him that the majority of traders only use trading rules to provide some basic structure, before “improvising” whenever they considered it necessary.

 following these rules in a rigid manner would produce poor trading performance. The experiment was set to last for a period of two weeks. Dennis named his students "turtles" because of an experience he’d had visiting turtle farms when in Singapore. He believed that, just like turtles, traders could be grown quickly and efficiently.

Formal results from this experiment — which continued for five years — weren't published. However, a former "turtle" named Russell Sands, who died in 2019, had stated that the two separate classes of turtles whom Dennis trained earned over $175 million in a period of five years. The takeaway is that even first-time traders who had no previous experience with the market could learn how to trade effectively and ultimately become successful traders.

Some of the “turtles” were asked to leave the experiment, but of those who were able to rigorously follow the prescribed strategies, there were notable successes. Jerry Parker, a “turtle” who even now practices the system’s precepts, 

 Chesapeake Capital after founding it over 30 years ago.

Even though modern investors can't be given personal training by Dennis (who, incidentally, is still politically active and president of Dennis Trading Group Inc.), the rules he established can be applied when making trades. The main goal again is to purchase breakouts and eventually close on trades whenever prices begin to drop or rise.

Although turtle trading resulted in some success for traders who were part of the experiment, there are some issues to be aware of before you begin to use it for crypto trades. The primary one is that sizable 

 are common when using this trading technique.

The majority of breakouts that investors place their money into are false movements, which can lead to investors losing on a high number of trades. The potential for high returns is still possible for investors who understand that drawdowns will happen.

There are a large number of rules that must be followed when using the turtle trading technique. However, the original turtle trading rules have been modified over the years. Even though the initial strategy of identifying possible breakouts is still somewhat effective, modern traders have modified these rules in order to more effectively identify trends.

For instance, the previous rules stated that an investor should only enter the market when the price goes above the 20-day high. The modified rules prescribe buying whenever the price goes higher than the 200-day high. Turtle trading doesn't work much differently when used to make crypto trades and investments versus stocks, bonds and futures.

Turtles only trade in highly liquid markets, which yields more market depth to mitigate risks and reduce potential losses. When employing the turtle trading strategy, make sure that you focus your attention on the most popular crypto assets. 

The following section explains the rules behind turtle trading in detail.

During the experiment, the turtles traded various futures contracts with the goal of making trades in highly liquid markets. This approach was meant to provide traders with the ability to move the market without necessarily making a sizable order. Along with commodities, turtles traded metals, bonds, the S&P 500, FX and energy.

Position-sizing is an algorithm that effectively normalizes the volatility of the set position by altering how sizable the trade is based on the current market volatility. The purpose of this system is to enhance diversification by making sure that every position in each market is the exact same size.

Highly liquid markets will have fewer contracts traded. At the same time, markets that are less liquid will trade many more contracts. The position-sizing system assesses the 20-day moving average for the true range to determine how volatile the market currently is.

Turtles ended up using two completely different entry systems when making trades. As mentioned previously, these systems have been modified over the years. The first of the two entry systems involved using a basic 20-day breakout. The second system used a 55-day breakout.

Winning positions were added with a maximum of four entries. Turtles were told directly by Dennis to take all signals that were offered, because of the knowledge that missing just one signal could result in a large winner being overlooked. Missing a big winner could substantially reduce total returns.

Turtles were told to take advantage of stop-losses whenever necessary to make sure that losses never went too high. An important aspect of the stop-loss strategy was that the turtles needed to determine what their exact stop-loss was before entering a position. The intention here was for risk to be defined before even making a trade, allowing the turtles to mitigate losses. (Investments in more volatile markets, such as crypto, involve wider stops.)

As for exits, turtle trading rules state that leaving a position earlier than normal could limit the potential returns from the trade, which is a mistake that regularly occurs with other trend-following systems. Turtles used two separate trading systems, which resulted in two exit rules.

The first exit rule involved a 10-day low when taking long positions into account, as well as a 20-day high for any shorts. In comparison, the second system used a standard 20-day low or high. The price was watched in real time, as opposed to using stop-exit orders.

Turtles were also taught by Dennis how to use 

 while dealing with any quick-moving markets. Another tactic involved waiting for relative calm before placing a new order — as opposed to trying to quickly obtain the best price, which is a mistake that many new traders make. Turtles were told to purchase in the strongest markets, while also selling in the weakest ones, in order to benefit from momentum.

Over the years, traders of all experience levels have learned the ins and outs of turtle trading, which has allowed investors to take away some key lessons. While the initial turtle trading rules have been modified to account for current trading standards, traders still use the principles behind turtle trading when making trading decisions.

Understand the Concept Behind Your Trading Strategy

Whether you use the turtle trading method in the crypto market or decide to use a completely different strategy, it's essential that you comprehend every facet of the concept behind the strategy, as well as the logic of the rules it’s based on.

Once you truly understand the concept, you should be able to implement more than one trading strategy around it, which helps to diversify risk. Without knowing what the trading strategy actually means, you'll likely stop using it after the first drawdown occurs since you won't know how to correct this issue.

Even if the turtle trading strategy works for you when conducting crypto trades, you may still incur high losses if you don't develop a risk management strategy as well. Let's say that you're using the modified turtle strategy that produces a return of more than 32% and a drawdown of more than 41.50%. If the risk per trade is just 1%, you're in a relatively manageable position.

Investors who don't use a risk management strategy could decide to increase risk to around 4%. In this scenario, the annual returns would be just under 76%. However, the max drawdown would be around 97%. If this drawdown ever occurs, it would be practically impossible for you to recover from it. The takeaway here is that any trading strategy should be paired with risk management techniques.

Market conditions invariably change on a regular basis within the crypto industry, which means you may not be successful using the same trading strategy at all times. Eventually, this strategy will likely result in an extended period of drawdown. It's also possible that a trading strategy will no longer work at all, which can put you in a difficult situation.

If you find that your trading strategy no longer works, there are several steps you can take. First, determine whether the concept behind your strategy has failed — or the actual strategy no longer works. In the event that the strategy is all that’s failed, you can retool it around that concept for an improved approach to trading.

If you find that the concept behind your strategy no longer produces results, you’ll want to change to a completely new trading concept, instead of attempting to salvage the one you currently use. Once you've moved to another concept, start creating new strategies around it.

Plan your exit, just as you plan your initial entry. Know exactly when you’ll either exit with your profits or cut your losses.

Does Turtle Trading Work for Crypto Markets?

Over the years, many traders have used the turtle trading strategy on crypto markets. The results haven't been great. When following the initial turtle trading system from the early 1980s, it's difficult to obtain high profits. However, the modified rules mentioned previously have resulted in more profits, since trades are made less frequently.

 isn't a great option in cryptocurrency markets. When taking the turtle trading rules into account, shorting doesn't provide many benefits and can lead to capital loss when making numerous stop-losses throughout a bull run.

One reason why the initial turtle trading system isn't perfect for crypto is because it was meant to be used with loosely correlated markets. Cryptocurrency assets have relatively high correlation in regard to price. If you want to use the turtle trading strategy when making crypto trades, the modifications you should implement include the following:

Every crypto trader wants to find the perfect strategy that will net them high returns when trading crypto. While you might make the right trades at the right times, the turtle trading rules mentioned earlier aren't necessarily perfect for everyone. Beginners and experts alike should be able to use the turtle trading strategy without much issue.

However, the results can vary depending on your approach and the level of risk you take on, which means that it will take time for you to identify if turtle trading is right for you. It's true that many of the "turtles" who first took part in the turtle trading experiment garnered an ample amount of success.

On the other hand, Dennis himself incurred exceedingly high losses in the stock market crash of 1987, which means that this isn't an infallible strategy. Regardless of the trading system you decide to use, it's highly recommended that you have a strong basis for each trading decision you end up making.

Turtle trading is a unique strategy that gives traders the opportunity to explore making investment decisions without putting any emotion into their decisions, which may result in a successful approach to trading. Since the turtle trading experiment took place in the early 1980s, the rules behind this strategy have been modified. Take this reality into account before you decide to implement this strategy with your trades.

What Is Turtle Trading & Does It Work for the Crypto Market?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards