Data-Driven Trading Wisdom: A Conversation with CoinKarma Founder Benson

Benson, the founder of CoinKarma, shared in detail his changes in trading strategies during different cycles, as well as how the CoinKarma indicators guide trading in various market conditions. Benson has always thought in a non-consensus way about how to build trading structures in order to outperform others, because essentially, contract trading is a game of how to win over the majority.

1. About Trader Benson

1. Trading Strategy

• In a volatile market, find positions with high safety margins based on indicators to participate in the market; pay attention to BTC inflow and exchange CVD indicators to determine market trends.

• The majority of positions are allocated to quantitative strategies for asset appreciation, primarily holding and accumulating coins; about 40% of the positions are in stablecoins, used for participating in on-chain trading or the first order of contracts.

• The trading strategy is primarily focused on stability, with the goal of outperforming the market index, and the performance from the beginning of the year to date is between 2 to 3 times.

• For potential market hot spots, hold until market attention or bull market ends; for larger market cap tokens, determine price trends through technical analysis or fundamental analysis.

2. Reasons for forming trading strategies

• Initially, frequent stop-losses and chasing highs and lows led to significant losses. I realized that market fluctuations are controlled by major funds, especially in the futures market, where the major players create volatility to harvest retail investors.

• From 2019 to 2022, it was found that funding rates have a significant impact on trading. When the contract open interest is high and the funding rates reach extreme values, the market may reverse. Profiting in a bull market by operating against market sentiment.

• The interest rate hikes by the Federal Reserve in 2022 affected the sensitivity of funding rates in the cryptocurrency market, rendering the original trading system ineffective. We began studying order book data and developed the CoinKarma indicator to find safer trading positions.

2. Benson's trading indicators

1. About the market

• The duration of unilateral market trends is short, observe indicators such as the exchange's CVD and BTC ETF's net inflow to make judgments.

• CoinKarma obtains order book data in real-time by integrating with mainstream exchange APIs, converting it into indicators to help assess market conditions.

• The overall LIQ indicator assesses potential price reversal points by depicting the market liquidity conditions. When the price approaches the upper and lower bounds of a range, a market reversal may occur.

• The CVD indicator determines whether the market is consolidating or trending by observing the strength of market orders.

2. Judgment Cycle

• The characteristics of market peaks are increased external attention. For example, the peak of NFTs was in Q1 2023, with many Web2 and Web3 projects linked to NFTs.

• The ranking of the Coinbase APP and the page views of the Bitcoin page on Wikipedia can indicate whether retail investors are entering the market on a large scale.

• Breaking through historical highs requires external capital intervention; relying solely on on-site funds is difficult to achieve.

3. Benson's Trading Experience

1. High Win Rate Trading Mindset

• Understand the sources of market fluctuations, the entities that create fluctuations, and their costs and benefits, in order to formulate appropriate strategies.

• Establish a unique perspective, think about how most people will act when they see the same pattern, and make different decisions.

• The validity of indicators will change, and it is necessary to find new deterministic alpha to adapt to market changes.

2. Daily Trading Process

• Check the market liquidity overview in the morning to determine if intervention is needed.

• Check if the holdings of altcoins meet expectations and whether there are valid reasons for holding them.

3. Methods to Avoid Large Losses

• Avoid buying tokens like buying stocks; pay attention to whether the project demand exists in the long term.

• Sell projects that have reached expectations or no longer have valid holding reasons in a timely manner.

• Control leverage to avoid being harvested by the main players.

Core Views of the Dialogue

1. Trading strategies need to be continuously adjusted according to market changes, paying attention to the changes in the effectiveness of indicators.

2. Construct the trading structure through non-consensus thinking, aligning with the interests of the main forces to overcome the majority of traders.

3. Understanding the market operation mechanism and the sources of volatility is the foundation for developing effective trading strategies.

4. Control risks, avoid high leverage and chasing highs and lows, maintaining a steady strategy is more beneficial for long-term profits.

5. Continuously learning and observing market changes, and timely adjusting strategies is the key to successful trading.