Auto-Invest and Grid Trading: How Newbies Can Develop Robust Strategies in the crypto market

The formulation of a trading plan is a process that varies from person to person. The complexity of the financial markets means that there is no one-size-fits-all strategy. Each investor needs to think deeply and find the trading method or investment strategy that suits them best.

In fact, we all tend to follow certain trading plans to some extent during the investment process, such as following the advice of a particular analyst or operating based on specific indicators. However, these methods often struggle to yield consistent and stable returns. Some people buy and sell based on market news, some rely on so-called insider information, and others chase highs and cut losses; all of these can be seen as a form of trading plan.

Experienced professional traders often test various trading strategies in the market, selecting a few that suit them best and continuously optimizing them in practice to improve the accuracy and profitability of their strategies. In contrast, ordinary investors, lacking professional knowledge and practical experience, are often easily swayed by various information, blindly trying different trading plans without deeply understanding the logic behind them, and recklessly entering the market, ultimately becoming the "chives" of the market.

For novice investors, regular fixed investment (commonly known as "dollar-cost averaging") is a relatively simple and common strategy. This method is widely used in traditional financial markets, and many fund products adopt this model. In the current cryptocurrency market, especially during bear markets, dollar-cost averaging remains one of the relatively safe trading strategies. However, it is advisable to only dollar-cost average into Bitcoin or other mainstream cryptocurrencies, as these assets have potential for future price increases while the risk of going to zero is relatively small.

Grid trading is another common strategy that has received considerable attention in traditional investment fields. The basic principle is to divide available funds into multiple parts, buying when the price drops by a certain extent and selling when it rises by a certain extent. This strategy can help investors profit from price fluctuations, especially suitable for assets like Bitcoin.

For example, suppose there is 100,000 RMB for cryptocurrency investment, with 50,000 RMB allocated for executing a grid strategy. Taking the Bitcoin price of 8,500 USD as a benchmark, the funds are divided into 10 parts, each worth 5,000 RMB. When the Bitcoin price drops by 500 USD, buy 5,000 RMB worth of Bitcoin, and when it rises by 500 USD, sell the corresponding amount. This approach allows investors to avoid excessive focus on short-term market trends while capturing profit opportunities amidst price fluctuations.