Trading Strategies
Last updated
Last updated
On Alkimiya, one can take a long or short position based on one’s view on the impact of the on-chain events. Simply put, if you think an event(s) will cause significant network congestion, go long and if you think the event(s) are overhyped or the overall usage will slow down, go short.
However, trading on Alkimiya is more than that. Parameters such as entry price and size affect your orders and as a result, your PnL.
Before diving in, it’s imperative to understand the parameters/data that affect trading on Alkimiya. Make sure to check out our and for unfamiliar terms.
Avg. BTC feeThis is the underlying index. It is the average of the across a pool’s duration and is updated daily at 3am UTC.
With reference to the data available on , this is the numerical data of the graph tracking median feerate.
The settlement of this index is based on the final Avg. BTC fee on the last day. In essence, when trading, keep in mind the question: “What will the Avg. BTC fee be at the end of this pool?”.
Resources
This is the chart of Avg. BTC fee for a specific pool. Since it tracks the average instead of the spot feerate, it’s a closer visualization of where the final Avg. BTC fee might end up at.
There are 2 lines on this chart:
BTC fee (orange); and
Avg. BTC fee (teal)
Due to the averaging effect, feerate spikes at the beginning of the pool period usually have more visible impacts on the Avg. BTC fee than those towards the end of the pool period.
Before the pools begin, the feerate range will be calculated based on historical volatility. The range will remain constant throughout the pools.
The Avg. BTC fee can serve as an indication of which pool to trade in. Ensure that your desired pool is chosen before moving to the next step.
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On ‘Open Orders’, these are the available orders you can pick from within a pool. They are made by other traders on Alkimiya. Categorised under Buy and Sell, you can choose to fill Long order/s or a Short order/s respectively.
On ‘Trade History’, these are the orders that were made and filled by traders on Alkimiya.
Using these two sections, gain insight on the level of bullishness or bearishness of other traders.
Identifying good orders can get confusing, but it’s not impossible. Before scrutinizing the available orders, consider the decisions you’ve made above and your risk appetite.
There are only 2 directions to choose from - Long or Short.
The general rule of thumb is:
For Long orders, if the final Avg. BTC fee lands above your order’s price, you profit the difference.
For Short orders, if the final Avg. BTC fee lands below your order’s price, you profit the difference.
If you did not manage to find a good order, you can create your own order. Here, you have full control over the price, size, and expiration. However, it is not without its limitations.
Custom orders are created and placed on the orderbook for other traders to fill. If it is not filled before its expiration, the order will be removed from the book.
To ensure that the custom order gets filled before its expiration, it needs to be competitive within the orderbook.
Thus, before creating an order, it is important to get a feel of the market sentiment.
The aim is to have your order at the top of the orderbook -> check the Best bid/ask
Best Bid: This is the best Short order in the orderbook
Best Ask: This is the best Long order in the orderbook
These values, when compared to Avg. BTC fee, could provide insight on how competitive your order needs to be.
Resources
bid priceBased on your research of on-chain events, input a value in Bid Price.
For example, the current Avg. BTC fee is 10 sats/vB.
You have determined that the final Avg. BTC fee will increase and land at 15 sats/vB. The best range of values to input here will be 10.001 - 14.999 sats/vB.
Recall that you will only profit the difference between your price and final Avg. BTC fee if the former is lower.
ExpirationThis is the number of hours you'd like your order to remain on the orderbook. The longer the duration, the more likely your order will be seen.
Note: It is free to create your own order, but if you decide to cancel your order before the expiration, you would have to cover the cost for gas.
bid priceBased on your research of on-chain events, input a value in Bid Price.
For example, the current Avg. BTC fee is 10 sats/vB.
You have determined that the final Avg. BTC fee will decrease and land at 5 sats/vB. The best range of values to input here will be 5.001 - 9.999 sats/vB.
Recall that you will only profit the difference between your price and final Avg. BTC fee if the latter is lower.
ExpirationThis is the number of hours you'd like your order to remain on the orderbook. The longer the duration, the more likely your order will be seen.
Note: It is free to create your own order, but if you decide to cancel your order before the expiration, you would have to cover the cost for gas.
Voilà! Welcome to Alkimiya, Trader!
This journey is not one to be taken alone.
There are at least 2 active to trade in at any given time. One with a lower feerate range, and the other with a higher feerate range.
The lower end of the range is known as the . The higher end of the range is known as the .
