Science Popularization: Understanding the jargon of the quantitative trading industry in one article I heard that KOLs are making crazy profits, easily earning hundreds of dollars every year. As a science writer, I am very envious. How do teachers manage their finances after earning money? Most likely not going to the secondary market, right? So I saw that many quantitative strategy projects have become popular recently, and mining profit generating projects have become popular. However, they have too much slang to understand. Let's dive in! ⬇️ Delta-Neutral、Market Neutral Strategies、Pairs Trading、β = Cov(R_i, R_m) / Var(R_m) What's all this? I'm just an ordinary nouveau riche chubby tiger. Do I need to be so sophisticated to cheat my money? May I ask you, how much is the annualized rate? Can we break even? Can it be redeemed at any time? Is it self hosted? Is there a guaranteed compensation for rug? Take a look, this is the cognitive gap between the two sides. Both sides understand quantitative strategies within their respective cognitive scopes. Let's learn together and quantify slang. Market Neutral Strategies The literal translation is' market neutral strategy ', which is a bit difficult to understand. If translated as' strategy unrelated to the market', it may be easier to understand. In fact, it is true that Market Neutral Strategies are a trading strategy that is not related to the ups and downs of the market. They can make money when the market rises or falls, and I can make money when the market rises or falls freely. How did it happen? Simplified understanding, market neutral strategy is an investment method that involves selecting highly correlated targets A and B in the market, calculating the correlation coefficient between the two, and then simultaneously long and short the two products to hedge against systemic market risk. How do we make money? The returns of market neutral strategies come from pursuing stable excess returns amidst market volatility. To be more specific, it mainly comes from the relative performance difference between long and short portfolios, rather than the overall market trend. For example, going long underestimates the target while going short overvalues the target. The hedging mechanism is very important and also the core difference among many quantitative measures. This involves advanced mathematics, hehe, I don't know either. The general principle is to balance positions through quantitative models such as statistical arbitrage or multi factor models, ensuring that the beta coefficient of the portfolio is close to zero, thereby eliminating the influence of market direction. β coefficient In quantitative trading, beta coefficient is an indicator that measures the volatility and systemic risk of a single asset or investment portfolio relative to the overall market. The closer β is to 0, the weaker the correlation between the strategy or asset and the market. For example, for the US treasury bond bonds, β is almost equal to 0. Conversely, if β is greater than 1, it indicates greater volatility and higher risk, such as in common technology stocks. So, what are the specific products of market neutral strategies? How does it make money again? Come on, let's continue. Pair Trading Basic strategy: Choose two types of encrypted assets with high historical correlation, ADA/USDT and XRP/USDT, and calculate their price difference. When the price difference deviates from the historical average, go long to underestimate assets and go short to overestimate assets; Close the position when the price difference returns to the mean. Money making method: Profit from the convergence of price differences, for example, when ADA prices fall relative to XRP, go long on ADA and short on XRP, expect to earn the price difference after the return, with an annualized return of 10-20%, and rely on stable correlation. Delta Neutral Basic strategy: Buy assets such as JLP in the spot market and short equivalent contracts in the perpetual futures market to achieve a net Delta of zero. The fund rate is settled once at a fixed time: in a bull market, long positions pay short positions, and in a bear market, the opposite is true. Collect fees through holding positions while hedging price risks. Money making methods: Mainly profit from capital rates, for example, in a bull market, short positions are charged a rate of 0.01-0.05% every 8 hours, which can exceed 10% on an annualized basis. Adding small basis opportunities can amplify returns. Even if BTC rises or falls, the portfolio value remains stable and the rate provides passive income. Of course, in addition to funding rates, there are other methods such as using "volatility arbitrage" to trade volatility, and the basic strategies are similar. Basis Trading Basic strategy: Utilize the basis difference between spot and futures, that is, the price difference, such as long spot and short futures when the futures premium is reached, and close the position when the basis converges at maturity. Money making methods: Lock in basis profits, such as 1-3%, or profit from statistical bias regression without predicting market direction, which is very suitable for high liquidity assets such as ETH. / Does a neutral strategy make money? According to the data statistics from 2021-2025, assuming a 2-5x medium leverage situation, it is shown that: Annual return CAGR: 10-20% Maximum drawdown: 10-25% Sharpe Rate: 1.0-6.0 Winning rate/January ratio: 70-90% In summary, the market neutral strategy in encrypted quantitative trading is actually a "steady defense" choice, not a strategy that makes you lie down and rise tenfold. This strategy is particularly suitable for risk averse institutions and family offices to allocate 10-20% of their positions here, achieving a stable annualized return of around 15%+<15% drawdown. KOLs who earn hundreds of million can also achieve asset appreciation through self built strategies or direct investment in excellent quantitative strategy platforms. For example, Neutral (.) trade @ TradeNeutral provides a variety of risk preference and return combination strategy products, often unable to squeeze in and needing to grab, which is exaggerated. Neutral (.) trade points S2 have already started, and theoretically, a strategy platform that has traded $1 billion and earned $4.3 million for clients should not have points or anything like that. But with it, the imagination space becomes larger. I have observed that in addition to strategy, adding another 'Earn' may expand the user base and increase the probability of points becoming tokens in the future. Password: anymose Everyone understands, DDDD。 / Author: Anymose | A Soft Core Science Popularization Writer This article is for educational purposes only and does not constitute any investment advice. Always remember DYOR!