March market analysis
March is over. We have prepared a short article about what happened in the cryptocurrency market and how it affected our March results.
When unprecedented events occur, such as the war in Ukraine, markets tend to diverge from their established pathways and the tumultuousness and uncertainty of the world gets reflected in prices and trades made. This usually lasts until people find some solution to the crisis and with it a new direction for humanity’s future. With the current crisis, we haven’t found the solution yet; a fact bearing profound effect on our March trading.
What was happening in the market and how it affected our March results
It seems that in March, most of the cryptosphere laid half-dormant, waiting for something. In terms of structure, the market found its bottom where it consolidated for the first half of the month (with occasional spikes). In the second half, it cautiously headed higher. The key word here is “cautiously” — because every slow movement upward was followed by a correction challenging the bulls’ resolve.
BTC/USDT price chart for March 2022
Our short-term strategies traded very actively during this period (in both directions), but most of the positions closed on their stop-loss limit (preset maximum acceptable loss) due to the lack of clear market direction. Longer-term positions were headed for a nice recovery towards the end of the month, but due to business reasons (i.e. clients selling their PBX) some positions had to be closed early, so the profits from these positions did not reach the levels we had hoped. All in all, the month ended with a loss. The first loss since the beginning of the project.
Some months there is loss and that’s okay
Let’s pause here for a moment and point out that, statistically speaking, so many consecutive months with above-average profits is a very rare phenomenon. Even for funds with the highest turnover and highest trading frequency (High-frequency trading funds), several months in a row ending with a loss is perfectly normal. Losses are inherent to trading and there is no zero-risk strategy. The best anyone can do is stick to their principles and keep trading. Because if you trade well, then the average gain over a long period of time will by far outweigh the average loss.
To not downplay the situation though, loss teaches us important lessons and we are always looking for new ways to improve. This month, we’ve learned that there’s an important challenge for our team of quants to overcome: even though the market structure keeps repeating, those iterations are also always slightly different, unique. We thus need to work on the auto-adaptability of our strategies, i.e. making them more flexible and able to react to sudden changes in the market structure. If the strategies can analyze the market better, they can automatically adjust their positions or not trade at all. Because sometimes not trading is the best strategy of them all.