Insight into Data 02: OKX & CoinGlass: How to mine valuable data and cultivate mature trading thinking?

Summary: In the cryptocurrency market, data has always been an important factor for people to make trading decisions. How can we sift through the data fog and discover effective data to optimize trading decisions? This is a topic that the market continues to follow. This time, OKX has specially planned the “Insight into Data” column, and has joined hands with mainstream data platforms such as CoinGlass and AICoin to explore a more systematic data methodology based on common user needs, for the market to reference and learn from.

Here is the content of the second phase, jointly discussed by the OKX strategy team and CoinGlass Research Institute, focusing on different data dimensions that need to be considered in different trading scenarios. It involves capturing trading opportunities and cultivating a scientific trading mindset. We hope it will be helpful to you.

**CoinGlass：**CoinGlass is a global cryptocurrency data analysis platform dedicated to providing users with comprehensive market monitoring and in-depth data interpretation services. CoinGlass provides real-time market data, market depth analysis, futures and options holdings data, funding rate, liquidation data, and other tools to help traders better understand market dynamics and risk conditions. Through intuitive charts and regular market reports, CoinGlass has become an important tool for global cryptocurrency market analysis.

OKX Strategy Team: The OKX strategy team is composed of a group of experienced professionals dedicated to driving innovation in the global digital asset strategy field. The team brings together experts from multiple areas such as market analysis, risk management, and financial engineering, providing solid support for OKX’s strategic development with deep expertise and rich business experience.

**1. For new users, how many types of data dimensions have high reference value?

CoinGlass: Newbie users usually lack trading experience and professional knowledge, so they tend to use simple and intuitive data indicators that are easy to understand. These indicators usually have high reference value because they can quickly reflect market sentiment and trends. For example, the greed and fear index, long/short ratio, inflow and outflow of ETF funds, and changes in CME’s open interest are data indicators that novice users can quickly understand. These indicators intuitively reflect market sentiment and trader behavior, helping users quickly understand market trends and make informed decisions.

So, how can they quickly understand these simple data? Here are some tricks:

First of all, pay close attention to indicators such as the inflow and outflow of ETF funds, the greed and fear index, and the long-short ratio. When these indicators change, use charting tools to visually analyze the relationship between indicator changes and price trends.

Next, check the historical trends of these indicators and compare them with the price chart to understand the corresponding relationship between the changes in these indicators and the market trends.

Third, learn basic analysis methods, including mastering the principles and methods of basic technical analysis and market sentiment analysis.

Fourth, pay more attention to market news and analysis from cryptocurrency experts, accumulate more market knowledge and experience, which is helpful for a deeper understanding of market background and trend.

Finally, practice through paper trading, use data for post-event analysis, in order to improve data interpretation and application abilities. Through these methods, it is possible to gradually improve the understanding and application of market data, and thus become more confident and wise in trading decisions.

OKX Strategy Team: We have summarized the following four aspects and corresponding analysis tips for users’ reference:

First, there is price trend data. Current price, historical price trend, moving averages (MA), relative strength index (RSI), Bollinger Bands, etc. all belong to this category of data. These data can help users understand the basic market trend, identify buying and selling opportunities. For moving averages (MA), when the price is above the MA, the market may be in an uptrend; when the price is below the MA, the market may be in a downtrend; and when the short-term MA crosses the long-term MA, it may indicate a trend reversal. As for the relative strength index (RSI), if the RSI is above 70, the market may be overbought and selling should be considered; if the RSI is below 30, the market may be oversold and buying should be considered. In terms of using Bollinger Bands, when the price is close to the upper band, it may face resistance and selling should be considered; when the price is close to the lower band, it may find support and buying should be considered; and when the bandwidth of the Bollinger Bands narrows, it may indicate an upcoming major breakthrough.

Next is the trading volume data. The trading volume data reflects the market’s activity, helping users judge the strength and sustainability of the trend. The basic principle of the volume-price relationship is that an increase in volume and price indicates a possible upward trend continuation, while an increase in volume and a decrease in price may indicate a deeper decline and trend reversal. In the pattern of changes in trading volume, if the market was relatively sluggish in the previous period, with both trading volume and price at relatively low levels, and the trading volume gradually increases while the price slowly rises, this may indicate that large funds are starting to enter the market gradually, and the market may be forming a new upward trend. When trading activity increases, more traders participating in the trading may signal a trend change. A huge trading volume after a deep decline may indicate a slowdown in selling pressure and an inflow of buying orders, suggesting that the market may start to stabilize, but it does not mean that the price will rebound immediately. The counter-trend trading volume of individual currencies in the overall market decline may reflect the special factors of the currency, and it is necessary to combine fundamental analysis to judge its sustainability and subsequent trends.

Then there is fundamental data. Project announcements, partner relationships, technical progress, tokenomics, and regulatory dynamics are all part of fundamental data. These data provide information about the long-term potential and risks of the project, which helps make wiser trading decisions. Users should pay attention to important announcements, evaluate their potential impact on project development; understand technical progress, focus on the completion of development milestones, and evaluate technical feasibility; analyze tokenomics, understand the token’s supply mechanism, inflation rate, and usage; track regulatory dynamics, and evaluate the potential impact of regulatory changes on the project.

Finally, there is market sentiment data. Social media mentions, fear and greed indices, derivatives market funding rates, and so on all belong to market sentiment data. These data can reflect the psychological state of traders, helping to judge possible reversal points in the market. A sudden surge in social media popularity may indicate short-term price fluctuations, while sustained high popularity requires attention to whether there is excessive speculation. In terms of fear and greed indices, extreme fear (0-25) may be a buying opportunity, while extreme greed (75-100) may be a selling opportunity. Regarding funding rates, a sustained high positive rate indicates strong bullish sentiment, possibly facing a pullback, while a sustained negative rate indicates strong bearish sentiment, possibly leading to a rebound.

**2. For advanced users, diversified asset allocation is important. How to do it is helpful?

**CoinGlass：**We suggest advanced users to start from the following dimensions:

First is the selection of Promising Crypto. By filtering based on criteria such as price, market cap, circulating supply, and listing on exchanges, we can identify currencies with growth potential and make precise trading strategies. This selection method helps traders find coins with higher potential, thus achieving better trading returns.

Next is asset allocation. The key to asset allocation is to use correlation analysis to select assets with low correlation for allocation. In this way, the risk of the trading portfolio can be effectively diversified, and the overall stability and return on investment can be improved. Selecting assets with low correlation ensures that when some assets fall, other assets may pump, thereby balancing overall returns.

Furthermore, there are derivative arbitrage opportunities. By using the funding rate arbitrage calculator, you can identify arbitrage opportunities and conduct funding rate arbitrage to increase the overall return of assets. Funding rate arbitrage is a relatively low-risk strategy that can generate stable returns in market fluctuations.

Next is portfolio monitoring. Using portfolio monitoring tools, you can test the profitability and risks of different trading schemes, and regularly review and adjust them to optimize your allocation strategy. This method can help traders monitor the performance of their portfolios in real-time and make timely adjustments to adapt to market changes.

Finally, there is the Risk Management tool. By using various Risk Management tools and techniques such as stop-loss orders, hedging strategies, etc., the trading risk is controlled. Effective risk management is an important means for traders to ensure the safety of their assets in market fluctuations.

OKX Strategy Team: According to our observations, for this type of individual, the selection of strategic products is very important. Commonly used tools include auto-investment strategies, portfolio arbitrage, and splitting large orders. Auto-investment strategies reduce overall holdings cost through periodic purchases, portfolio arbitrage hedges to reduce trading risk, and large order splitting reduces market impact and transaction costs by splitting large orders into smaller ones. Combining these strategies with their respective characteristics can help large capital users efficiently diversify their holdings and achieve stable trading goals.

The dollar-cost averaging strategy (multi-currency combination, regular purchases) is a strategy that lowers the overall holding cost by periodic buying. Continuously buy at low prices in batches during the process of price drop, and take profit by selling when the price rebounds, constantly repeating the cycle to arbitrage.

Combination arbitrage is a strategy that helps users hedge arbitrage and reduce trading risks. This strategy can choose to trade different or the same currencies/markets at the same time, and automatically and timely help users profit from the price difference between various trading varieties through the use of market fluctuations. The combination arbitrage strategy can effectively help users reduce the potential loss risk of dealing with future market uncertainties.

The splitting of large orders is also a convenient trading strategy provided to large volume traders. This strategy can help users split large orders into smaller ones and place them in batches. Through intelligent settings, the orders can minimize the impact on the market, while maintaining a relatively high average execution price, thus greatly reducing the transaction costs for large volume traders.

**3. Timing is the key to victory. How do traders identify the best trading opportunities?

CoinGlass: Timing is crucial. In the previous question, we introduced some key data dimensions that are essential for users to find the best buying and selling opportunities. Below, we will briefly discuss the data and analysis methods that can be referenced during the stages of building a position and setting take profit and stop loss levels.

During the position building stage:

The liquidation heat map shows that when the liquidation intensity is concentrated in a specific price range, the price may move to that area. Traders can build a position based on the direction of the highly concentrated liquidation level. If a large amount of ETF funds flow in, such as the daily inflow of funds for BTC ETF far exceeding the average, this indicates an increased market interest in BTC. Traders may consider building or increasing positions. A long-term funding rate for Bitcoin that is lower than the benchmark rate (0.01%) usually indicates that the market is in a consolidation or near the bottom phase, suitable for establishing positions at the bottom. A significant increase in open interest indicates that the market is attracting more fund inflows, increasing market activity. This usually occurs before an upward trend. For example, a sudden 10% increase in open interest in CME Bitcoin futures implies that institutional traders are very confident about the future market trend and may consider building or holding positions.

Low trading volume in the long term usually indicates that the market is in a consolidation or bottoming area, which is suitable for building a position. An increase in spot inflows indicates an increase in buying demand in the market, which is usually a buying signal. In this case, you can consider building a position to seize the opportunity of market pump. When the long/short ratio is low, it means that the shorts have the advantage, which may trigger short covering and thus lead to a price pump, making it a good time to build a position. When the greed and fear index is below 20 for a long time, the market is in a state of extreme fear, the price is low, and there is an opportunity to buy the dip, gradually building a position is a good choice.

During the take profit and stop loss stage:

The liquidation heat map can help traders find the positions for taking profit and stop loss. Setting take profit and stop loss at the price level where a large liquidation is imminent can safely lock in profits. If there is a significant increase in ETF outflows, such as the daily outflow of funds from BTC ETF far exceeding the average, it may indicate a shift in market sentiment towards pessimism, and consideration should be given to reducing positions or setting stop losses. A high funding rate is a warning signal, for example, if the funding rate for Bitcoin futures exceeds 0.1%, it indicates an excessively bullish market. If the high funding rate persists for a long time, it may trigger a market adjustment or even a crash.

On the contrary, a long-term low funding rate indicates that the market sentiment is overly negative, and there may be excessive selling, often leading to unexpected reversals in the market, bringing potential trading opportunities. For example, if the open interest of Bitcoin contracts suddenly decreases by more than 10%, it reflects insufficient market confidence, suitable for reducing positions or taking profit and stop loss. A rapid price drop leads to a large number of liquidations, and the market may rebound quickly. Traders can enter the market when the market hits bottom and rebounds. An increase in spot outflows indicates increased selling pressure in the market, serving as a signal for taking profit or stop loss. A large amount of selling may cause the price to drop, and taking profit can lock in profits before the price drops, while stop loss avoids greater losses.

When the long/short ratio changes significantly, it usually indicates extreme fluctuation in market sentiment, and prices are likely to fluctuate sharply. Traders need to be vigilant, adjust their positions, set stop-loss and take-profit orders to cope with the market’s drastic changes. When the greed and fear index remains above 80 for a long time, the market is in an extremely greedy state, and prices are excessively high. It may be appropriate to gradually reduce positions or take profits, as the market may face pullback risks.

By using these data dimensions, traders can build a position at the right time, adjust their strategies in a timely manner, and achieve better returns and risk management. However, it should be clear that when looking for the best timing, traders should comprehensively use multiple data indicators to more comprehensively predict market changes, reduce the misleading of single indicators, and improve the accuracy and efficiency of decisions.

OKX Strategy Team: Regarding this issue, we suggest traders to comprehensively use holdings, basis, and technical indicators to accurately grasp the best buying and selling opportunities. Traders can then objectively determine the timing for taking profit and stop-loss through profit/risk tools.

Position Bias (Long Short Ratio):

The position inclination reflects the long and short ratio of market participants. A high long ratio usually indicates optimistic market sentiment, and traders tend to buy; a high short ratio indicates pessimistic market sentiment, and traders tend to sell. By analyzing the position inclination, users can judge the main trend and sentiment of the current market, and thus choose the appropriate timing to build a position.

Basis:

Basis refers to the difference between the futures contract price and the spot price. The basis can be a positive value (futures price higher than spot price) or a negative value (futures price lower than spot price). The basis reflects market participants’ expectations of future price changes. If the basis is positive, it usually indicates that the market expects future prices to rise (contango); if the basis is negative, it usually indicates that the market expects future prices to fall (backwardation). The basis can be used to monitor market sentiment and develop arbitrage strategies. For example, a rapid rise in the basis may indicate a bullish market sentiment, while a rapid decline in the basis may indicate a bearish market sentiment.

technical indicator - 超买超卖（Overbought/Oversold）

By using technical indicators such as Relative Strength Index (RSI) and Stochastic Oscillator, users can determine whether the market is overbought or oversold. When RSI is above 70, the market may be overbought, and prices may pull back; when RSI is below 30, the market may be oversold, and prices may rebound. These technical indicators help users choose the timing to build a position in the market during extreme market sentiment.

Income/Risk Tool

This tool helps users visualize and manage the potential returns and risks of each transaction. Users can set take profit and stop loss points, calculate the risk-reward ratio for each transaction, and formulate reasonable exit strategies. By using this tool, users can better control risks and ensure optimal returns in market fluctuations.

4. Overall, are there any underestimated data indicators?

Coin Glass: Different traders have different trading styles, risk tolerance, and trading goals. Therefore, they also have different choices of data indicators when analyzing the market. The changes in the market environment and market conditions can also affect the value of certain indicators, making them more meaningful in some periods and less important in other periods.

Although each indicator has its unique function and meaning, in practical application, a single indicator often fails to fully reflect the market situation.

Therefore, it is recommended that traders consider data indicators from multiple dimensions, conduct comprehensive analysis and integrated judgment, in order to more accurately grasp market trends and trading opportunities. Comprehensive use of multiple data indicators, such as fundamental data, technical analysis indicators, and market sentiment indicators, helps traders to have a more comprehensive understanding of the market, reduce the misleading effects of single indicators, and improve the accuracy and efficiency of decision-making.

OKX Strategy Team: The following data indicators in the cryptocurrency market may be underestimated, but they have relatively important value for market analysis and trading decisions:

lETF inflow and outflow of funds

The inflow and outflow of funds in the cryptocurrency ETF can reflect the market attitude of institutional traders. A large inflow of funds into the ETF usually indicates that institutional traders are optimistic about the market outlook, while outflows may indicate a weakening of confidence in the market by institutions. Analyzing the fund movement of ETFs can help users judge the medium and long-term trends of the market.

Options Market Data

Option market data includes implied volatility, the open interest of call and put options, etc. These data reflect the market’s expectations of future price fluctuations. Option market data can provide a leading indicator of market sentiment. For example, changes in implied volatility can foreshadow significant price fluctuations, and an increase in call options may indicate bullish market expectations.

Stablecoin Flows

The inflow and outflow of stablecoins (such as USDT and USDC) can reflect the capital flow of the market and the hedging needs of traders. When a large amount of stablecoins flow into the exchange, it may indicate that traders are ready to buy cryptocurrencies; conversely, the outflow of stablecoins from the exchange may indicate that traders are cashing out and leaving the market. Analyzing the flow of stablecoins can provide clues to the trend of capital.

Network Effect Metrics

Network effect indicators include active user numbers, developer activity, social media attention, etc. These indicators reflect the network effect and ecosystem health of blockchain projects. Strong network effects usually mean higher project stickiness and growth potential, making them suitable for medium to long-term trading decisions.

DeFi Activity Metrics

Includes Lock-up Position Total Value (TVL), number of users of DeFi protocols, lending and liquidity provision, etc. DeFi activity indicators reflect the health and growth potential of the decentralized finance market. High TVL and active user participation often indicate strong demand and growth potential in the DeFi market.

5. How to cultivate a more scientific trading mindset?

CoinGlass: When it comes to cultivating a scientific trading mindset, we need to improve ourselves through systematic learning and practice. Firstly, it is crucial to maintain objectivity and rationality. By formulating detailed trading plans and executing them resolutely, we can avoid being influenced by market emotions. However, achieving this is not easy. Secondly, learning data analysis and risk management are essential steps. Mastering technical analysis and fundamental analysis tools, learning to set stop loss and take profit levels, can help us better cope with market fluctuations and ensure the steady development of our trades.

Of course, accumulating trading experience is also a key to success. Recording the reasons, process, and results of each transaction, summarizing and reflecting on them, can help us constantly improve our trading strategies. However, the market is ever-changing, and we need to maintain an open mindset. Keeping an eye on industry news and expert opinions, continuously updating our knowledge, can better grasp the market’s pulse.

In addition, by formulating clear trading rules and strictly adhering to them, we can effectively avoid making wrong decisions due to greed or fear. And through paper trading, we can fully prepare, validate, and improve our trading strategies before actual combat, reducing risks and losses in actual combat.

Finally, regularly reviewing and adjusting trading strategies is key to continuous improvement. Based on market conditions and experience, optimize our trading strategies in a timely manner to ensure they remain effective and adaptable. Through these efforts, we can gradually cultivate a more scientific trading mindset and improve the success rate and efficiency of trading.

OKX strategy team: From our experience, to become a mature trader, it is necessary to enhance the following three abilities:

First, it is important to master the basic data and indicators. For example, understanding the macro trend is key, including understanding basic economic indicators (such as GDP, inflation rate, interest rate, etc.) and their impact on the market, paying attention to the impact of global geopolitical situations and major events on the cryptocurrency market, understanding the cryptocurrency market cycles and long-term trends. Price and technical analysis are also essential, using common technical indicators (such as moving averages, RSI, MACD, Bollinger Bands, etc.) in-depth, mastering the methods of identifying trend lines, support levels, and resistance levels, understanding the identification and analysis methods of market structures (such as highs, lows, trend channels, etc.). In addition, in-depth fundamental analysis is needed, studying the white paper, team background, and technical roadmap of cryptocurrency projects, understanding the principles of tokenomics, including supply mechanisms, deflation/inflation models, use cases, etc., and continuously following industry trends, technological innovations, and regulatory environment changes.

Secondly, it is important to cultivate analytical and decision-making abilities. Maintaining critical thinking is a crucial part of it, learning to question and verify the sources of information, especially the market ‘hotspots’ on social media. It is essential to develop the ability to think from multiple perspectives, consider the possibility of opposing viewpoints, learn to identify signs of market sentiment and overreactions, cultivate independent thinking, and not blindly follow ‘expert’ opinions. Build a systematic trading strategy, develop a clear trading plan based on personal risk tolerance and trading goals, set clear entry and exit rules, including stop loss and take profit levels, and learn to use different types of orders (such as limit orders, market orders, conditional orders, etc.) to execute the strategy. Establish strict trading discipline, develop a habit of checking analysis before each trade, avoid impulsive trading, strictly follow the pre-established trading plan and risk management rules, learn to control emotions, especially when facing significant profits or losses, and keep a trading journal to record the reasons, results, and emotional state of each trade.

Finally, it is about practice and continuous improvement. Systematically review and optimize, regularly review trading records, analyze the reasons for success and failure, use quantitative methods to evaluate strategy performance, such as Sharpe ratio, maximum drawdown, etc. According to market changes and review results, continuously optimize trading strategies, learn from failures, and consider each loss as an opportunity for improvement. Maintain learning and market sensitivity, follow the views of industry-leading analysts, while cultivating the ability for independent verification, and continuously pay attention to the development of new financial technologies, such as DeFi, NFT, cross-chain technology, etc., learn cross-market analysis, and understand the connection between traditional financial markets and cryptocurrency markets.

Conclusion

The above is the second issue of the ‘Insight Data’ column launched by OKX, focusing on different user scenarios and the need for different data dimensions. It is hoped to provide a systematic data methodology for traders with different levels of experience, so as to better grasp the market pulse and make wise trading decisions. In future articles in this series, we will continue to explore more practical data usage/analysis methods to provide reference for traders learning trading.

Risk Warning and Disclaimer

This article is for reference only. The views expressed in this article are those of the author and do not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) solicitation of offers to purchase, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risks and may experience significant fluctuations. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For your specific circumstances, please consult your legal/tax/investment professionals. You are solely responsible for understanding and complying with applicable local laws and regulations.