2025-12-26 14:23:40

Recently, I’ve been testing a contract strategy and would like to hear everyone’s opinions.

My core logic is as follows: when the funding rate drops below -0.5, and the top 20 long-short ratio is still greater than 1, while open interest remains stable and the overall market shows a bullish dominance, I go long during the pullback sideways phase. The reason is that at this time, the short side is deeply trapped, and the market makers can easily control the market, forcing shorts to cut losses. I usually leverage 10x, aiming to earn from two or three cycles of funding rate returns, or to bet on a big surge triggered by liquidations.

These five real trades have taught me a lot. The two most failed ones were Layer and Banana — I rushed to open long positions before a clear pullback, and ended up getting wiped out. The second was OG; I placed an order at Maker and caught a decent pullback. The funding rate was -1.5% when I opened the position and rose to -1.9% just before settlement. I initially wanted to earn steadily from the funding rate, but the price kept falling. I got emotional and averaged down several times, and only closed after the settlement. On the other hand, moves on AVNT went smoothly, especially since AVNT had a chance for another wave of gains.

During these operations, I noticed two strange phenomena that I can’t quite understand:

**First question:** Why do shorts still insist on opening positions when the funding rate is so high? The rate is bleeding at -1.5%, -1.9% daily, yet I observe many shorts not closing even as the settlement cycle approaches. Is there some logic I’m missing? Do they really believe the price will keep falling, or have they already lost too much and are just giving up?

**Second:** About my strategy itself. Is this approach reliable? I now think some of my ideas might be too idealistic — for example, assuming market makers will definitely control the market, or that shorts will be forced to cut losses causing a big rally. But in practice, I often get slapped in the face. Where did I misunderstand? What details can be optimized? Especially, how can I more accurately judge the timing of pullbacks to avoid opening positions prematurely like Layer and getting wrecked?

I hope experienced friends can give some guidance.

BANANA-2.33%

OG-3.66%

MOVE-7.94%

AVNT4.31%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

15 Likes

Reward
15
5
Repost
Share

Comment

0/400

MEVictim

· 3h ago

With such high fees, why aren't the shorts running? It shows they don't really believe it will go up, bro. 10x leverage eating fees—this logic sounds dangerous. One black swan and you're done. Layer getting smashed is deserved; who gave you the courage to go long without a pullback? Still dreaming that the market makers are definitely controlling the market... Wake up, the market isn't that obedient. Actually, you're just betting on shorts getting squeezed, but they might really be bearish on the future. That AVNT trade was purely luck; don't treat it as a lesson learned.

View OriginalReply0

RooftopVIP

· 4h ago

摊平才是绝命毒师，这逻辑听起来太美了兄弟老哥费率那么高空头还死守，说明他们根本不信会反弹啊...你在赌庄家控盘，人家在赌价格继续砸，两方都破罐子了 Layer和Banana直接被砸说明什么，还没形成共识就开多呗，回踩的点根本没有 OG那波摊平几次真的是在赌一个不存在的反弹，费率结算完还得平...这不就是被迫止损

Reply0

FloorPriceNightmare

· 4h ago

Well... To be honest, I've seen too many people get wrecked by 10x leverage and fee rates. Essentially, your approach is still gambling on the market maker; if you can't beat them, it's over. The short sellers insisting on shorting might already be exhausted from losses. Since it's all negative anyway, it's better to hold firm or truly believe that the bottom has arrived. But your hypothetical scenario is interesting—does the market maker definitely control the market? Haha, that's too idealized. That wave of Layer was actually out of desperation; they acted before receiving a signal, and the contract suffered from this. Suggest adding a confirmation mechanism?

View OriginalReply0

PancakeFlippa

· 4h ago

Fee rate, fee rate, your logical loophole is quite big. Short sellers insist on bearing the fee rate? They might just be bearish on the overall trend; losing a bit daily fee isn't a big deal. But if it really crashes down, your 10x leverage will be gone instantly. Brother, to be honest, your approach is just gambling on the market maker and risking liquidation. It's too idealistic. The market doesn't behave so obediently; Layer and Banana are lessons learned. Waiting for a true pullback is really difficult. It's better to wait for a genuine technical confirmation instead of relying solely on the fee rate as a hard indicator. This kind of thinking is easy to get carried away with. Just look at how you spread out OG to see it. Maybe try introducing a stop-loss discipline; otherwise, a few more Layers could lead to even bigger losses.

View OriginalReply0

Anon32942

· 4h ago

Rate arbitrage sounds good but is hard to execute; I've also fallen into traps. That wave of Layer was indeed urgent, I understand that, but the real problem is that you treat the "ideal model" as market law. Short sellers not closing positions are mostly—either genuinely bearish on the future market or already in a bankruptcy mindset, which can't be simply explained by high rates. Using 10x leverage to eat fees is already a gamble; a misjudgment on a pullback can blow up, there's no black technology.

View OriginalReply0