Manage your Bumper Hedge position to always beat the market

Trader flexibility has been a significant development theme throughout the recent protocol improvements that were deployed alongside Bumper’s Arbitrum migration. The improvements included much more flexible position term lengths, higher floor prices and the ability to close positions before term expiry.

In the previous article, Unlocking New Crypto Trading Strategies, we explored how Bumper’s novel approach to trading with a protected price floor provides an effective, efficient and fundamentally different way to beat the market and maximise returns.

Trading with a protected price floor allows traders to be the master of volatility, whereby each Bumper Hedge position allows you to simultaneously be in the market with unlimited upside and have their position value protected by a floor price to the downside. Additionally, the newly added flexible functionality allows traders to manage their positions and react to market conditions.

There are several ways to manage your Bumper Hedge position which include Renewals, Claims and Closes, and their applicability depends on whether you’re in a fixed term or at the end of it, and whether the current market value is above or below the price floor.

How to Manage Your Position

Let's first look at and understand the core expected functionality:

• Renew: As it suggests, a renewal offers a term extension with the same position value & price floor, and is more cost efficient than taking a new position because of lower transactions (ie. lower gas fees).
• Claim: If market price is below the floor price and the term has expired then a claim will execute a payout in USDT at the protected price floor, minus any fees and premiums charged.
• Close: Anytime the market price is above the floor price you can close your position. With a close, traders are returned their principal asset minus any fees and premiums charged to that date.
• Early Close: If the position is still inside term and market price is below the floor price, you can execute an early close and the principal asset is returned minus any premiums charged to date.

Trading Market Conditions

The above functionality gives traders the ability to adapt to both upside and downside market conditions, whilst always retaining the protected floor price. Below we explore some of those scenarios.

Markets are pumping, so we raise the floor.

• You’ve taken a Hedge position but prices continue to rise, anytime during your term (hours/days/weeks) you have flexibility to execute a close, and take a new position with a higher price floor - locking in profits at higher prices.

Markets are sideways, so we continue our position.

• Prices have been oscillating in a small range, the next move isn’t clear and downside risk remains a possibility, so at the end of your term you can take up the offer of a renewal to make things easy.

Markets have dumped, simply accumulate with Bumper.

• At the end of your term prices are several percent below the protected price floor so you execute a USDT claim and re-buy your volatile asset at a lower price.

Further downside expected, go again.

• At the end of your term you’re below floor but more downside is expected, in this scenario traders can claim USDT, immediately re-buy BTC at current lower levels and take a fresh position with their higher quantity of BTC and new protection floor. Accumulate all the way down into the dip.

Take profits or sell up

• At any point if prices are above (close) or below the floor (early close) and you decide you want to sell up, you can simply close your position and get your principal asset back.

Trailing HODL

• With a bullish long-term HODL’er viewpoint, one could simply lock in profits by raising the floor periodically and renew during cool-offs into a bull run for a simple hassle-free strategy.

Success to the upside, accumulate to the downside

• In contrast to Spot and Perps trading, Hedge positions on Bumper allow traders to benefit whichever way the market moves. Price growth to the upside, Accumulate opportunity to the downside. No longer does a trader need to worry about being stopped out, or making a long/short decision.

Compounding Gains

Einstein was right, compounding gains are the 8th wonder of the world. 

The long-game cheat code to trading on Bumper is to use claim opportunities to re-buy and accumulate assets at lower prices, and to use renewals along with raised floor moves to capitalise on upside price fluctuation across multiple back-to-back positions.

The effect of using Bumper to consecutively surf the upside or beat the downside is exactly how one can master volatility and maximise returns.

Seen through this lens, managed with these techniques - you win.

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