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.
Let's first look at and understand the core expected functionality:
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.
Markets are sideways, so we continue our position.
Markets have dumped, simply accumulate with Bumper.
Further downside expected, go again.
Take profits or sell up
Success to the upside, accumulate to the downside
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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Ever found yourself riding the crypto wave, only to watch your profits vanish in a market dump? We've all been there. But what if you could lock in those highs without missing out on potential gains? Enter Bumper, the game-changing DeFi protocol that lets you do just that.
When introducing radically new functionality & trading strategies to the market which help traders successfully and consistently beat the market, we also need to address new ways to look at Trade PnL since a traditional Long/Short are directional trades, whereas, a Bumper Hedge position is bi-directional. In the case of Bumper, traders generate PnL in three specific ways as we explore here.