After checking today's market data, the screen is filled with cries of 'Alpha strategy has failed', 'Excess returns have been crushed', and 'Even hedging costs can't be recouped'. As an old trader who has survived across cycles since 2018, I have to admit that today's market environment has indeed caused many quantitative institutions and retail investors to frown.
But have you all noticed? Every time the market is hard and there are complaints all over the internet, it's precisely the time to stay clear-headed. Because in this game, 'hard' is never a dead end, but a filter, a signal, and an entrance ticket for a few.
Remember this counterintuitive formula: Difficulty = Reduced Competition = Amplified Opportunities
Signal one: High turnover strategy returns have fallen below cost lines, and the market is eliminating 'pseudo-alpha.'
Today I saw some data: the proportion of trading costs in potential returns for some high-frequency quantitative products has risen significantly. This is not an isolated case—along with stricter regulatory 'frequency reduction' requirements for programmatic trading, strategies that rely on extremely high turnover rates and multiple intraday trades have seen their trading costs and compliance constraints significantly increase.
What does this indicate? The market is actively raising the threshold for 'blindly racing for speed,' filtering out players who only want to rely on technical advantages to get ahead.
In the past, 'high-frequency = high returns'; now, steady frequency = no loss, chaotic rushing = severe losses. Those who chase short-term fluctuations every day are the first to be crushed by costs.
Signal two: Mature players collectively shift to medium- to low-frequency strategies; surviving is more important than running fast.
At least 5 experienced institutions around me have recently shifted their strategic focus from 'racing for speed' to 'racing for depth.' It's not that the technology can't keep up, but they finally realized: the core of alpha is not 'who is faster,' but 'who lasts longer.'
Against the backdrop of increasingly stringent regulation of programmatic trading management, some medium- to low-frequency strategies with turnover rates far below regulatory red lines and primarily focused on holding returns have shown stronger adaptability to the environment.
Dayan Capital is an example; their product net value primarily comes from holding returns, with trading returns contributing long-term below 5%. This 'holding as primary, trading as auxiliary' model has shown resilience in the recent market of liquidity differentiation.
This is the wisdom of mature players: during periods of rising difficulty, 'not making mistakes' is 100 times more important than 'showing off.'
Signal three: Homogeneous strategies are exiting on a large scale, and the remaining players will share a larger cake.
Industry data shows that the recent extreme market styles have led to significant drawdowns in many quantitative products' excess returns. This seems like 'bad news,' but in reality, it is an 'opportunity signal'—the total capacity of alpha is relatively fixed; the more people exit, the greater the probability for those who remain.
Just like the 'quant winter' in 2022, when everyone was saying 'quant failed,' the market later returned to equilibrium, and the strategies that persisted saw performance rebounds.
Remember: Big profits are never for everyone; they are for those who 'hang on until the end.'
Three heartfelt truths from veteran traders
1. Now is not the time to exit, but to change strategies.
Don't lie down; replace 'volume thinking' with 'quality thinking.' Those who can withstand this wave of difficulty will find it easiest to reap big rewards later. As regulation pushes the market from 'sprinting for speed' to 'long-distance racing for research depth and risk control ability,' the continuous evolution ability of strategies is more important than short-term returns.
2. Focus on real alpha, not pseudo-beta
In the current market environment, many people mistakenly equate style returns with their own abilities. True valuable alpha should possess long-term stability and be insensitive to noise; this is the key to sustainability. The sieve has already started shaking, and what remains are tough nuts.
3. Alpha won't kill those who persist; it will only kill those who act recklessly.
The market will not disappear; it will only shift. When liquidity recedes, strategies that focus on meticulous detail across the entire chain (from data cleaning, factor design to portfolio optimization, and risk control constraints) will form the core advantage of future quantification. Follow me to learn more firsthand information and precise points in the crypto world, becoming your navigation in the crypto space; learning is your greatest wealth!#ETH走势分析 $ETH
