Trakx: Leading Platform for Crypto-Index Trading

Investing efficiently in cryptocurrencies is challenging: There are various complexities with multiple blockchains and wallets, and the high volatility exposes you to numerous risks. Additionally, it isn’t easy to implement a well-defined strategy and adhere to it consistently, which is why most traders are not profitable. Trakx created its crypto-index trading platform to solve these complexities: With crypto index funds, you can invest in multiple assets at once, automatically implementing period passive rebalancing on predefined factors, sound risk management, and advanced diversification. Let’s explore the benefits of crypto-index trading in more detail!

Crypto-Index Trading: Understanding Advanced Investing Strategies

With its proprietary technology and infrastructure, Trakx is setting new advanced standards for crypto investments by allowing investors to gain exposure to a diversified portfolio of cryptocurrencies through crypto-index trading. Similar to traditional stock market indices, such as the S&P 500 or the Nasdaq Composite, trading crypto indices allows investors to invest in specific market segments and sectors or to implement a specific advanced strategy. Let’s explore the benefits of crypto-index trading more in detail.

Benefits of Crypto-Index Trading

Through its crypto-index platform, Trakx offers various valuable benefits for novice and experienced investors. What are the benefits of crypto-index trading?

Automatic Diversification and thematic exposure

One of the key benefits of crypto-index trading is the automatic diversification you can get by investing in a single asset instead of multiple cryptocurrencies. Diversification is crucial in risk management and allows you to spread the risks over multiple assets, avoiding the possibility of investing only in individual poor-performing assets. For example, one remarkable case that explains the importance of diversification is $LUNA. If, in fact, you invested a considerable amount of your funds in Luna in 2022, you could have lost a large part of your capital. Instead, if that cryptocurrency was part of a crypto index, its negative impact could have been limited, not affecting the overall performance of your portfolio so much. Trakx’s crypto index funds are numerous and allow you to select the basket that is best suited to your goals and risk tolerance: From RWA, AI, and Memes to DeFi, DePin, and PoS, you can invest holistically in the sector you prefer.

Sound risk management best practices

The most undervalued factor in investing is probably risk management. It’s difficult for investors to rebalance their portfolio periodically, diversify efficiently without falling into scams or unsafe projects, and adhere to predefined investing strategies and rules. Trakx solves these complexities by automatically implementing specific rules for the crypto indices, such as a minimum market cap or trading volume to include assets in the index and automatic rebalancing each month (or even each day for specific indices). Additionally, the indices are also divided based on investors’ risk tolerance, allowing you to select the most suited for your goals, risk tolerance, strategy, available capital, and time horizons. In this way, with crypto indices, you can ensure that your portfolio is always aligned with your predefined trading strategy.

Advanced strategies: Smart beta and beyond

Another important advantage you can benefit from is the possibility of investing in some indices that have automatically implemented advanced quantitative investing strategies, such as smart beta. Smart beta models in crypto are based on quantitative strategies and aim to outperform specific market benchmarks while reducing associated risks. One of the most common strategies is based on momentum, meaning that the index automatically increases or decreases exposure to cryptocurrencies based on predefined parameters and technical indicators. For example, Trakx, with its BTC Momentum Index, allows investors to get dynamic exposure to Bitcoin depending on the market performance, decreasing the allocation to 0% during bearish phases and increasing it to 100% during bull phases. Another common strategy is based on value, automatically analyzing indicators to select and invest only in undervalued assets with solid fundamentals and high growth potential. Some crypto indices are specifically designed to allow investors to implement advanced institutional-grade strategies that require quantitative analysis and cannot be implemented manually.

Tradability 24/7 without interruptions

Unlike traditional and crypto ETFs, which are tradable only during market hours, Trakx’s crypto index funds are available to trade 24/7 without interruption, allowing traders and investors to trade when they like and to seize the opportunities effectively. This is crucial in the crypto market because prices can change quickly based on breaking news, and traders can open and close positions accordingly, without limitation and with full control. Additionally, another common problem in trading, especially if you use leverage or derivative ETFs, is the liquidity issue and large spread between buy and spread orders: Trakx’s crypto index funds are always backed 1:1 with the underlying assets and the reserves ensure that there is always liquidity available and little spread, reducing costs associated with transactions and allowing you to trade without worrying about market orders’ depth.

Cost efficiency and passive management

Trakx’s crypto indices offer another important advantage: Cost efficiency. In fact, if you trade “traditionally”, meaning trading individual cryptocurrencies from multiple wallets, you inevitably incur trading and transaction fees that erode your returns. Active management, both if done autonomously or through a financial institution, brings fees and costs. Conversely, crypto index trading, with its automatic rebalancing and passive management, can help you save fees and keep the management cost low, ensuring efficiency and safeguarding your returns. Additionally, you must also consider that the automation of portfolio rebalancing reduces the risks of human errors, ensuring the portfolio is always aligned on predefined strategies, risk tolerance, and goals. In conclusion, crypto-index trading on Trakx allows you to implement the most advanced strategies typical of institutional investors and actively managed funds while ensuring cost efficiency and passive management.

In conclusion, crypto-index trading is the new frontier in crypto investing, and Trakx is leading the way in setting new advanced standards for crypto investments. Whether you are a novice or an expert, whether you have a high or low tolerance for risk, the wide selection of crypto index funds on Trakx will allow you to implement a strategy aligned with your profile, ensuring sound risk management, the potential for higher returns, and passive management.