Choose Your Desired Long-Term Currencies
DUO is a short-term product and at expiration, you will either receive the invested currency or the quote currency. If you believe that both currencies will perform equally well in the future, the short-term outcome becomes less important.
Select a Liquid Mean-Reverting Pair
When selecting a currency pair, choose from liquid markets that tend to be less volatile than illiquid markets. Liquid markets are actively supported by market makers, which provides liquidity and stabilizes the market, making it less susceptible to manipulation and volatility. Good options include the top 10 to 20 cryptocurrencies by market capitalization, such as Bitcoin (BTC), Ethereum (ETH), etc.
BTC quoted pairs are generally more mean-reverting compared to USDT quoted pairs. The 30-day correlation between BTC and ETH prices often exceeds 90%, and remained above 74% this year, particularly around the Ethereum Merge in September.
Roll or Hold Your Investment Based on DUO Outcome
If you receive your invested currency at expiration with a reward, you have the option to reinvest the amount in a new DUO on the same pair to seek further rewards, effectively rolling your position.
If the quote currency is received instead, it indicates that the invested currency underperformed. To avoid realizing the loss, do not roll. Instead, hold and attempt to recover your initial investment by setting a "Limit Buy" order at the initial price. This strategy is not guaranteed to succeed in the long run, as past correlations do not indicate future patterns, and there is no guarantee that a limit order will be filled or that the market price will move in your favour.