Evaluation of OKX's "Pre-Market Trading" Feature: Three Characteristics and Four Major Strategies

In just two days, OKX has quickly launched two pre-market trading projects: one is the TON game project Hamster Kombat (Hamster) token HMSTR, and the other is the popular TON ecosystem MEME project DOGS (Telegram Dog).

This is undoubtedly a significant piece of news in the crypto industry that many people have overlooked.

Pre-market trading is an extremely niche segment of the crypto industry, allowing traders to trade coins that have not yet been launched. In the past, pre-market trading was mainly over-the-counter, with third parties acting as trusted intermediaries to facilitate trades between both parties. Despite the many inconveniences and risks such as double betting and order running, the potential high returns in the crypto market still make both parties enjoy the experience.

In 2023-2024, many star projects are crowding into the final moments of TGE, and market trading enthusiasm is extremely high, leading to an exponential growth in demand for pre-market trading. The traditional model has clearly become an "industry pain point." When will the trust issues in over-the-counter trading in the pre-market trading model be completely resolved? The liquidity issues? The industry is waiting for an "iPhone moment."

In fact, from DEX to CEX, the pre-market trading market in 2024 has entered a stage of "intense" competition, and the launch of OKX's pre-market trading function is undoubtedly a milestone marking the maturity of this market.

From various aspects such as functional professionalism, user volume, trading volume, and market influence, OKX's entry has undoubtedly ignited "pre-market trading," pushing it from niche to mainstream.

We carefully studied OKX's pre-market trading function and discovered some interesting aspects. Additionally, we also researched some of OKX's features, and from the development history of CEX products, it is indeed very innovative, providing trading users with more specialized tools.

Three Major Features of OKX Pre-Market Trading: A Milestone in the Maturation of Niche Segments

What exactly is OKX's pre-market trading? We have sorted out several key pieces of information as follows:

1. Essentially a USDT-based contract;
2. Leverage ranges from 0.01 to 2 times;
3. Ordinary users have a position limit requirement of $10,000;
4. Only isolated margin mode;
5. The token price in pre-market trading is determined by the market behavior of buyers and sellers;
6. Tokens traded in pre-market on OKX may not necessarily go live on OKX spot trading after TGE;
7. If the token goes live on OKX's coin-to-coin market after TGE, it will be settled before going live; if not, the contract may be delisted early. Specific settlement will depend on announcements.

These rules can be summarized into three major features.

First, USDT-based settlement contracts.

This is the most interesting aspect of OKX's pre-market trading function, which is extremely different from the currently common spot settlement pre-market trading. Traders who have experience with spot settlement should be aware that this model can be described in two words: difficult to play. Buying and selling are inconvenient, liquidity is frustrating, and the price difference is significant.

The essence of OKX's USDT-based settlement contracts makes it nearly zero difficulty in understanding and operation, especially for contract traders. How to trade BTCUSDT-based contracts on OKX is exactly how to operate the tokens in pre-market trading.

Additionally, the ability to buy and sell at any time provides an extremely convenient trading method for assets with significant uncertainty and price volatility, allowing for better optimization of trading strategies.

Second, the rules are relatively "conservative."

With a maximum leverage of 2 times, a position limit of $10,000, and isolated margin, this is undoubtedly a compromise choice that balances the risks and potential opportunities of pre-market trading, which is very helpful for traders who do not effectively control "risk." The conservativeness behind it makes the risks for traders more manageable.

Third, tokens have price differences.

The token prices on OKX are determined by the market behavior of buyers and sellers, and pre-market trading tokens may go live on different trading platforms, including DEX and even CEX. However, they cannot smooth out price differences like tokens after TGE through third-party arbitrage. Price differences exist across different platforms. This is undoubtedly a risk, but also a potential trading opportunity for rediscovering token prices.

Since its official launch on August 5, as of the time of writing on August 8, the contract trading volume of HMSTR in nearly 24 hours was about $40,000; the DOGS contract trading volume in nearly 24 hours was about $30,000.

It must be said that compared to the 24-hour trading volume of $23.4 billion for BTCUSDT contracts, pre-market trading is still a "small ant." However, the low trading volume should also be a "characteristic" of pre-market trading at this stage of development, which is an unavoidable challenge in the growth of this niche segment.

After a deep experience, I believe that the pre-market trading function currently offered by OKX, in terms of the USDT-based settlement contract model, has provided traders with a very "effective" trading tool. For the vast number of tokens that have not yet been launched, it can also help the market form price consensus in advance.

OKX's pre-market trading function is simple and easy to use, and it currently appears to be the latest advanced version of this function, which will undoubtedly push this trading model into a more mature stage and escalate the competition in this segment to "intense."

Currently, what needs to be observed is which star projects OKX will launch in the future, how the trading volume, trading depth, and number of trading users for these project tokens will be, as this will determine who can become the most important trading tool in this market and who can capture more market share.

Practical Testing of OKX Pre-Market Trading: 0 Basics to Get Started, 4 Potential Alpha Opportunities

To experience the pre-market trading function, you first need to upgrade the OKX APP to the latest version 6.78.0. Then directly click on "Trade" in the middle, and select "Pre-Market Trading" in the pop-up dialog. Alternatively, in the "Discover" section, click on "Market," and you will see "Pre-Market Trading" located between Contracts and Options.

As mentioned above, OKX's pre-market trading function is fundamentally consistent with contracts and even spot trading, making it easy to operate. I initially hoped to share more details, but it was too simple, leaving little to share.

How can one strategically use the pre-market trading function? After our experience, we summarize as follows:

1. Participate in trading of popular projects in advance.

Currently, OKX has launched HMSTR and DOGS within two days, both of which have high popularity in the TON ecosystem. The speed at which OKX lists tokens is very fast, and the new tokens that will be launched in the future are worth paying close attention to, as this is an opportunity to obtain popular tokens in advance aside from airdrops.

2. If you hold related token airdrops, you can short to lock in profits in advance.

Most pre-market trading tokens are clearly defined airdrop tokens. By estimating the airdrop share and based on the pre-market trading price, shorting can lock in airdrop profits in advance.

3. Utilize low liquidity characteristics to increase trading profits.

The price fluctuations of pre-market trading tokens are more pronounced, heavily influenced by project-related news, and liquidity is relatively low, creating opportunities for price discovery in extreme situations.

4. Use pre-market trading prices to predict post-TGE token prices.

Compared to other platforms, OKX's pre-market trading has relatively high liquidity, thus enhancing its price discovery capability, which can serve as a price guide for tokens after TGE, helping to avoid high-level buying or low-level selling of popular tokens in the future.

The potential Alpha opportunities in pre-market trading are clearly present, but this model has low liquidity, price differences, limited participation from traders, especially institutional participants, and is easily influenced by news, making prices potentially unable to accurately reflect token value, leading to high volatility and trading risks. I believe it is essential to fully understand the trading mechanisms and associated risks before participating in trading.

Clever Use of OKX's Innovative Trading Features: It Will Be the "Specialized Weapon" for Ordinary Traders in the "Super Cycle"

From what I understand, many traders who have been in the crypto trading field for years still only stick to the most basic trading operations on CEX, lacking attention to the innovative gameplay of CEX in recent years.

If you pay attention to OKX, its pre-market trading is just "one point" in its expansion of CEX trading functions. It has already launched many explosive innovative features. These innovative features are continuously evolving with the crypto industry, providing traders with value to optimize trading decisions and enhance trading experiences. A craftsman must sharpen his tools; it is very regrettable to have good tools but not know how to use them.

The following two types of features are particularly worth understanding.

1. Innovative Feature: "Strategy Trading"

Strategy trading is an automated trading function that replaces subjective human judgment with advanced mathematical models, along with programmatic trading to assist traders in intelligent order placement. OKX's strategy trading can be described in three words: diversification. See the table below for specifics:

Grid Strategy: Spot Grid, Contract Grid, Infinite Grid

Average Cost: Contract Martingale (Contract DCA), Spot Martingale (Spot DCA), Regular Investment Strategy

Combination Arbitrage: Coin Holding Treasure, Bottom Fishing Treasure, Top Escape Treasure, Arbitrage Order

Large Order Splitting: Iceberg Strategy, Time-Weighted Strategy

Signal Trading: Signal Strategy

If you have not been exposed to these, you might find it overwhelming, as traders need to choose based on their risk preferences and trading environments, which requires some learning time.

Here, taking a simple BTC regular investment strategy as an example, traders can set the trading amount for each period, trading cycle, scheduled buying time, etc., thereby reducing the risk of emotional trading such as chasing highs. It is very suitable for volatile markets and bullish markets with oscillations.

Compared to strategies obtained through data backtesting and optimization, traders often trust themselves more, which may be a psychological challenge in using strategy-based products. However, the development of the crypto industry will inevitably lead to specialization, and we can clearly see this process from the evolution of the aforementioned products on OKX.

2. Innovative Feature: Copy Trading

Copy trading is a long-standing trading strategy that helps traders "copy" the operations of successful traders, allowing them to open and close positions (buy and sell) without manual operation or monitoring the market. OKX currently offers contract, spot copy trading, and strategy copy trading.

Taking the smart copy trading model as an example, it allows traders to choose the maximum copy trading amount and then select the copy trading amount ratio, such as copying 0.02 times the value of the trader's order. This enhances risk control in copy trading, balancing returns and risks, and allows for one-click copying. Copy trading also has many detailed features, which will not be elaborated here, but from the experience, these details are extremely important for optimizing trading operations.

In fact, after more than a decade of development, the crypto industry has reached a crossroads of diversified innovation and intertwined challenges in crypto trading products, and the entire industry is entering a new stage of development.

Today, CEX faces not only competition with DEX but also the pursuit and challenges of security, transparency, compliance, and user experience. The integration of DEX and CEX technologies is also bringing infinite possibilities, and how to serve the massive influx of users during the "crypto super cycle" has become a challenge. All of this drives CEX to innovate and evolve.

OKX's innovations in trading products lead the industry in the aforementioned process and also reflect a side of the industry's evolution and upgrade: becoming more specialized, richer in functionality, and more convenient to use.

In which areas will CEX compete next? What interesting features will emerge in which details? How can CEX empower ordinary traders to gain the trading capabilities of professional traders?

Observing OKX, to some extent, its continuous innovation may become the "specialized weapon" that empowers ordinary traders during the current "super crypto cycle."

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