Strategy Update + Binance Strategy

jason 聽路聽 2018 Nov 8

Updates on the following topics to be discussed:

  • Sideways market strategy development update
  • Binance strategy
  • Monthly updates

Some quick updates first

  • Still going strong with Quora and I'm now a top 10 writer for Bitcoin, virtual currencies and cryptocurrencies on Quora. Who would have thought that 馃槑
  • We have a total of 43 verified signups in the last 30 days
  • We are nearing $50K under management
  • On average about $7,000 per customer
  • We have about 7 customers now in the managed fund

Sideways Market Strategy

This is an update on the much anticipated sideways market strategy. It's not coming. Now that that's out there let me explain.

I've tweaked and tested the strategy for days and it looked very promising at first. However, merging with a current strategy is a whole other story as you need to consider multiple signals, that eventually will trigger mixed signals. Do we sell if the short term strategy signals a sell, or keep as the long term strategy still signals a buy? It gets even more complicated because the short term strategy is entirely based on different indicators than the long term one.

The current strategy is optimised to catch the winners. Those are gains in the 20% range and up. We'll have the occasional 1-5% losses but the winners offset this by a good margin. See performance images further below.

The short term strategy for the sideways market is never going to outperform the long term strategy. It can make micro profits usually in the 0.1-1% but it complicates the current strategy with magnitudes.

The long term strategy is already using a multi-strategy system, where in ranging markets we use the strategy optimised for alts. This one exits earlier as a response to the micro losses past few weeks and was pushed in the V4.10 update. The losses were still there but less. Once we have a trend, it changes to the Bitcoin optimised strategy, to complete the entire run. We usually do not sell in a strong up market trend where the alt optimised strategy will.

Using this multi-strategy approach is outperforming if both were to run separately over a 3 year timespan.

As a sidenote, the alt and bitcoin strategy works on both assets, and on any timespan, and be very profitable. However Bitcoin has different characteristics than let's say Ethereum. The optimised strategies take this into account. I generally backtest strategies on different assets and periods, in which they all should be profitable AND beat the market.

I have the following charts for you. One after the bull run and one before. In all cases we beat the market with 24-40% market exposure.

Period: 2017-07-15 路 2018-09-15 Balance Performance 2017-2018

Period: 2014-12-01 路 2016-02-20 Balance Performance 2014-2016

And one from 2014 all the way until the bull run from 2017. Balance Performance 2013-2017

Last months losses were in the -6% range, which is completely within spec with our backtests. It's the worst period for our strategy because we follow trends, but there are no trends to follow atm. So it's not doing all too bad. I wish I had data from 2011 onwards, but no one seems to be able to deliver hourly candle data from that period. Makes sense though. If you know someone who can provide this data let me know.

When looking at a similar period with a sideways market in 2015 we also sustained losses around -5%. However the market became bigger, thus slower, so that's the reason why this period is probably longer than the one in 2015. However I expect more volatility soon nearing and during the Bakkt launch 12th December.

Backtest Monthly 2015

So that concludes my endeavour for trying to optimize this period. We have to think long term and stay strong.

Moving on.

Binance

The current running strategy called JW_V4, is a long term strategy focused on minimising risks.

I want to focus my further development on another separate strategy, a higher risk/higher reward strategy based on the Binance exchange. My plan is to offer two packages one stable risk first strategy, and one profit first strategy.

There are many opportunities on Binance. Huge pumps based on news or interest and of course those pump and dump. I will start by monitoring a set of high market cap alts by minute or tick, and act based on high volume changes. This can be a signal to a big pump starting to take off. We want to get in and out quickly with tight stop losses.

The goal of this package is to offer opportunities to make big short term gains, based on an automated system to detect trend anomalies that can act faster than human traders. You can for example have 90% managed by JW_V4 and 10% on the new Binance strategy.

Besides that, I think we have a lot of opportunities from our current JW_V4 strategy when applying to alts. As most alts' performance are based on Bitcoins' performance, but with higher up and downwards volatility, we can apply this knowledge to basically trade with margins, without margins 馃 I will test this strategy too along with the with pump monitor.

I don't want to trade lower cap alts though as they carry more risks and are more prone to pump and dump schemes. You'd also have to monitor the alts orderbook more closely to know how your buys and sells are going to affect price.

Anyway development for Binance will start next week and will keep you updated on the progress and the test results.

Monthly updates

I will share monthly updates in the first week of each month from now on. What the market did and how we are performing.

Furthermore, customers who are in the managed fund plan will receive tailored automated monthly performance updates. Also somewhere in the first week of each month. I will also disable notifications on each trade by default as this creates unnecessary hope and stress. Which we are trying to reduce. You can always check your dash or exchange if you want to know the status but I'd suggest to wait for the monthly updates for a better peace of mind.

To close off, I'd like to share this message I received with you: "Hi! Not trying to be rude, but your site might be hacked. Every instance I can find of the word "holding" has the word "hodling" in its place. You might want to fix that as otherwise this looks like a decent site for crypto investors. Thanks and have a good one."

He has a point 馃お Not too much fan of the term hodl too. Haha.

Cheers, Jason