Road from $6K to $6K

jason  ·  2019 May 23

In October 2018 when CoinBakers started serving its first few customers we were at the Bitcoin price of $6K. This month we reached $6K again after seeing Bitcoin losing more than 40% of its value. This blog post is a summary and look-back on what happened in this period.

The CoinBakers strategies are not that complicated by itself but handle many scenario's to make running it through bull, bear, and neutral markets viable. Complexity was added when creating a strategy that helped the main strategies giving info on shorter time frames. This so called supporting strategy gives us the ability to react to markets in real-time. Instead of relying only on hourly candles. Because, within an hour, a lot can happen.

The unfortunates

The supporting strategy was introduced in March 2019 with the aim to reduce risks between the hourly candle closes. It had its problems on launch due to an edge case/bug, outlined in this blogpost https://coinbakers.com/blog/march-2019-performance, we missed out on ~25% profits.

Another point in time I remember well was when I paused all trading due to the sudden pumps and crashes. Similar patterns were seen since December 2018. The pause was commenced in anticipation of the development and release of the supporting strategy to protect our portfolio's better in these situations. Of course after weeks of relative stability and prices going down, the weekend that I paused all trading, the market pumped 10%.

In both situations backtests showed that we would have a solid position. I learned to not care too much about positions, but knowing this does sting, as our strategies are living off these major pumps. We spend a lot of small positions and take losses, just to be in those pumps.

CoinBakers strategies perform not so well in neutral markets. So end tail of the bear market, was a hard period. Also everyone who experienced the November 2018 crash, knew the strategy worked in protecting your portfolio during crashes (past performance does not indicate future returns), but with limited upwards volatility, the big question was, does it work in securing profits.

With the supporting strategy edge case/bug and the unfortunate timing of trading, this was yet to be unanswered in a real scenario. I hoped by returning to $6K we would have profited from the 40% dip. In this $6K to $6K period, we protected your portfolio but were unable to profit massively off it.

However it was a good period to see what more was needed, improve stability, and hopefully a good starting point if we had to choose one point in Bitcoin's timeline for these learnings.

It's so easy to wanting to do something, intervene, and react to the market as its happening, forgetting all about that the bot is designed to take the human aspect out of it. This also applies to myself when improving strategies, decisions to pause, switching strategies, etc. I think over time this is something based on experience to find a balance that works.

Recent Status

CoinBakers has been running quite stable recently. Did discover a minor, but impactful bug last week on V4, but this has been patched. This did not affect historical positions as far as I know, but I could see this leading to an edge case where it wouldn't buy in.

Since the infrastructure is maturing and major modifications that were required when introducing the Master and Support strategy, development is a lot more focused on independent portions of the infrastructure. This means less bugs so increased stability.

I'm making progress in visualizing the real-time data but it's definitely not ready for thorough strategy-preparing-analysis, as there's just massive amounts of data to plow through and keeping this performant is a challenge. It's built all custom to give me exactly the data and visuals I need.

Anyway, a reflectionary post. I want to be transparent on actual results, strategies' weaknesses, and not hiding bugs or decisions that worked against me. Behind all trading mechanisms, algorithms, and decisions are people, and I think if this process is more transparent, we can all understand better what's going on.

The performance report for May will be late as I will be in Malta the first week of June. Hope the weather will be better by then!

Jason