Now, being at the end of our narration, I would like to share my working methodology for effectively withdrawing money from the cryptocurrency market, collected on the basis of the materials and ideas of this book.
Consider the formulation of the problem.
1. It is necessary to make the most of the feature of cryptocurrencies – unexpected unpredictable very wide movements that do not lend themselves to programming in algotrading.
2. The number of transactions should be minimal to reduce the commission.
3. Work at the computer should take no more than 1 hour a day to analyze the current situation and remove the resulting profit, to submit new applications.
4. Use the practices of the best modern traders for the strategy.
5. Profit should flow continuously, there should be no loss at all.
6. The amount of funds raised should be as small as possible, the profit as large as possible.
7. The strategy should be safe for beginners.
8. The strategy should use all the developments covered in this book.
After much thought and tracking a variety of techniques, their elimination under my requirements described above, I managed to develop a working strategy based on the effect of long money – the strategy is resistant to almost any drawdown. That’s what happened.
1. Having studied the cryptocurrency market for a long time, I came to the conclusion that it is more reliable to use short trades, since the fact of long trades allows you to determine the boundaries of movement for a short. I did the strategy in 2022 – a short year.
2. For the amount you have, we calculate the parameters of our strategy. The amount is divided in half: we buy coins for one part, the second part is the working volume of margin maintenance. This is the most important thing. The technique immediately sets the level of possible drawdown (but not loss) equal to half the amount.
3. Then suitable coins are sold for half the amount. In total, in my opinion, at least 15 coins are needed for successful trading. At the time of writing this article, I am using 33 coins, and I plan to further increase their number. This is the essence of the methodology.
4. Which coins are suitable? Those that have already jumped up by at least 100%. These coins are the most suitable.
5. What happens next? Some coins start to fall, some are worth it, some are growing. For all coins, we issue the following additional orders: closing by -10% of the sale price, an additional short by +50%-100% of the sale price. I.e., after reaching the drawdown value of 50%, we sell for the same amount as the first time. Magic happens: if you have a lot of coins in your work, then even the growth of any of them does not knock you out even by 200%, and you can increase your short position at a good price, while it was 50% minus, it becomes 4 times less, i.e. the coin will have to travel twice the distance back – 12.5% if the same transaction volume in lots is used. 50% is not taken by chance, because this is the most common size of growth for coins, usually does not even reach 30%. That is, we assume that all our coins cannot grow by more than 100% at the same time, which gives us a reason to keep exactly the same amount free on the account that we we bought coins + GO (for most coins 10% of the transaction (leverage 10x), but sometimes 100%, we do not accept such coins for our strategy).
6. So, then the algorithm is as follows, everything is done exclusively manually, now I will explain why. Periodically, 1-3 times a day, we monitor the status of our short trades. If the transaction is closed, having reached 10% of the offset down for the long position, then we open the short again, and the previously placed short extension order is again shifted 50% higher from the current transaction price, we put the long position 10% lower from the current price. And so it is all the time. As a result, we seem to be in the market all the time.
7. Now about the main thing. At the very beginning, we select coins that have jumped up by more than 100% or so from the last strait. What is it for? We immediately pocket 30-50% of the profit within 1-7 days. I do this. During the next monitoring, if I see that the coin makes a profit of at least 2%, I close the deal and immediately sell again, I shift the long order again by -10% down and the short order by +50% up from the transaction price. As a result, we get the effect we need all the time, we are added at a good price, and we also come out at a good price. When the price falls, the value of our transaction also falls, because the number of lots we have is strictly constant. That is, let’s say at the very beginning you took a coin for 5 lots. We keep this amount all the time in the first transaction and in additional ones. I.e. when we add, we will add 5 more lots, i.e. there will already be -10 lots. What it’s for. When the price drops sharply, we collect our legitimate profit, but at any moment it can soar by, say, 30-60%. What’s happening? We do not have a huge drawdown, because the transaction amount was small, and as the price increases, we are added already at the maximum growth of the coin and the probability of its further growth drops sharply. Even if the coin grows further, we can safely sell our 5 lots for example. But here it is necessary to follow the general trend for bitcoin and all your coins – maybe in some cases it is better to set not 50%, but 100% to increase the position – this is if you are very afraid of a drawdown that will block your free funds, or you stupidly do not have money to deposit margin to the account in exceptional cases. But again, if you don’t overdo it and stick to the approach I described, it’s very difficult to practically take you out, and this is where the system manifests itself. It is sufficiently resistant to elimination.
8. What happens to the account? As a result, your account is divided into 2 parts: the wallet balance and the unrealized PNL. The strategy is built in such a way that the wallet balance only grows, falls and the unrealized PNL changes. It’s bigger and smaller every day. The bottom line is that we do not use stop losses at all, except for the long at the profit cutoff. That is, therefore, we do not lose anything, because when we drawdown, all transactions are open – and until we close there is no loss. That’s how miracles work out!
9. Of course, you can adjust the margins of 10% and 50% for yourself, but I do not recommend doing this, because then you may get a different effect. By setting, for example, 100% your price may never reach such a price. bet 100% when the market becomes long, there may be a series of growth up to 400% or even 600% (as on the WAVES coin), but that’s another story. Again, all your coins will never give 400% at once, this is the strength of the algorithm. Control greed, don’t build up your position when you get it, have patience and profit will flow into your pocket strictly according to plan.
10. How to choose the minimum required amount. I recommend choosing this way. The minimum transaction amount per coin is $10. The minimum number of coins for the stability of the algorithm is at least 15 pieces. It turns out that you need $ 150. Buying $ 150 worth of coins with a shoulder, you essentially use only GO -10%, the rest is the margin working volume, which we monitor. I.e., about 10,000 rubles is enough to start the strategy, which is quite acceptable to me.
11. The return from such a strategy is as follows: depending on the market, the profit ranges from 0% per day to 20% per day (up to 20% at the moments of the Bitcoin spill). It seems not bad, considering that there is no minus at all, there is only a floating drawdown volume, which we can adjust by increasing positions and shortening the return path by 2 or more times, the size of the added volume of the short!
12. Having increased the account by 2 times, add positions from above with double volume. That is, when the price rises by 50% or higher from the entry point of the first transaction in which you are, put a short on twice the number of lots. This will significantly reduce the return journey to the point of zero profit. Then you can close the excess volume at the beginning of the entry into the profitable zone and immediately open a new short position with the usual volume and finish the profit. You can try and continue moving down with an increased volume if there are reasons for that. Then the profit will increase dramatically. The reason may be the beginning of a downward price movement after a sharp rise, for example, over 100% or higher. When more than half of the coins that have already fallen quite heavily in your portfolio, i.e. by the beginning of a sharp increase, it’s time to think about leaving such coins and replacing them with new ones that have just taken off. This will increase the resilience of the portfolio to the addition of new money. During such periods, I buy a spot for the same coins for the same number of lots (I align with shorts or vice versa). This is necessary to compensate for unexpected upward shoots in a number of coins, gu and we will not be prevented from additional profits.
13. I consider the need to hedge USDT pairs with BUSD pairs to be a further development of this strategy. Unfortunately, there are simply no futures with a BUSD pair for most coins yet, so we have to work with spot. The spot has an advantage – the amount of money spent on the spot will no longer be higher, because the leverage is 1x.
14. It is important in this algorithm to close short trades in time and start working with long ones when the trends in the price movement of an individual coin change. In a falling market, as in 2022, bursts of Bitcoin growth will give you additional profits on spots and BUSD positions. Further, if the growth has ended, we sell these more expensive positions and then work with shorts. 15. While this topic is in development, because it requires extra money and becomes more complicated for beginners. I will tell you exactly how to implement this in the next releases of this book. Follow the new articles on our portal.