Before we dive into how a simple rule created the insane ROI mentioned in the heading, let’s get one thing straight.

You can’t copy that.

Actually, no one can do that. Even a trading bot couldn’t replicate this particular strategy in real life as it is more of a thought experiment, proof-of-concept than an actual way to make money in crypto trading. The exchange fees alone would nullify this particular strategy for most traders.

But that doesn’t mean it’s useless – in fact, it’s the perfect way to illustrate how a simple strategy can work for real traders in real life.

So let’s dig in. What could you do with this algorithm now, today?

What does “buy 80, sell 12 hours” mean?

Here is the basic requirement. In collaboration with the data company The TIE, Cointelegraph Markets Pro has developed the VORTECS ™ Score, an algorithmic determination of how bullish or bearish the current trading conditions are for a particular crypto asset.

The rating is based on historical data and essentially searches the entire history of a coin or token looking for conditions similar to those it is currently observing.

It searches for a variety of similarities and outliers – for example, trading volume, recent price action, social sentiment, and even the amount of tweets about that asset.

If it finds similarities, it looks to see what happened next. Has the asset gone up or down? How consistent was this movement? How big was the increase or decrease?

The combination of all these data points creates the VORTECS ™ Score, a dynamic and constantly evolving assessment of the current trading conditions for each supported asset. The higher the score, the more bullish the outlook – and the more confident the algorithm is. Conversely, a very low score is bearish (and equally confident). A neutral value of 50 means that the algorithm does not see any significant correlation between the current conditions and the past price development.

The Markets Pro team started testing a whole range of strategies the day the algorithm went live.

A “buy 80, sell 12 hours” strategy means that the test will “buy” any asset that exceeds the 80 score, which is considered highly bullish. And then it “sells” the asset again after exactly 12 hours.

Of course, this does not happen on a stock exchange, but on a spreadsheet. And since the test wants to keep all assets within its reach the same, it is rebalanced every hour.

For example, if Solana’s SOL coin exceeds 80 and it was the only asset with that high score, the test would place 100% of the current portfolio in SOL. But if Binance Coin (BNB) then also exceeds 80, the test would assign half of its position to the BNB in ​​the next hourly rebalance.

Why couldn’t you

First, let’s assume you are human when reading this. When you are human you need sleep. The test works 24 hours a day, every day and has been for over 10 months. Even new parents get a break from the baby every now and then.

Second, the algorithm does not take into account the liquidity or order depth of a particular asset on a particular exchange. It “buys” at the current price and “sells” at the current price, which, as we all know, is not necessarily realistic.

And third, hourly rebalancing exchange fees would be prohibitive, no matter how many BNB or FTX tokens (FTT) you are hoarding.

Why is this a valuable test at all?

The point here is to evaluate whether the VORTECS ™ algorithm is doing its job well.

When it sees bullish conditions, is it mostly right? In general, do prices go up as the score goes up? For this test, of course, the answer is yes.

And while Buy 80, Sell 12 is an outlier, there are other strategies that have produced massive hypothetical returns.

For example buy 80, sell 24 hours. This sits on a “profit” of 13.099%. Other strong strategies are:

Buy 90, sell 168 hours | + 4.544%

Buy 80, sell 80 hours | + 14.862%

With Bitcoin (BTC) getting 49.5% back since testing began on Jan. 5, 2021, every single strategy has exceeded the ROI of simply holding BTC.

And that signals that VORTECS ™ is working properly. It proves – generally over time – that historical trading conditions for digital assets can be a useful measure of the current state of that asset.

In other words, a high VORTECS ™ Score has a proven correlation to price increases. Not in every case, not for every asset … but generally speaking, this 10 month trial made a compelling case.

Warren Buffett (perhaps paraphrasing Georg Wilhelm Friedrich Hegel) once said: “What we learn from history is that people do not learn from history.”

(As a crypto skeptic, he may want to reconsider his stance.)

This is what the VORTECS ™ Score is all about. Learn from history. And that’s why a hypothetical return of 36.205% is important.

It tells us that we are looking at the correct history.

Cointelegraph Markets Pro is exclusive to members on a monthly basis for $ 99 per month or annually with two free months included. It has a 14 day money back policy to ensure it meets the crypto trading and investment research needs of subscribers, and members can cancel at any time.

Cointelegraph is a financial information publisher, not an investment advisor. We do not offer any personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent loss and total loss. Past performance is not an indication of future results. Illustrations and diagrams are correct at the time of compilation or as otherwise stated. Live-tested strategies are not recommendations. Consult your financial advisor before making any financial decisions.

All specified ROIs are as of October 23, 2021, 4:00 p.m. UTC

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