One difference between Shares and Cryptocurrencies is that the equivalent of holding an index ie S&P500 is not the same as holding a number of Cryptocurrencies.
A good way to invest in classical financial instruments is to buy and hold an index that represent the market, ie S&P500 as the most famous one. I have seen a lot individuals trying to emulate this in Cryptomarkets by buying and holding various Cryptocurrencies.
This is a really bad tactic and it is destined to fail because the price of the smaller currencies is tied to the Bitcoin price. When an exchange is calculating the price of a smaller currency it always checks the BTC/USD equivalent. That means that even if the individual small coin in the “index” is doing really good in comparison with bitcoin , if the BTC/USD is not strong then the Altcoin/USD will also be weak. Also the opposite is true, if the BTC/USD is strong but the Altcoin/BTC is weak you can think that your Altcoin is doing good but in reality it is doing good because of the Bitcoin price.
So the conclusion is that if you want to hold the market, just hold Bitcoin. You will not see 10000% gains in a short period of time but also you will avoid 10000% loses.
It took me some time to write this third part. The actual writing of this post took around 20 minutes plus some editing, it was the preparation and the execution that was really tricky. After running some experiments and a couple of Bots with different settings I decided to take a different path from what I originally planned and that was mentioned on part 1.
If we want to make automated trading effective it has to be 100 % automated without any human interaction at all. This game is played in milliseconds and every human interaction adds delay.
I decided to trade Coin listings for the begging and if I manage to make this successful I will expand. That means that once an Exchange announces that a new coin is listed ( i.e Binance, Gemini, Coinbase) the Bot will instantly buy the coin to be listed and I will manually try to sell it later once the price is hopefully higher. By checking older listings I observed that almost 90 % of the time the price would instantly pump once a listing was announced and it could be that the price would keep rising for several minutes. Therefore the idea here is to use the Bot in order to make the buy ideally in the first milliseconds after a listing announcement.
I am still using Bittrex as the exchange that I am buying the coins but I do not use Twitter as my golden source anymore. This is because in general an Exchange would first update its website about a new listing and then it would make a twitter post about this listing. I noticed that there is some seconds of delay between site and twitter announcements, and twitter comes last.
So what I am doing is i am sending constantly HTTP requests and search for specific strings on articles that are posted on various Sites regarding new listings.
Today I got the first result after a month of waiting for some exchange to do a new listing. Today Binance listed GoChain and my bot worked and it bought “GO” but it was too slow. Too slow it means that it was about 2 seconds late. It bought at the price of 993 Satoshis where i had expected that it would buy around 910. The pump started around 900 Satoshis. There were other bots that did worst than me and bought around 1100 but the price dropped immediately and I could not sell it that fast , since my bot is at the moment only programmed to buy.
The price remained the remaining of the day around 930-950 so I decided to sell for a lose and take the lessons learned and improve my next listing. My current plan is that the bot buys and then I manually login and check the price and decide what to do. For the next listing I have already improved my bot by a great percentage. Now it performs 600 % faster HTTP requests and I have also done some improvements on the code that sends the buy request so i am expecting to see a doubling of performance from there as well.
On the next post I will post the results of the next coin listing. There are a lot to say about the bots that are out there but I will also hold my thoughts for another post.