This is my first piece for Whale Reports. I figured I would start with a brief introduction, and then get into the content. I am The Dragon. I am currently in school, working towards my degree in Computer Science. I am heavily focused in trading cryptocurrencies through algorithmic trading bots. I plan on also having some content that is focused on data science and different studies in the cryptocurrency field. Considering the technology we are exposing ourselves to every single day, I have developed an interest in bots that trade in hopes to profit through market volatility. I have been researching cryptocurrency for around 2 years and have been researching and developing an algorithmic based strategy for around 6-8 months. While relatively new to the space in comparison to others, I hope my insight can provide a fresh perspective as well as an innovative way to approach trading.
Due to the volatility of the market, it was slightly overwhelming when I began research on algorithmic based bots during the peak of bull run in late 2017/ early 2018. It was something that as a trader I had never seen before. I think a good majority of traders were somewhat surprised to see such a dramatic increase in overall market capitalization, with the total market cap reaching just over 800 billion in January 2018.
There are multiple bot based platforms online that I hope to review, as I have utilized and tested most of them. Generally, these services are paid programs. You pay a subscription fee per month of hosting and as the user are able to implement a plug and play strategy. The other route to running algorithmic bots are coding, running, and deploying them on your own dedicated servers. Generally, this is the most secure way to deploy an algorithm, and this can be done on a desktop computer, or something like a Raspberry Pi.
For the average casual bot user, the attraction to automation is the idea of a truly hands off experience. One that you can set and forget. The fact of the matter is if you are going to devote time and resources to coding and deploying Python based algorithmic bots on your own systems or servers, there is a good amount of upkeep and debugging that you may have to do, leading to an experience that is not so hands-off. The only way to keep your algorithm proprietary is to keep it on private servers, and manage and run it yourself, hooking up to a major exchange of your choice. For now, I am not going to be focused on providing guides on how to code Python based bots. I will be focusing most of my articles on bot systems or platforms that the everyday user would be able to use and adapt to their own strategy – little to no coding experience beforehand.
That being said: none of what I am saying is financial advice. I am not being paid by the bot service I am writing about today. I have used them for roughly 1 month now as they just came out of their beta testing stage. This bot is a premium service I paid to use and am currently subscribed to, payable in BTC/BCH/ETH/LTC.
The platform I am reviewing today is called Nazca Bot. Nazca bot is a platform that allows you to create a pre-made strategy that can be dynamic or fixed. They have some pretty powerful customization options. Nazca bot website can be found: https://nazcabot.io/ . They have built a pretty powerful and fluid GUI on a web based platform.
Above is a screenshot of the homepage of Nazca bot. The first reason I was initially attracted to the Nazca bot is that the back-testing feature that the platform provided was one of the most powerful web based back-testing features that I had seen. Aesthetically it was very pleasing as well.
Nazca focuses on building a long-term diversification strategy. Using the platform, you can pick a portfolio style to your liking, and there are many different customization options. Nazca recently added 8 preset strategies you can deploy on your own. I have attached a screenshot of what those presets are below so you can see them as well as get a peek at the beginning of the back-testing feature. Another key part of the Nazca bot is the re-balancing feature, which is not pictured here, and I will address that next.
Here are the current preset options that Nazca offers:
A key aspect of Nazca bot is the distribution model. I highly encourage everyone to try different re-balancing strategies to find what may work best for the outcome they want to see. The back-testing feature uses historical data, but keep in mind there is no guarantee that the market will repeat the results that the back-testing feature provides to you. However, it is an indication of previous price action, and the cryptocurrency markets can be very unpredictable. Below are three screenshots of the different distribution options that Nazca offers, followed by two executed back-tests on Nazca’s platform.
Above are the re-balancing options you can use to truly customize your strategy.
The first back-test that I am going to show below is using one of Nazca’s preset strategies. This is the “Top 30 by Volume % Change (7d)” and instead of using a re-balancing period of 30 days, I have chosen to execute a re-balancing period of 7 days. This is a slightly more aggressive strategy than the 30-day re-balancing. I am also using the even distribution for my distribution model.
The following strategy above would produce roughly an 8x gain over a year’s time. The volatility seen here is drastic, and the peak of the gain indicated it would be well over a 5000% gain from 8/1/2017 to 8/1/2018. Keep in mind this is using historical data, and there have been many changes in the market over the past year. Also, note that this bot platform strictly uses Binance. Binance as an exchange has had many changes throughout the years’ time. This strategy uses the top 30 Volume % Change (7d) meaning coins that were seeing a lot of market volume. Simply put, it looks at the coins on Binance with the most volume within the past week, re-balancing them every week. Re-balancing simply means redistributing the (hopefully) profits among the coins selected by the strategy.
The next back testing I am going to show is a strategy I came up with, and it is an interesting one. Here is the screenshot of the back-test below.
A back-test throughout 8/1/17 to 8/1/18 would have produced a roughly 12x return. Keep in mind market cycles, Binance adding/removing coins, liquidity issues etc. So the result may not have performed exactly this way, but this back-test is using data pulled from Binance. The peak of this back-test would have been a 26x return in the beginning of March after what was a very positive month in the market for alts and a small run for Bitcoin.
I have had discussions with Alessandro Marin, who is the software engineer on the product and he has been helpful with answering questions throughout my setup process. He is on telegram at: @afinemonkey. I have also been in contact with the Valerio Mostacci, the market analyst for Nazca. He answered a couple of questions I had regarding upcoming features and potential future development.
The link to the Nazca bot platform is: https://nazcabot.io/
Link to the Nazca Telegram joinable at: https://t.me/nazcabot
Affiliate link to Nazca bot: https://app.nazcabot.io/register?ref=897267
I am The Dragon, reach out below.
My twitter: https://twitter.com/thedrag0n
Telegram username: @thedrag0n
Email: [email protected]