Bulls make money, bears make money, pigs get slaughtered.
The rise of crypto in 2016–17 brought with it large exchanges, increase in the number of traders, liquid markets and large price volatility.
Unlike HODLers who buy and hoping the price goes up sometime, traders love price volatility and leverage it make money.
Some of the best traders don’t even care which way the market is moving. They don’t care if the market is bullish or bearish. All they want to do is capitalize on price volatility by the old adage, buy low and sell high.
Trading in the Bull market
When the market is rallying all you do is HODL
When the market is going up, pretty much anything that you do will give you good returns. Traders tend to become complacent and opportunities to beat the market comes only when you are looking for dips.
For Passive traders buying and holding becomes the thing to do. The wait and try to, time market peaks during bull runs.
Active trades try and use a better strategy:
- Buy in steps at the end of a dip
- Open long term position and wait for prices to rise by 10–12%
- Keep trades open for multiple hours or days
- Close when there is some bad news or prices begin to dip
- Repeat
This strategy worked very well to help me grow my portfolio. Until it didn’t.
Winter of 2017 also brought in winter with crypto. Markets began to crash. Prices fell faster than they had grown. In my head, I was clear that this bull run strategy of waiting and watching was never going to work now.
My experiments with trading in bear market
With the onset of bear markets, trading approach became very different. I could no longer just wait for the price to go up, if anything it went the other way around.
I initially started dabbling around on different forums, followed ‘trading gurus’ and started to look at the vast amounts of indicators, charts and tools available in tradingview.com. I very quickly got overwhelmed by all the information thrown at me and I was no professional trader.
Once I had read enough and built a strategy I wanted to try, I put my first money on Bitmex.com. That was a disaster from the word go I quickly realised that
- I needed to test my strategy before deploying it
- Constantly staring at graphs to check when was the right time to buy/sell took too much of headspace
- I was loosing out on 2/3rd of the opportunities because crypto was 24*7*365 and I could barely cover 8 hours in front of the screen
- There were just too many markets and finding the right opportunities became difficult
Trading went from passively making 10% per trade to actively hunting for opportunities in small tokens and hoping to make 1–2% per trade. I realised that the only way to win was to automate this trading. My strategies were just algorithms and there should be a way to automate them except that there was one small problem. I don’t know how to code an infrastructure so complex.
Automating my trading with Mudrex.com
Not being able to automate my trading wasn’t only a problem I faced. I and my friends started to look for ways in which I could make my bot. I tried some platform but most of them were either too limiting or turned out to be scams.
A friend of mine introduced me to Mudrex is the first of its kind algorithmic trading platform where users can create trading strategies using a drag and drop interface. The platform was simple, intuitive and had everything I needed.
It took me a couple of hours to figure out how to build. This is the kind of strategy i first ended up building
Simple strategy which buys when the price increases and sells when the price decreases by 2%(I admit it looks terrible)
I quickly got the hang of it and built another strategy that I called the Trend catcher. My hypothesis was simple:
- Try to catch confirmed up trends using moving averages and oscillators
- ensure a minimum profit in every trade
- Not to trade too frequently
- Not to trade in downtrends
I with some help of the documentation i automated my strategy and built out this on day 1!
Trend catcher: My strategy to find small uptrends in bear markets
The good part was that I was not only able to build my strategy but also test it on historical data on a multitude of assets. I could look at the info in detail and find out where exactly the strategy went wrong. And step by step improve it.
This was the first version
This is where I was able to get to eventually!
Once I was confident that the strategy would work, I ran those strategies live. I could go live with real crypto in my exchange accounts using API keys.
So, if you have an account on say, Binance , you can export API keys for trading into Mudrex and simply have it trade automatically for you.
I have now been trading for a few months and steadily growing my profit base. My strategies are comfortably beating the market. When I started off I though I would
- Build a strategy
- Run it
- Take a nap
- See profit
In a realistic world with Mudrex, it’s more like
- Build a strategy
- Run a backtest
- Tweak strategy some more
- Run another backtest
- …
- …
- Run a paper trade (imaginary trades with imaginary money running in real time)
- Tweak.
- Finally, run a real trade
- Take responsibility for the outcome.
Disclaimer: I have been helping the team at Mudrex as a beta tester for the past 3 months because I love the product!
Mudrex is free for everyone to use! They are running a trading contest to find the best trading strategies. I have already registered for it and I plan to win :D
I have worked on some more bear market strategies with similar principles.
TV Strategy: This is a brute force strategy that helps me evaluate if its the right time to enter/exit by looking at values of over 30 different indicators and moving averages
Here is a backtest result:
The strategy shows a profit but not better than market
Ichimoku Cloud strategy: This strategy uses the popular indicator ‘Ichimoku Cloud’ and buys and sells when the markets starts to trend up or down.
Some early backtesting results in the last few months:
Below are some more samples that Mudrex gives all its early users that work in bear markets: