Théo

Back 2 School Trading Contest 2021 🏆 [1000$ to win]

We are very pleased to announce the launch of a new bitcoin and cryptocurrency trading contest, the Back 2 School Trading Contest. This is the perfect opportunity for all traders to get back on the markets after the holidays, to progress in a friendly atmosphere and above all to try to win the 1000 USDT that we are putting at stake! More details below.

Rules

Your goal? To make the biggest profit in 1 week with 2 BTC. You will start with 1 virtual wallet of 1 BTC on Kraken and 1 virtual wallet of 1 BTC on Binance to be able to take advantage of the different pairs on these platforms.

  • All cryptocurrencies pairs available on Botcrypto are allowed.
  • All cryptocurrencies exchanges available on Botcrypto are allowed.
  • All strategies are allowed.
  • Trading bots are allowed.
  • Manual orders are allowed.

Start date : 09/10/2021 19:00 CET
End date : 09/17/2021 19:00 CET

Additional rules can be found on our Helpdesk. Botcrypto reserves the right to change the rules and exclude participants at any time.

Prizes

To reward the best traders, we are offering 1000 USDT which will be distributed among the winners.

  • 1st place 500 USDT
  • 2nd place 300 USDT
  • 3rd place 200 USDT

You read that right. Virtual trading, but real earnings! Are you interested? Then take advantage of the next few days to practice creating trading bots with Botcrypto, and register now for the contest!

3 technical indicators that indicated to sell at the Bitcoin top

A few days ago, @cryptomonk asked on his Twitter account which technical indicators could have convinced traders to sell at the Bitcoin top in April 2021. Here is a selection of the best answers.

The RSI (Relative Strength Index) indicator

RSI divergences on high time units are particularly reliable and there was no exception during the bitcoin bull run earlier this year. From the first peak on February 21, 2021, a divergence of the RSI was visible in daily. The other two peaks, on March 13, 2021 and April 13, 2021, accentuated the divergence. In the end it was a very long bearish divergence of the RSI that we could see building up little by little over several months. The price of Bitcoin was then above $56,000.

Daily RSI chart for the BTC/USDT pair
Daily RSI for the BTC/USD pair (source: TradingView)

The MACD (Moving Average Convergence Divergence) indicator

The MACD is constructed from exponential moving averages and has two lines, the MACD and the signal line. An upward crossing of the MACD with the signal line means that we have a buy signal, and a downward crossing means that we have a sell signal. And this is exactly what was observed during the candle of the week of April 19, 2021. The price of Bitcoin was then above $48,000.

MACD chart in weekly for the BTC/USD pair
The MACD in weekly for the BTC/USD pair (source: TradingView)

The Pi Cycle Top indicator

The Pi Cycle Top is a technical indicator much less known than the two previous ones. But it has the merit of having indicated the highest points of the last 3 big bitcoin bull runs! It consists of two lines, a yellow one corresponding to a MA111, and a green one corresponding to 2MA350. It is a very long term indicator that can only be used in daily trading. An upward crossing of the yellow line with the green line indicates a sell signal. The price of Bitcoin was then over $60,000!

Pi Cycle Indicator daily chart for the BTC/USD pair
The Pi Cycle Indicator in daily on the BTC/USD pair (source: lookintobitcoin.com)

And you, which technical indicators pushed you to sell at the top of bitcoin prices? Which ones prevented you from doing so? Share them in comments so everyone can be better armed during the next bull run 😉

Everything you need to know about backtests

When you discover trading bots, you immediately want to know what the results will be. Even if it is not possible to guarantee results, we can still use tools to try to predict the behavior of a strategy. In this article, we will present backtests, one of the most well-known tools!

What is a backtest ?

A backtest is a test into the past. When we backtest a trading bot, we will test the behavior of the trading bot on the data of the last 3 days, the last 6 months, even the last 3 years with virtual funds. So there is no risk. A backtest allows us to answer the question “What would my trading bot have done if I had launched it 3 days ago, 6 months ago, 3 years ago“.

Here is an example of a backtest running on the Botcrypto platform, with the vortex-bull strategy that you can import for free from the strategy store. I have configured the backtest to test the strategy over the whole year 2020 on the bitcoin/euro pair on the Kraken trading platform. You can see at a glance the different moments when the backtest bought and sold.

Example of a backtest with the vortex-bull strategy on Botcrypto
Example of a backtest with the vortex-bull strategy on Botcrypto

Why you need to do backtests ?

Backtests provide a lot of information on the effectiveness of a strategy, and answer a number of questions:

  • Has the strategy been properly configured?
  • Is it effective during the test period?
  • What are its characteristics during the test period?

You can usually see many statistics and details of all orders. Here are the details of the previous backtest. There can be global statistics, such as profits made or success rate. You can also see the details of all orders, including the fees taken (virtually) by the exchange.

The detailed interface of the results of a backtest on Botcrypto
The detailed interface of the results of a backtest on Botcrypto

This allows you to check whether the strategy is effective during the test period. Did it take losing trades? If so, how to avoid them? Is it sensitive to fees? With this information, you can modify the strategy to improve your results.

What are the limits of backtests?

First of all, it should not be forgotten that a backtest only tests a strategy over a given period of time. The results are therefore not universal, and if your backtest took place in an uptrend, it does not give any interesting information for a downtrend. Therefore, just because a backtest of your trading bot has made +300% in the last 6 months, does not mean that your trading robot will make +300% in the next 6 months. In fact, you simply have to remember that past results are no guarantee of future results.

Moreover, backtests never completely correspond to what would have happened in reality, because they depend on factors that cannot be taken into account such as the order execution time or the spread (the price difference between the buy and sell price). All software that performs backtesting is therefore obliged to make shortcuts and simplifications. The backtest shows how everything works in theory.

These various limitations do not prevent backtests from being very useful to get an overview of the functioning and potential of a strategy.

How to make backtests?

A backtest simply consists in analyzing each candle of a given period with its strategy. Nothing prevents you from analyzing the charts by hand on TradingView to replicate how your strategy works. But most trading bots, whether ready for use, customizable or installable, allow you to do backtests almost instantaneously. This saves you a lot of time.

Obviously, if you want to backtest your own strategies, you would have to go through platforms that allow you to design strategies, such as our Botcrypto platform where no technical knowledge is required, or Freqtrade where we have written an installation and configuration tutorial.

Our tips for setting up the best backtests

Finally, here are some tips to configure the best backtests :

  • Reproduce the backtests with the conditions closest to your trading conditions to get the most relevant results. If you can set the initial backtest funds, set a realistic amount. If you can configure the fee taken by the platform, configure that as well.
  • Perform multiple backtests in different market conditions. If you’re looking to build a strategy that takes advantage of Bitcoin’s volatility, don’t settle for just one backtest. Instead, try to run several backtests, on different trends, over different periods of time, to get the most representative results possible.
  • When building a strategy, change only one parameter at a time between each backtest. This will make it easier to understand the results of the backtests.
  • And if you are satisfied with the result of your strategy, then save it, with a copy for example. This will prevent you from losing your progress in the search process.

[Tutorial] Your first trading bot with Zenbot

Introduction

Zenbot is a free and open source bitcoin and crypto trading bot. It is used in command line and relies on Node.js and MongoDB. It is a serious competitor of Freqtrade that we have already mentioned. It is used on the command line and is therefore rather reserved for confirmed users. To create trading bots without technical knowledge, visit Botcrypto!

Prerequisites

This tutorial has been realized on a Ubuntu 20.04 server.

We will need Node.js, MongoDB and git.

  • To install the various prerequisites, run the following command:

sudo apt update && sudo apt install git && sudo apt install nodejs && sudo apt install npm && sudo apt-get install build-essential mongodb

Zenbot’s installation

  • First, we will clone the git repository by executing the command below:

git clone https://github.com/deviavir/zenbot.git

  • Once the download is complete, we will go to the zenbot folder:

cd zenbot

  • Then we will install the dependencies with the following two commands:

npm install

sudo npm link

Zenbot’s configuration

Zenbot can be configured in different ways. We will create a configuration file based on the example provided.

  • Execute this command to create your conf.js configuration file.

cp conf-sample.js conf.js

You can if you want check the different possible configurations of Zenbot by opening this file but for this tutorial we will keep the basic settings.

Zenbot’s usage

We will see how to do a backtest, a test in the past.

First you can use the command ./zenbot.sh list-selector to see all available pairs.

  • To perform a backtest we will need the data of a market. We will retrieve the BTC/EUR market of Coinbase Pro over 1 day with this command: ./zenbot.sh backfill gdax.BTC-EUR –days 1.

Once the data is downloaded (this can take time), we can perform our backtest. But we will have to choose which strategy to use.

You can access the list of all preconfigured Zenbot strategies by executing the following command: ./zenbot.sh list-strategies.

For this tutorial, we will test the trend_ema strategy based on exponential moving averages.

  • ./zenbot.sh sim gdax.BTC-EUR –strategy trend_ema

After running the backtest, an HTML file starting with “sim_result_gdax.BTC-EUR” was written to Zenbot’s simulations folder. You can open it in your browser to observe the results and the behavior of your strategy with a chart and some information about the trades of the backtest. This visualization is very interesting. Mine has 4 winning trades against 6 losing trades.

Results of my backtest with Zenbot
Results of my backtest with Zenbot

With Zenbot, you can also test your strategies in real time on the market in a fictitious way.

By executing this command ./zenbot.sh trade --paper --strategy trend_ema gdax.BTC-EUR I simulate the execution of the trend_ema strategy in the BTC-EUR market of Coinbase Pro. This method is called paper trading since it is equivalent to simulating the execution of the strategy on paper.

Running the strategy simulation on Zenbot
Running the strategy simulation on Zenbot

Your initiation to Zenbot is now over! You have discovered how to create a backtest and a real-time simulation. In a future article, we will see how to create your own strategy to customize actions. And in the meantime, don’t hesitate to read our guide on trading bots to become an expert!

[Tutorial] Create your own trading bot strategy with Freqtrade

Introduction

In our last article, we saw how to create our first trading bot with Freqtrade, but his results were not satisfactory. We will now discover how to build our own customized strategy.

Prerequisite

  • A full installation of Freqtrade, see our article.
  • Basics of technical analysis.
  • Basics in the python computer language.

Creation of a new strategy on Freqtrade

The strategies usable by Freqtrade are stored in the freqtrade/user_data/strategies folder and are python (.py) files.

To start, move to a terminal in the /freqtrade folder and activate its virtual environment with this command :

source .env/bin/activate;

Then create a new strategy called MyStrategy.

freqtrade new-strategy --strategy MyStrategy

After executing this command, a MyStrategy.py file was created in /freqtrade/user_data/strategies. It is this file that we will customize throughout this article. The final file is available at the end of the article.

Configuration of the strategy on Freqtrade

Configuring strategy settings

Open the MyStrategy.py file with a text editor. In the class, we will specify parameters that our strategy will have to respect.

We start by defining the minimal_roi, ROI meaning return on investment, which allows us to define to sell our assets at any moment of the strategy if a percentage of profit is reached independently from the rest of the strategy. For this tutorial, I have chosen a minimal_roi that at any moment of the strategy will engage a sale if the profits exceed 50%. Furthermore, if the trade has been open for more than 40 minutes, then a sale will be issued if the profits exceed 20%.

minimal_roi = {
  "40": 0.2,
  "0": 0.5
}

We are also going to set up a stop loss, to avoid having too big losses.

stoploss = -0.15

With this stop loss, if one of my trades registers a loss of more than 15%, a sell order will be issued.

We will then choose a unit of time for our bot this way (here, 5 minutes).

timeframe = '5m'
Addition of technical indicators to the strategy

To add technical indicators to the strategy, we will modify the populate_indicators function. In this tutorial, I will use the Relative Strength Index, a technical indicator that we have already discussed many times.

dataframe['rsi'] = ta.RSI(dataframe)

After adding the indicator (you can of course add more), I end this function with a dataframe return.

return dataframe
Addition of conditions of buy/sell

To add a buy condition, we need to modify the function named populate_buy_trend and then add our condition inside as well as a return of the dataframe like this.

dataframe.loc[
(
(dataframe['rsi'] < 30)
),
'buy'] = 1

return dataframe

In this example, I decide that a buy order is sent if the ROI is less than 30.

It works the same way for the sell condition. I decide that a sell order is issued when the ROI is greater than 70.

dataframe.loc[
(
(dataframe['rsi'] > 70)
),
'sell'] = 1

return dataframe

There you go! All that remains is to test our strategy. If you don’t know how to do it, I redirect you to our tutorial on how to use Freqtrade, where we presented how it works in general. This strategy is not intended to be implemented with your funds. It is very simple, and its main interest is to show you how to build your own strategy with Freqtrade. You now have all the cards in hand to create and customize your trading bots with Freqtrade! The next step is to increase the results of your strategy with an incredible freqtrade feature, Hyperopt. Happy trading!

Comparison of the best free and open source crypto trading bots

In this article, I will compare different open source crypto trading bots. Open source trading bots have several advantages. They are particularly reliable because anyone can check and correct their code. They also have many different features. They are very complete products that have nothing to envy to commercial solutions, even though they are available for free. Pretty interesting, isn’t it? The main drawback is related to the interface and the use. Generally speaking, you need fairly advanced technical knowledge to understand and deploy them.

You’ve heard about trading bots, but you’re still not sure what they are and how they work? Then go ahead and read our ultimate guide to trading bots.

For each project, the title corresponds to a link to the bot’s GitHub repository.

Zenbot

Zenbot is a command line crypto trading bot. It uses node.js and MongoDB to operate. Zenbot supports Windows/Linux /MacOS 10 (or via Docker).

Zenbot supports a large number of exchanges and offers the way via a plugin to add even more to the list. It has most of the normal and advanced features that you can ask a trading bot for.

Active developmentyes
Easy to installyes
Easy to useyes
Backtestsyes
Manual orderyes
Graphical interfaceno
Webhooksyes

Hummingbot

Hummingbot is software that allows you to create and execute customizable trading strategies on Windows/Linux/MacOS.

Hummingbot has a documentation and an academy allowing a fast and complete learning of the tool. Its installation couldn’t be easier.

Active developmentyes
Easy to installyes
Easy to useyes
Backtestsno
Manual orderno
Graphical interfaceno
Webhooksno

Gekko

Gekko is a platform for automating trading strategies in the cryptocurrency markets and can be used on the most popular operating systems (Windows, Linux and MacOS).

Gekko has a web interface which makes it easier to use, but is unfortunately no longer maintained.

Active developmentno
Easy to installno
Easy to useyes
Backtestsyes
Manual orderno
Graphical interfaceyes
Webhooksno

Freqtrade

Freqtrade is an algorithmic crypto trading software developed in python (3.6+) and supported on Windows, Linux and MacOS.

It is designed to support all major exchanges and be controlled by Telegram. It contains tools for backtesting and portfolio management as well as strategy optimization by machine learning. You can find our article on how to create your first trading robot with Freqtrade at this address.

Active developmentyes
Easy to installyes
Easy to useno
Backtestsyes
Manual orderno
Graphical interfaceno
Webhooksyes

So much for this comparison! You now know the advantages and disadvantages of the main open source trading bots for trading bitcoin and ethers. Do you know others? Have you developed your own? Tell us about it!

They switched in 2020

2020 is a very interesting year for bitcoin. A lot of professionnal and institutional investors are now seeing bitcoin as a real store of value or even a real currency. We made an infography to represent this switch.

Sources

Ray Dalio
https://www.cnbc.com/2020/01/21/ray-dalio-at-davos-cash-is-trash-as-everybody-wants-in-on-the-2020-market.html
https://cointelegraph.com/news/ray-dalio-admits-he-might-be-missing-something-about-bitcoin-as-it-surges-past-17k

Larry Finck
https://www.investopedia.com/blackrock-ceo-larry-finks-views-on-bitcoin-evolve-5090073

Michael Saylor
https://twitter.com/michael_saylor/status/413478389329428480
https://twitter.com/michael_saylor/status/1293141856700768257

Stanley Druckenmiller
https://www.forbes.com/sites/billybambrough/2020/11/12/a-legendary-hedge-fund-billionaire-just-flipped-to-bitcoin-calling-it-better-than-gold/

JPMorgan
https://cointelegraph.com/news/jpmorgan-turns-bullish-on-bitcoin-citing-potential-long-term-upside

Jim Cramer
https://www.cnbc.com/2018/08/14/cramer-the-tide-has-turned-against-bitcoin.html
https://news.bitcoin.com/mad-money-jim-cramer-bitcoin-inflation/

The 5 types of trading bots

When we start to be interested in trading bots, we realize that there are many of them with their own characteristics. In this article we will introduce you to the different categories of trading bots.

There are trading bots with very different characteristics. Explanations.

Open source trading bots

Open source trading bots are free software that you can install and configure for free. They usually offer many features and one of their strong points is customization. On the other hand, you usually need a minimum of technical knowledge to install and configure them. The configuration of the strategies is usually done with code or pseudo code, although in some cases you can download strategies from the Internet. Deployment is also to be taken into account. In general, one avoids deploying this type of software on one’s personal computer, as one would not be able to turn it off and would be dependent on one’s personal environment.

Cost : free (unless deployed on a dedicated server)
Examples : Freqtrade ([Tutorial] Your first trading bot with Freqtrade) , Zenbot, …

The source code of Freqtrade, a trading bot, on GitHub
The source code of Freqtrade, a trading bot, on GitHub

Customizable online trading bots

Many services offer customizable online trading bots. Compared to open source trading bots, you can also customize them, but you don’t have to worry about deploying them. The company takes care of their execution and maintenance in the cloud. Some are distinguished by 100% visual interfaces where you can configure and customize your trading bots without technical knowledge. This is for example what we offer at Botcrypto.

Cost : a subscription (starting at $10 per month in general) or fees

An example of a strategy customizable without technical knowledge on Botcrypto
An example of a strategy customizable without technical knowledge on Botcrypto

Ready for use online trading bots

The trading bots that we call ready for use are among the easiest to handle. Their developers have developed one or more strategies that you don’t usually know and control. Once you set up your trading platform, everything is automatic. There is no need for technical knowledge, but you must have absolute confidence in their developers since you don’t know what the applied strategy is.

Cost : a subscription (starting at $10 per month in general) or fees

Copy trading online trading bots

Copy trading consists in replicating the actions of other traders considered competent. Some companies have replicated this model with trading bots: some traders create trading bots (with or without a visual interface), others replicate these trading bots (but without knowing the behavior of the strategy). It is in fact a mix between the two previous categories, customizable trading bots and ready for use trading bots. You usually have a marketplace, where you can access all available trading bots, which are usually rated by their users.

Cost : a subscription (starting at $10 per month in general) or fees

Scams

Unfortunately, trading bots attract many investors who think they can get regular income easily. That’s why there are many scams in the world of trading bots. Avoid services that promise guaranteed performance, and be very careful!

Cost : everything 🙃

With Dollar-Cost Averaging, invest serenely in bitcoin and cryptos

Have you heard of bitcoin? Do you want to invest in bitcoin or another cryptocurrency? Then Dollar-Cost Averaging is surely THE method you need to discover now.

What is Dollar-Cost Averaging?

This simple strategy consists of investing the same amount of money at regular intervals in order to reduce the risks associated with volatility. It is mainly intended for investors who aim for the long term. Instead of buying $1,000 of bitcoin tomorrow and taking the risk that it will lose 20% of its value in the following weeks, you can buy for $100 every month, thus smoothing your investment over time.

But does it actually work? Does Dollar-Cost Averaging improve returns and reduce risk in the long term?

Dollar-Cost Averaging in a concrete example

Let’s take a concrete example, where you discover bitcoin 3 years ago and see what happens with and without it.

Without Dollar-Cost Averaging

If you had invested this 3600$ on December 3rd 2017, you would have received 0.32 BTC. 0.32 BTC is worth $6176 at the time of writing. It is therefore a good investment but the value of your investments will have fluctuated enormously over time especially with the bursting of the bubble in early 2018.

Without Dollar-Cost Averaging

Let’s imagine that instead of buying for $3,600 3 years ago, you would have bought $100 worth of Bitcoin every month. On the dcabtc.com calculator, we can see that with the Dollar-Cost Average strategy, you would have 6812$ today. That’s nearly $700 more by investing the same amount!

Screenshot of Dollar-Cost Average simulator dcabtc.com
Screenshot of Dollar-Cost Average simulator dcabtc.com

So obviously, this added value depends on when you start your investment. In some cases where you invest at exactly the right time, Dollar-Cost Averaging will be less effective. But investing at the right time is not that easy. Dollar-Cost Averaging overcomes this difficulty by smoothing investments and reducing the risk of investing at the wrong time.

How to make a success of this strategy?

You must be wondering why I’m talking about the success of his strategy. How could we fail? It’s quite simple, isn’t it? Well, it’s not.

First, you need to define the parameters of your Dollar-Cost Averaging strategy. For example, if you want to invest in Bitcoin, you can for example choose to invest €100 every month, or €20 per week, or even €5 per day! Of course, it all depends on how much you can afford and what you want. These parameters are at your discretion.

Then, the only rule is to respect these parameters. And you’ll see that it’s not going to be that easy, especially with cryptocurrencies, which are very volatile assets. When prices go up or down all at once, it’s going to be very tempting to accelerate your investments, or to let some time go by. But then you lose all the advantage of Dollar-Cost Averaging.

An interesting solution is to use software that sends the purchase orders for you. Our platform Botcrypto allows you to easily set up trading bots that apply Dollar-Cost Averaging strategies. With a few clicks you can start your trading bot that applies a strategy like the one below, where every month a buy order for $100 of Bitcoins is sent.

Screenshot of a Dollar-Cost Averaging and bitcoin strategy on Botcrypto
This strategy buys for $100, waits 30 days, buys for $100, waits 30 days, etc.

This way, no need to log on to an exchange every month. Your trading bots take care of applying your strategy for you. You can import this strategy for free from the Botcrypto store. It’s the Monthly DCA strategy.


In conclusion, Dollar-Cost Averaging is a very interesting investment method for all those who want to invest in Bitcoin and cryptocurrencies on a long-term basis, without having to think about it on a daily basis. With this method, you reduce the risk, both upwards and downwards, but what is certain is that you gain peace of mind!

Botcrypto Monthly Report #22 – November 2020

We just finished one of the most important months in Bitcoin’s history, at least in the history of its prices, with the highest monthly close price ever! It’s even more motivating to develop trading bots in these conditions, so here is the very large list of news from the last few weeks.


Development

Here is the list of the main new features of the last few weeks on Botcrypto, the platform to create easily and quickly cryptocurrency trading bots.

  • The Botcrypto rating reveals the best strategies of the strategy store at a glance. Full details on its calculation are available here.
  • The automatic classification of market trends over the week makes it easy to find the most bullish/bearish market. We have written an article on how this classification works (only in French at the moment).
Screenshot of the trends
Trends are displayed on the dashboard by clicking on the Trends button.
  • The addition of advanced parameters for strategy indicators, such as the Multiplier that allows to make conditions like “When the price is above the EMA +3%”. The Buy EMA9 rebounce strategy is a good example.
  • From now on, you no longer need to create an account or be logged in to view the store’s strategies (click on the link above to see!). This makes it much easier to share strategies publicly.
  • Follow the evolution of the strategy in real time with the display of the current state of the bots.
The current state is displayed with a gold border!
The current state is displayed with a gold border!
  • The suggested backtest periods are now much smarter and correspond to the TU of your strategy. The TUs of the strategies are also displayed directly on the strategy card. No more need to call your strategies Buy EMA 4H 😉

We plan to continue at this pace in the coming months, so don’t hesitate to suggest improvements on our Discord server where we are already close to 500 traders! You can also vote for the next features directly on the dedicated page.

The LOCKDOWN Contest

The LOCKDOWN Contest, the free and educational contest that we have set up has been extended for 15 days. You can thus continue to use this space to learn and improve your trading skills. Feel free to share your successes, failures and questions on our Discord server (again!), which also displays daily contest rankings.

The best traders of our contests are published on Discord
The best traders of our contests are published on Discord

The Shark Week

We had the pleasure of hosting the Shark Week, the trading competition organized by the Transaction and Plug’n’play associations of the emlyon school. More than 300 students discovered bitcoin and crypto trading during one week thanks to Botcrypto’s virtual trading features. The results were quite good, as more than 20% had positive results. Congratulations!

In this context, we also spoke at a webinar entitled “Les cryptomonnaies : quels enjeux ?” where we discussed many topics related to cryptocurrencies: news, advantages and disadvantages, regulation… It is available in replay here.

Les cryptomonnaies : quels enjeux ? by Constantin De La Roche and Théo Poizat
Les cryptomonnaies : quels enjeux ? by Constantin De La Roche and Théo Poizat

With an ATH that has been hit several times recently and high volatility, cryptos trading bots are particularly interesting at the moment. So, what are you waiting for to (re)launch yours on Botcrypto? 😉