Tag: ROI

The Holy Grail for crypto traders: Consistent average returns over 5%

by Cointelegraph

If you look at crypto assets’ price movements as a series of isolated events, the picture is messy. Sure, some traders can occasionally win big off one-time events or thanks to sensing a meme-inspired trend.

In the long run, however, most of these “fortuitous” traders tend to lose.

Why? Because they have to pick big-time winners to cover all the times they miss their targets.

For every Shiba Inu, there were a thousand coins that didn’t moon.

Which is why crypto traders who employ processes rather than try to predict events are more likely to fill their bags in the long run.

They trade on probabilities rather than hoping that Token X goes parabolic next week. They win on aggregate numbers instead of sexy-looking one-offs. If you offered them average weekly returns of over 5% on trades… they’d bite your hand off.

The table below shows average returns following high VORTECS™ Scores generated by Cointelegraph Markets Pro’s historical analysis.

Good things come to those who wait

There are two unmistakable trends here. Firstly, the higher the VORTECS™ Score, the greater the average returns. In other words, the more confident the algorithm is that the historical conditions around the coin are bullish, the more likely this asset is to deliver greater gains after the high score was registered.

Secondly, time is of consequence. The algorithm has been trained on a fuzzy time frame with the emphasis on identifying favorable conditions that may materialize over several days.

The more time passes after the signs of a historically favorable outlook are recognized by the VORTECS™ algorithm, the better, on average, the asset’s price performance looks. Favorable conditions shaping up around high-scoring tokens generate the greatest price increases after 168 hours (one week) from first showing up on the algorithm’s radar.

Doing the crypto trading math

A 5 or 6% return on investment over a week may not seem a lot, in these days of bull market plenty. Don’t be fooled.

Studies show that short-term traders often lose money. One recent paper estimated that “97% of all individuals who persisted for 300 days” in the Brazilian equities futures market fell into this category. Other studies have demonstrated similar results.

So to find an algorithm that can generate consistently positive average returns over accurately measured periods of time is — well, the Holy Grail for crypto traders.

Is it infallible? Absolutely not. Again, don’t be fooled. The VORTECS™ algorithm has thrown up plenty of scores that suggested bullish conditions, and yet prices failed to rise.

What this table shows is the AVERAGE return over a specific time frame following an arbitrary score.

But what this table PROVES is that VORTECS™ does exactly what it is designed to do. It consistently identifies market conditions for specific crypto assets that have been historically bullish, and employs confidence modeling to determine a score that traders can use as part of their decision making.

VORTECS™ Score ROI methodology and background

The VORTECS™ Score is an AI-powered algorithm exclusively available to Cointelegraph Markets Pro members.

The tool is trained to search for historical patterns of price change, trading activity and social sentiment around 200-plus digital assets, ringing the alarm whenever the arrangement of these metrics starts to resemble those that, in the past, consistently showed up before price increases.

The higher the VORTECS™ Score at any given moment, the greater the model’s confidence.

The table presents average price changes across all digital assets that hit VORTECS™ Scores of 80, 85, and 90 after fixed intervals, from the moment the Score was first registered. The period of observation is the entire period of CT Markets Pro platform’s operation, from early Jan. to late Nov. 2021., or almost 11 months.

For this analysis, each asset could only yield one observation per day, i.e. if a coin went from 79 to 81, then back to 79 and then to 80 once again within a few hours, only its first entry to 80+ would count.

This way, we ensured that the analysis did not give disproportional representation to instances of more volatile VORTECS™ Scores as opposed to those times when assets went above reference thresholds and maintained high Scores for longer times.

The average price movement figures that you see in the table are aggregated from hundreds of digital assets hitting high VORTECS™ Scores over the observed period of almost 11 months.

They reflect crypto assets’ performances in bull, bear, and sideways markets, in both Bitcoin season and Altseason, and for all sorts of assets from DEX tokens to layer one platforms and privacy coins.

Start using the VORTECS™ algorithm today!

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions.

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How a single-strategy crypto algorithm turned $100 into $36,205 in 10 months

by Cointelegraph

Before we get into the nitty-gritty of how one simple rule created the kind of insane return on investment noted in the headline, let’s be clear on one thing.

You can’t copy this.

Actually, no human can. Even a trading bot couldn’t replicate this particular strategy in real life, as it’s a thought experiment, a proof-of-concept, rather than an actual way to make money in crypto trading. The exchange fees alone would kill 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, right now, today, with this algorithm?

What does “Buy 80, Sell 12 hours” mean?

Here’s the basic premise. In partnership with data firm The TIE, Cointelegraph Markets Pro has developed the VORTECS™ Score, an algorithmic determination of how bullish or bearish current trading conditions are for a given crypto asset.

The score is based on historical data, and it essentially sifts through the whole history of a coin or token looking for conditions that are similar to those it observes right now.

It’s looking for a variety of similarities and outliers — for instance, trading volume, recent price action, social sentiment and even the volume of tweets about that asset.

If it finds similarities, it looks at what happened next. Did the asset go up or down? How consistent was that movement? How significant was the rise or fall?

Combining all of these data points, it creates the VORTECS™ Score, a dynamic and constantly evolving evaluation 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 score of 50 means the algorithm sees no significant correlation between current conditions and past price performance.

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

A “Buy 80, Sell 12 hours” strategy means that the test “buys” every asset that crosses the 80 score, which is considered strongly bullish. And then it “sells” the asset again after precisely 12 hours.

Of course, this is not happening on an exchange — it’s happening on a spreadsheet. And since the test wants to maintain equal holdings of all assets that are within its range, it rebalances every hour.

For instance — if Solana’s SOL coin crossed 80, and was the sole asset with that high score, the test would place 100% of its current portfolio into SOL. But if Binance Coin (BNB) then crossed 80 as well, the test would allocate half of its position to BNB in the next hourly rebalance.

Why you couldn’t do this

First, let’s assume that you’re human if you’re reading this. If you’re human, you need sleep. The test is working 24 hours a day, every day, and has been for over 10 months. Even new parents get a break from the baby once in a while.

Second, the algorithm is not taking account of liquidity or order depth on any particular asset on any given exchange. It “buys” at the current price and “sells” at the current price, which we all know isn’t necessarily realistic.

And third, exchange fees for a rebalance every hour would be prohibitive, no matter how much BNB or FTX Token (FTT) you’re hoarding.

So why is this a valuable test at all?

The point here is to evaluate whether the VORTECS™ algorithm is good at its job.

When it sees bullish conditions, is it right more often than not? When the score goes up, do prices generally increase? Obviously, with this test, the answer is yes.

And while the Buy 80, Sell 12 is an outlier, there are other strategies that have created a massive hypothetical return on investment.

For instance, Buy 80, Sell 24 hours. That one is sitting on “gains” of 13,099%. Other strong strategies include:

Buy 90, Sell 168 hours | +4,544%

Buy 80, Sell 80 hours | +14,862%

In fact, with Bitcoin (BTC) returning 49.5% since the tests started running on Jan. 5, 2021, every single strategy has beaten the ROI from simply holding BTC.

And that signals that VORTECS™ is working correctly. It is — in general, over time — proving that historical trading conditions for digital assets can be a useful gauge for the current health of that asset.

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

Warren Buffett (perhaps paraphrasing Georg Wilhelm Friedrich Hegel) once said that “What we learn from history is that people don’t learn from history.”

(As a crypto skeptic, he might want to revisit his stance.)

That’s what the VORTECS™ Score is all about. Learning from history. And that’s why a hypothetical return of 36,205% is important.

It tells us we’re looking at the right history.

Cointelegraph Markets Pro is available exclusively to members on a monthly basis at $99 per month, or annually with two free months included. It carries a 14-day money-back policy, to ensure that it fits the crypto trading and investing research needs of subscribers, and members can cancel anytime.

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions.

All ROIs quoted are accurate as of 4:00 pm UTC on Oct. 23, 2021