The Art of Catching a Digital Wave

Take a look at the chart below:

DREAMS is an asset I got into on Kucoin because it seemed as if it may have a future, was reasonably priced (at the time I bought in) and had a TON of volume.  I bought the dip and used the DREAMS tokens to create the above bot in Bitsgap.

Though to note, my stop loss hit and I have sold off this asset, and bought back in much lower – but not before I used the DREAMS tokens I held to fund several bots that made USDT gains. My original investment made a gain as well.

Buy low and sell high. In the above screenshot the green circles are buy trades and the red circles are sell trades.  A bot does this for you non-stop all of the time.  It’s like a person working for you to buy and sell and make gains.

The art of botting is something I have looked into over the past 18 months and I wish to share my findings.  This isn’t a “get rich quick” scheme. It’s hard and not for the faint of heart. But to those who manage to adapt quicker, they can surf longer on the upward momentum of the massive bull markets.

Active-HODLing

First off, I HODL, meaning that I rarely (if ever) sell all of a crypto asset I own.  If one is a HODL investor it’s said that means that they Hold On for Dear Life through down markets. 😉

So, if an investor practicing proper HODLing buys BTC at $53k they will NOT sell if the price depreciates to $42k…. This is our investment strategy.

One might consider me a crypto hoarder.

In fact, if you looked at some of the assets I own you’d wonder why even bother keeping them on that weird wallet.

When crypto projects first come out, the tools needed to hold their assets are rudimentary and difficult to use.  Not many folks go through the trouble to buy at this stage, but this is when you can make the most gains, buying the closest to the birth of a new great crypto.

I found over the months many assets rose to the top as being valuable for botting and it almost always surprised me which ones were and which weren’t good for botting.  The idea is to have a little of each asset so if they get to a point I can bot with them, I have a base that is in the green to use for botting.

I am a crypto HODL investor with a twist as I believe I have found my way in this crypto world investing some of my HODL’d assets. This is called Active-HODLing.

My Background

I am a HODL investor who started building a crypto portfolio during the covid crunch in 2020. I now have a hefty quantity of unique coins scattered about the cryptoverse. It’s a full-time job to manage my portfolio. It’s never really large in notional value, it’s just very diverse and fun to oversee.

It’s taken me a long time and many repetitive bot restarting cycles to understand the flow of this strategy.  I have practiced throughout 2020 and into 2021.  Most recently I have seen proof that there are tools existing that can finally assist me in my search.

This is not financial advice nor is it an indication that you will have the same results.  I share my journey in the hopes of helping others with their crypto journey.

My Strategy

There are many ways to generate a yield within crypto.  One could stake, loan their crypto, trade their crypto, or even create new crypto by mining.  By far the method that most interests me are BOTs!  Hence my name: The Bot Guy!

A BOT is a computer program that buys low and sells high many hundreds or thousands of times more efficiently than a human can do.  I have been using BOTS now for a very long time. I have lost and gained with bots.

I learned quickly that there were many facets of this 4 dimensional chess game called crypto. 

Volume

Volume is a sum of the last period’s trades in an asset pair such as BTC/USDT.  It’s usually measured in USDT and the 24-hour value has come to be relevant as a statistic.  Higher volume means that either a larger quantity of trades are occurring OR the asset price increases.

When botting, I find that large volume almost always provides for decent returns, but only if the per unit price is low enough.

 Contributing to good volume are high sentiment scores as measured by platforms like AltcoinAlerts.  Sentiment measuring systems indicate what asset may have more short or long term interest in them, which sometimes is suggestive of quick gains in those markets.

Exchange Fees

Face it, exchanges are there to make money, so they need to charge for the valuable services they provide.  They don’t have “membership” fees or dues, or monthly licensing fees. Instead they retain a small portion of each transaction performed over their exchange interface.

This is a revenue source for exchanges, but only if their volume is high enough to generate a worthwhile income.  Some percentage-based exchange fees are less than 0.2%.  Though in aggregate this means that a crypto exchange collects somewhere around 0.002 * their 24-hour TOTAL volume every day as just one revenue source.  Talk about lots of little gains over a long period of time.

YOU MUST be careful about exchange fees and never go too low on the margin in the grid spacing.  I ONLY set up bots that calculate and remove the exchange fees from calculations.  It was such a pain to do this manually and let me tell you I am grateful that services now use their data wisely.  Pionex, Bitsgap, and Kucoin are said to remove the exchange fees from their calculations so you’ll see a proper ROI. These are the tools within my current botting toolbox.

Pairing Up

First a quick refresher – An example of a trading “pair” is BTC/USDT.

In a Pair, the BASE currency is that which is before the “/” so the BASE for BTC/USDT is BTC…  and the QUOTE currency is that which is after the “/” so the QUOTE in BTC/USDT is “USDT”

In the bots below, when I am talking about the BASE currency, I am referring to a part of my HODL investment on a particular asset.

Issues I Have Had to Overcome

Below are a few of the issues I have had with my strategy. I’ve had to put a resolve in before I could continue on the path.

Managing MANY Coins

I won’t scare you by saying how many coins I hold in my portfolio, but let’s just say it’s more than 100 unique coins.  I had to build my own analytics system to organize and account for everything because all the existing portfolio management systems choked and didn’t give accurate balances.

If you are going down this rabbit hole with me, I recommend limiting your landscape to a few exchanges and a few normal wallets. Basically anything on this site is recommended by me.

Spreading the Coins Properly

The spread of your assets across your platforms, wallets, and exchanges is a really personal matter.  Only certain assets are allowed to be stored and/or traded on certain exchanges and wallets only hold some assets…

It can get really confusing to move things around and there are a few tricks of the trade I can share.

First up, seeding a new exchange with some low transfer cost asset like TRX or XLM.  From there you can sell to USDT and buy whatever you need.  Or send USDT over the TRON network as this has a cost that is far less than sending USDT over the Ethereum network.

This isn’t always an option and sometimes you need to move assets into a new exchange or wallet individually.  This is ok, but if you are keeping track of your portfolio make sure you update your tracking tools / spreadsheet as well.  

You will most likely need to split your HODL assets into a few places so you can place the assets you want to BOT with in the proper position.

BE REALLY careful about the transfer fees.  Some ETH moves have asked me to pay a FULL ETH for a $250 transfer of assets… you must be careful to not be overcharged, it’s sad but true.

If you see an ETH fee that is too high, wait an hour and re-try.  If you try a few times in a day, come back around 11ish and try again – you might get lucky!  Or better yet, watch websites like this which track in real time the Ethereum gas fees: https://ethgasstation.info/ or https://www.blocknative.com/gas-estimator 

Managing All the Logistics of Exchange Trading

Crypto marketplaces are worldwide and always on.  Life is lived at all hours.  It’s strange as I find myself in two worlds at the same time.  One that is always happening, growing, changing, and the other that is my real life.  Certainly time marches on at the same rate in both, but it seems (at least to me) that my family life doesn’t seem to change as quickly as crypto does.  I could go to sleep one night and wake up the next day to a whole slew of things that could have happened to move the crypto market in one direction while all I did was catch up on shut eye.

A traditional trader sets alerts that they live and die by.  This isn’t what I do, though I probably should.  I’m not more or less successful.  I just take a more hands off approach to portfolio management than most.

Guided by my personal risk management, I started by HODLing at least 70% of my assets in proper investment platforms leaving a smaller portion for defi, bots, swing trading, staking, and other things that build a proper crypto portfolio.

I like to think of botting as an automated growth strategy and, to be honest, it will probably only work in a bull market.  I believe those who are in the know received confirmation that this bull market is a proper “super bull market.”  This means that slow and steady movement upwards for almost a decade is potentially in the cards now.  So potentially this has another 10 years of working well for me 🙂

The Warning

Past performance is not indicative of future results.  Market conditions change over time and, while this worked for me, it might not for you.  Though paying attention to the details is critical in all market conditions, I had the privilege of performing all of my tests in the most massive Bull run crypto has ever seen and truthfully anyone who owned crypto in 2020 is probably already sitting on gains.  Please know that this is not financial or investment advice and please do your own research before embarking on anything said in any of my writing.

Assuming you have already done the proper research and bought into an asset, when you choose to split some of that crypto into bots you are faced with a series of tests to validate your methods.  I’d like to let you know what I have done, but note that every situation is different.  Every moment within every trading pair is as unique as a snowflake, prediction isn’t always possible.  Reputation of an asset is the keyhole and a strong attention to details by the investor provides the key to hopefully unlock proper diversification.

As for botting though, thank goodness for Bitsgap, Kucoin, and Pionex!  Their botting platforms are amazingly simple to use!

FISHING

I lay my assets as bait and catch a bigger fish for use again.

I use some of my stable coin gains to purchase new altcoins to either add to a position or start a new one.  I like to get a bargain for my investments.  I call this fishing.  This not only helps me get into positions at far better prices but it lowers my exchange fees.

You just want to place a bunch of limit orders 2-3% below the market price.  Some will get filled and others won’t.

I can’t explain this – all I see is this stupid picture in my head.

So I feel like I’m sitting here waiting, with my little stable coin buy orders floating out there in hopes that one day they’ll get gobbled by a whale, LOL.

Many traders call this “buying the dip” and the above case is a really blown out example of this for the potential humor.  But if I were to have bought where the fish is and sold at the top of the right most green peak that would have been an awesome trade!

BOTS

All BOTs are NOT alike.

I really enjoy the visual nature of the Bitsgap interface and there are a few types of Bitsgap BOTs that I use: SBot and Classic.

Classic BOTs are good if the market you are looking to start a BOT in is expected to trend upwards over time.  SBots are really good for sideways markets.

FISHING BOTs

I advocate Active-HODLing, and the BOTs I promote are quoteless, meaning that when I start them, I ONLY use the BASE asset, no matter what…

If I were to start a BTC/USDT bot, I’d only use BTC to start it and earn new USDT. This is what I call a “FISHING BOT” 

A Fishing BOT is when you use a HODL asset as BASE, pair that against a stable coin and don’t use any of the QUOTE asset in hopes you’ll gain new stable coins. The only real way this can happen is if one sets the lower part of the BOT’s trading grid at the current market price.  Start the BOT with ONLY the BASE, no QUOTE and over time the QUOTE currency will appear in your exchange balance.

Picking a pair to set a Fishing BOT on is tricky but the process is the same for all of them.  Here’s an example:

On December 6th I set one of my crypto bags against USDT.  You’ll see that I picked the low point in the market to enter – which seems lucky until you realize that I re-starting this bot many times before it actually took.

Waiting and setting the base of the bot at 0.142 when that was the price of the market allowed me to avoid putting USDT into the bot.  It set up all the sell orders and once the asset began to move upwards in price the botting began.  All the reds are sells and green are buys…

Here are the stats for this bot:

On the right it shows my initial funds. I started this bot by supplying 1,096.9408 DAG and NO USDT.

The left shows what the assets are worth now and notice the DAG is less and USDT is more.  This is because as the bot moves up, it sells a bit of the DAG for USDT and places proper buy orders to make a gain over time.  The total value of the assets is appreciating though as the DAG price goes up.

What I’ll do is let this sit until the trading drops out the bottom of the grid bot and that will return all (or most) of my DAG and allow me to close the bot without losing any of my HODL bag.  Well, what has this BOT made so far?

9 USDT, not bad for 8 days and only a 154 USDT investment of DAG.  In addition to this new USDT, the actual bot value has appreciated from 154.77 USDT to 176.63 USDT.  If I had wanted to sell my DAG now I could realize that gain as well, but since this is my last DAG bag, I’m keeping it to re-use the next time it gets excited and trades a lot.

UPDATE: a week later check out this bot.

During this time period BTC went down 3.62% and ETH went down 8.21% while DAG bounced around my botting range gaining 15 new USDT for me whilst retaining the full value of my DAG assets plus the short term appreciation.  You’ll see that the split is different and that doesn’t much matter to me.  In both cases I could sell the USDT for the proper amount of DAG to get back the full amount I put in…  make sense?

STACKING BOTs

Let’s start with what “stacking” is.  The act of stacking is to accumulate small amounts of crypto over time and one can stack any number of ways and gain marginally on many of the existing coins.  Some ways of stacking are with Lolli, bitcoin rewards, credit card rewards, staking, etc… 

Applying the Stacking concept to a BOT appears routine as all gains are made in small quantities from minute by minute transactions, therefore automating a stacking strategy for you.

To make it truly a “Stacking BOT”, the same rules apply as a fishing bot.  Only use the BASE and don’t fund with QUOTE, set the bottom of the grid trading range to the current market price.  In addition, to be a stacking bot you should have a crypto as the QUOTE.

So DOT/BTC would be a “Stacking BOT” and DOT/USDT would be a “Fishing BOT.”

Say you have 10 DOT and want to stack BTC; you’d start a bot with 10 DOT and NO BTC on the DOT/BTC pair and set the low trading range on the current market price, then wait for new BTC to be generated.

The goal of a Stacking BOT is to stack up more of the QUOTE crypto.

The most common type of crypto I stack is BTC, but I have stacked others successfully like ETH, KCS, and BNB.

ALL BOTs are limited to what pairs are available on the Bitsgap integrated exchanges.  As a result, most of my BOTS are against BTC since that’s the most popular pairing, second only to USDT.

Bitsgap kicks the new BTC to your trading account- but let the bot run it’s cycle and don’t cancel in the middle, unless you are ok with the split of assets currently in the bot.

When I stack assets, I stack those with which I believe will gain over the next few years.  The output of the Stacking BOTS should theoretically appreciate over the years.  It’s kind of like getting two presents.

This is why I call it the BOT that keeps on giving…

Down Markets?

Being an active-HODLer I am not worried about prices falling over time as much as an active trader would be.  As price goes down it’s really just forcing me to decide if I want to lower my BOTs, trade the asset into BTC or ETH, or ignore it.

The downside for any of my BOTs is that some of my principal would be lost which would suck – but for me, my principal crypto balance no longer has a cost basis as I have already removed my investment many times over.

This is NOT for the faint of heart – there is lots of work to maintain a bot army and if you have the patience, organization, and conviction perhaps this might be something worthwhile to look into?