I am not a trader and I have never, nor will I ever give investment advice. I do not want to speculate or over-react to market conditions, I just want to plan a life worth living and I believe the BOTs will assist in that goal.
I just want to share with you a prime example of a BOT that happens to have it all going for it.
For the purpose of this article and to exhume this strategy I’m going to proceed with the technical talk as if you are familiar with everything. Please note that with each mention of a new concept I will break down the thinking behind it and fill in the “trader’s mentality” just in case you aren’t a trader.
I too am not a trader and I have never, nor will I ever give investment advice. I do not want to speculate or over-react to market conditions, I just want to plan a life worth living and I believe the BOTs will assist in that goal.
Long-term I see myself sitting on just enough crypto to maintain staking and bot-driven gains that are sold down to pay for my normal living expenses. This does not mean I won’t work, but it does mean I’ll be less interested in working for a paycheck and more committed to learning for a living and using my new knowledge to gain a competitive edge with the BOTs I create.
I invested a full year (during the pandemic) to learn and relearn things. The Crypto space can be confusing at times but, as a result of my education, I can think and read charts like a Crypto trader – I just don’t have the stomach to put thousands of dollars in a bet that can win or lose. I’m much happier watching small gains happen thousands of times daily, knowing my computer is doing all the work while I sleep and take care of other things.
I highly recommend anyone interested in Crypto learn how to be a trader even if that isn’t your long-term goal. Being aware of the trader mindset is truly the only way to ensure you will gain more times than not. I recommend everyone attempt to swing trade at least once – even if you fail. Start by putting a $10 trade in that way if you do lose, you can say that was the $10 class fee LOL.
It’s important to think like a trader when pursuing a BOT growth strategy because you have to understand the market and think in three dimensions. Then and only then will your BOTs be successful.
Most folks understand that a chart is a map of price over time. This creates a line that moves up and down as price increases or decreases and with each segment of time a new point in the line is drawn.
The goal in three dimensional thinking is to not only predict market movement, but also how long things will take. For example, say there is an asset that shows no Bull signals and has no sentiment. This asset may take a long time to appreciate and/or may depreciate first so starting a BOT on an asset like this wont result in any gains unless you are really lucky.
One who is into BOTs must look backwards on the charts and understand what the asset does when it’s in motion and position BOTs accordingly over time with an eye towards the macro market.
I want to take an example of a situation that led to my starting a couple of bots a while ago. These BOTs in particular have every element of a solidly structured BOT. In fact, there are three that are related and I will discuss each of them in this article. First, the asset, ADA… This BOT analysis was from March 18th and by the time you read this none of what I’m about to say will apply.
Please know this is NOT an endorsement of ADA or a recommendation to buy or sell, I’m only using this as an example so I can dissect the strategies in my head.
The first thing to note is that I subscribe to a service called AltCoinAlerts and, as a direct result of that, I was made aware of a bit of news that was positive for ADA. The time difference in my receiving the notice versus the general public allowed me to purchase ADA prior to the news getting out, so I’d be in early. This is something traders know as the information disparity. However, you might think of it as “the early bird gets the worm.”
In this case, I didn’t buy any new ADA. I am an Active-HODLer and I already have ADA that I purchased a long time ago at around a dime each. I was able to use that ADA to fund the bots, but if I needed to buy new ADA it was trading around $1 at the time.
My process is to first understand the market cap and how much room to move an asset has. I believed at the time that the upward movement of ADA is limited. No matter if I’m right or wrong, let me explain why I made that call as it’s a good lesson.
This screenshot is from a favorite site of mine, https://www.coingecko.com and it displays the top three crypto currencies by Market Cap as of March 18th
Market Cap is a funny way to visualize the worth of an asset as a whole in comparison against any other asset out there. This is a good way to bridge the gap between legacy and crypto investment as the name and concept of Market Cap is the same. Take the number of total coins (or shares) and multiply by price to get the market cap.
Notice in the screenshot that the market cap for Bitcoin on March 18th 2021 was over 1 Trillion dollars and that leads the crypto assets by a significant amount. Second in line is Ethereum with a 212 Billion dollar market cap and then Cardano (ADA) with a 47 Billion dollar market cap.
For comparison Tesla’s market cap today is 643 Billion; ebay sits at 43 Billion; Disney is worth 352 Billion; and Apple has a lofty 2 Trillion dollar market cap. So you can think of ADA as an asset that is worth more than ebay but far less than Disney, Ethereum, Bitcoin, Apple, and Tesla.
That’s the first metric I looked at and, knowing that this market cap won’t grow exponentially, is something that can be determined by looking at the tokenomics of ADA. My question is how high will the market cap go in the long term and that gives me the math to figure out what the highest price I’d be guessing ADA might hit eventually.
Tokenomics are what traditional traders would call “Fundamentals.” Each token has its token issuing rules and it allows for investors to do comparative analysis of a Crypto currency. This includes any vesting or staking rewards as well as any pre-mined tokens awarded. It allows us to understand a little more of what the future may hold for any Crypto currency.
Tokenomics include various calculable measures that give life to the asset, much the same way as Fundamentals do about a stock in the traditional investment world. Since a Crypto asset doesn’t always have cash flow and sometimes doesn’t even have a company to look at, these tokenomics become very important for traders to pay attention to.
Taking ADA for example and clicking on CoinGecko to the ADA page you’ll see a more complete story as seen (as of March 20th) in this screenshot: https://www.coingecko.com/en/coins/cardano
When I set up my BOTS the market was trading around $1 per ADA. If you look at what ADA was worth on March 20th, $1.37 ← a trader sees this as a 37% gain and is happy – they sell and move on. I am an Active-HODLer and I use the ADA I purchased a year or so ago for a dime each in 3 BOTs to generate new crypto while KEEPING my ADA.
Back to the rationale, check the “circulating supply” you will notice that there will not be more than 45,000,000,000 ADA and there are now 31,992,435,270 ADA in circulation. You get the Market cap from multiplying the price by how many tokens are in circulation and that’s where the $43 Billion dollar market cap comes from. NOTE that there is a discrepancy because pricing goes out to 8 decimals and you only see 2 of them.
But take that same price and multiply it by the total amount of tokens once they all are issued, 45 Billion, and you get $61 Billion as the fully diluted valuation. This is the potential market cap once all ADA tokens are fully issued. It’s also relatively high compared to the value ADA presents at that moment in time. I believe in ADA for the future, but in technical terms it was trading sideways for years and just broke out. I was certainly in the green then and could have sold my ADA for a profit… but I more like using the bags I hold for BOTS.
I picked 2 exchanges (Binance US and Kucoin) and I split some of my ADA between them. I set up some BOTs via Bitsgap to see if I can make some passive income. Traders are looking to buy into ADA before the news is picked up on mainstream media and sell once the news comes out to the public. When new news hits, the public regular retail traders start buying. It’s called Fear of Missing Out or FOMO and it’s used to generate a yield by traders. Basically the large amount of buying pressure pushes the price upwards.
Kucoin pair ADA/BTC – this market was trading low at the time and the high was 10 or so clicks above the push from the first impulse.
Let me break down that statement. First, the impulse is when a large buyer enters a small market or many small buyers purchase all at once (FOMO). What results is a massive buy up of the order book which quickly pushes price higher. For large buyers buying out everyone who wants to sell it usually gives a decent entry point as their average buy would be below where the market resumes trading. This buy up sometimes contains folks who place market orders and get HUGE slippage so remember: no matter what, ALWAYS place Limit orders. Slippage is bad as it eats into your profits or could wipe away all profits quickly. Market orders are always discouraged.
Here’s what the original impulse looked like:
That’s Kucoin ADA/BTC on an Hour chart and below is the same pair on a minute chart with my BOT activity overlaid.
There are a few details worth noticing. First there is a gap in the market. This is common when large news events come out. I have witnessed MANY of these events as my membership with AltCoinAlerts sends me a notice on my phone whenever there is a signal worth acting on. The gap just means that there were no sellers there when buyers wanted to buy, so they in essence skipped over that section and resumed buying activity higher.
The green circles represent when the bot used ADA to purchase BTC and red circles represent where the bot sold the newly purchased BTC back to ADA for a profit.
The BOT in this case is from Bitsgap and if there is a way to love a company, I am in love with Bitsgap. Their tools have provided me with a consistent mechanism to generate bots pain free.
Their BOTs are “grid bots” and the way they generate a return is by buying low and selling a little higher. Bitsgap is a tool that exists outside of your exchanges and uses API’s to connect to your exchanges. They provide an intuitive interface to trade and BOT on all of your exchanges via one login.
Their Bots do this buy and sell for a gain thing thousands of times a day 24/7/365 without human interaction and are effective at generating a return if, and only if, they are set up correctly and properly researched. NOT ALL BOTS ARE CREATED THE SAME. Some don’t always behave the way you anticipated but with the new version of the Bitsgap interface I have NEVER had an issue.
As with EVERYTHING, do NOT trade anything you aren’t ok losing. On that note, it’s important to know your level of risk and understand what will happen with each new trading position or BOT you create. For example, say I have $10,000 in assets and my ADA is $100 of that. That is a 1% position already. Now say that of that $100 in ADA I’d set a bot up for $25 worth so I still have ADA for other uses. Note the portion of my WHOLE portfolio tied to any single BOT is well below the 1% risk threshold I have set. I NEVER put up more than 1% of my assets in a single trading vehicle because if I were to lose, I’d be able to make up 1% quickly. But if I went to 5% or more, the chances of coming back whole again without stress get smaller.
I want a stress free life, but you may have a greater tolerance for risk. With that in mind,take this as a concept and not as a rule. Come up with your own percentage-based risk policy and stick to it.
Since I have assets on multiple exchanges I was also able to deposit ADA into Binance US and set up the same bot there via Bitsgap. The volume is lower in Binance US versus Kucoin and therefore the return will be lower, but the return was predicted by me to be large enough to allow the use of two of my BOTS on these gains.
Because of the Cryptnation group I’m in; the connections I have made; and knowledge I have developed, I have been privy to some behind the scenes information and I have known for years that ADA will eventually rise and that’s why I bought so long ago at a dime each and was HODLing and staking ever since.
I also had started a BOT on ADA/USDT at Kucoin back in February and that one went really well also, though the amount earned daily picked up around this time.
The news alert on the 17th was that ADA will be listed on Coinbase and Coinbase Pro. Typically when this happens there is a mad rush for consumers to purchase the newly listed asset. Traders call this the “dumb money” and they anticipate (much like I did) that this immediate timed rush will push price up quite a bit. The trader’s way to play this is to purchase the ADA as soon as the call is made (in this case at $1) and move it to Coinbase Pro and sell into the FOMO (Fear Of Missing Out) buying which can reach prices far higher than the asset may ever be worth in open markets.
That day price on Coinbase Pro shot up to $1.87 and some traders should have gotten in and out and made upward of 80% on a 2 day trade. If I had big dollars and a ton of time on my hands I would do this, but the stress level and attention to detail is far more than my life will allow, so I stick with my BOTS. But how much better is it to trade than to bot? You’ll be surprised.
Here are the details of the Kucoin ADA/USDT bot after running for 5 weeks.
I started this 5 weeks ago by placing 135 USDT worth of ADA into this bot. I did NOT put USDT into it and at this point the ADA I put into the bot is worth 192 USDT for a 41.49% investment gain. This is the price increase gain and, in addition to this gain, I earned an actual 58.85 in NEW USDT added to my Kucoin balance. That in itself is a 43% profit and I still own all the ADA I put in (although some has been converted to USDT to facilitate the BOT trading). Once the price falls out the bottom of my grid trading range I’ll be given back my ADA and be able to open a new bot later with the same bag.
And here are all of my buy and sells…
This BOT has transacted 3747 times and each buy is in green and each sell is in red
Every transaction has a reconciliation line pairing the buy and sell and subtracting the exchange fees for both transactions, thus generating the profit and adding it to the BOT profit number seen above.
Let’s break down the other two as those are even more interesting. Both are against Bitcoin rather than USDT. I much prefer to BOT against BTC because I get 2 gains. 1 with the original BOT allowing me to gain more BTC and, once I have the new BTC, it will participate in Bitcoin price appreciation, so I’m able to enjoy that too with everyone else.
My Kucoin ADA/BTC bot
I started with 0.00857089 BTC worth of ADA and NO BTC in this BOT. After 396 orders, some of the ADA was converted to BTC as seen above. Now the ADA I put in is worth 0.00917165 BTC and on top of that I have pocketed a 0.00062181 BTC profit.
This is a similar case with the Binance US BOT as well.
I think these BOTs are cool and I hope you agree. Once you get used to setting them up they will just run and run like the energizer bunny. I need to spend a few hours per day checking in.
I’m formulating more thoughts and will release a more detailed description of my botting theorem in the next few weeks.
It’s all pretty cool and I’m excited to be a part of this new generation of wealth accumulation.