[danuker]

I warmly recommend the book Systematic Trading by Robert Carver. [1]

The perils of trading bots are explained in it. The author himself runs one for a long time. [2]

In particular, the greatest risks are overtrading (so you get eaten up by fees), and overexposure (so you get eaten up by volatility).

[1] - https://www.systematicmoney.org/systematic-trading

[2] - https://qoppac.blogspot.com/2021/04/trading-and-investing-pe...

[argvargc]

Bitcoin averaged 300% returns YoY the past decade (most other crypto followed to a degree, or did similar or better - with some doing worse).

Anyone looking for a trading strategy, automated or not, needs to consistently beat such numbers to do anything other than lose money versus just buying and holding.

Given prior (lack of) success in every other market this kind of thing has been attempted, makes this a hugely tall-order. The most successful quant firms all average well under 100% returns, even with years of experience, armies of experts, and loads of investment in assets and infrastructure.

Buying and holding crypto already outdoes them (massively). Why take on greater risk and spend time to try and get yet more out of such a market?

[rokobobo]

If you are confident that these returns will continue, I’d happily loan you a couple of million at 50% interest rate, so you can buy even more crypto. (Of course, I’ll take your crypto as collateral).

[argvargc]

I'll do you a deal:

Put 5% of that 2 million into a spread of the top 10 crypto by market cap.

After a few years, and despite some of those coins going to zero, you'll likely have done way better than just the 50% you'd have got from me.

If you don't though and it all goes to zero, you only lost 5%, as opposed to the entire 2 million to a random person you met on the internet.

You're welcome.

[mszcz]

Yeah, HODLing is underappreciated. I once tried mining, a long time ago. Dumped $5k in mining equipement and, at the time, barely broke even. Had I bought and held, instead of wasting countless hours on the project, I would've been way better off.

Then again, I did have the somewhat limited foresight to keep ~33% of what I've mined in crypto form so not a total loss ;)

[JohnJamesRambo]

Same here. Former miner. Wish I bought coins instead. It worked out ok in the end though because I learned pretty quick. :)

[deadcoder0904]

Time in the market always beats timing the market.

[mszcz]

I like that!

[dmos62]

If those are the greatest risks, it sounds like it's easy to buy low and sell high. I would have thought that that's the biggest challenge.

[wombat23]

Well it kinda is.

Empirically, you could have bought a share of the SPX at any point in time, and sold it with profit later. The real problem is what happened in the time between, and whether you were able to hold on.

[dmos62]

You can buy shares in an index?

[danuker]

You can buy shares in an ETF (exchange-traded fund) that tracks an index (buys and sells to attempt to keep exposure the same as the index).

[asdev]

what does this have to do with OP's post? Does the book directly contradict OP's work

[user-the-name]

This is trading cryptocurrencies, so the actual greatest risks are: Exchanges frontrunning you and manipulating the market, exchanges just taking your money and running, prices crashing without you being able to sell your assets, and all kinds of other stuff.

Cryptocurrency is NOT a market you want to be in.

[capableweb]

As someone who been in the cryptocurrency market since ~2015, it's possible to be in that market without actually encountering any of those problems (I've never had those issues for example).

Except the market manipulation, that'd be hard for me to see. It's also a kind of extraordinary claim, so please provide some extraordinary proofs that there actually is manipulation.

Cryptocurrency is a market that everyone should be in, it is after all created for and by everyone. Be careful of putting in money you really need though, and see it as gambling more than anything.

[jerf]

"Except the market manipulation, that'd be hard for me to see. It's also a kind of extraordinary claim, so please provide some extraordinary proofs that there actually is manipulation."

I guess that depends on your priors. Given the nature of the market, its opacity, its lack of regulation, the sheer proliferation of the number of cryptocurrencies, the growing interest by large entities like hedge funds with a history of active manipulation, I'd personally consider it the extraordinary claim that there isn't manipulation occurring. Like, if I were to set out to design a fertile ground for manipulations, it would pretty much look like the cryptocurrency space.

[capableweb]

So... You want people to provide proof that the cryptocurrency market isn't manipulated? That feels slightly backwards. Usually we want to have proof that something is happening, not proof that something is not happening.

And since you also claim it's do easy to manipulate, wouldn't it be easier to provide proof of this?

When thinking about it, i'm not even sure how I could provide any evidence that it isn't manipulated... Any ideas?

> Like, if I were to set out to design a fertile ground for manipulations, it would pretty much look like the cryptocurrency space.

One tip for your future scam-network: don't design your entire ecosystem around the idea that you want to have a forever-stored global ledger of all the transactions, as it'll be easy to trace everything whenever. Better to have a few entities controlling the ecosystem that the public don't have insight into.

[jerf]

"You want people to provide proof that the cryptocurrency market isn't manipulated?"

That's not what "priors" mean. It simply means that based on my experience of the world and my understanding, I would very heavily assume it is being manipulated. I'm not asking for anything. I already have a solid opinion. If you choose to try to disagree with that with solid evidence, feel free, but I'm not asking you to.

"don't design your entire ecosystem around the idea that you want to have a forever-stored global ledger of all the transactions, as it'll be easy to trace everything whenever. Better to have a few entities controlling the ecosystem that the public don't have insight into."

I think that counts for a lot less than you probably do. Nationstates may be able to back wallets to individual entities, but you and I can not in general. Moreover, I wasn't just talking about BitCoin. Some of the cryptos are even more impenetrable than that.

[capableweb]

> I already have a solid opinion. If you choose to try to disagree with that with solid evidence, feel free, but I'm not asking you to.

So I guess you see Hacker News as your platform to share your opinions without wanting to discuss them at all? You might want to refine how you use Hacker News then, as when commenting, it seems that you want to discuss. But since it's clear you do not, maybe it's more appropriate you create a blog and then submit the posts here?

In these days of misinformation, it sucks that people feel like it's fine to write "Exchanges frontrunning you and manipulating the market" without any sort of evidence and when challenged for the evidence, the rebut is "you don't have to believe me and I already believe in what I believe". In particular, it's not the kind of content I hope to see on HN, where many people are open to both providing evidence of their claims and also open to listen to others.

[csomar]

> Exchanges frontrunning you and manipulating the market

This should not be a concern, just don't HFT your trades. Play longer time-frames (like a few months between a buy and sell); and don't use leverage.

> exchanges just taking your money and running

There are many established/regulated exchanges which have guarantees as good as the traditional exchanges.

> prices crashing without you being able to sell your assets

Maybe that's when you should buy?

> Cryptocurrency is NOT a market you want to be in.

I have been in this market for 6 years, and I was able to generate double digit yields every year (even on bear markets, actually these were the most profitable).

[meltedcapacitor]

Beauty is in the eye of the beholder.

- Frontrunning and market manipulations are as many opportunities: the game for small players is to detect occurrences and free ride them. In clear markets there's no opportunity left in fast trading for anyone without access to institutional fee structures.

- Exchanges doing a runner: diversification and gross (not net) leverage can mitigate that.

- Price crashing: be short-only or market neutral (long=short) if need be.