How I earn money on cryptocurrencies

Investments. Development.

How I created an algorithm for crypto trading

Quick intro of this post:

  • Machine learning / deep learning for cryptocurrencies trading

  • Udemy courses about trading

  • Technical analysis for crypto trading

  • Success!

Back in 2017, when I first started cryptocurrency trading, I started to think about trading automation. I have a non-trading mindset. I am always scared when my positions starting to drop, and sometimes I even sell. And of course, it starts to go up, right after I sell. But… it was 4 years ago.

For my luck, I am a developer. And a good developer, I believe.

Machine learning for trading

Four years ago I first understood that I should write a bot for trading. Which will trade stocks and crypto for me 24/7/365. And I started to write ML models for trading. The best programming language for this is Python.
I’ve read a lot of good articles about writing ML models, learning datasets, and machine learning algorithms. There are a few links, you should check if you want to create an ML-based algorithm for trading:

  1. Machine Learning for Algorithmic Trading by Stefan Jansen

  2. Stefan Jansen on GitHub

  3. Machine Learning Stanford course on Coursera

I could tell, that ML algorithms for trading don’t work for me. I tried different models, but I wasn’t able to make it work. So I moved next.

Udemy courses about trading

At the beginning of 2020, I decided to give another chance to the trading bot. After my first failure with my bot, I decided that I need to learn more about how to trade. I found a few great courses on Udemy, I watched them from the beginning till the end, and It was a pleasure to learn some background.

I completed 2 courses:

  1. The Complete Foundation Stock Trading Course

  2. The Advanced Cryptocurrency Trading Course - With Strategies

I learned a huge background about technical analysis in crypto trading and stocks trading during these 2 courses.

The 3 main indexes which I use are Bollinger Bands (BB), Relative Strength Index (RSI), and Average True Range (ATR). And of course, you have to check trading volume. I decided to try day-trading and here is what I got.

Technical analysis for crypto trading

I make my trading only on Bitcoin. Because I think Bitcoin is the most stable coin. It should not drop to zero. So pair is BTC-USDT on Poloniex. I chose Poloniex mostly because of the small fees. Also, it’s one of the biggest trading platforms, so I believe everything will be OK with it. If you want to register on Poloniex - click here.

I tried more than 50 different trading strategies and selected 3 of them. I purchased $100 for each of them at the beginning of 2020, and there are my results.

  1. Algorithms based on Bollinger Bands only.

It sounds easy. You should BUY when the price touches the lower band, and you should SELL when it touches the upper band. I wish it works. But it doesn’t work for me. After a year of trading, it made 7560 transactions, and I have $54 on my balance. So profit is -$46 and I lost almost half of what I purchased.

  1. Bollinger Bands + RSI

The second algorithm combined Bollinger Bands (BB) and RSI. So you should decide whether buy or not based on two indexes. It works much better for me. I even earned some money. After a year of trading, it made 1512 transactions, and I have $128 on my balance. So profit is $28 or 28%. Not bad for a year, what do you think? I plan to add $1k for this algorithm, so it should make around $300 per year for me.

  1. The third one which I chose, is to BUY when the price drops by 5% during the day and sell once it rises again.

It was the most profitable trading algorithm for me. After a year of trading, it made only 252 transactions, but the profit is the highest. I have $195 on my balance. 95% of increase! I wish Poloniex have zero fees, so this amount would be even more. But even 95% per year is much more than I could expect. I am going to purchase $2-3k for this algorithm and let’s see how much money it can make.

Conclusion

I wish I can predict the price of crypto or stocks for the next 5 minutes. But for now, nobody can do it. I started to play with crypto in 2017, and finally, I have some results in 2021.

So I purchased $300 total in May 2020. And now I have $377 on my account. I wish I purchase everything for the 3rd strategy, I could have $585 now. But now I have a bit more experience and I know where to move next.

I think crypto is our future. I am going to continue working on my trading algorithm and I will write you more about it soon. Subscribe to my newsletter if you want to receive updates.


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