Approaching the crypto market with discipline and structure

Transcript

The Birb Nest 2:11: Hey, everyone. Welcome to Trading Congress 2025 day two, and we've got another absolute banger lined up for you. We've also got a full week of focused education, market insights, practical guidance, all designed to help you become a stronger and more confident trader.

So now that's out of the way, I'm super excited to bring you our next guest. So will you please welcome Chris Jack from Jackonomics.

Chris, how are you doing? Doing very well. Yourself?

Awesome. Great. Love having another Brit on the show as well.

I think it's about time we got some recognition in this industry. You Just joking. Some some wonderful people from Britain as well, obviously, all over the world.

But I'm really, really, really excited to have you on, Chris. I think you really bring a very different angle to this. If I'm not mistaken, you're ex-Cambridge as well, right, that's where you kind of came through and you built this kind of wonderful approach to the markets that you've got at the moment.

So rather than me rattle through the past, maybe give us a little bit of an introduction to yourself and where you've come from. Yeah. Absolutely.

So, I'm actually born and raised in Luxembourg, so you'll hear the subtle Excuse me.

Chris Jack 3:39: Subtlety of the accent there. In Luxembourg. But, yeah.

No. I started my career off at, the Cambridge Centre for Alternative Finance, which is a small research center. That's part of Cambridge university.

The Birb Nest 3:49: And,

Chris Jack 3:51: really what we were looking to do there was to see the opportunities and the risks of digital assets. So we wanted to have this very balanced look, I would say, at the market. And we did this in partnership with some of the biggest financial institutions around the world, both on the public and private side.

So the likes of Visa, Mastercard, Goldman Sachs, the IMF, the World Bank, so on and so forth. And our research really took the form of free digital tools, which you'll find online still nowadays, like the Cambridge Digital Money Dashboard for stable coins and research papers. But throughout all of this time, I've also been algorithmic trading myself.

And that has always been a passion of mine since I really picked up Nick Radge's book, Unholy Grails, half a decade ago. And I was hooked really. I was hooked.

I, I felt like that was the way to approach the market properly, especially on the retail side, we don't have access to the same infrastructure necessarily that some of these big financial institutions have. So I was always looking for a way to approach it and profit from the market.

The other big thing for me was always finding an approach that would allow me to sleep at night and not be too I never wanted to be stuck or glued in front of a screen.

My opinion is life is too precious for that. Yeah. I know I know some discretionary traders would probably, already probably thrown stuff at me right now.

But, yeah, for me, I wanted to find a way that, I knew there was a high expectancy of me profiting from the market Mhmm. But I could enjoy my life as well. Yeah.

Removing the stress. I think where I really kinda connect with that is I had a similar well, similar, but very different start. I wasn't really

The Birb Nest 5:39: never really thought that I had the mindset for, doing quant work, algo, stuff like that. Right? And had nothing to do with code.

But after being an entrepreneur for from my late teens into my late twenties when I really got hooked by the trading bug actually in traditional markets. Right? And I kind of started my career out and then I worked for a small fund in Germany, I then pivoted heavily into crypto and they'd opened a crypto desk at the time so I got to see early stages of that.

And I actually made my career as a swing trader and technically, what I was really lucky to learn under some exceptionally good professional people, back in the day, which, as I'm sure gives you a huge leg up in the market if you find the right people to learn from and surround yourself with. For me, the problem was the same, the solution was very different.

As a swing trader, the results were good and I was doing well, I was prospering of the fun but my life was horrendous.

I didn't sleep, I was anxious all the time, I was waking up to check my positions overnight, every moment the news dropped, I'd be out having a dinner, I'd be that guy that was always checking their phone and I was like look, my health took a big hit, my mental health, my physical health. And even though I was still delivering in terms of the P and L, it wasn't a lifestyle I wanted to live.

So then, and this was very early in my career, I then pivoted very, very heavily into day trading.

I was like look, if I can just close these things out when I'm finished for the day, if I can just walk away win or loss, I'm not wearing that baggage moving forward. And actually really really transformed my career but more importantly it really transformed my lifestyle, better energy, better structure, better version of myself kind of coming to the charts. So you obviously did the smart thing and worked that out pretty early, right?

So what was the journey like in that respect for you?

Chris Jack 7:19: I think my background comes from mathematical economics. So that's always I've always loved numbers. I've always loved algorithms.

But I would say for me, I was, I always had this belief that there was a way for me to profit from the market while not getting attached. I think we all know that emotions is, can drive you nuts. And I can't even imagine, how nuts it would drive you, when, when you're doing it, on a discretionary basis.

But for me, I just realized, some that there was a niche out there, namely systematic or algorithmic trading, whatever you want to call it. And I realized that these people weren't getting that much attention because it's not interesting. It's not interesting to many people.

They want to know what is Bitcoin doing tomorrow? What is Ethereum doing tomorrow? Whereas the algorithmic trader will tell you, it doesn't matter.

You know, I'm set up to profit from it, whatever, depending on how many uncorrelated strategies you have. And so you're not the most interesting person at the party. Let's put it that way, you're an algorithmic trader.

You might be the most profitable long term, but you're definitely not the most interesting. And I think that's one of the things that's really important, but basically what I prepared for us today is hopefully a presentation that I wish I could have had someone do for me five years ago. It would have saved me a lot of time.

The Birb Nest 8:56: And I'm just hoping to hopefully shed a little bit of light onto the crypto market, everything I've learned from my time at Cambridge. Yeah. I mean, I'm super super excited about this, by the way.

I have to say, like, like, genuinely, Chris, I'm I'm excited about this. I think this is what congress is all about. Just before we just dive in, I think, again, I know I sound like a broken record to some of our viewers and some of our listeners here as well,

but just listen to the context of what Chris is saying and the experience in the background of the people that we have on the show about investing your time in yourself, understanding what type of trader you are, having that focus to remove the noise and focus on something that you can build out that aligns not only with what you're passionate about, suit your character type, suit your personality and something you can see yourself having longevity with.

So that's basically me done for now, Chris. Absolutely. Let's take this forward.

I'm super excited for this.

Chris Jack 9:47: Absolutely. And if you have any questions along the way, don't don't hesitate to stop me. Sure.

Is financial advice and some of these are back tests and there's obviously limitations with back tests. There is also some out of sample performance in there and I'll note that when we get there, but obviously risk management is always important. So we need to make sure that we take care of that.

Awesome. Great. So let's start with probably one of the most important things that we'll talk about today.

And that is the fact that crypto as a whole, the broader market is not an investment asset class. Okay. Now note that I didn't say it's not a trading asset class.

It very much is. And we'll get into why in a second, but the golden standard or the benchmark that the industry uses, and people always compare it to is, can it beat the S&P 500? If you just buy and hold the S&P 500, you hear it all the time.

Yeah. And if it can't, then you should probably not touch it. Well, here we have actual Standard & Poor's crypto data as well.

So this is one of their indices. And actually this S&P of crypto is the large cap minus Ethereum and Bitcoin, because they would obviously dilute this a little bit and falsify it. So large caps is basically everything over a billion market cap. And we'll get into market cap later as well, because that's also a little bit of a difficult metric.

But you can see here that compared to the S&P 500, it's actually underwater. You know? And what I like to compare this period in crypto to is actually the tech bubble of the nineties.

Where you have so many companies out there and every company that has a.com at the end of it is valued at ridiculous prices. Yeah. Yeah.

And, so then you have some people that say, well, crypto is useless, forget it. And you had people actually screaming that the internet was useless. Yeah.

In the 1990s, there's articles out there. You can, some of you, if you have some time, go and look at what people said about email the first time that came out, you see similar trends here in crypto, but basically we are in a place in crypto still where there will be things that come out that change the world. I mean, you can see that stable coins are having record volumes currently.

You can see that, Bitcoin adoption institutionally is huge. I speak to institutional investors on a daily basis. There's a lot of demand there.

But then you have a lot of, this other stuff, down the tail, down the risk curve that, very frankly, is purely speculative and doesn't provide any long term value. An interesting stat for you is that we actually have 50,000,000 coins now. There's over 50,000,000 coins issued, over, and I think just over 10,000 are actually liquid.

But even that's, that's huge. Like how many of those 10,000 are actually providing value? So the big takeaway from this is please, please, please, you're better off going to casino if you wanna have some fun.

Yeah. Just wanna take random bets, buying and holding Bitcoin. Yes, there can be a case made for that.

Absolutely. But the rest, and, and I see it all over X on a daily basis. And I try and plead to people don't listen to that.

The Birb Nest 13:24: Crypto is extremely interesting. I wouldn't be in crypto if if I didn't think it was interesting, but it's not an investment asset class. Mhmm.

And I think that's really, really important to remember. Mhmm. So just quickly to interrupt there because something you said really, really interesting.

First of all, I love that. Again, understanding the asset class that you're trading and the environment you're trading in. We had a guest on a moment ago, Robin, and we're talking about the same thing.

It's like, well, are you buying Bitcoin because your time horizon is five to ten years, or are you looking at three months in the future? I understand that. But what resonates with me, somebody that takes on board a lot of kind of legacy markets into my kind of forward thinking is that with the.com bubble, was this whole buzz that just stick.com at the end of the name of your product and all of a sudden you've got this mass valuation.

Exactly. Lots of overinflated valuations, some having absolutely zero revenue, lots of PE, and it was mostly debt driven. Right?

Now the comparison with crypto is that all of a sudden it became really sexy to put blockchain in the business name and then start to open the doors for some more aggressive VC funding, for example. But how do you and you might come onto this,

but looking at the dilution of the crypto market when we saw, like, those major bubbles like we saw with the.com bubble, for example, is that a risk that you're very aware of that the crypto industry is really laden and kind of weighed down by so many companies that have no intrinsic value?

Chris Jack 14:44: Yeah. So, they're hard. Yeah. 99% is going to zero.

Yeah, of course. That is for sure. But I think there is a, there is a big difference though, still compared to the,.com era.

And that is that there is a little bit more friction to start an internet company than to launch a coin. You know, you and I could do that probably in the next five to ten minutes if we wanted to. Well, you probably could.

Yeah. That's right. We could probably launch coin pretty quickly.

So, but, but there are a lot of projects out there that are starting to slowly get institutional adoption. And so that will, it, it will, it'll come over time. And that's also, and I'll get into this later.

One of the reasons why you need to trade a dynamic universe, even some of the biggest professional allocators out there that we see, they will pick, two or three coins, maybe five coins that have had a lot of volatility have performed well in the past and say, this is our tradable universe. What if, what if those go to zero or what if there's no volatility or momentum on those? And what if the narrative shifts?

So it's very dangerous in that sense. We're still seeing a lot of volatility. Obviously there's been less momentum these last four or five months.

Yeah. A little bit more elevated since the October 10, of course. But yeah, I would say, overall it's, one of those things where, the crypto market will mature and we'll get into the asset maturation cycle in, in the second year.

But there will be, 99% is going to zero and there will be, some very big winners absolutely coming out of that, that I'm, I'm quite sure about. But just to briefly touch on, on this. Yeah, please.

You can see from a risk perspective, it doesn't, doesn't make much sense to hold, even hold the S&P of crypto if you could, we're talking about 80% draw downs here. So really, really big. And then a lot of people will come to me and say, but Chris, what if I just buy the strongest coins?

And I say, so if you had bought the strongest coins, yeah, so the ones at the top of the bull market in 2021, so these are the top 20 strongest coins. Yeah. Only three of them are currently positive.

The Birb Nest 17:11: Three. I mean, that is that is in a little bit of contrast to what most people would guess, I would say. Right?

Yeah. No. Exactly.

Only three of them are positive.

Chris Jack 17:21: And so, again, this this doesn't work. And I think this this next chart is the one that went viral on X, about a month ago, Adrian reposted this one too. But this is the state, so this is our tradable universe, the top 50 crypto futures ranked daily by volume liquidity.

But this is the state of the broader crypto market. You know, you had huge, huge upward momentum in 2021, 2020 But since then, it's again, there's no long term trendiness in that sense where where you can just put your money pocket and forget. And I think that narrative is extremely dangerous, especially because a lot of people that come into crypto, of course, the institutions, they are trying to get the most robust approach to invest in crypto.

But for the average retail trader, that's trying to make a quick win, it's very dangerous. You become exit liquidity, basically. So

The Birb Nest 18:22: That's really, really interesting, actually, because, again, I think people look at these slightly differently as well. They they I think it's called Bayesian methodology, which is where you're constantly taking onboard new data and you're processing that into your thoughts, right, And you're planning.

And the problem is people look at say, you go back to the beginning of the chart on the left and you say, ah 2020 to 2021, this is the old season I'm after this past.

But they forget about the market dynamics and conditions, capital flow, institutional money, fact we've got ETFs now. Right? But also the fact that the space is maturing a lot more.

It's like the difference between investing in an emerging market and, it's somewhere like The US. You know? Yeah.

There's loads of investment goes in The US, but you're looking at a very, very different playbook. Right? And you're looking at very different volatility.

Chris Jack 19:07: Yeah. No. A 100%.

You you said it exactly right. And that asset maturation cycle will be one that will be interesting to talk about in just a second. But the other thing that we have to talk about, because I see this over x all the time too, is, so total three is basically what the S&P of crypto that I just showed you is supposed to show.

Yeah. But there's a problem and people need to realize this with how market cap is calculated. Okay.

So market cap is basically the last price that, a coin was sold at times the number of coins in issuance. Okay. That's basically how market cap is calculated.

Now you and me could create a $1,000,000,000 market cap coin today. You know, basically we issue a billion coins. We put all of them in storage and you sell one coin to me for $1 And because that's the last price that was transacted.

And even though it's an extremely illiquid coin because you can't trade the rest, technically in market cap, it would be valued at a billion dollar market cap. Yeah. Yeah.

So that's something that I didn't realize it was that easy to spoof, by the way. Really, really didn't. Yes.

No, it is. So it's, it's one of those things where you have to be careful because looking at this chart, would think, okay, this is great. You know, the broader crypto market is going up.

We might be testing at, kind of that, at that support level again of the last one, but forget it. That's not actually what's happening. And so that's why it's really important to know what data you're looking at and how that data is calculated.

I think that's one of the ways that you can get ahead in crypto is by going a layer deeper. Yeah. And looking at that data.

So just to sum all of that up, so the annual return of the S&P 500, has been just a little over 12%, a decent return to drawdown ratio, not comparable to the S&P of crypto. Yep. You would actually need a return of 33% annually in order to have the same return to drawdown ratio that the S&P 500 has.

And the S&P of crypto is not gonna do that. No. It's not in the near future.

The Birb Nest 21:33: But not many people are gonna be willing to take drawdowns of 90% as well. I mean, imagine the Sharpe ratio on something like that would be ridiculous. Terrible.

Terrible.

Chris Jack 21:43: So should we just forget crypto, or should we just go Bitcoin? And the answer, at least for me, is no. And for us at Robuxio, it is no.

Mhmm. And let me go over the reasons why crypto is still extremely interesting. One of the main reasons here, if it loads here in a second, just next slide.

It's taking a second to load. This arrived probably the

The Birb Nest 22:11: Internet overwhelmed. I got it straight away, man. The crypto volatility advantage.

Brilliant. Yeah. I think everybody apart from me and you had that for the majority.

From the get go.

Chris Jack 22:23: Yeah. So I think this is, so what are we seeing here? Okay.

So we're seeing the average true range of, over the last fourteen days of both crypto futures and the S&P 500. So you can see the crypto futures here in the in the dark blue and the S&P 500 in red. And you see how big that volatility difference is.

And this is this is gold mine for traders, right? Because you want to have more volatility. Again, volatility is a unit of how much something moves in either direction.

And the more volatility you have, the more profit potential you have. Again, caveat if you approach it the right way. Yeah.

It will absolutely destroy you. But that's, that's one of the, the big points here. So volatility is huge.

There's no other asset class that's directly available to everyone on earth currently that will give you this level of volatility currently. The other thing that's really, really important is relative momentum. So that is the magnitude of these movements.

So here you can see three different, three different price charts. You see Bitcoin in orange. Then you see the top 50 Binance futures in green.

And you can see here already that both up and down, so no directional bias here, but both up and down, it moves more violently, and it moves, with bigger magnitude. And then if you look at the top 20 ranked by momentum, so ranked by rate of change, It's that much more of an amplifier effect. And so this is tradable.

This is tradable with, a bunch of different strategies. And this is, again, so the volatility paired with this relative momentum is what makes crypto so attractive for and specifically algorithmic trading in, in that sense. Here again, I think it shows you very nicely the difference in volatility of the S&P 500 compared to, the top 50 crypto future.

So to put it into perspective, the volatility of broader crypto market is around five to 10 times as volatile

The Birb Nest 24:45: as the S&P 500. And let's not forget for anybody that's listening as well. If you're looking at the S&P 500 or the Nasdaq, you're basically taking the most volatile index that exists outside of crypto.

You're not comparing this with, like, something like gold, for example. I know gold has been on one recently, but this is taking the legacy market's king of volatility, right, and making it look like a flat line compared to what That's Yeah.

Chris Jack 25:08: Great way of explaining it. I'm gonna steal that one from you in the future. Please do.

And I think the thing so what does volatility give us? Well, the one thing that we need to know is that obviously volatility is profit potential in a sense, because it means it's moving. Especially because with directional traders, this is not Delta neutral trading.

You need volatility, you need direction to basically profit from that. But the second thing is that when you have volatility, you at least get periods of short term trendiness, where it trends one way or another. And that is something that we can absolutely profit from as well.

So let's take a look at a very, very simple, model. Okay, very, very simple strategy. Basically you'd be buying.

So this is on Bitcoin, you'd be buying Bitcoin, when it goes, above its fifty day moving average, And you would exit your position if it goes below the fifty day moving average. Now you can see that even a ridiculously simple, right? Probably the most textbook simple strategy that you could use outperforms Bitcoin buy and hold.

Now this is a sign of relative immaturity, I would say in the market. Yeah, for sure. Because this doesn't work when you apply it to the S&P 500, for example.

When you look at the S&P 500, what you do get is you get slightly smaller draw downs, but you are also giving up performance. So you can see that if you just buy and held the S&P 500, you would have performed better over this kind of five, six year period. Then if you had used a simple strategy, simple momentum strategy, like, closing over its moving average.

Now, how is this possible? Many people ask how, how is this possible? Why can't you do this in stocks?

And this is where I think most retail traders, at least beginner retail traders, I was lost. Let's put it that way at the For sure. What what is happening?

Well, when you have an emerging market, there tends to be low liquidity, okay, not that many market participants. This leads to high volatility. And this high volatility, like we've talked about brings in opportunities.

Now, we're not the only people seeing this opportunity. There's other big institutions seeing this opportunity. You know, there's professional traders seeing this opportunity, at the top of a crypto market, probably somebody's grandmother's calling them saying, should I put a little bit of money in Bitcoin?

You know, so the opportunity is visible. Now what happens inevitably is when that opportunity exists, you have more people entering the market, and especially also more sophisticated players, more institutional investors, that brings in more liquidity. Now, once you bring in more liquidity, the market becomes more efficient, and there will be smaller opportunities.

And we're seeing that already on Bitcoin. So if you look at Bitcoin and the number of days where you had a rate of change, so, percentage move of 10% or more, or ten day period where you had 10% or more gains in 2017, you could find 50% of those ten day periods. And then in 2024, we're looking at, 20%.

So a lot less. And you can see Bitcoin is maturing as an asset class and expecting Bitcoin to make these 50X returns over the next five to ten years. It's not gonna happen.

It's just, I'm very sorry to tell you, could it get to a billion per coin? Yes, It it can, theoretically.

The Birb Nest 28:56: And that's not that far from where it is now. Do you like like, look at it back in the day, like we talked about earlier with emerging markets and that if if you want that supernormal return, you have to meet that with supernormal risk and you need to have the volatility. The more an asset matures, the more it gets the institutional adoption, the ETFs, everything.

It's being bought and treated in a very different way. And, ultimately, it's what people have wanted in this space for a long time, right, is institutional adoption. But, ultimately, probably didn't understand what that meant in terms of it being a tradable asset.

Chris Jack 29:25: Yeah. That's really, really well said. And I think that's also one of the reasons why, the broader crypto market is interesting to trade because institutions are moving into that more slowly.

I'm not saying they're not moving into it. We are seeing them moving into it. Yeah.

But more slowly, than Bitcoin, I think it's, it's probably easier to pitch a big institution on, to have a little bit of a Bitcoin reserve than to put, your money in Dogecoin, for example. Sure. Yeah.

You know? So, now if we compare that to the S&P 500, what a contrast in 2020, obviously, we had COVID, you had, big returns after that V shaped recovery. But apart from that, you really don't see it at all.

You know, it's non existent. And that is because the S&P 500 and, The U S stock market is a lot more mature. It's a lot more mature of a market.

And so the returns that you can expect from strategies,

The Birb Nest 30:20: algorithmic strategies, whatever, is gonna be lower than those same ones applied to, the crypto market. Mhmm. But so is your vol, so is your drawdown.

Right? The expectations on return, your sharp ratios, and it's gonna be a lot. Yeah.

Absolutely. Now I think one thing that's

Chris Jack 30:36: really important to cover is how to go about building your own trading trading strategy.

The Birb Nest 30:42: Mhmm.

Chris Jack 30:43: And this is something that I see people do wrong all the time. I did wrong at the start as well, where basically a lot of people, they will look for indicators, ideally as many indicators as possible to then find the perfect back test. And then like, oh my God, I'm gonna make so much money going forward with, with, the strategy that I've built that has, I don't know, 15 indicators and, very close parameter ranges.

And all they have is, is over optimized crap, like that's, that's really what's what's happened. And what we preach is you need to start from an ideas first approach. So what does that mean?

You need to understand the market characteristics first. So crypto, I can tell you from our research and research that's out there is that the big, and this is true for many other asset classes. This first thing that I'm gonna say is that the bigger the asset, the more trendiness it has and the more stable trends it has.

Right. Bitcoin is very unlikely that it's gonna drop by 90% tomorrow, unless I don't know, Satoshi Nakamoto starts selling all, all the Bitcoin. Okay.

So, very unlikely, but some of these smaller coins, they tend to have mean reverting behaviors, right? You, you can, you can remember the pump and dump schemes. Yep.

And they're still still applicable today. And so that's, it's really important to understand the characteristics. And also, as I said before, that it's not a long term upward moving asset class as of now that might change.

So we need to adjust to that. The second thing is when you're building your strategies, you want to build strategies that are as simple as possible. Yeah.

I think the thing that people need to ingrain in their mind is simplicity equals robustness. The reason why I say this, and you can even hear big investors talk about this, like Warren Buffett, where you want to have as, as few hypotheses that need to be correct in order for you to make money. And it's the same thing when you're looking at indicators and, and,

and parameters in your strategies, you might think that adding more indicators here, you can see on, on the right side of the graph, you can see that it's actually not a linear relationship between adding more conditions complexity.

It's an exponential one. And so you need more things to go right in order for it to work, basically lowering the probability that it's gonna happen. The other thing that's really important is that a lot of people are looking for a holy grail, one single holy grail strategy.

Yeah. It doesn't exist. The, what you want to have is a portfolio of uncorrelated strategies.

And we'll talk about that in a second afterwards as well. But with you will, every strategy, every robust strategy is gonna have periods of performance and underperformance where momentum strategies. So if we wanna take, for example, the two biggest ones, directional strategies that are directional trading approaches that are available to the retail market, you also have arbitrage and market making, but that's more on the institutional Exactly.

So you have momentum and mean reversion and very briefly, just for anyone that, that might not understand what the difference is. Momentum is pretty much the effect that, and it's widely studied across many different asset classes that when the price of an asset is in motion in one direction or another, it tends to stay in motion. Why?

It's natural human herding behavior. You see price goes up. The rational thing is not necessarily to buy, but buy.

Yeah. And that's why you have people come in at the top. Trend following, right?

Is the other group pick crypto people will know it as trend. Yeah. So so momentum.

Exactly. No, that's exactly right. So for us, momentum, there's two categories.

There's trend following, which falls underneath it and breakout trading, which is just the same, shorter holding periods pretty much. And then mean reversion is a very, the exact opposite bet, the exact opposite logic that at least in the short term, when the price of an asset overextends to the upside or the downside, it tends to revert back to the mean. So those two different fundamental approaches will make money at different times.

And it's important to understand that they can't make money all the time. If there is no trend up or down, you can't be expecting your momentum strategy to make a ridiculous amount of profit. Same with mean reversion.

If you don't have a lot of mean reverting behavior, which in really strong upward moves or really strong downward moves that are, where momentum basically profits, mean reversion will be losing in that time. That's really, really important to remember. So let's dive very briefly into

The Birb Nest 35:46: some strategies here. Now all of us Just very quickly, Chris. So I just wanna kinda tell you, we've got about twelve minutes left.

Right? Yes. I don't know what am I talking about?

Absolutely like seven minutes left. Right? So just to give you a warning on that.

One thing I would love, and you might be coming onto this but a question I just have to ask and I know loads of people at the Birb Nest are gonna wanna know as well, is how you would and I know time frames and that are a variance but how you would set these up to say, let's imagine you have a successful momentum strategy and you have a successful mean reverting strategy.

The things that you look at to say, okay, what conditions dictate that? Are you looking at volatility?

Are you looking at ATR? You know, those kind of things. So definitely, do go on.

I'll give us a little heads up when we're going on. Unfortunately, if we were the last show, I think I'd keep you here for another two hours. Absolutely.

Chris Jack 36:34: I think the main thing is looking at research papers and looking at things that have worked on other asset classes because there's only four and a half years of crypto futures data out there, reliable crypto futures data. So that's really important. But just very briefly, there's not that much to talk about, but we have a few strategies here.

So this is a very simple Bitcoin momentum strategy where basically you are buying when it, goes above the fifty day high and you have a trading stop, fifty five day, moving average trading stop. Now why only trip, why not only trade on Bitcoin? If you look at, for example, the broader market.

So if we look at the top 20 and we take 10 max positions where we rank them by rate of change. So 10 max positions of the top 20, you can see it outperforms bitcoin heavily again due to that relative momentum that we talked about and the volatility that is bigger in the broader crypto market compared to bitcoin.

So now I'm gonna talk, walk you through a very, very small portfolio that we actually has been live out of sample performance since September 2024.

Pavel, our CEO, created a university course back in the Czech Republic where he's from. And the goal was basically to give back because there's so much noise out there. This is not our primary business model.

Our primary business model is selling automated portfolios to institutions, high net worth individuals and stuff like that. But I think this is really, really important for anyone that choose to start treat here, didn't they? I mean, like, Jesus,

The Birb Nest 38:18: where was this guy at my university?

Chris Jack 38:21: Five years ago, I would have loved to have my university too. So this is a short term momentum strategy. I'm not gonna get into all the details right now.

Mhmm. But basically the main gist is that we have three strategies here. The short term one, long term one, which is the one that we just talked about previously, the same one that on top 20, and we have a mean reversion strategy.

Now the performance is interesting for all of these, especially this mean reversion long strategy. But what's even more interesting is that the drawdowns are there. And especially for the mean reversion long one, you saw huge profit, but also extremely big drawdowns.

And in my experience, most people can't stomach drawdowns beyond 20 to 30% max. And that's really important to be very honest with yourself there. Now the holy grail of trading is not a single strategy, but a portfolio of uncorrelated strategies.

Yeah. You can see here that all of these strategies, especially because remember we talked about mean reversion and momentum logic being opposing logics. So you have natural uncorrelation there.

And so they're perfect to add together in a portfolio. Now what's really interesting is if you add them together in a portfolio, you'll see here and you, assign them all equal weights pretty much. You'll see, ah, it underperforms, the mean reversion one.

So most new traders would say, okay, it's not interesting. I'm just gonna do the, one single strategy and that's it. But keep, keep in mind, keep in mind that the profits are a lot more stable the profit, for the portfolio one.

They're like between 10 to 15% on average where you're looking at, very substantial ones for the mean reversion one. Mhmm. And what we can do there is we can weight the strategies more heavily, which we're doing in our Robuxio Lite high vol portfolio right here.

Yep. And what's interesting to see here then is that it's very difficult for a strategy to get more return and reduce the drawdown at the same time. It's almost not possible.

But it is possible in portfolio trading when you add together uncorrelated strategies. And you can see that here where the mean reversion has, around 100%, compounding our growth rate with 50% max drawdowns. And you get a way better performance in the Robuxio Lite high vol portfolio with way smaller drawdowns.

And that's, it's kind of like the ninth wonder to the world in that sense. And there's a few key advantages of portfolio trading. Obviously, better capital allocation.

Can use if you don't have a 100% exposure, which you normally don't have across all of these strategy at all times, if it's uncorrelated, you can package them together. More stable profits. You you don't succumb to the single strategy failure because all of these edges will decline over time.

Erosion of edge.

The Birb Nest 41:19: Literally about to say that, right, which is another important thing. Exactly.

Chris Jack 41:23: You have a lower risk of over optimizing a single strategy and you have less risk of a single coin failure where liquidity vanishes overnight and it's gone. Now this is the correlation table of actually our institutional high sharp portfolio. You can see we have over 20 strategies in there.

And it's just to show you very briefly here as well, the performance of those portfolios. So again, we're looking at way better performance than the Robuxio Lite one, but these are the automated strategies that we offer to institutional

The Birb Nest 41:54: investors and, and anyone looking to trade pretty much 50,000 plus. It's really interesting, though. Right?

So I know we're limited on time. I've just gotta jump in and say this as somebody that builds and run, multi portfolio strategies, multi strats anyway, is the challenge of that Sharpe ratio, right, not having huge draw huge drawdowns. Right?

Like, if you if especially momentum based systems. Right? So I it was really, really interesting to balance that so well with Sharpe ratios, over three or anything over, what two, two and a half is someone had snapped your hand off for it.

Right? You would normally expect drawdowns 20 to 30%

Chris Jack 42:31: Yep. For returns of that kind of risk nature. So it is really interesting data.

And it's because of the inefficiency of the crypto market, really. That's why, this won't exist for forever. No.

Or in. Very briefly, what can people do? If there's one thing that you do today, I would really say you should go and sign up for our newsletter.

Robuxio.com/playbook. You'll get an email a day for pretty much, like a few weeks and then a few emails a week, just educating you on all of this stuff and more than I talked about before. Make sure to go and follow me at Jackonomics on X if you wanna stay up to date for daily insights.

I've just done And then the other thing I was gonna say is for anyone out there that really wants to learn, there's so much that I couldn't cover today. And I wish I could I could have ten hours to talk about this. So do I.

Please go and check out our Robuxio course at robuxio.com/course. Again, it is a university level course. In that sense, you get lifetime access to all lessons.

We build eight strategies with you. They all have had positive out of sample performance since they started in September of last year. And as a special treat, actually, you are also going to be able to trade the Robuxio Lite portfolio, the automated version with up to $10,000 in capital fully for free if you get the course with our institutional trading engine.

So the same trading engine that automates all the trading for the big funds, family offices that we work with, you will be able to trade the Robuxio Lite portfolio with — and we walk you through all of that. There's a lot of content on there.

The Birb Nest 44:10: So I would definitely recommend that people go and check that out if you are looking to take your trading to the next level. Well, I'm definitely gonna go and check it out, mate. I love things like this.

I really wanna I'm trying to build my my world out more into the kind of automated so I love it intraday trader, lots of price action, order flow, volume spread analysis and stuff. But ultimately, you've only got so many hours you can bring in the day and this really is really interesting. Look, Chris, thank you so much for your time today.

I found this super interesting. I'm sure all the viewers have as well. I know we'll get a lot more people that will be watching this and getting in touch as well.

For anybody that is, you can see the link to Chris' Twitter down there as well. Obviously, all the information. We'll share everything.

If you wanna get in touch, just reach out to us. But this sounds super interesting. I've just followed Chris myself on there.

I'm gonna dive in. I'm about to sign up for the newsletter. If we didn't have another show, I'd keep him here probably until about 7PM.

Right? But but unfortunately, we do. So I'm gonna have to cut this a little bit undignified in terms of me being short.

But just wanna say to you what just what a huge, huge thank you. Right? I mean, it's been so very interesting.

People, do go along and give Chris a fire. You gotta find good people like this in the industry that really do understand their stuff. And I'm sure this won't be the last time that we speak, Chris, and obviously we'd love to be back on the show again.

And just a really, really huge thank you. Right? So Thank you as well.

Everybody get on, follow, sign up, get the newsletter. It's free. Go and check out that course if it's anything that interests you.

A really, really huge thank you, Chris. And really look forward to seeing you hopefully on here again.

Chris Jack 45:40: Absolutely. Thanks so much, everyone. Take care, mate.

The Birb Nest 45:43: Wow. Alright. I'm blown away by that.

I really do need to go though because it's normal I've rattled on for far too long. Could have stayed there for ages. Do join the trading congress.

It's completely free. You can join the Discord, get early bird Black Friday access. That wasn't the easiest thing to say quickly by looking in the description if you're watching this on YouTube, or you can go over to the Birb Nest Twitter or X profile, and you can find all the information there.

Got an amazing show coming up next. Absolutely stay around and enjoy that, and I'll catch you legends tomorrow. Take