# Robuxio Public Website - Full Content This file provides comprehensive rendered markdown content for every public page in the Robuxio sitemap. ## Root URL https://robuxio.com --- # Robuxio — Algorithmic Crypto & Equities Trading Source: https://robuxio.com/ Markdown: https://robuxio.com/index.md Built for funds, family offices and high-net-worth investors. 20+ systematic strategies across crypto and equities, engineered to perform across regimes. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Systematic investment platform # Algorithmic Exposure Across All Regimes Built for funds, family offices, and high-net-worth investors, delivered through an alternative investment vehicle, SMA, ETI or white label. [Book a Call](https://robuxio.com/call)[Learn more](#why-systematic) Approach Systematic · Automated Markets Digital assets · Equities Vehicles ETI · Fund · SMA · WL Scale 100+ Clients Why systematic ## The Algorithmic Advantage Passive long-only exposure concentrates risk in a single direction and a single market regime. Systematic allocation combines uncorrelated return streams engineered to perform across the full market cycle. ### Stronger risk-adjusted returns By diversifying across multiple, uncorrelated trading sleeves, the portfolio runs at lower volatility than passive exposure, leading to materially higher compounding over time. ### Shorter, shallower drawdowns Low correlation across sleeves dampens drawdown depth and duration. When one strategy underperforms, others tend to offset, limiting portfolio-level losses. ### Long-short exposure Combined long and short exposure decouples returns from market direction. The portfolio is built to generate returns in rising, falling, and sideways regimes. ### Rules-based execution Every strategy is fully codified and stress-tested before deployment. Execution is automated end-to-end, with no discretionary intervention. Asset Classes ## Markets That Reward Systematic Exposure Buy-and-hold is a single directional bet on momentum. Algorithmic exposure offers a more robust way to access the same markets and profit across regimes. [Digital assets Bitcoin's return profile is fading as the asset matures, and the broader crypto universe has been capital-destructive for passive investors. Algorithmic strategies turn that same volatility into systematic returns by trading both directions across the full universe. More on digital assets →](https://robuxio.com/crypto) [Equities Systematic exposure to equities provides stronger returns and shallower drawdowns than passive index allocation, driven by multiple uncorrelated return sleeves running simultaneously across the equity universe. The combined portfolio compounds faster than the index, with drawdowns kept to a fraction of what passive allocators absorb. More on equities →](https://robuxio.com/equities) The Infrastructure Layer ## The Infrastructure Others Run On A portfolio is only as good as the infrastructure that is executing it. Robuxio runs that infrastructure end to end. An institutional-grade stack across execution, security, data, and observability, powering every product and every white-label partner. ### Execution engine In-house order router Custom routing logic cuts exchange-API dependency and adapts fast to venue changes. WAP execution protocols We implement WAP execution protocols to eliminate market frictions and optimize order execution across venues for better fills, lower slippage, and more consistent performance under stress. Real time tracking Real-time tracking of order outcomes and market conditions, including take-profit and stop-loss signals, so the system detects stress events faster and responds with execution aligned to risk limits. Scalability The trading engine scales to 10,000+ agents: each agent’s exchange interactions run in parallel following the corresponding WAP criteria, reducing operational fragility while maintaining execution performance and consistency. ### Security & isolation Client network isolation Fully isolated private networks per client. Zero cross-client communication possible. Zero-trust design Nothing reaches the public internet except through controlled, whitelisted exit proxies. API key protection Stolen keys are useless. Exchanges only accept requests from whitelisted proxy IPs. VPN-only admin access Administrative access is possible only through the admin panel via VPN, following the highest security standards. ### Data & reliability The Trading Engine is isolated The critical trading engine runs as an isolated component for maximum stability. It keeps execution state separate from the rest of the platform so the most sensitive operations remain predictable under load. Internal processes All other processes (APIs, internal reports, and operational tooling) read from the trading engine’s real-time database replica. This avoids contention and prevents internal activity from interfering with live trading execution. High availability Multi-datacenter platform replication for disaster recovery and continuous resilience, paired with proven redundancy and fast failover to keep execution stable, minimize operational fragility, and preserve performance during stress events. 99.95% uptime SLA Monthly uptime guarantee backed by monitoring and automated failover. ### Observability Centralised control panel One real-time console oversees every client and account simultaneously. Anomaly detection Automated detection of rogue trades, unusual balance changes, and breaches. Multi-level alerting Alerts routed to the internal team and to clients across multiple channels. Vehicles ## Choose The Vehicle That Fits You Investors and partners come with different constraints. Robuxio meets them through familiar listed access, pooled fund exposure, direct managed accounts, or branded partner infrastructure. [Traditional-finance access ETI Systematic equity exposure packaged as an exchange traded instrument. Buy shares directly through your brokerage account. View ETI →](https://robuxio.com/equities) [Simplified digital-asset access Fund Pooled access to Robuxio's digital-asset strategies for investors who want a simpler operational route than direct accounts. View fund →](https://robuxio.com/capital) [Premium direct allocation SMA Direct implementation for sophisticated allocators who need mandate-specific parameters, transparency, and account-level control. View SMA →](https://robuxio.com/crypto/sma) [Institutional scale White Label Partners offer Robuxio-powered strategies, infrastructure, dashboards, and reporting under their own brand. View white label →](https://robuxio.com/whitelabel) Risk management ## Risk Control At Every Stage The most dangerous risks are the ones the data can't show. Robuxio does not treat risk as a final filter after trades are generated. Position sizing, sleeve behaviour, exposure, infrastructure isolation, execution controls, and monitoring are part of the system from the start, and portfolios are built to hold up across regimes. ### What we defend against Two risks dominate across crypto and equities: a fast, market-wide drawdown, and a single name losing most of its value within minutes. The portfolio is built with these left tail events in mind. ### Long-short model portfolio Market falls are mitigated with a long-short portfolio of many models. Some sleeves are held solely to hedge net exposure, not for standalone return. ### Liquidity-aware sizing Positions are sized by inverse volatility and volume, shrinking exposure in volatile or illiquid markets. A hard cap limits single-name risk. Crypto adds coin-quality weighting and equities add a beta cap and regime-aware allocation. ### Platform-level monitoring Three layers are monitored continuously: portfolio (P&L, exposure, volatility, drawdown), execution (slippage, abnormal fills), and infrastructure. Anomalies trigger automated alerts. Who It's For ## Built For Investors And Partners Whether you allocate your own capital, manage it for others, or offer systematic strategies under your own brand, there's a route built for you. ### Investors & Allocators Private investors, high-net-worth individuals, family offices, funds, and corporate treasuries who want systematic, rules-based exposure to digital assets or equities without running the strategy themselves. [Explore crypto →](https://robuxio.com/crypto)[Explore equities →](https://robuxio.com/equities) ### Advisors & Partners Financial advisors, planners, and institutions that want to offer Robuxio's systematic strategies to their own clients, under their own brand, without building the research, execution, and reporting infrastructure. [Explore white label →](https://robuxio.com/whitelabel) The team ## Built By Traders And Engineers Robuxio was founded by systematic traders and infrastructure engineers with decades of combined experience across traditional finance, digital assets, and high-performance computing. ![Pavel Kýček](https://robuxio.com/images/team/pavel.png) ### Pavel Kýček CEO Pavel Kycek brings 20 years of trading experience and a strong background in risk management, having worked extensively in currency hedging for some of the biggest companies in his country. As CEO of Robuxio, he leads the company's development of institutional-grade algorithmic exposure across asset classes, with a focus on uncorrelated strategies, measurable edge, and disciplined risk management. [LinkedIn](https://www.linkedin.com/in/pavelkycek/) ![Dries Van den Broecke](https://robuxio.com/images/team/dries.png) ### Dries Van den Broecke COO As a former Olympic athlete, Dries applies the same resilience and determination from his athletic career to his role at Robuxio. He oversees most operations, connecting all parts of the company to foster a cohesive and innovative environment. His strategic mindset and entrepreneurial spirit drive Robuxio's growth and operational excellence. [LinkedIn](https://www.linkedin.com/in/belgianskier/) ![Xavier Fariña](https://robuxio.com/images/team/xavier.png) ### Xavier Fariña CTO A mathematician with advanced degrees in Big Data and Artificial Intelligence, Xavier combines 25 years of IT expertise with a forward-thinking approach to innovation. As a former Software Architect at HP, he excelled in designing complex systems. Now, he masterminds Robuxio's infrastructure and leads a talented development team. [LinkedIn](https://www.linkedin.com/in/xavier-farina/) ![Chris Jack](https://robuxio.com/images/team/chris.png) ### Chris Jack CGO As the former lead of Cambridge University's Digital Assets Program, one of the largest global public-private research initiatives, Chris brings deep expertise in digital assets and strategic growth. At Robuxio, he drives all facets of growth, from business development and partnerships to brand strategy, communications, and digital presence. [LinkedIn](https://www.linkedin.com/in/christopher-jack-3953b2142/) ![The full Robuxio team](https://robuxio.com/images/team/full-team.webp) Full team ### The people behind the platform. Beyond the executive team, Robuxio is built by a wider group across research, engineering, operations, growth, and client support. Keep exploring ## Ready to learn more? Pick a path. The product pages cover the strategy, the performance, and the access routes for each market. [Explore Crypto →](https://robuxio.com/crypto)[Explore Equities →](https://robuxio.com/equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/index.md) --- # Live Crypto Market Benchmarks Source: https://robuxio.com/benchmarks Markdown: https://robuxio.com/benchmarks.md Live cumulative returns, drawdowns, volatility, correlations and regime indicators for Bitcoin, the top-50 crypto universe, and major equity indices. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Back to Home](https://robuxio.com/) # Crypto Market Benchmarks, Indexes & Volatility Report Explore crypto index performance, Top 50 altcoin benchmarks, volatility, drawdowns, correlations, breadth, and market regime indicators in one institutional market data report. Last update · 2026-07-29 Page sections [Crypto Index Performance](#crypto-index-performance)[Bitcoin Benchmark](#bitcoin-benchmark)[Top 50 Altcoin Index](#top-50-altcoin-index)[Crypto Volatility](#crypto-volatility)[Crypto Market Data](#crypto-market-data)[Crypto Correlations](#crypto-correlation)[Market Breadth & Regimes](#crypto-market-breadth)[Robuxio vs BTC/SPY](#robuxio-vs-btc-spy)[Methodology](#methodology) ## 1. Executive Snapshot Below are the cumulative performance and headline risk/return metrics for Bitcoin, the S&P 500, and an equally-weighted crypto index of the top 50 altcoins rebalanced on a daily basis. This crypto index performance view compares passive Bitcoin exposure, the broader altcoin market, and traditional equity benchmarks across returns, drawdowns, volatility, and correlation. ### Risk & Return Metrics (Crypto vs Equities) — Since Jan 2020 Asset Total Return CAGR Sharpe Vol (ann.) Max DD Worst Day Corr to SPY BTC +788.6% +39.4% 0.65 +60.8% -76.7% -40.0% 0.40 Top50 -33.8% -6.1% -0.07 +88.5% -97.1% -43.1% 0.35 All Futures +214.7% +19.0% 0.22 +87.4% -89.5% -43.1% 0.43 SPY +145.0% +14.7% 0.73 +20.2% -33.7% -10.9% — Risk and return metrics for each index, computed from daily close-to-close returns over the selected period. ## 2. Bitcoin Benchmark and Maturing Return Profile Bitcoin's risk/return profile has changed structurally. As institutional adoption has deepened, realized volatility and the frequency of extreme price moves have declined, a pattern consistent with asset class maturation across every major market in history. The data is unambiguous: in 2017, 56.6% of trading days saw a 10-day rate of change exceeding ±10%. By 2025, that figure had fallen to 10.1%. Bitcoin's annualised volatility, measured on a rolling 1-year basis, has followed the same downward trajectory. ## 3. Top 50 Altcoin Index and the Passive Allocation Problem The top 50 altcoin index shows why passive crypto allocation is structurally difficult: broad altcoin exposure can suffer extreme drawdowns and long periods of negative compounded returns even when Bitcoin performs well. ## 4. Crypto Volatility Opportunity The same volatility that makes crypto unsuitable for passive exposure is precisely what makes it useful for systematic trading. Compared to the S&P 500, the top 50 crypto futures are structurally 4-9x more volatile and often 2x more volatile than Bitcoin. This crypto volatility report tracks how that spread changes through time. ## 5. Crypto Market Data and Universe Analytics Understanding the opportunity set matters as much as understanding the strategy. This crypto market data covers the Binance perpetual futures universe, liquidity concentration, market participation, and the difference between Bitcoin, top-tier altcoins, and the broader tradable futures universe. ## 6. Crypto Correlation Structure For systematic strategies, crypto correlation determines whether a universe of assets behaves as a single risk factor or as a genuinely diverse opportunity set. Correlations are high in aggregate but shift meaningfully across market regimes, rising sharply during stress and compressing in calm periods. ## 7. Crypto Market Breadth and Regime Indicators Systematic strategy returns are shaped by the market environment they operate in. These crypto market breadth and regime indicators characterize trend, dispersion, pairwise correlation, momentum, and mean-reversion conditions across the futures market. ## 8. Robuxio Performance vs BTC and SPY Robuxio's institutional High Sharpe portfolios apply a systematic long/short approach to the crypto futures market across all regimes. The data below compares Robuxio performance against BTC, SPY, and crypto market benchmarks since January 2022. Methodology & Data Universe Definition - The investment universe comprises all USDT-margined perpetual futures contracts historically listed on Binance, including contracts that were subsequently delisted. This survivorship-bias-free approach ensures that returns reflect the actual opportunity set available to investors at each point in time. - Stablecoin pairs are excluded: USDT, USDC, BUSD, DAI, TUSD, FDUSD, USDP, USTC, GUSD, FRAX, LUSD, SUSD, and EUR-denominated contracts. - BTC is reported as a standalone benchmark. It is also included in the broad tier indices (Top50, All Futures) by volume ranking, since BTCUSDT is consistently the most-traded perp on Binance. - The universe spans January 2020 to the present and includes several hundred unique symbols, growing over time as new perps list. Index Definitions - BTC — Bitcoin perpetual futures cumulative return, rebased to 100 at period start. Represents the return of a fully-collateralized long position. - Top50 — Equal-weighted index of the 50 most liquid perps ranked by 25-day trailing average dollar volume. Membership is determined using prior-day data (t−1) to prevent look-ahead bias. Reconstituted and rebalanced to equal weights at each daily close. - All Futures — Equal-weighted index of all available Binance USDT-margined perpetual futures (stablecoins excluded). A symbol must have traded on the prior day (t−1) to be included. Reconstituted and rebalanced daily. - SPY — SPDR S&P 500 ETF Trust price series, rebased to 100. Included as a traditional equity benchmark. SPY prices are forward-filled for chart alignment; however, all statistics (volatility, correlation, beta) are computed on real trading-day returns only — NaN weekends are never used as zero-return observations. Index Construction Rules - No look-ahead bias — all index membership, rankings, and weight assignments are determined exclusively using data available as of the prior daily close (t−1). No future information is used in any construction step. - Equal weighting — each constituent receives equal weight (1/N) at each daily rebalance. This avoids concentration in large-cap names and provides a cleaner measure of broad market performance. - Volume ranking — constituents are ranked by dollar volume, averaged over a trailing 25-calendar-day window. For newly listed contracts without a full 25-day history, a shorter fallback window is used so that newly liquid perps can enter the index. - Daily reconstitution — index membership and weights are recalculated at every daily close. This captures the full dynamics of the listing/delisting cycle and ensures the index reflects the current tradable universe. - Delisted symbols — when a contract is delisted, its final return is included on the last trading day. The index naturally adjusts N downward, and the weight is redistributed equally among remaining constituents at the next rebalance. Robuxio Strategy Portfolios - Robuxio High Vol — Systematic long/short portfolio combining momentum and mean-reversion signals across the top 50 liquid altcoins. Higher target volatility profile. Rebalanced daily. - Robuxio Low Vol — Same signal framework as High Vol with reduced position sizing for a lower target volatility profile. - Strategy returns are gross of management fees, performance fees, and trading costs. Live performance may differ due to execution slippage, funding rates, and fee drag. - Performance data for Robuxio portfolios begins January 2022. Metrics & Conventions - Volatility — annualized standard deviation of daily returns. Crypto series use √365 (24/7 markets); SPY uses √252 (trading-day calendar). All rolling volatility is computed on real returns only (no forward-filled inputs); the resulting series is forward-filled for chart display. - Sharpe ratio — CAGR divided by annualized volatility. No risk-free rate is subtracted (excess-return Sharpe = reported Sharpe minus rf ÷ vol). - CAGR — computed over real calendar time: (end / start) 1/years − 1 , with years = calendar days ÷ 365.25. - Calmar ratio — CAGR divided by the absolute value of maximum drawdown over the measurement period. - Maximum drawdown — largest peak-to-trough decline in cumulative return over the measurement period, expressed as a percentage. - Correlations and beta — Pearson correlation and OLS beta computed on simple daily returns (not log returns). Rolling windows are calendar-based: 60 days for the Avg Pairwise Correlation chart, 3 calendar months (~90 crypto days / ~63 SPY days) for Robuxio vs BTC/SPY rolling correlation and beta. - Capture ratios — computed on monthly compounded returns, arithmetic convention. Up-capture = average portfolio return in months when the benchmark is positive, divided by the benchmark's average in those months. Down-capture defined analogously for negative benchmark months. Computed over a fixed window since January 2022. - Regime indicators — breadth oscillator measures the percentage of altcoins above their N-day SMA. Momentum and mean-reversion regime classifications are based on composite scores derived from trend-following and RSI signals across the universe. - All benchmark returns are gross of fees, slippage, funding rates, and financing costs. They represent hypothetical performance and should not be interpreted as achievable net returns. Data Sources - Crypto OHLCV + volume — Binance Vision public data repository. Daily bars for all USDT-margined perpetual futures contracts (including delisted), January 2020 to present. Volume is stored as quote (USDT-denominated) volume, so the 25-day volume MA is already a dollar-volume measure. - Traditional benchmarks — SPY daily close prices sourced from public market data providers. Weekend and holiday gaps forward-filled for alignment with the crypto daily series. - Data validation — the full dataset has been verified for completeness: zero missing trading days across all active symbols. Delisted symbols retain their full history through the final trading date. Important Disclaimers - Hypothetical and simulated performance results have inherent limitations. Unlike actual trading records, simulated results do not represent actual trading and may not reflect the impact of material economic and market factors. - Equal-weighted indices assume daily rebalancing with zero transaction costs, which is not achievable in practice. Actual implementation would incur spread costs, market impact, and funding rates that would reduce realized returns. - The crypto derivatives market is subject to exchange-specific risks including counterparty risk, liquidity fragmentation, and potential data irregularities. - Past performance is not indicative of future results. ### Explore Systematic Crypto Allocation Learn how the Robuxio High Sharpe portfolios can add an uncorrelated return stream to your existing allocation. Book an introductory call with our team using the calendar link below. [Book a Demo Call](https://robuxio.com/call) Past performance is not indicative of future results. This material is for informational purposes only and does not constitute financial advice. [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/benchmarks.md) --- # Read a Free Sample — The Algorithmic Crypto Playbook Source: https://robuxio.com/book/sample Markdown: https://robuxio.com/book/sample.md Preview the first chapters of Pavel Kýček's book on systematic crypto trading free. Read the sample, then get the full Algorithmic Crypto Playbook. --- Back The Algorithmic Crypto Playbook [Get Full Book Buy](https://robuxio.com/book/link?source=book_sample_header) # Read a free sample of The Algorithmic Crypto Playbook Loading... --- # The Algorithmic Crypto Playbook — Reader Resources Source: https://robuxio.com/bookhub Markdown: https://robuxio.com/bookhub.md Strategy code, datasets, worked examples and supplementary downloads for readers of Pavel Kýček's book, The Algorithmic Crypto Playbook. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) Exclusive Email Series # The Algorithmic Crypto Playbook Companion Email Series ![The Algorithmic Crypto Playbook](https://robuxio.com/_next/image?url=%2Fimages%2Fbookhub%2Fbook.png&w=640&q=75) What's Inside 10 Advanced Trading Insights That Didn't Fit Into The Book 2 New Strategies With Rules And Performance Metrics Practical Implementation Tips And Technical Breakdowns Website Get Trading Insights This exclusive email series expands on the book's core concepts with additional case studies, deeper technical breakdowns, and practical implementation tips we couldn't fit in the original. [← Back to home](https://robuxio.com/) --- # Robuxio Brand Assets — Logos & Guidelines Source: https://robuxio.com/brand Markdown: https://robuxio.com/brand.md Download Robuxio logos, brand colors and style guidelines. Official brand assets for press, partners, white-label clients and content collaborations. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Brand Assets Download official Robuxio logos, colors, and brand assets for your projects and collaborations. ## Logos Full logo with wordmark. Use on websites, presentations, and marketing materials. ![Logo White](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Flogo-white.png&w=640&q=75) ### Logo White For dark backgrounds [SVG](https://robuxio.com/images/logos/brand/logo-white.svg)[PNG](https://robuxio.com/images/logos/brand/logo-white.png) ![Logo Black](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Flogo-black.png&w=640&q=75) ### Logo Black For light backgrounds [SVG](https://robuxio.com/images/logos/brand/logo-black.svg)[PNG](https://robuxio.com/images/logos/brand/logo-black.png) ![Logo Blue](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Flogo-blue.png&w=640&q=75) ### Logo Blue Primary brand color [SVG](https://robuxio.com/images/logos/brand/logo-blue.svg)[PNG](https://robuxio.com/images/logos/brand/logo-blue.png) ## Emblems Icon-only versions for favicons, app icons, and compact spaces. ![Emblem White](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Femblem-white.png&w=256&q=75) ### Emblem White Icon for dark backgrounds [SVG](https://robuxio.com/images/logos/brand/emblem-white.svg)[PNG](https://robuxio.com/images/logos/brand/emblem-white.png) ![Emblem Black](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Femblem-black.png&w=256&q=75) ### Emblem Black Icon for light backgrounds [SVG](https://robuxio.com/images/logos/brand/emblem-black.svg)[PNG](https://robuxio.com/images/logos/brand/emblem-black.png) ![Emblem Blue](https://robuxio.com/_next/image?url=%2Fimages%2Flogos%2Fbrand%2Femblem-blue.png&w=256&q=75) ### Emblem Blue Icon in brand color [SVG](https://robuxio.com/images/logos/brand/emblem-blue.svg)[PNG](https://robuxio.com/images/logos/brand/emblem-blue.png) ## Brand Colors Official color palette. Click to copy hex values. ### Navy Dark Primary brand color #002745 RGB: 0, 39, 69 ### Red Accent color #FC0335 RGB: 252, 3, 53 ### Navy Light Secondary navy #003d66 RGB: 0, 61, 102 ### Gray Text Body text #4c5257 RGB: 76, 82, 87 ### Background Page background #F2F5F9 RGB: 242, 245, 249 ### White Cards & contrast #FFFFFF RGB: 255, 255, 255 ## Typography We use Inter for all text across the brand. Headings Inter Bold (700) Subheadings Inter Semibold (600) Body Text Inter Regular (400) - Used for paragraphs and general content. [Download Inter from Google Fonts](https://fonts.google.com/specimen/Inter) ## Usage Guidelines Please follow these guidelines when using our brand assets. ### Do - • Use logos with adequate clear space around them - • Use white logo on dark backgrounds - • Use black or blue logo on light backgrounds - • Maintain the original aspect ratio ### Don't - • Stretch or distort the logo - • Change the logo colors - • Add effects like shadows or gradients - • Place on busy or low-contrast backgrounds ## Need Something Custom? For press inquiries, custom formats, or partnership materials, reach out to our team. [Contact Us](https://robuxio.com/contact-us) --- # Book a Call Source: https://robuxio.com/call Markdown: https://robuxio.com/call.md Schedule a consultation with the Robuxio team. Discuss your crypto portfolio needs and trading goals. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) ![Robuxio](https://robuxio.com/images/logos/logo-dark.svg) # Discovery Call 60 Minutes ![Google Meet](https://robuxio.com/images/icons/google-meet.svg) Google Meet Book a 1-on-1 session with us. In this meeting, we can: - Review all of our portfolio solutions built for institutional and private capital - Discuss which offerings fit your exposure and risk profile preferences - Explore how our SMA and white-label trading infrastructure can fit your strategy Whether you're managing institutional assets or personal capital, this session will be tailored to your needs and questions. Select your profile to book ### Institution For funds, family offices, and institutional investors looking to explore algorithmic trading solutions. 60 min call Book Now ### Individual For private investors and personal capital seeking automated trading strategies. 60 min call Book Now --- # Robuxio Capital — Alternative Crypto Investment Vehicle Source: https://robuxio.com/capital Markdown: https://robuxio.com/capital.md A private alternative investment vehicle running Robuxio's systematic crypto strategies. USD and BTC unit classes for qualified investors. Monthly liquidity. --- ## Important Notice For Qualified Investors Only By continuing, I confirm that I am accessing this website on my own behalf or on behalf of an entity that may qualify as an eligible investor for a private asset management arrangement under Czech law, and I understand that the information does not constitute a public offer, investment advice, or a regulated investment service. No investment may be made before completion of investor eligibility assessment, AML/KYB checks, contractual documentation, and written risk acknowledgement. Who is a qualified investor? I confirm and continue [![Robuxio Capital Management](https://robuxio.com/images/capital/logo-header.png)](https://robuxio.com/capital) [Home](https://robuxio.com/capital)[About](https://robuxio.com/capital#about)[FAQ](https://robuxio.com/capital#faq)[Approach](https://robuxio.com/capital#philosophy)[Get in Touch](mailto:info@robuxio.capital) [Client Zone](https://fund.robuxio.com/) # Robuxio Capital Management A private alternative asset management vehicle providing qualified investors access to Robuxio's low volatility High Sharpe crypto portfolios denominated in either USDT or BTC, without operating exchange access, custody, or execution themselves. [Book a Call](https://robuxio.com/call)[Trading Philosophy](https://robuxio.com/capital/philosophy) The Problem ## Barriers to Crypto Exposure Qualified investors face three barriers to crypto: regulatory access to futures markets, the accounting and tax burden of an SMA, and operational complexity. This vehicle removes all three, and gives qualified investors direct access to Robuxio's regime agnostic crypto portfolios. ### Market access Many qualified investors can't open accounts on venues like Binance Futures due to jurisdiction, entity type, or KYC constraints. ### Accounting & tax burden Running crypto exposure as an SMA generates frequent short-term capital gains and a per-trade cost-basis tracking burden on the client's books. ### Operational complexity Even with automated execution, an SMA still requires the client to self-custody collateral and manage exchange API keys themselves. Inside the vehicle ## Regime Agnostic Crypto Exposure Robuxio combines momentum, mean reversion, long and short exposure, and a dynamic liquid crypto futures universe to create crypto exposure that is not dependent on one market regime. 20+ Uncorrelated strategies Top 40 Crypto futures tradable universe reconstituted daily 24/7 Fully automated ### Mean Reversion Targets market inefficiencies and short-term price extremes LONG SHORT ### Momentum Captures directional breakouts and breakdowns LONG SHORT ### Read the philosophy behind the trading approach The Robuxio trading philosophy paper covers the systematic framework, the trading engine architecture, and the risk-management principles that guide how the strategies are built and operated. [Read the Philosophy](https://robuxio.com/capital/philosophy) Our portfolio offerings ## Low Vol High Sharpe Portfolios The vehicle offers qualified investors access to our flagship Robuxio portfolios in two unit classes based on preferred denomination. $ ### USD Unit Class Denominated in stablecoins. Pure alpha returns uncorrelated to underlying crypto market direction. ₿ ### BTC Unit Class Denominated in Bitcoin. Maintain BTC exposure while the engine generates active alpha on top. How the vehicle operates ## The Investment Vehicle The portfolio is available as an open-ended private investment vehicle domiciled in Prague, Czech Republic, providing qualified investors with access to the strategy through subscriptions and redemptions priced at the daily internal NAV per unit. Vehicle Overview · Robuxio Capital Management Domicile Prague, Czech Republic Structure Open-ended private investment vehicle, unit-based Internal NAV per unit Calculated daily from end-of-day balances per the methodology in the investor documentation Subscriptions Priced at day-T close internal NAV per unit Redemptions Priced at day-T close internal NAV; lots consumed FIFO HWM Lot-level high-water mark Mgmt. fee 2% p.a. (indicative) — accrued daily Performance fee 20% on lot gains above HWM (indicative) Fee crystallisation Quarterly, by allocation of additional internal units to Robuxio Unit classes USDT-funded and BTC-funded, each with class-specific internal NAV calculation and settlement mechanics Onboarding Eligibility, KYB and contractual process; typically 5–15 business days Audit Annual independent audit of accounts and internal NAV Who can invest ## Investor Eligibility The vehicle is available only to a private circle of approved investors who satisfy the eligibility requirements applicable to private asset management under § 15 ZISIF. Before any investment is accepted, Robuxio must complete investor eligibility, AML/KYB and risk assessment procedures. In particular, the investor must: - 1. invest at least EUR 125,000 or the equivalent in another currency or in money-valued assets; - 2. receive written information on the risks of the investment, the fact that the investment is not guaranteed and may be lost in full, the fee structure, investment horizon, investment strategy and the fact that Robuxio is not subject to CNB supervision; - 3. provide written confirmation that the investment corresponds to its financial background, investment objectives, knowledge and experience; and - 4. successfully complete AML/KYB, sanctions, PEP, adverse-media and source-of-funds / source-of-wealth checks. Submitting an inquiry, booking a call or starting KYB does not constitute an offer, acceptance, or commitment by Robuxio to accept the investor. Onboarding ## From first call to funded account. A four-stage eligibility, KYB and contractual process. Standard corporate onboarding typically takes 5–15 business days, while complex ownership structures, high-risk jurisdictions or enhanced source-of-funds reviews may take longer. 1 Step 1 ### Intro call & preliminary eligibility Initial call with the KYB Manager. The investor provides basic entity details, jurisdiction, expected investment size, investment objective, anticipated funding method and high-level source of funds. 2 Step 2 ### KYB, AML and investor assessment The investor submits the KYB questionnaire and supporting documents, including corporate documents, ownership and control structure, UBO information, IDs, source-of-funds / source-of-wealth evidence and, where relevant, wallet ownership information. 3 Step 3 ### Contractual documentation and screening The asset management documentation is sent out to the client while Robuxio completes AML screening and investor eligibility assessment in parallel. 4 Step 4 ### Signing and funding Final documents are signed electronically. Where applicable, a verification payment is used to confirm bank account ownership and blockchain analytics may be used to assess crypto funding. Funds are accepted only after onboarding, AML/KYB and contractual steps are complete. The team ## The People Behind The Fund An experienced, multidisciplinary team across trading, technology, compliance, and growth. ![Pavel Kýček](https://robuxio.com/images/capital/team-pavel.png) ### Pavel Kýček Co-Founder & CEO Pavel brings 18 years of trading experience across forex, commodities, stocks and crypto. He spent six years in traditional finance specializing in risk management and currency hedging for major corporations. As CEO and Co-Founder, he specializes in building diverse portfolios of uncorrelated strategies. [LinkedIn](https://www.linkedin.com/in/pavelkycek/) ![Dries Van den Broecke](https://robuxio.com/images/capital/team-dries.png) ### Dries Van den Broecke Co-Founder & COO As a former Olympic Alpine Skiing athlete, Dries applies resilience and strategic thinking to his role as COO. His entrepreneurial spirit connects all parts of Robuxio together, fostering a cohesive and fast-paced innovative environment. He oversees operations and ensures smooth execution across the business. [LinkedIn](https://www.linkedin.com/in/belgianskier/) ![Xavier Fariña](https://robuxio.com/images/capital/team-xavier.png) ### Xavier Fariña Co-Founder & CTO A mathematician with a Master's in Big Data and AI, Xavier brings 25 years of IT expertise including his role as Software Architect at a major American multinational. Fascinated by blockchain since 2013, he now masterminds Robuxio's infrastructure and elevates the platform to the highest technological standards. [LinkedIn](https://www.linkedin.com/in/xavier-farina/) ![Jan Šobora](https://robuxio.com/images/capital/team-jan.png) ### Jan Šobora Co-Founder & CCO An experienced lawyer specializing in financial regulation, AML, compliance, and risk management. Previously Director of Compliance at a major Czech payment institution. At Robuxio, Jan focuses on risk management, investor relations, regulatory affairs, and the physical security of managed assets. [LinkedIn](https://www.linkedin.com/in/jan-%C5%A1obora-894b0382/) ![Chris Jack](https://robuxio.com/images/team/chris.png) ### Chris Jack Chief Growth Officer As the former lead of Cambridge University's Digital Assets Program, one of the largest global public-private research initiatives, Chris brings deep expertise in digital assets and strategic growth. At Robuxio, he drives all facets of growth, from business development and partnerships to brand strategy, communications, and digital presence, shaping the company's public face and expanding its global reach. [LinkedIn](https://www.linkedin.com/in/christopher-jack-3953b2142/) Next step ## Start the conversation. To begin the onboarding process, book an initial call with the team. Be prepared to share the legal name and jurisdiction of your entity, nature of business, approximate investment amount, investment objective, anticipated funding schedule, and high-level source of funds. [Book a Call](https://robuxio.com/pavel) [![Robuxio Capital Management](https://robuxio.com/images/capital/logo-footer.png)](https://robuxio.com/capital) The first algorithmic crypto asset management vehicle in the Czech Republic. Robuxio Capital Management s.r.o., osoba rizikového kapitálu, is not subject to supervision by the Czech National Bank. [Extract from CNB Register](https://jerrs.cnb.cz/apljerrsdad/JERRS.WEB10.VIZITKA?p_lang=en&p_SEQ_ID=15075890&p_VER_ID=1003&p_DATUM=17.07.2024&p_ROL_KOD=) Navigation [Home](https://robuxio.com/capital)[Trading Philosophy](https://robuxio.com/capital/philosophy)[Portfolios](https://robuxio.com/capital#portfolios)[Eligibility](https://robuxio.com/capital#eligibility)[Team](https://robuxio.com/capital#team)[KID (on request)](mailto:info@robuxio.capital?subject=KID%20Request) Contact [info@robuxio.capital](mailto:info@robuxio.capital) Robuxio Capital Management s.r.o., osoba rizikového kapitálu IČO 17441978 Vacínova 1848/2 CZ-18000 Prague Disclaimer Robuxio Capital Management s.r.o., osoba rizikového kapitálu, with registered office at Vacínova 1848/2, 180 00 Prague 8, ID No. 17441978 (hereinafter referred to as the "Company") carries out private asset management and is registered in the list of persons carrying asset management pursuant to Section 15 of Act No. 240/2013 Coll., on Investment Companies and Investment Funds ("ZISIF") maintained by the CNB. The company's activities are not subject to CNB supervision. The Company's asset management is intended only for a private circle of approved investors who are qualified investors in accordance with the ZISIF. The Company does not offer investments publicly or collect assets from the public. The Company does not provide any main investment service or ancillary investment service of custody and management of investment instruments for customers as defined in the ZPKT Act. The information contained herein is not intended to represent any investment instruments or investment services. None of the statements contained herein should be construed as an offer of an investment instrument or other form of investment pursuant to the ZPKT or the ZISIF. The value of an investment varies over time and can go up or down. Past returns are no guarantee of future returns. There is no guarantee of a return on the amount originally invested. Investments in different types of investment assets may be subject to different restrictions and regulations. The information provided on this website does not take into account the circumstances, assets or other circumstances, investment strategy or restriction relating to any particular investor. The content of this website is subject to change without notice. Any redistribution or other unauthorized manipulation of the information contained herein is prohibited. © 2024 Robuxio Capital Management. All rights reserved. [Powered by ROBUXIO](https://robuxio.com/) --- # Algorithmic Trading Philosophy Source: https://robuxio.com/capital/philosophy Markdown: https://robuxio.com/capital/philosophy.md The trading approach and engine architecture behind Robuxio's systematic crypto technology. Philosophy, principles, and what makes the engine institutional. --- [← Back to capital](https://robuxio.com/capital) [← Back to capital](https://robuxio.com/capital) | [The Problem](#problem)[The Opportunity](#opportunity)[Our Approach](#approach)[The Trading Engine](#engine)[Risk Management Philosophy](#risk) [![Robuxio — go to homepage](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) ROBUXIO s.r.o. # Our Trading Philosophy The approach behind a systematic crypto trading engine ## Important Notice This page describes the technology, infrastructure and systematic trading engine developed and operated by ROBUXIO s.r.o. , ID No.: 19439237 with its registered seat at Pavlovsko 108, 337 01 Dobřív (hereinafter referred to simply as “Robuxio”). Robuxio is a separate company from ROBUXIO CAPITAL MANAGEMENT, osoba rizikového kapitálu, s.r.o. , a person managing assets comparable to investment funds within the meaning of Section 15 of the Czech Act on Investment Companies and Investment Funds. Robuxio provides technology, infrastructure, data processing, execution logic and strategy-support tools that may be used by ROBUXIO CAPITAL MANAGEMENT, osoba rizikového kapitálu, s.r.o. for the implementation of its investment strategy. This page does not constitute an investment offer, public offering, solicitation, investment recommendation, investment advice, portfolio management service, crypto-asset service, or offer of participation in any fund or comparable investment structure. Any investment opportunity, if made available by ROBUXIO CAPITAL MANAGEMENT, osoba rizikového kapitálu, s.r.o. or another relevant entity, is subject to separate legal documentation, investor eligibility assessment, AML/KYC checks, risk disclosures and applicable regulatory restrictions. ## The Problem ### Bitcoin's diminishing returns Bitcoin's volatility is declining — a typical sign of asset-class maturation — and its future returns are likely to diminish, following patterns observed in other emerging markets as they mature. As shown in Figure 1, the percentage of 10-day periods each year with returns above 10% has fallen sharply from 2017 to 2024. In 2017, 69.3% of 10-day periods delivered returns of 10% or more, compared to only 22.2% in 2024. This declining volatility suggests that Bitcoin's extraordinary early-stage returns are unlikely to be repeated at the same magnitude. ![Percentage of 10-day periods with Bitcoin returns over 10 percent](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbitcoin-returns-10-day-periods.png&w=3840&q=75) Figure 1: Percentage of 10-day periods with Bitcoin returns > 10% This trend is further confirmed by Bitcoin's steadily declining 4-year annualised volatility, which has fallen from over 180% in early 2019 to approximately 60% by late 2025. As volatility compresses, the magnitude of potential returns naturally diminishes, signalling Bitcoin's evolution from a high-growth speculative asset to a more mature digital store of value. ![Bitcoin 4-year annualised volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbitcoin-annualized-volatility.png&w=3840&q=75) Figure 2: Bitcoin 4-year annualised volatility ### The buy-and-hold trap in broader crypto In search of similar outsized gains, many participants have turned to the broader crypto market. Yet most approach it incorrectly. While buy-and-hold strategies may be acceptable for Bitcoin (despite severe drawdowns), they fail almost entirely when applied to the broader crypto universe. Consider this stark example: a basket purchase of the 20 largest cryptocurrencies at the market peak in late 2021 would have seen only three coins recover to positive returns by July 2025. The majority suffered deep drawdowns exceeding 70%, with many losing over 90% of their value. Table 1: Performance of buy-and-hold on Top 20 coins from late 2021 (1/11/2021 – 1/7/2025) Coin Return Coin Return XRP 98.54% BTC 74.28% BNB 25.22% XLM -36.14% DOGE -35.53% SOL -23.44% LINK -58.39% ETH -43.40% ADA -72.21% ETC -67.76% SHIB -83.40% FTM -87.98% AVAX -72.05% VET -84.41% ATOM -88.75% MATIC -90.41% ALGO -89.82% DOT -92.04% XTZ -91.41% LUNC -100.00% The picture is even starker when examining the Top 50 Binance Futures Index — a daily-rebalanced, equally weighted basket of the top 50 crypto futures. As illustrated in Figure 3, most cryptocurrencies never recover from major drawdowns and eventually trend toward zero. ![Top 50 Binance Futures Index 2020-2025](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbinance-top-50-index.png&w=3840&q=75) Figure 3: Top 50 Binance Futures Index (2020–2025) Buy-and-hold strategies may work for Bitcoin, but they have been consistently capital-destructive in the broader crypto market. Identifying future winners is extremely difficult, and the cost of being wrong is severe — often resulting in permanent capital loss. While Bitcoin's returns gradually diminish, the broader crypto market continues to exhibit high volatility and structural inefficiencies, which open the door for a fundamentally different approach. ## The Opportunity While buy-and-hold has proven ineffective for broader crypto, the same characteristics that make it unsuitable for passive participation — extreme volatility, persistent market inefficiencies, and emotionally-driven participants — make this market environment highly attractive for systematic approaches. ### Volatility is opportunity Crypto remains one of the most volatile and inefficient asset classes globally. Daily price movements of the top 50 Binance-listed futures contracts are often 5–10× larger than those of major equity indices such as the S&P 500. This elevated volatility creates frequent price dislocations and short-term momentum patterns that quantitative strategies can systematically exploit. ![Daily volatility comparison between top 50 Binance Futures index and the S&P 500](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fvolatility-top-50-vs-sp500.png&w=3840&q=75) Figure 4: Daily volatility — Top 50 Binance Futures Index vs S&P 500 For passive participants, volatility represents risk. For systematic strategies, volatility represents opportunity. Larger price swings generate more frequent and more actionable trading signals, while the crypto market's structural inefficiencies persist far longer than in mature markets. ### Ranking by relative momentum An important factor beyond overall volatility is the magnitude of relative performance during market trends. During major market moves, smaller crypto assets tend to significantly outperform larger ones, and ranking assets by relative momentum amplifies this effect even further, as shown in Figure 5. ![Relative momentum of BTC versus top 50 coins and top 20 coins ranked by relative momentum](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Frelative-momentum.png&w=3840&q=75) Figure 5: Relative momentum — BTC vs Top 50 coins vs Top 20 coins ranked by relative momentum This combination of high volatility, structural inefficiencies, and behavioural mispricings creates a rare and time-sensitive window for systematic strategies to capture short-term dislocations before the crypto market matures further and these inefficiencies diminish. ## Our Approach Robuxio's trading engine is designed to provide unbiased, market-regime-agnostic exposure to the cryptocurrency market — capable of operating across both bull and bear conditions. Rather than relying on any single approach, the engine supports a diversified set of more than twenty uncorrelated strategies, built around two of the most consistently observed edges in crypto trading. #### Momentum (long & short) Captures upside breakouts and hedges against downward trends. Exploits the strong momentum effect observed in crypto markets. #### Mean reversion (long & short) The most stable edge in crypto: profits from short-term overreactions and provides stability during non-trending market conditions. ### Strategy development and validation Given the limited historical data available for crypto futures, each strategy is grounded in decades of validated out-of-sample performance from traditional finance, adapted specifically for crypto market dynamics and continuously monitored under live trading conditions. Benchmark models are maintained for each targeted market behaviour to validate that live strategy performance aligns with expected outcomes. When live results diverge materially from expectations, the engine's operators investigate whether the model is accurately capturing the intended market behaviour and make appropriate adjustments. ### Dynamic universe selection To eliminate selection bias and ensure robust results, all strategies operate on a dynamic universe of the top 50 USDT-settled crypto futures. This universe is reconstituted daily based on volume and liquidity thresholds, ensuring: - Tradability: only highly liquid instruments are eligible for positions. - Bias-free selection: no hindsight or selection bias in universe construction. - Market representation: captures the most actively traded crypto assets. - Adaptability: the universe evolves with changing market structure. ## The Trading Engine At the core of Robuxio s.r.o.'s offering is a proprietary, fault-tolerant trading engine that executes more than twenty uncorrelated, rule-based strategies across a dynamic universe of highly liquid USDT-settled crypto futures. The engine replaces manual fragility with robust execution and scales to thousands of independent portfolios without compromising discipline. ### Architecture and execution The engine ingests continuous market data streams. Strategy models evaluate recent and historical context to generate entry and exit instructions. These instructions are broadcast to independent, portfolio-level trading agents. Each agent adapts sizing and constraints to its portfolio's bankroll and policy, ensuring consistent logic with portfolio-specific execution. Execution is liquidity-aware. Orders are sliced, paced, and offset as needed to reduce footprint, preserve fill quality, and remain robust during periods of elevated volatility. Agents run in parallel, allowing thousands of portfolios to operate concurrently under common global rules while remaining isolated from one another. Only assets that meet predefined liquidity thresholds are eligible for long or short positions. The tradable universe is reconstituted daily from the currently liquid USDT-settled futures, ensuring eligibility reflects live market liquidity and remains bias-free. ### Operational safeguards A pre-trade risk router validates every instruction before any order is sent. Checks include exposure limits, collateral rules, instrument allow-lists, and venue health. A 24/7 live monitoring layer supervises orders, fills, connections, and data coherence. It detects and corrects anomalies — failed settlements, API disruptions, or state mismatches — and maintains alignment through automatic reconciliation and autosync. ### Performance & latency Core processes run on a high-throughput, low-latency stack and are deployed in close proximity to primary exchange infrastructure. This reduces instruction-to-execution delay and preserves reliability during extreme market conditions. ### Security & isolation The trading engine runs entirely within a private network, with no public access. Sensitive systems, internal tools, and execution pathways are not exposed to the public internet. Portfolio state and execution records reside behind strict traffic management and access controls designed for low-latency reads/writes under load, ensuring the database remains responsive even at scale. ![System architecture diagram with dual-network infrastructure and security layers](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fsystem-architecture.png&w=3840&q=75) System architecture: dual-network infrastructure with security layers ## Risk Management Philosophy Risk management forms the foundation of the systematic approach embedded in the engine — designed to protect capital from both market-wide drawdowns and idiosyncratic cryptocurrency failures (the two largest tail risks in any crypto exposure). ### Market-wide risk mitigation - Directional diversification: market-wide drawdowns are addressed through combined long and short exposure across the broader strategy set. The engine supports more than twenty uncorrelated trading approaches designed to generate returns in both bullish and bearish regimes, limiting directional exposure to any single market trend. - Strategy correlation management: strategies are selected based on rigorous correlation analysis during development, with ongoing systematic monitoring. Risk-adjusted outcomes improve and drawdown periods shorten when a large set of uncorrelated strategies is traded together. - Regime detection: regime-change detection identifies when market conditions shift significantly, allowing strategies to take new positions only in favourable market conditions. ### Single-asset risk controls - Position sizing: each individual trade represents only a small fraction of total portfolio capital, ensuring that no single position can cause significant portfolio damage. - Diversification requirements: the dynamic universe approach ensures exposure remains spread across many liquid assets, reducing concentration risk and the impact of any isolated asset failure. - Catastrophic loss protection: black-swan stop-loss mechanisms protect against extreme adverse moves, protocol exploits, exchange delistings, or liquidity collapses. ## Want to discuss the trading approach? If you have questions about the technology, the strategy framework, or the engineering behind the trading engine, we're happy to discuss further. [Book a call](https://robuxio.com/call) --- # Meet Chris, Robuxio CGO Source: https://robuxio.com/chris Markdown: https://robuxio.com/chris.md Speak with Chris (CGO) about Robuxio's systematic crypto and equities strategies, portfolio access routes, and the right product for your account size and region. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Book a call with Chris --- # Book a 30-Minute Call with Chris Jack Source: https://robuxio.com/chris30 Markdown: https://robuxio.com/chris30.md Schedule a 30-minute call with Chris Jack, Robuxio's CGO, to discuss systematic crypto and equities access routes and the right product for your portfolio. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Book a 30-Minute Call with Chris Jack --- # Contact Us Source: https://robuxio.com/contact-us Markdown: https://robuxio.com/contact-us.md Get in touch with the Robuxio team. Questions about our trading strategies, platform, or partnership opportunities. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Get in Touch Whether you're ready to explore institutional crypto trading or have questions about our platform, we're here to help. ## Schedule a Strategy Call Discuss your portfolio requirements, risk parameters, and how Robuxio can fit your institutional needs. [Book a Demo](https://robuxio.com/call) ### General Inquiries Questions about our platform, services, or partnership opportunities. [info@robuxio.com](mailto:info@robuxio.com) ### Technical Support Need help with your account, API setup, or the trading platform. [support@robuxio.com](mailto:support@robuxio.com) ### Company Information ROBUXIO s.r.o. Registered in Czech Republic ICO: 19439237 [@robuxio_com](https://x.com/robuxio_com) --- # Algorithmic Crypto Trading Masterclass Source: https://robuxio.com/course Markdown: https://robuxio.com/course.md Pavel Kýček's masterclass on systematic crypto trading. 11 video lessons, 8 strategy scripts, 2 live portfolio examples. Realtest-based, no programming required. --- [Home](https://robuxio.com/) ## Algorithmic Crypto Trading 11 lessons Introduction Welcome & course overview Lessons 1 Lesson 1: Introduction to Algorithmic Trading Czech · EN subtitles This lesson focuses on clarifying the basics of trading and building a strong foundation for understanding algorithmic trading. It is a live recording of Pavel's lecture at the University of Zlín. Lesson 2: Backtesting Platform English This lesson focuses on the main criteria for selecting a proper testing platform. We dive into the basics of Realtest, our backtester of choice, learning how to import data and create a benchmark strategy. Lesson 3: Market Selection English Every market behaves differently—one trends more, while another moves sideways. This lesson helps you understand the unique characteristics of each market and choose the right trading approach. Lesson 4: Trading Approaches English This lesson is dedicated to understanding the various trading approaches, their classifications, and how to implement them effectively. Lesson 5: Strategy Building English This lesson focuses on understanding trading biases and building momentum and mean reversion strategies on a broad basket of cryptocurrencies. Lesson 6: Robustness Tests + Trend Following English In this lesson, we will build a strategy based on long-term momentum. Afterwards, we dive into robustness tests, essential for ensuring a strategy is reliable and ready for live trading. Lesson 7: Exits English Exits can significantly change the characteristics of a strategy. This lesson focuses on how to approach exits in different trading strategies and the philosophy behind them. Lesson 8: Risk Management + RSI Strategies Czech · EN subtitles A trader is, first and foremost, a risk manager. The primary goal is to protect capital before focusing on multiplying it. This lesson is a live recording at the University of Zlín. Lesson 9: Portfolio Trading English Portfolio trading of diversified strategies is the ultimate goal of algorithmic trading. This lesson explores the techniques and methods required to build and manage a robust portfolio. Lesson 10: Trading Psychology English Trading psychology develops alongside a true understanding of trading and the creation of sound strategies. There are key psychological aspects to focus on to succeed in the markets. Lesson 11: Realtest Introduction by Marsten Parker English This special episode introduces participants to the logic behind Realtest. Marsten Parker, a featured trader in Jack Schwager's Unknown Market Wizards, shares insights into his 27+ years of trading experience. Recommended ![The Algorithmic Crypto Playbook](https://robuxio.com/images/book-no-glow.png) Book Available The Algorithmic Crypto Playbook Course concepts in book format View Disclaimer [![Robuxio](https://robuxio.com/_next/image?url=%2Fimages%2Flogo-dark.png&w=3840&q=75)](https://robuxio.com/) [Sign In](https://robuxio.com/auth/login?callbackUrl=/course) 11 Lessons • by Pavel Kycek # Algorithmic Crypto Trading Build, backtest, and deploy systematic crypto trading strategies. 11 lessons from strategy development to live portfolio management. 🌐 Course language: English. 9 of the 11 lessons are in English. Lessons 1 & 8 are live university lectures recorded in Czech, with English subtitles. Included with the course ## 1 year of automated Robuxio Lite trading Enrolment isn't just lessons. You get 12 months of automated access to the Robuxio Lite portfolio — run on the same institutional trading engine behind our client mandates. Connect your Binance or Bybit API keys and trade an account of up to $10,000 — fully automated, no configuration required. 12-month automated access Up to $10,000 capital Institutional trading engine [See what's included & enrol](https://robuxio.com/course/get-access#pricing) ## What You'll Learn The fundamentals of algorithmic vs discretionary trading How to select the right backtesting platform Building momentum, mean reversion, and trend following strategies Proper risk management techniques Portfolio construction and diversification The psychology behind successful trading ## By the End of This Course You'll have the skills to develop and deploy your own trading strategies with confidence. Start building systematic, data-driven approaches to the crypto markets. Start Lesson 1 --- # Algorithmic Crypto Trading Course + Live Trading Included Source: https://robuxio.com/course/get-access Markdown: https://robuxio.com/course/get-access.md Enroll in Pavel Kýček's algorithmic crypto trading course: 11 lessons, 8 strategy scripts + 1 year of automated live trading up to $10K on Binance & Bybit. --- [![Robuxio](https://robuxio.com/_next/image?url=%2Fimages%2Flogo-dark.png&w=3840&q=75)](https://robuxio.com/) [Reviews](#reviews)[Pricing](#pricing)[FAQ](#faq) [Sign in](https://robuxio.com/course)[Get Access](#pricing) ![Pavel Kýček](https://robuxio.com/images/course/pavel-photo.png) By Pavel Kýček Robuxio, CEO • University Lecturer # Master Algorithmic Trading in Weeks, Not Years Everything you need to build profitable trading strategies and portfolios, even if you've never traded algorithmically before. No coding experience required — you'll write strategies in RealTest's simple scripting language (not real programming), with every concept taught alongside the reasoning behind it. Includes 1 year of automated live trading — up to $10,000 on Binance & Bybit [Get instant access](#pricing) Join 1,000+ students ![Tomas Bata University](https://robuxio.com/images/course/university-logo.png) ## The Robuxio Course ### Before the Robuxio Course - • Reliance on intuition rather than systematically-tested approaches - • Confidence shaken by drawdowns without statistical foundation - • Market movements feel unpredictable with unclear entry/exit logic - • Wins difficult to replicate; losses lack diagnostic clarity - • Excessive chart analysis without increased conviction - • Over-fitted indicators creating mistrust - • No scalable, trustworthy framework for capital deployment ### After the Robuxio Course - • Systematic process with clearly-defined rules and position sizing - • Strategies built on robust, idea-first logic with identifiable edge - • Understanding of risk profiles and drawdown characteristics - • Data-driven decisions executed without guesswork - • Clear entry/exit logic with transparent strategy rationale - • Fully automated trading eliminating discretionary decisions - • Validated plan with self-built strategies ready for live deployment ## What You Will Master ### 1. Algorithmic Trading Edge Fundamentals - • Match strategy logic to asset behaviour. - • Discover robust idea-first approaches. ### 2. Foundational Strategy Types - • Learn Breakout, Trend Following, Mean Reversion. - • Develop idea-first strategies with clear logic and edge. ### 3. Code and Data Analysis - • Get clean futures data of the entire crypto market. - • Get code templates with comprehensive explanations of each line. - • No programming knowledge required to implement and use. ### 4. Strategy Design & Execution - • Get access to 8 pre-built strategies. - • Learn to develop and refine additional strategies. - • Learn advanced exit techniques informed by data-driven insights. ### 5. Robust Portfolio Development - • Construct scalable multi-strategy portfolios. - • Learn the link between uncorrelated strategies and portfolio design. ### 6. Trading Automation - • Get exclusive access to the Robuxio Lite portfolio for 1 year. - • Trade it automatically with our institutional trading engine. - • Run it on an account of up to $10,000. ## Algorithmic Crypto Trading Course Outline Lesson 01: Introduction to Algorithmic Trading ![Lesson 01 thumbnail](https://robuxio.com/images/course/lessons/Lesson1.png) 62 minutes Description: This lesson focuses on the main criteria for selecting a proper backtesting platform. We dive into the basics of Realtest—our backtester of choice—learning how to import data and create a benchmark strategy. [Get instant access](#pricing) Topic Factors to Consider When Choosing a Trading Platform Key Features for Algo Trading Commonly Used Platforms Why Realtest? Example of Realtest Language Realtest: Source of Information Testable Trading Approaches Research-Driven Models Testable Data Code: Bitcoin Benchmark Strategy Lesson 02: Backtesting Platform Lesson 03: Market Selection Lesson 04: Trading Approaches Lesson 05: Strategy Building Lesson 06: Robustness Tests + Trend Following Lesson 07: Exits Lesson 08: Risk Management + RSI Strategies Lesson 09: Portfolio Trading Lesson 10: Trading Psychology ![Realtest software interface](https://robuxio.com/images/course/Group-21-1.png) ![Marsten Parker](https://robuxio.com/images/course/testimonial-avatar.png) Special Episode ## Realtest Introduction by Marsten Parker This special episode introduces participants to the logic behind Realtest, presented by Marsten Parker—creator of Realtest and a featured trader in Jack Schwager's Unknown Market Wizards. Marsten brings his 27+ years of trading experience to highlight the unique features of Realtest, designed to help traders build and test strategies efficiently. The goal of this session is to understand the core functionality of Realtest and its logical foundation, empowering participants to create robust strategies and portfolios. Realtest is a no-nonsense tool, focused on delivering results rather than aesthetics, and Marsten shares insights on how he continues to innovate and enhance the software. ## Strategies You Will Build The strategies are built with conservative settings to provide a stable foundation. In the course, you'll learn not only how to adapt these strategies to match your risk tolerance but also how to build and customize your own strategies for long-term success. ### BTC Strategies Strategies focused on Bitcoin, used in the course to explain the fundamental principles of each approach. 2024 Return: Mean Reversion: 42.14% Breakout: 72.9% Trend Following: +81.5% CAGR: Mean Reversion: 31% Breakout: 37.65% Trend Following: +77.67% ![BTC Strategies performance chart](https://robuxio.com/images/course/strategies/BTC-Strategies-2.png) ### Crypto Breakout Strategy Crypto Breakout Strategy 2024 Return: 45% CAGR: 52.85% ![Crypto Breakout Strategy performance chart](https://robuxio.com/images/course/strategies/Breakout-Strategy-1.png) ### Crypto Mean Reversion Strategy An aggressive mean reversion strategy designed to buy corrections in the most trending coins of our trading universe. 2024 Return: 45.4% CAGR: 52.85% ![Crypto Mean Reversion Strategy performance chart](https://robuxio.com/images/course/strategies/Mean-Reversion-Strategy.png) ### Crypto Trend Following Strategy A strategy that buys strong breakouts in our universe, riding trends to completion while cutting losses early. 2024 Return: 63% CAGR: 74.58% ![Crypto Trend Following Strategy performance chart](https://robuxio.com/images/course/strategies/Trend-Follwoing.png) ### RSI Mean Reversion Classical use of RSI but together with momentum. 2024 Return: 10.7% CAGR: 21.49% ![RSI Mean Reversion performance chart](https://robuxio.com/images/course/strategies/RSI-Mean-Reversion-2.png) ### RSI Momentum An innovative approach that uses RSI as a breakout indicator to identify breakouts. 2024 Return: 78.5% CAGR: 60.42% ![RSI Momentum performance chart](https://robuxio.com/images/course/strategies/RSI-Momentum-1.png) Included free with every enrolment ## Exclusive Access To Robuxio Lite Automation Enrolment isn't just lessons. You get 12 months of automated access to our Robuxio Lite Portfolio — executed by the same trading engine that runs our institutional mandates. Plug in your Binance or Bybit API keys and trade an account of up to $10,000 . 12-month automated access Up to $10,000 capital Institutional trading engine Trades on Binance & Bybit Set up in minutes ### Robuxio Lite Portfolio Automation You'll run the exact Robuxio Lite portfolio taught in the course—fully automated on the same engine that powers our institutional mandates. 55.4% 2024 Return 62.18% CAGR [Get instant access](#pricing) ![Robuxio Lite Portfolio cumulative profit chart](https://robuxio.com/images/course/Robuxio-Lite-Portfolio.png) ![Pavel Kýček - CEO, Robuxio](https://robuxio.com/images/course/Rectangle-3463291-2.png) About ## Hi, I'm Pavel, Algorithmic Trader and CEO of Robuxio! I have been trading for nearly 20 years, and at Robuxio, we trade crypto for institutional clients using fully automated algorithmic strategies with remarkable success. But my journey wasn't always smooth. In fact, the early years were filled with painful lessons. ### The Painful Beginning For the first 5+ years, I struggled and lost money consistently. ### Why? - I didn't have a systematically tested and robust trading edge. - I would discover an idea, trade it, and abandon it after a few losses. - I had no confidence in my approach—because I didn't truly understand what I was doing. ### It took me a long time to realize that: - Each asset behaves differently. - There are only a few sound trading approaches, and each needs to be applied to the right type of asset. ### The Turning Point. I also subconsciously resisted algorithmic trading because I thought, "I'm not a programmer—I can't do this." But when I finally embraced algorithmic trading, things changed. It wasn't easy—I learned everything the hard way, losing tens of thousands of dollars and wasting years with no progress. ### Why I Created This Course. I don't want you to go through what I did. This course was initially created for students at Bata University in Zlín, to teach them everything about algorithmic trading in just 10 lessons. No programming skills needed. ## Start Algorithmic Crypto Trading Today $997 One-time payment • Lifetime access ### What's Included: - Lifetime lesson access (10 comprehensive modules + bonus masterclass) - 8 step-by-step strategy builds with code templates - Survivorship bias-free Binance Futures data - 12-month automated Robuxio Lite portfolio access (up to $10K capital) - Strategy logic and portfolio design instruction - Same institutional trading engine used by funds worldwide [Get Instant Access](https://robuxio.com/checkout/course) 7-day satisfaction guarantee • Credit cards and crypto accepted ## Frequently Asked Questions Course Content Technical Requirements Strategies & Trading Support & Access ### What do I get exactly? 10 comprehensive lessons on algorithmic crypto trading and bonus masterclass with Marsten Parker, creator of Realtest and featured trader in Unknown Market Wizards; 8 step-by-step strategy builds with code templates; survivorship bias-free crypto futures data; 12 months automated Robuxio Lite portfolio access, run with up to $10K using our institutional trading engine. Who is this course for? Do I need coding experience? What makes this course unique? What will I achieve by course end? [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/course/get-access.md) --- # All-Weather Algorithmic Crypto Portfolios Source: https://robuxio.com/crypto Markdown: https://robuxio.com/crypto.md Robuxio's all-weather crypto portfolios are comprised of 20+ uncorrelated systematic strategies that compound across bull, sideways and bear regimes. SMA, alternative investment vehicle, white-label. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) Systematic Crypto Portfolios # The All-Weather Crypto Solution An algorithmic crypto portfolio designed to deliver strong returns with lower drawdowns across all market regimes, accessible to institutional and individual investors. [Book a Call](https://robuxio.com/call) Learn more The market problem & opportunity ## Crypto's Passive Allocation Problem Allocators increasingly want crypto exposure, but passive allocation now faces two separate problems: Bitcoin's return profile is decreasing as the asset matures, and the broader crypto market has been capital destructive for investors who simply buy and hold. ### Bitcoin's early return profile is fading Bitcoin's risk and return profile has changed as the asset has matured. In 2017, 57% of trading days saw a 10-day move exceeding ±10%. By 2025, that had fallen to 10%. Rolling 4-year volatility has followed the same path, which makes a repeat of Bitcoin's early return profile harder to underwrite. ### Passive exposure is inadequate Investors looking beyond Bitcoin often assume the broader crypto market offers the same upside with more diversification. The data says otherwise. Of the 20 largest cryptoassets bought at the November 2021 peak, only 2 were positive by May 2026. The equal-weighted Top 50 Binance Futures universe tells the same story: high volatility, no secular upward trend, and passive exposure compounding losses rather than returns. ### Crypto's volatility is the opportunity The broader crypto market still moves far more aggressively than traditional equity markets. That volatility is damaging for passive investors, but it creates a wide opportunity set for systematic strategies designed to trade both directions instead of simply holding exposure through every cycle. ### See the market data behind the opportunity Our benchmarks page compares Bitcoin, the top crypto universe, Robuxio portfolios, volatility, drawdowns, correlations, and market regimes. [Explore Benchmarks](https://robuxio.com/benchmarks) Our approach ## Regime-Agnostic Crypto Exposure Robuxio combines momentum, mean reversion, long and short exposure, and a dynamic liquid crypto futures universe to create crypto exposure that doesn't depend on a single market regime. 20+ Uncorrelated strategies Top 40 Crypto futures tradable universe reconstituted daily 24/7 Fully automated ### Mean Reversion Targets market inefficiencies and short-term price extremes LONG SHORT ### Momentum Captures directional breakouts and breakdowns LONG SHORT ### Read the whitepaper behind the trading approach Our whitepaper goes deeper into Robuxio's systematic trading framework, portfolio construction, risk management, and how the strategy is designed to adapt across crypto market regimes. [Read the Whitepaper](https://robuxio.com/crypto/whitepaper) The Portfolios ## Tailored Risk Profiles Two standard volatility profiles to match your risk appetite, and fully customizable for bespoke mandates. Denominated and collateralized in USD stablecoins, BTC, or ETH. Available in these collaterals USD Ethereum Bitcoin ### Robuxio Crypto High Vol A diversified blend of momentum and mean reversion strategies, both absolute and relative. Targets ~40% annualised volatility for full participation in crypto's directional moves. Get Factsheet ### Robuxio Crypto Low Vol The same diversified strategy stack, run at smaller position sizes for ~20% annualised volatility and shallower drawdowns. Get Factsheet Charts show compounded returns using USD collateral [View Reports](https://robuxio.com/reports) ## 1. Performance Below you will find the cumulative growth of Robuxio Crypto portfolios compared to passive buy-and-hold Bitcoin exposure. Robuxio Crypto portfolio returns are shown as GAV (gross of fees) as fees vary by investment vehicle. All 3Y 1Y ### Drawdowns ### Summary Statistics Strategy CAGR Sharpe Sortino Max DD Vol Calmar Best Month Worst Month Robuxio Crypto HV 124.4% 2.44 4.56 -35.2% 35.8% 3.53 +60.8% -15.1% Robuxio Crypto LV 57.6% 2.62 4.88 -19.5% 18.0% 2.96 +25.9% -7.6% Bitcoin 6.6% 0.38 0.55 -66.9% 51.0% 0.10 +43.8% -37.3% ## 2. Calendar Returns Annual returns are broken down by year and series. The monthly heatmap provides a visual overview of the distribution of positive and negative months throughout the full history. ### Annual Returns Year Robuxio Crypto HV Robuxio Crypto LV Bitcoin 2026 YTD +5.7% +4.3% -27.0% 2025 +6.4% +7.1% -6.4% 2024 +255.9% +106.1% +121.1% 2023 +256.0% +92.5% +155.9% 2022 +182.9% +80.3% -64.2% ### Monthly Return Heatmap — Robuxio Crypto HV (GAV) Crypto HV Crypto LV Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2026 +2.1% +8.0% -6.0% +7.3% -1.9% +0.6% -3.7% — — — — — 2025 -9.4% +16.4% +2.5% +14.3% +7.8% -7.9% +5.1% +10.5% -15.1% -7.1% +0.6% -5.7% 2024 -2.1% +23.9% +60.8% +7.9% +8.1% +1.6% +17.7% -5.9% +15.2% -13.0% +29.3% +7.1% 2023 +53.6% -1.2% +6.3% +0.9% +1.3% +19.4% +1.8% +4.9% -1.2% +9.1% +16.4% +35.0% 2022 +21.0% +6.1% +18.8% +7.8% +31.4% +22.1% -8.0% +0.6% -2.9% +8.6% +1.2% +8.6% ### Read the monthly performance reports Per-month returns, strategy attribution, and market commentary for both Crypto HV and Crypto LV. [View All Reports](https://robuxio.com/crypto/reports) ## The Engine Behind Every Trade Robuxio's trading engine is the invisible infrastructure that powers both our portfolios and white-labeled solutions. Ultra-low latency execution, physically colocated with major exchanges 24/7 monitoring across portfolio performance, system load, and order health Encrypted, IP-restricted, and non-withdrawable API key handling, for enhanced security Dynamic IP rotation and proxy routing to avoid rate limits on exchanges Load-tested to run 60,000+ executors in parallel, with no degradation in execution speed Four global zones per exchange with full failover protection for uninterrupted trading Whether you're trading via SMA or integrating our engine behind your platform, Robuxio delivers operational reliability at scale. ## 3. Investment Rationale Why we built systematic crypto strategies, and why the structural inefficiencies we exploit are durable. ### The Buy-and-Hold Problem Holding BTC or a passive top-40 index exposes investors to 70%+ drawdowns and multi-year recoveries. Diversification across coins offers little protection: in stress, correlations converge to 1, just as they do in equities. The compounding cost of those drawdowns is brutal. ### Market-Neutral Misses the Trend Pure market-neutral crypto approaches sidestep beta entirely but give up the asymmetric upside that crypto's cleanest trends produce. The result is consistently underperforming a directional approach across full cycles. ### Diversified Sleeves, One Risk Engine Five sleeves run on orthogonal drivers: long/short mean reversion, long/short momentum, and crisis hedging. The mix captures the upside of crypto trends while limiting drawdown depth and recovery time. ### Capital Efficiency Substantially higher return-per-unit-of-drawdown (Calmar) and return-per-unit-of-volatility (Sharpe) than passive BTC. Both Crypto HV and Crypto LV deliver meaningfully better risk-adjusted returns than buy-and-hold across the full cycle. ## 4. Portfolio Construction Five independently operated systematic sleeves assembled under one risk framework. Each sleeve targets a distinct return driver in the top-40 crypto universe. Sleeve Alpha Source Holding Role in Portfolio Details Mean Reversion (Long) Reversal of short-term overreactions to the downside Hours to several days Buys oversold dislocations in BTC, ETH, and high-cap alts Holding Time: Hours to several days Crypto markets routinely overshoot on sentiment-driven or forced-selling episodes — leverage cascades, liquidations, and panic selling. This sleeve systematically identifies short-term oversold conditions in liquid majors and the broader top-40 universe, and captures the subsequent mean reversion. Holding periods stay short because edges decay quickly in 24/7 markets. Mean Reversion (Short) Mean-reverting overshoots to the upside Hours to several days Fades parabolic blow-offs after sentiment-driven exhaustion thrusts Momentum (Long) Trend persistence in directional markets Days to weeks Captures sustained uptrends across the top-40 universe Momentum (Short) Trend persistence to the downside Days to weeks Profits from persistent downtrends in alts and majors #### Balanced Sleeve Allocation Different sleeves perform better in different market regimes. The overall portfolio is designed not to depend on a single sleeve, which allows it to provide more robust, all-weather exposure across changing market conditions. ## 5. Strategy Development & Validation Every strategy must pass the same three-stage selection process before entering the portfolio, with live performance used to validate backtested results. ### Logic-First Design Every strategy begins with a clear hypothesis, a reason why the pattern exists and why it should persist. No data mining without an underlying rationale. ### Out-of-Sample Testing Performance confirmed on unseen holdout periods. Walk-forward analysis across rolling windows. Strategies that fail out-of-sample are discarded. ### Live Track Record The majority of signal families have been traded live for at least a year. Live experience informs execution quality, liquidity behavior, and real-world dynamics. ## 6. Market Regime Analysis Portfolio behaviour across distinct market regimes, including crashes, rallies, and prolonged bear markets. The portfolio is designed for uncertain environments, where broad diversification across strategies and return drivers is intended to provide resilience. Rather than relying on a single market regime, it is built to adapt to changing conditions and maintain a more balanced return profile. Use the selector below to see how Robuxio Crypto HV and Crypto LV performed against passive Bitcoin during specific historical events. COVID-19 Crash & V-Recovery 2020–2021 Bull Market Luna / 3AC Collapse FTX Collapse & Contagion Spot-ETF Approval Rally ATH Through 10th Oct Crash BTC lost ~50% in two weeks of forced deleveraging, then began the parabolic 2020–21 bull run. A stress test for crypto strategies during cross-asset liquidations. Choppy / Range-Bound Mean-reversion sleeves do their best work when crypto markets oscillate without strong direction, where crowded long/short setups predictably revert. Momentum sleeves stay small. Strong Uptrend Long momentum dominates as the portfolio participates in directional rallies across BTC and the top-40 universe. Mean reversion takes a back seat to avoid fading clean trends. Corrections & Drawdowns Mean-reversion long enters its most productive period as forced selling creates oversold dislocations in liquid majors. Short-momentum contributes protective exposure. Prolonged Bear Short-momentum and short-mean-reversion sleeves carry the portfolio. Long exposure scales down. Drawdowns are kept to a fraction of passive BTC's decline. Regime Transitions The multi-horizon structure adapts progressively: fast mean-reversion within days, momentum within weeks. No single sleeve is permitted to dominate during transitions. ## 7. Risk Management Risk control is embedded at every level of portfolio construction. ### Structural Risk Controls - Per-coin position size caps based on liquidity and historical vol - Dynamic portfolio-level vol target — gross exposure adapts to market regime - Momentum Short sleeve runs 24/7, ready to activate during liquidation cascades - Real-time PnL and exposure monitoring with automated alerts (24/7) ### Realistic Expectations - Does not guarantee outperformance every year - BTC may outperform in vertical, no-pullback bull markets - Value proposition is the full cycle: 3+ years - Regime shifts may cause temporary underperformance ## 8. Investment Vehicles Two ways to access Robuxio's crypto strategies. Both run the same engine, the difference is custody, structure, and fit for your situation. [Robuxio Capital Management A pooled alternative investment vehicle for qualified investors running the strategies inside dedicated USD and BTC share classes. Pooled structure with qualified investor verification Custody, execution, and reporting handled for you USD and BTC share classes available Learn More](https://robuxio.com/capital)[Separately Managed Account Keep assets in your own exchange account (Binance or Bybit) and grant Robuxio trading-only API-key access. You retain custody and withdrawal rights at all times. Full self-custody, assets never leave your exchange Trading-only API keys (no withdrawal permissions) Onboarding in days Learn More](https://robuxio.com/crypto/sma) Keep exploring ## Want to dig deeper? Pick a starting point. The playbook walks through the strategy, the reports show what the live portfolios are doing, and the data is downloadable for your own analysis. [7 parts The Crypto Playbook The systematic crypto framework in seven readable parts. Read the playbook →](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Monthly Performance reports Live portfolio reporting with attribution and commentary. View reports →](https://robuxio.com/crypto/reports)[Downloads Portfolio data Factsheets and daily returns — CSV, PDF, or JSON. Open data →](https://robuxio.com/data) Or, if you've seen enough, [book a call](https://robuxio.com/call) with the team. For informational purposes only. This is not investment advice or an offer to invest. Past performance is not indicative of future results. Cryptoassets are highly volatile and can lose substantial value rapidly. All investments involve risk, including possible total loss of capital. Full product documentation, risk disclosures, and eligibility requirements are available on request. [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/crypto.md) --- # Crypto Performance Reports Source: https://robuxio.com/crypto/reports Markdown: https://robuxio.com/crypto/reports.md Monthly and annual performance reports for Robuxio's systematic crypto portfolios. Strategy returns, drawdowns, volatility analysis, and market commentary. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) [← Back to Crypto](https://robuxio.com/crypto) # Crypto Performance Reports Annual and monthly performance reports for our systematic crypto portfolios. For strategy and portfolio changes, see [Portfolio Updates](https://robuxio.com/updates). [2026 Monthly Reports Monthly performance reports with strategy returns and market commentary. View Reports →](https://robuxio.com/crypto/reports/2026)[2025 Annual Report Full-year performance review, strategy insights, and outlook. View Reports →](https://robuxio.com/crypto/reports/2025) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/crypto/reports.md) --- # 2026 Monthly Crypto Performance Reports Source: https://robuxio.com/crypto/reports/2026 Markdown: https://robuxio.com/crypto/reports/2026.md Robuxio's 2026 monthly performance reports for the systematic crypto portfolios. Strategy returns, drawdowns, volatility analysis, and market commentary. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) [← Back to All Reports](https://robuxio.com/crypto/reports) # Crypto Monthly Reports 2026 Monthly performance reports for the Robuxio High Sharpe strategies and benchmark comparisons. [January View Report →](https://robuxio.com/crypto/reports/2026/january)[February View Report →](https://robuxio.com/crypto/reports/2026/february)[March View Report →](https://robuxio.com/crypto/reports/2026/march)[April View Report →](https://robuxio.com/crypto/reports/2026/april)[May View Report →](https://robuxio.com/crypto/reports/2026/may)[June View Report →](https://robuxio.com/crypto/reports/2026/june) July Coming soon August Coming soon September Coming soon October Coming soon November Coming soon December Coming soon [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/crypto/reports/2026.md) --- # April 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/april Markdown: https://robuxio.com/crypto/reports/2026/april.md Robuxio's April 2026 crypto performance report. Crypto HV and Crypto LV returns, drawdowns, rolling volatility, funding rates, and net exposure analysis. --- --- # February 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/february Markdown: https://robuxio.com/crypto/reports/2026/february.md Robuxio's February 2026 crypto performance report. Crypto HV and Crypto LV returns, drawdowns, rolling volatility, funding, and net exposure analysis. --- --- # January 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/january Markdown: https://robuxio.com/crypto/reports/2026/january.md Robuxio's January 2026 crypto performance report. Crypto HV and Crypto LV returns, drawdowns, rolling volatility, funding, and net exposure analysis. --- --- # June 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/june Markdown: https://robuxio.com/crypto/reports/2026/june.md Robuxio's June 2026 crypto performance report: Crypto HV and Crypto LV returns, drawdowns, rolling volatility, net exposure and funding versus Bitcoin and the Top 50. --- --- # March 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/march Markdown: https://robuxio.com/crypto/reports/2026/march.md Robuxio's March 2026 crypto performance report. Crypto HV and Crypto LV returns, drawdowns, rolling volatility, funding, and net exposure analysis. --- --- # May 2026 Monthly Crypto Performance Report Source: https://robuxio.com/crypto/reports/2026/may Markdown: https://robuxio.com/crypto/reports/2026/may.md Robuxio's May 2026 crypto performance report. Crypto HV and Crypto LV returns, drawdowns, rolling volatility, and market commentary versus Bitcoin and the Top 50. --- --- # Crypto SMA — Self-Custody Algorithmic Trading Solution Source: https://robuxio.com/crypto/sma Markdown: https://robuxio.com/crypto/sma.md Trade Robuxio's systematic crypto strategies inside your own Binance, Bybit or BIT account. Self-custody, trade-only API keys, $100k minimum, anytime onboarding. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) Separately Managed Account # Automated Crypto Portfolios On Your Account Retain custody of your assets on your exchange, while granting Robuxio trade-only API access to run the same systematic strategies that drive our fund. Learn More [Setup Guides](https://robuxio.com/setup) ## Four Simple Steps to Start Robuxio isn't just a signal service or a bot. It's a fully automated infrastructure stack built to deliver institutional-grade execution, real-time monitoring, API routing, and portfolio management, without requiring you to build anything yourself. We've engineered the complexity behind automated portfolio trading to make professional crypto exposure accessible to everyone. 1 ### Choose Your Access Prime brokerage or direct exchange access 2 ### Setup Your Infrastructure Securely connect to our institutional trading engine 3 ### Choose Your Portfolio Based on volatility and collateral preferences 4 ### Enjoy The Ride 24/7 automated execution, real-time monitoring ## Step 1: Choose Your Access The SMA runs inside your own exchange account. If you cannot get access access to Binance or Bybit futures in your region you can get exposure to our portfolios through our prime brokerage solution. ### Direct Exchange You retain full custody of your assets and connect to our trading engine via trade-only API. For Capital $100,000+ Access Direct API connection (Binance or Bybit) Pricing 30% of profits above high-water mark (quarterly) Execution Fully automated Options All portfolios & collaterals Onboarding Anytime [Explore setup guide](https://robuxio.com/setup) ### Prime Brokerage If you cannot get access to a crypto futures account, you can get the same exposure through BIT. For Capital $50,000+ Access Subscribe to portfolios via BIT Pricing 30% of profits above high-water mark (monthly) Execution Fully automated Portfolios Robuxio Crypto High Vol (USDT, BTC) Onboarding Monthly liquidity window (1-5 of each month) [Explore BIT setup](https://robuxio.com/setup/bit) ## Step 2: Infrastructure Setup All trades are executed using trade-only API keys. Trading permissions are enabled but withdrawal rights are disabled, meaning we can place trades, but never move your capital. ![Robuxio](https://robuxio.com/images/logos/logo-dark.svg) i Data Collecting Trading Engine Portfolio Trading Trade-only API Your exchange account i ![Binance](https://robuxio.com/images/exchanges/path16-3.png) ![Bybit](https://robuxio.com/images/exchanges/bybit-4.png) ![BIT](https://robuxio.com/images/exchanges/Frame-2147225128-2.png) Your funds never leave your account. Trade-only permissions let the engine place trades but never withdraw, and you can revoke access at any time. ## Step 3: Choose Your Portfolio Select portfolios based on your volatility and collateral preferences. Every portfolio is powered by a blend of 20+ uncorrelated strategies that have undergone rigorous robustness testing. Available in these collaterals ![USD](https://robuxio.com/images/portfolio/usd.svg) USD ![Ethereum](https://robuxio.com/images/portfolio/ethereum.svg) Ethereum ![Bitcoin](https://robuxio.com/images/portfolio/bitcoin.svg) Bitcoin ![Robuxio Crypto High Vol](https://robuxio.com/images/portfolio/usd.svg) ### Robuxio Crypto High Vol A pure short-term focused portfolio combining breakout momentum and mean reversion strategies on both the long and short side. Designed to capture short-term profits, even in non-trending markets. Get Factsheet ![Robuxio Crypto Low Vol](https://robuxio.com/images/portfolio/usd.svg) ### Robuxio Crypto Low Vol Same strategy logic as the High Vol variant, but with reduced net exposure and strategy weights. Built for clients seeking consistent returns with lower volatility. Get Factsheet Charts show compounded returns using USD collateral [View Reports](https://robuxio.com/reports) ## Step 4: Enjoy the Ride Real-time execution and full transparency, live in your own Robuxio dashboard. app.robuxio.com app.robuxio.com Live Robuxio dashboard · illustrative data Dashboard shown only available with Direct Exchange Access. Prime Brokerage clients can track performance via the BIT app. - ✓ 20+ live strategies monitored continuously - ✓ Automated trade lifecycle management - ✓ Position tracking and reconciliation - ✓ Daily dashboards and equity curve updates* [Explore setup guides](https://robuxio.com/setup) ## Frequently Asked Questions General Questions Onboarding and Setup Account Management Plans & Pricing Trading & Strategy ### Do I need trading experience? No. Robuxio is a fully automated trading platform. You don't need to understand charts, signals, or indicators to use it effectively. That said, we provide full transparency and clear explanations of the strategies being used in your selected portfolio, so you always know what's happening. What is the minimum investment required to use Robuxio? When can I expect results and are they guaranteed? What happens to my money if the market crashes? The market is up, but my portfolio is down. Shouldn't it be performing well right now? [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/crypto/sma.md) --- # Two New Uncorrelated Strategies Added to High Sharpe Portfolios Source: https://robuxio.com/crypto/updates/new-strategies-february-2026 Markdown: https://robuxio.com/crypto/updates/new-strategies-february-2026.md Launch Fader and Spread Long & Short added to our High Sharpe portfolios with near-zero correlation to the existing portfolio. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) [← Back to Portfolio Updates](https://robuxio.com/updates) Portfolio Update # Two New Uncorrelated Strategies Added to High Sharpe Portfolios February 26, 2026 ## Launch Fader This strategy structurally shorts low-quality projects during their initial exchange onboarding phase. By identifying and fading weak launches early, we capture value from the natural price decay that follows hype-driven pumps. ![LaunchFader equity curve](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fportfolio-update-launch-fader.png&w=3840&q=75) ## Spread Long & Short This strategy trades relative momentum within the crypto market. It shorts underperforming coins while hedging with positions in larger, high-volume assets. The approach captures alpha from market dispersion while maintaining overall portfolio stability. ![Spread Long & Short equity curve](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fportfolio-update-spread.png&w=3840&q=75) ## Portfolio Correlation Both strategies add uncorrelated returns to our existing portfolio. Launch Fader capitalizes on behavioral inefficiencies in new listings, while Spread Long & Short extracts value from relative strength dynamics across the market. Below you can see their relative correlation to the portfolio on a 90-day rolling basis. ![Rolling 90-day return correlation with Crypto HV](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fportfolio-update-rolling-correlation.png&w=3840&q=75) A correlation near 0 means the strategy moves independently of the portfolio. Near +1 means they move together; near -1 means they move in opposite directions. Our research is primarily focused on models that exhibit low drawdown correlation with the total portfolio: ![Strategy correlation matrix](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fportfolio-update-correlation-matrix.png&w=3840&q=75) All performance data shown as GAV (Gross Asset Value). Past performance does not guarantee future results. [← Back to Portfolio Updates](https://robuxio.com/updates) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/crypto/updates/new-strategies-february-2026.md) --- # Robuxio Crypto Whitepaper Source: https://robuxio.com/crypto/whitepaper Markdown: https://robuxio.com/crypto/whitepaper.md Robuxio's institutional crypto framework: market opportunity, trading engine architecture, portfolio construction and risk management — the methodology in full. --- White Paper [Executive Summary](#executive-summary)[The Problem](#problem)[The Opportunity](#opportunity)[Our Approach](#approach)[The Trading Engine](#engine)[The Portfolios](#portfolio)[Risk Management](#risk)[Implementation Options](#implementation)[Founders & Executive Team](#team) Contents - [1. Executive Summary](#executive-summary) - [2. The Problem](#problem) - [3. The Opportunity](#opportunity) - [4. Our Approach](#approach) - [5. The Trading Engine](#engine) - [6. The Portfolios](#portfolio) - [7. Risk Management](#risk) - [8. Implementation Options](#implementation) - [9. Founders & Executive Team](#team) [![Robuxio - Go to homepage](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) # White Paper Robust Crypto Market Exposure Last updated May 23, 2026 ## Executive Summary Institutional investors are racing to gain crypto exposure after witnessing the extraordinary returns of Bitcoin over the last decade. However, as Bitcoin matures as an asset, its volatility, and therefore its return potential, is steadily declining. To replicate these past returns, many allocators are now turning to the broader crypto market, often assuming that the same buy-and-hold approach that worked for Bitcoin can deliver similar results. Historical data reveals a different reality: buy-and-hold strategies consistently fail when applied to the broader crypto market. Most altcoins suffer catastrophic drawdowns from which they never recover. What the broader crypto market does offer, however, is unprecedented volatility and persistent inefficiencies. These conditions are poorly suited to buy-and-hold investing but well suited to systematic trading strategies designed to capture short-term dislocations. Robuxio provides institutional-grade access to this opportunity through robust, risk-managed exposure to the broader crypto market. Our proprietary platform executes over twenty uncorrelated momentum and mean-reversion strategies across the top 50 crypto futures, designed to generate returns in both bull and bear market conditions while avoiding the permanent capital losses common in buy-and-hold portfolios. These strategies operate through our fault-tolerant trading engine, which eliminates human error, enforces disciplined signal-based execution, and scales securely across thousands of portfolios with real-time monitoring and institutional-grade infrastructure. Combined with strict risk controls and diversification, this approach enables institutions, family offices, and sophisticated investors to access crypto's upside potential while significantly reducing downside exposure. ## The Problem ### Bitcoin's Diminishing Returns Many financial institutions are racing to gain crypto exposure after witnessing Bitcoin's outsized returns over the past decade. However, Bitcoin's volatility is declining (a typical sign of asset-class maturation) and its future returns are likely to diminish, following patterns observed in other emerging markets. As shown in Figure 1, the percentage of 10-day periods each year with returns above 10% has fallen sharply from 2017 to 2024. In 2017, 69.3% of 10-day periods delivered positive returns of 10% or more, compared to only 22.2% in 2024. This declining volatility suggests that Bitcoin's extraordinary early-stage returns are unlikely to be repeated at the same magnitude. ![Percentage of 10-day periods with Bitcoin returns over 10 percent](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbitcoin-returns-10-day-periods.png&w=3840&q=75) Figure 1: Percentage of 10-day periods with Bitcoin returns > 10% This trend is further confirmed by Bitcoin's steadily declining 4-year annualized volatility, which has fallen from over 180% in early 2019 to approximately 60% by late 2025. As volatility compresses, the magnitude of potential returns naturally diminishes, signaling Bitcoin's evolution from a high-growth speculative asset to a more mature digital store of value. ![Bitcoin 4-year annualized volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbitcoin-annualized-volatility.png&w=3840&q=75) Figure 2: Bitcoin 4-Year Annualized Volatility ### The Buy-and-Hold Trap In search of similar outsized gains, many investors have turned to the broader crypto market. Yet most approach it incorrectly. While buy-and-hold strategies may be acceptable for Bitcoin (despite severe drawdowns), they fail almost entirely when applied to the broader crypto universe. Consider this stark example: if you had purchased the 20 largest cryptocurrencies at the market peak in late 2021, only three would have recovered to positive returns by July 2025. The majority suffered deep drawdowns exceeding 70%, with many coins losing over 90% of their value. Table 1: Performance of Buy and Hold on Top 20 Coins in 2021 (returns from 1/11/2021 – 1/7/2025) Coin Return Coin Return XRP 98.54% BTC 74.28% BNB 25.22% XLM -36.14% DOGE -35.53% SOL -23.44% LINK -58.39% ETH -43.40% ADA -72.21% ETC -67.76% SHIB -83.40% FTM -87.98% AVAX -72.05% VET -84.41% ATOM -88.75% MATIC -90.41% ALGO -89.82% DOT -92.04% XTZ -91.41% LUNC -100.00% The results are even worse when examining the Top 50 Binance Futures Index, a daily-rebalanced, equally weighted basket of the top 50 crypto futures available on the world's largest crypto exchange. As illustrated in Figure 3, most cryptocurrencies never recover from major drawdowns and eventually trend toward zero. ![Top 50 Binance Futures Index 2020-2025](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fbinance-top-50-index.png&w=3840&q=75) Figure 3: Top 50 Binance Futures Index (2020–2025) Buy-and-hold strategies may work for Bitcoin, but they are consistently capital destructive in the broader crypto market. Identifying future winners is extremely difficult, and the cost of being wrong is severe, often resulting in permanent capital loss. While Bitcoin's returns gradually diminish, the broader crypto market continues to exhibit high volatility and inefficiencies, which open the door for a fundamentally different approach. ## The Opportunity While buy-and-hold strategies have proven ineffective for the broader crypto market, the same characteristics that make them unsuitable for passive investing—extreme volatility, persistent market inefficiencies, and emotionally driven participants—make them highly attractive for systematic trading. ### Volatility Is Opportunity Crypto remains one of the most volatile and inefficient asset classes globally. Daily price movements of the top 50 Binance-listed futures contracts are often 5–10 times larger than those of major equity indices such as the S&P 500. This elevated volatility creates frequent price dislocations and short-term momentum patterns that quantitative strategies can systematically exploit. ![Daily volatility comparison between top 50 Binance Futures index and the S&P 500](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fvolatility-top-50-vs-sp500.png&w=3840&q=75) Figure 4: Daily Volatility Top 50 Binance Futures Index vs S&P 500 For traditional investors, volatility represents risk. For systematic traders, volatility represents opportunity. Larger price swings generate more frequent and more profitable trading signals, while the crypto market's structural inefficiencies persist far longer than in mature markets. ### Ranking by Relative Momentum An important factor beyond overall volatility is the magnitude of relative performance during market trends. During major market moves, smaller crypto assets tend to significantly outperform larger ones, and ranking assets by relative momentum amplifies this effect even further, as shown in our momentum-ranked performance data in Figure 5. ![Relative momentum of BTC versus top 50 coins and top 20 coins ranked by relative momentum](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Frelative-momentum.png&w=3840&q=75) Figure 5: Relative momentum of BTC vs Top 50 Coins vs Top 20 Coins ranked by relative momentum This combination of high volatility, structural inefficiencies, and behavioral mispricings creates a rare and time-sensitive window for systematic strategies to capture outsized risk-adjusted returns before crypto markets mature further and these inefficiencies diminish. ## Our Approach Our goal is to provide unbiased, market-regime-agnostic exposure to cryptocurrency markets, designed to perform across both bull and bear market conditions. Rather than relying on any single approach, we operate a diversified portfolio of over 20 uncorrelated strategies built on two of the most consistently proven edges in crypto trading. #### Momentum (long & short) Captures upside breakouts and hedges against downward trends. Exploits the strong momentum effect observed in crypto markets. #### Mean reversion (long & short) The most stable edge in crypto, which profits from short-term overreactions and provides stability during non-trending market conditions. ### Strategy Development and Validation Given the limited historical data available for crypto futures, each strategy is grounded in decades of validated out of sample performance from traditional finance, adapted specifically for cryptocurrency market dynamics and continuously monitored under live trading conditions. We maintain benchmark models for each targeted market behavior to validate that live strategy performance aligns with expected outcomes. When live results diverge materially from expectations, we investigate whether the model is accurately capturing the intended market behavior and make appropriate adjustments. ### Dynamic Universe Selection To eliminate selection bias and ensure robust results, all strategies operate on a dynamic universe of the top 50 USDT-settled crypto futures. This universe is reconstituted daily based on volume and liquidity thresholds, ensuring: - Tradability: Only highly liquid instruments are eligible for positions - Bias-free selection: No hindsight or selection bias in universe construction - Market representation: Captures the most actively traded crypto assets - Adaptability: Universe evolves with changing market structure ## The Trading Engine At the core of Robuxio is a proprietary, fault-tolerant trading engine that executes more than twenty uncorrelated, rule-based strategies across a dynamic universe of highly liquid USDT-settled crypto futures. The engine replaces manual fragility with robust execution and scales to thousands of independent client portfolios without compromising discipline or performance. ### Architecture and Execution The engine ingests continuous market data streams. Strategy models evaluate recent and historical context to generate entry and exit instructions. These instructions are broadcast to independent, portfolio-level trading agents. Each agent adapts sizing and constraints to the portfolio's bankroll and policy, ensuring consistent logic with portfolio-specific execution. Execution is liquidity-aware. Orders are sliced, paced, and offset as needed to reduce footprint, preserve fill quality, and remain robust during periods of elevated volatility. Agents run in parallel, allowing thousands of portfolios to operate concurrently under common global rules while remaining isolated from one another. Only assets that meet predefined liquidity are eligible for long or short positions. The tradable universe is reconstituted daily from the currently liquid USDT-settled futures, ensuring eligibility reflects live market liquidity and remains bias free. ### Operational Safeguards A pre-trade risk router validates every instruction before any order is sent. Checks include exposure limits, collateral rules, instrument allow-lists, and venue health. A 24/7 live monitoring layer supervises orders, fills, connections, and data coherence. It detects and corrects anomalies, such as failed settlements, API disruptions, or state mismatches, and maintains alignment through automatic reconciliation and autosync. ### Performance & Latency Core processes run on a high-throughput, low-latency stack and are deployed in close proximity to primary exchange infrastructure. This reduces instruction-to-execution delay and preserves reliability during extreme market conditions. ### Security & Isolation The trading engine runs entirely within a private network, with no public access. Sensitive systems, internal tools, and execution pathways are not exposed to the public internet. Portfolio state and execution records reside behind strict traffic management and access controls designed for low-latency reads/writes under load, ensuring the database remains responsive even at scale. ![System architecture diagram with dual-network infrastructure and security layers](https://robuxio.com/_next/image?url=%2Fimages%2Fwhitepaper%2Fsystem-architecture.png&w=3840&q=75) System Architecture: Dual-Network Infrastructure with Security Layers ## The Portfolios Our flagship offering is our High Sharpe Portfolio, a short-term focused portfolio that combines momentum breakout and mean reversion strategies on both the long and short side. This portfolio is specifically designed to capture short-term profits, even in sideways or non-trending markets. To reduce volatility, it deliberately excludes longer-term momentum strategies. ### Volatility Profiles and Customization The High Sharpe Portfolio is available in two standardized volatility profiles: - High Volatility Profile: Targets higher returns with correspondingly higher volatility for aggressive allocators. - Low Volatility Profile: Emphasizes capital preservation with more conservative risk parameters for risk-averse institutions. Both profiles can be further customized to match specific institutional mandates. ### Collateral Options All portfolios trade USDT-settled futures contracts but offer three distinct collateral approaches: #### USD Stablecoin Collateral Provides pure strategy exposure without additional currency risk, ideal for institutions seeking isolated crypto trading alpha. #### Bitcoin Collateral For institutions wanting Bitcoin exposure plus trading alpha, with profits automatically converted to Bitcoin weekly. These portfolios typically emphasize short breakout strategies to hedge against Bitcoin-specific downside risks. #### Ethereum Collateral Similar to Bitcoin collateral but denominated in Ethereum, suitable for institutions with existing Ethereum allocations seeking enhanced returns through systematic trading. The historical returns of the portfolios are shown in Table 2 below. Detailed portfolio factsheets can be found by clicking on the specific portfolios in the table. Portfolio CAGR Daily Volatility Max Drawdown Sharpe Ratio High Sharpe High Vol - USD 170.87% 2.13% -30.40% 3.42 High Sharpe Low Vol - USD 65.58% 1.05% -17.21% 3.54 Benchmarks Bitcoin 48.00% 3.22% -76.58% 0.95 Top 50 Index -3.07% 4.76% -95.80% 0.44 Table: Historical Performance Metrics of Robuxio Portfolios. Portfolio name colors indicate collateral type: Green (USD), Orange (Bitcoin), Purple (Top 50 Index). All portfolio returns are NAV (01/01/2020 – present). Data refreshed: July 30, 2026 ## Risk Management Risk management forms the foundation of our systematic approach, built to protect capital from both market-wide drawdowns and idiosyncratic cryptocurrency failures (the two largest tail risks in crypto exposure). ### Market-Wide Risk Mitigation - Directional Diversification: Market-wide drawdowns are addressed through combined long and short exposure across our broad strategy set. Our portfolios include over 20 uncorrelated trading approaches designed to generate returns in both bullish and bearish market regimes, limiting directional exposure to any single market trend. - Strategy Correlation Management: All strategies are selected based on rigorous correlation analysis during development, with ongoing systematic monitoring. Returns are improved and drawdown periods reduced by trading a large set of uncorrelated strategies. - Regime Detection: We incorporate regime change detection to identify when market conditions shift significantly, allowing strategies to only take new positions in favorable market conditions. ### Single-Asset Risk Controls - Position Sizing: Each individual trade represents only a small fraction of total portfolio capital, ensuring that no single position can cause significant portfolio damage. - Diversification Requirements: Our dynamic universe approach ensures exposure remains spread across many liquid assets, reducing concentration risk and the impact of any isolated asset failure. - Catastrophic Loss Protection: Black-swan stop-loss mechanisms protect against extreme adverse moves, protocol exploits, exchange delistings, or liquidity collapses. ## Implementation Options Robuxio provides multiple implementation pathways to accommodate different jurisdictions, operational preferences, and business models, ensuring institutional clients and HNWIs can access our systematic trading capabilities through their preferred structure. ### Flexible Portfolio Access - Direct Exchange Connection: Clients can connect their existing Binance or Bybit futures accounts directly to the Robuxio trading engine via secure, trade-only API keys. This approach allows clients to retain full custody of funds while enabling automated execution. - Prime Brokerage Integration: For clients unable to access major crypto exchanges due to regional restrictions or institutional policies, we offer portfolio access through Matrixport, one of Asia's largest institutional crypto prime brokers headquartered in Singapore. ### White-Label Solutions In addition to direct portfolio access, institutions can also white-label the Robuxio trading engine and offer our strategies under their own brand. This option enables banks, brokers, and wealth managers to extend systematic crypto trading to their end clients without building the infrastructure in-house. #### For Banks and Wealth Managers Extend systematic crypto trading to end clients without building infrastructure, with new revenue streams, robust risk controls, and a competitive edge. #### For Asset Managers Launch crypto hedge funds or systematic trading products rapidly, while focusing on client acquisition and leveraging proven trading infrastructure. ## Founders & Executive Team ![Pavel Kýček](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fpavel.png&w=256&q=75) #### Pavel Kýček (CEO & Co-Founder) Pavel brings 18 years of trading experience and a strong background in risk management, having worked extensively in currency hedging for some of the biggest companies in his country. Now fully dedicated to Robuxio, he specializes in building uncorrelated strategies. ![Xavier Fariña](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fxavier.png&w=256&q=75) #### Xavier Fariña (CTO & Co-Founder) A mathematician with advanced degrees in Big Data and Artificial Intelligence, Xavier combines 25 years of IT expertise with a forward-thinking approach to innovation. As a former Software Architect at HP, he excelled in designing complex systems. Now, he masterminds Robuxio's infrastructure and leads a talented development team. ![Dries Van den Broecke](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fdries.png&w=256&q=75) #### Dries Van den Broecke (COO & Co-Founder) As a former Olympic athlete, Dries applies the same resilience and determination from his athletic career to his role at Robuxio. He oversees most operations, connecting all parts of the company to foster a cohesive and innovative environment. His strategic mindset and entrepreneurial spirit drive Robuxio's growth and operational excellence. ![Chris Jack](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fchris.png&w=256&q=75) #### Chris Jack (CGO) As the former lead of Cambridge University's Digital Assets Program, one of the largest global public-private research initiatives, Chris brings deep expertise in digital assets and strategic growth. At Robuxio, he drives all facets of growth, from business development and partnerships to brand strategy, communications, and digital presence, shaping the company's public face and expanding its global reach. Ready to explore institutional crypto exposure? [Book a Call](https://robuxio.com/call)[Contact Us](https://robuxio.com/contact-us) --- # Crypto Performance YTD — Robuxio HV, LV vs BTC Source: https://robuxio.com/crypto/ytd Markdown: https://robuxio.com/crypto/ytd.md Live year-to-date performance of Robuxio Crypto HV (high vol) and LV (low vol) portfolios versus Bitcoin and the Binance Top 50 index. Updated daily. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Dashboard](https://app.robuxio.com/)[Book a Call](https://robuxio.com/call) Live · Year-to-date 2026 # Crypto Strategy Performance YTD Robuxio Crypto HV (High Vol) and LV (Low Vol) portfolios versus Bitcoin and the Binance Top 50 index, rebased to 0% at 1 January 2026. Auto-updates daily with each end-of-day GAV upload. Robuxio Crypto HV +6.86% YTD return Robuxio Crypto LV +4.90% YTD return Bitcoin -27.97% YTD return Binance Top 50 -45.70% YTD return Last upstream update: 29 Jul 2026 · Source: Robuxio internal GAV (HV, LV) + Binance USD-M perpetuals (BTC, Top 50). [View full crypto product page](https://robuxio.com/crypto) for inception-to-date charts and risk metrics. --- # Portfolio Data — Factsheets, NAV, Return Series Source: https://robuxio.com/data Markdown: https://robuxio.com/data.md Per-portfolio factsheets in PDF plus CSV and JSON feeds with daily return series. Current allocation, key metrics and drawdowns for your own modelling. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Datasets # Robuxio Data Robuxio's portfolio factsheets and daily returns — performance data for the systematic crypto and equity portfolios, as CSV, PDF or a JSON API. Last updated: 7/30/2026, 3:17:37 AM [JSON API →](https://robuxio.com/api/data)[Need raw Binance Futures market data? Data Service →](https://robuxio.com/data-service) Crypto ## Crypto Portfolios Systematic crypto strategies — High Sharpe High Vol & Low Vol ### High Sharpe High Vol - [pdf GAV PDF — High Sharpe High Vol USD Since 2022 - GAV.pdf](https://robuxio.com/api/data/files/high-sharpe-high-vol-gav-pdf-since-2022) - [csv GAV CSV — High Sharpe High Vol USD Since 2022 - GAV.csv](https://robuxio.com/api/data/files/high-sharpe-high-vol-gav-csv-since-2022) - [pdf NAV PDF — High Sharpe High Vol USD - NAV.pdf](https://robuxio.com/api/data/files/high-sharpe-high-vol-nav-pdf) - [csv NAV CSV — High Sharpe High Vol USD - NAV.csv](https://robuxio.com/api/data/files/high-sharpe-high-vol-nav-csv) - [pdf GAV PDF — High Sharpe High Vol USD - GAV.pdf](https://robuxio.com/api/data/files/high-sharpe-high-vol-gav-pdf) - [csv GAV CSV — High Sharpe High Vol USD - GAV.csv](https://robuxio.com/api/data/files/high-sharpe-high-vol-gav-csv) ### High Sharpe Low Vol - [pdf GAV PDF — High Sharpe Low Vol USD Since 2022 - GAV.pdf](https://robuxio.com/api/data/files/high-sharpe-low-vol-gav-pdf-since-2022) - [csv GAV CSV — High Sharpe Low Vol USD Since 2022 - GAV.csv](https://robuxio.com/api/data/files/high-sharpe-low-vol-gav-csv-since-2022) - [pdf NAV PDF — High Sharpe Low Vol USD - NAV.pdf](https://robuxio.com/api/data/files/high-sharpe-low-vol-nav-pdf) - [csv NAV CSV — High Sharpe Low Vol USD - NAV.csv](https://robuxio.com/api/data/files/high-sharpe-low-vol-nav-csv) - [pdf GAV PDF — High Sharpe Low Vol USD - GAV.pdf](https://robuxio.com/api/data/files/high-sharpe-low-vol-gav-pdf) - [csv GAV CSV — High Sharpe Low Vol USD - GAV.csv](https://robuxio.com/api/data/files/high-sharpe-low-vol-gav-csv) Equities ## Equities Robuxio Systematic ETI — multi-sleeve equity portfolio ### Robuxio Systematic ETI - [csv NAV CSV (Since 2018) — Robuxio Systematic ETI - NAV.csv](https://robuxio.com/api/data/files/robuxio_systematic_eti.csv) - [csv NAV CSV (Full History) — Robuxio Systematic ETI - NAV Full History.csv](https://robuxio.com/api/data/files/robuxio_systematic_eti_full.csv) - [pdf NAV PDF — Robuxio Systematic ETI - NAV.pdf](https://robuxio.com/api/data/files/robuxio-systematic-eti-nav-pdf) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/data.md) --- # Crypto Market Data Service — Binance Futures | Robuxio Source: https://robuxio.com/data-service Markdown: https://robuxio.com/data-service.md Historical and live Binance Futures market data for algorithmic trading, synced to work with RealTest. 6-month or yearly plans at a fixed all-in price. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Data Service # Crypto Market Data Service Historical and live Binance Futures market data, synced to work with RealTest — the same data that powers Robuxio's systematic strategies. Built for backtesting, research, and live algorithmic trading. 6-month access $125 / 6 months Final price — VAT included where applicable - Historical Binance Futures data - Live market data feeds - Synced to work with RealTest - 6-month access period [Get 6-month access](https://robuxio.com/checkout/data-service-6month) 12-month access $250 / year Final price — VAT included where applicable - Historical Binance Futures data - Live market data feeds - Synced to work with RealTest - 12-month access period [Get yearly access](https://robuxio.com/checkout/data-service-yearly) Subscriptions renew manually — we email you before each period ends, and you can manage everything in the [billing portal](https://robuxio.com/billing). Questions about coverage or formats? [team@robuxio.com](mailto:team@robuxio.com) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/data-service.md) --- # Algorithmic Trading Education Hub Source: https://robuxio.com/education Markdown: https://robuxio.com/education.md A complete curriculum from foundations to running strategies live. The 16-part series, the masterclass, the book, asset-specific playbooks, and interviews. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Education # Learn systematic trading A complete curriculum from foundations to running strategies live. The 16-part series, the masterclass, the book, asset-specific playbooks, and podcast interviews. Start from zero ## Systematic Trading Foundations Sixteen parts covering the absolute basics of systematic trading. Examples use crypto, but the principles carry across every asset class. 16 parts · self-paced - [01 Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling) - [02 Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility) - [03 Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches) - [04 Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following) - [05 Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion) - [06 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading) - [07 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter) - [08 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin) - [09 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale) - [10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases) - [11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing) - [12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy) - [13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing) - [14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio) - [15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns) - [16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [Open the full series →](https://robuxio.com/education/series) Go deeper ## Take The Masterclass [![Robuxio masterclass — Lesson 1 video, taught step by step](https://robuxio.com/_next/image?url=%2Fimages%2Fcourse%2Flessons%2FLesson1.png&w=3840&q=75) Masterclass The Course Video lessons taught step by step in the classroom, with the underlying rules and code for 5 trading strategies and 2 live portfolio examples. Lesson 1 is open to watch. Watch lesson 1 →](https://robuxio.com/course)[The book The Algorithmic Crypto Playbook The full method, written down. Research, backtesting, execution, and portfolio construction, end to end. ![The Algorithmic Crypto Playbook — book cover](https://robuxio.com/_next/image?url=%2Fimages%2Fbookhub%2Fbook.png&w=1080&q=75) About the book →](https://robuxio.com/education/book) Frameworks by asset ## The Playbooks Two asset-specific frameworks: one for systematic crypto, one for systematic equities. [Digital assets · 7 parts Crypto Playbook The structural case for systematic crypto allocation. Why passive breaks down, and the systematic alternative. Read the series →](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Equities · 7 parts Equities Playbook The cost of passive equity exposure, and how rules-based allocation changes the outcome. Read the series →](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure) The Robuxio story ## Interviews & Podcasts Podcast appearances and interviews on systematic trading, updated frequently. [![TraderLion — Systematic crypto trading](https://robuxio.com/_next/image?url=%2Fimages%2Feducation%2Finterviews%2Fpavel-kycek-traderlion-systematic-crypto-trading.jpg&w=3840&q=75) TraderLion Systematic crypto trading](https://robuxio.com/education/interviews)[![The Algorithmic Advantage — Quant crypto trading, end to end](https://robuxio.com/_next/image?url=%2Fimages%2Feducation%2Finterviews%2Fpavel-kycek-algorithmic-advantage-quant-crypto-trading.jpg&w=3840&q=75) The Algorithmic Advantage Quant crypto trading, end to end](https://robuxio.com/education/interviews)[![Better System Trader — Algorithmic crypto trading](https://robuxio.com/_next/image?url=%2Fimages%2Feducation%2Finterviews%2Fpavel-kycek-better-system-trader-algorithmic-crypto-trading.jpg&w=3840&q=75) Better System Trader Algorithmic crypto trading](https://robuxio.com/education/interviews)[![Desire To Trade — Running automated trading systems](https://robuxio.com/_next/image?url=%2Fimages%2Feducation%2Finterviews%2Fpavel-kycek-desire-to-trade-automated-trading-systems.jpg&w=3840&q=75) Desire To Trade Running automated trading systems](https://robuxio.com/education/interviews) [See all interviews →](https://robuxio.com/education/interviews) ## Rather have it run for you? Book a call to see which Robuxio structure fits — crypto or equities. [Book a Call](https://robuxio.com/call)[Explore Robuxio](https://robuxio.com/) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education.md) --- # Algorithmic Crypto Trading I: Trading vs. Hodling | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling Markdown: https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling.md Part 1 of 16. How a simple 50-day moving average beats buy-and-hold Bitcoin by 5x. The foundations series opens with the case for systematic trading. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading I: Trading vs. Hodling Part 1 of 16 • Pavel Kycek • April 7, 2023 Welcome to the first article in our series on [algorithmic crypto trading](https://robuxio.com/education/series)! We decided to publish a series of articles that will show you how to trade cryptocurrencies in a systematic way, using hard statistics instead of relying on the advice of influencers. Today we're going to lay the foundation. I will teach you your first systematic trading strategy and show you how to apply this approach. All this using the specific example of Bitcoin and Ethereum. ## What is systematic trading? It is a way of trading that uses pre-set rules to make buying and selling decisions. It may sound complicated, but the rules of the basic trading system can be simple. And we'll start with one such basic strategy. First take a look at the following chart. It shows Bitcoin and its 50-day moving average. If Bitcoin is growing, it is above this moving average. If Bitcoin is falling, it is below this moving average. Let's try to come up with our first systematic strategy based on this observation. The rules will be as follows: If Bitcoin closes above this moving average on the daily chart, I will buy Bitcoin. If the closing price of Bitcoin is below this moving average, I will close the position - sell Bitcoin. That's it. Conditions: Buy Bitcoin: Close price > Moving Average (50) Close position (Sell Bitcoin): Close price < Moving Average (50) You might be thinking that it's too simple to work. Let’s look at the results of this strategy since November 1, 2017. ![MA50 on BTC](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-01%2Fresults-btc.png&w=1920&q=75) Look at 2 lines in particular. Net Profit % and Annual Return %. The total profit of the strategy is almost five times bigger compared to just Bitcoin hodling. The average annual return is twice as much. 25X vs. 5X! Moreover, you don't need any additional software to use such a strategy. Just a chart and a moving average. Compare the equity curve of the strategy and Bitcoin hodling: ![BTC Moving Average Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-01%2Fbtc-ma-strategy.png&w=1920&q=75) ![BTC HODL](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-01%2Fbtc-hodl.png&w=1920&q=75) The strategy's equity curve grows more steeply and has fewer dips. It could be definitely better. But keep in mind this is a very basic strategy. And even that beats Bitcoin hodling five times. How does such a system work when trading Ethereum? By trading this simple strategy, you could make almost four times more than by hodling. And don't forget that we are still at the beginning of our systematic trading journey. I'll show you the equity chart of this strategy and the price of Ethereum to give you an idea. ![ETH Moving Average Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-01%2Feth-ma-strategy.png&w=1920&q=75) ![ETH HODL](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-01%2Feth-hodl.png&w=1920&q=75) As you can see the strategy works on Ethereum too. This basic trend strategy also works on many other cryptocurrencies, as trend strategies thrive in crypto trading. Later parts of this series explore trend, mean reversion, and breakout approaches in detail. Do you know what is the biggest advantage of systematic strategies for me? That I can rely on them. By testing them on historical data, I can identify their strong and weak points and prepare accordingly. That's why I only trade systematically for many years. As a result, I don't have to rely on the latest hot tips or make emotional decisions about whether to stay in a position or get out. I simply make up a logical system, test it, and then trade it mechanically or automatically. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 1 of 16 [Series All 16 parts](https://robuxio.com/education/series)[Part 2 · Next Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 1 of 16 [1 Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[2 Volatility – Ultimate Reason to Trade Crypto Up next →](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[3 Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[4 Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling.md) --- # Algorithmic Crypto Trading II: Volatility Is the Edge | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility Markdown: https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility.md Part 2 of 16. Why crypto's volatility is a structural edge for systematic strategies, not a risk to avoid. The opportunity passive allocation misses. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading II: Volatility Is the Edge Part 2 of 16 • Pavel Kycek • April 11, 2023 In the previous blog [post](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling) we looked at how a very simple system can significantly increase profits compared to holding the underlying asset. Just by using a 50-day average and one rule, we were able to generate five times more profit on Bitcoin than simply holding ## How is this possible? The reason is simple: due to the huge price volatility of crypto. High volatility is a powerful weapon for traders who know how to use it. The higher the price fluctuations, the more likely it is to close a trade at a big profit. And big profits are important to cover losses, which we can never avoid in trading. ## Volatility Comparison Compare 3 charts - EURUSD, SP500, BTCUSD - where do you think there is the most margin for profit? ![compare volatility - EURUSD, SP500, BTCUSD](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-02%2Fvolatility-comparison.png&w=1920&q=75) Take a look at the chart below to understand how huge the volatility in crypto is. The average daily volatility of the most famous stock index - the [S&P 500](https://www.investopedia.com/terms/s/sp500.asp) - over the last 5 years is 1%. Bitcoin's average daily volatility over the same period is 5%. Bitcoin's volatility is 5X greater! That's a huge difference. This volatility is even more evident in our simple system from the previous blog post.. Using the same rules, starting the test on October 1, 2017, the strategy on Bitcoin had a profit of 25X (or 2400%), while the total profit on the S&P 500 was only 1.34X (or 34%). This shows the incredible difference that can be achieved on a high volatility asset using compound interest strategies! ![Bitcoin](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-02%2Fbtc-drawdown.png&w=1920&q=75) ![S&P 500](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-02%2Fbtc-spy-comparison.png&w=1920&q=75) This, by the way, is also why people in traditional finance automatically take annual profits in crypto above 15-20% as a scam. They are operating in a completely different reality ## Reasons for High Volatility in Crypto - Immature market Crypto is young. It is still looking for its utility and a correct and stable price level. There is always high volatility associated with this discovery phase. This was similar, for example, in the 1970s in the commodities market (such as gold, soybeans or orange juice). Today these are mature markets, but previously their volatility was huge. - Low liquidity market There is a lack of liquidity in crypto. The volumes traded are very low compared to traditional assets. Due to the low liquidity, even relatively small amounts of money can move the market. - Market full of amateurs Crypto is full of small traders who don't know what they're doing. They try to grab any tip and jump on any latest trend. Due to lower liquidity, this simply causes strong moves. - Lack of large institutions and professional funds The lack of legislation and regulation makes it very difficult for large institutions to access crypto. They would very quickly significantly increase liquidity across the sector and reduce volatility. The lack of professional money is our big advantage! - Risk premium due to high uncertainty We often trade small coins of new projects. There is a high risk of crashes. This risk is always offset by high volatility and high profit potential. ## Advantages and Disadvantages of High Volatility The advantage of high volatility is clear. There is a significantly higher return potential. The higher the volatility, the higher the amount of potential profits. This is true if you know how to take advantage of it. We proved this with the example of our system above. The main disadvantage, on the other hand, is the risk of quick and deep losses if you don't know what you're doing. You can see how volatility affects losses in our strategy. The drawdown in the case of Bitcoin is 2.5X greater than in the case of the S&P 500. ![Bitcoin Drawdown](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-02%2Fbtc-drawdown.png&w=1920&q=75) ![S&P 500 Drawdown](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-02%2Fspy-drawdown.png&w=1920&q=75) Fortunately, there are many advanced approaches to reduce these drawdowns, such as portfolio trading. We will discuss these later in this series. Volatility in crypto is a huge advantage. Don't let anyone convince you that you shouldn't trade crypto because of it. But it is a reason why you need to approach trading responsibly and know that you are trading the right way. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 2 of 16 [Part 1 · Previous Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Part 3 · Next Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 2 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[2 Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[3 Trading Approaches Up next →](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[4 Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility.md) --- # Algorithmic Crypto Trading III: Trading Approaches | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches Markdown: https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches.md Part 3 of 16. The three core systematic approaches: trend following, mean reversion, and breakout trading. What each captures, where each breaks down. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading III: Trading Approaches Part 3 of 16 • Dries • April 20, 2023 Let's talk about how trading approaches can be differentiated. There are two primary factors to consider - entry philosophy and holding period. Entry philosophy refers to the criteria used to enter a trade, while holding period refers to how long an asset is held. ## Entry Philosophy and Holding Period - [Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following): Identifies and follows the current trend in the market - Uses a longer holding period to capture larger profits - Positions can be held for weeks or months - [Mean reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion): Believes prices tend to move back towards their mean or average level over time - Uses a shorter holding period to capture small profits - Positions are held for a few days or hours - [Breakouts](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading): Identifies when the price breaks through a key level of support or resistance - Uses a medium-term holding period to capture the momentum of the price movement - Positions are held for a few days or weeks ## Trend Following Trend Following involves identifying the current trend in the market and holding onto it for as long as possible to capture larger profits. This approach is characterized by a longer holding period, with the goal of riding the trend as long as possible and capturing larger profits. The characteristics of trend trading include a lower win rate but larger profits, with a focus on cutting losses and letting winners run. Trend traders often experience high drawdowns and whipsaws when there is no clear trend in the market. Advantages of trend trading include the potential for large profits and the ability to capture long-term trends in the market. Disadvantages include the risk of high drawdowns and the need for patience to wait for trends to develop. Our Trend Catcher strategy is a good example of a Trend Trading Strategy. We use a simple 50-day moving average to identify the direction of the trend on Bitcoin, and with a simple 20-day moving average, we ride the trends on the altcoins. As you can see, our win rate is low (35%), with lots of small losses, but some very big winners to offset them all! Lot’s of winners you can’t even see on the chart because they went up 1000%+ ![Trade Analysis Plots - Trend Catcher](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Ftrade-analysis-trend.png&w=1920&q=75) Here you can see very well that we need a trend in the market to make money, no trend leads to whipsaws and drawdowns in your trading account. ![Equity Curve - Trend Catcher](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Fequity-curve-trend.png&w=1920&q=75) ## Mean Reversion Mean reversion is a type of trading approach where traders aim to take advantage of short-term price movements in the market. The main idea behind mean reversion is that prices tend to move back towards their average or "mean" level over time. This means that if an asset's price has been consistently moving above or below its average level, it is likely to eventually revert back to that average. Mean reversion traders look to identify these short-term price movements and capture small profits. They typically hold positions for only a few days or hours, and their win rate is typically higher than trend traders, but their gains are smaller. However, mean reversion trading can also be riskier, as there may be unexpected market moves. The profitability drops if the market is trending strongly, as the market may not revert back to the mean as quickly or at all. Here is an example of a Mean Reversion trade from our portfolio with the goal to buy pairs that are far below their “mean” level and therefore have a high probability they will revert back up. ![Trade - MeanReversion - FETUSDT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Ftrade-mean-reversion.png&w=1920&q=75) On the win/loss distribution you can see very well that we have a higher win rate. But that is also needed because our wins aren't as big compared to trend trading. ![Trade Analysis Plots - Mean Reversion](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Ftrade-analysis-mr.png&w=1920&q=75) ## Breakout Trading Breakout trading is a strategy that is quite popular among traders. In this approach, traders look for an asset whose price is about to break through a significant level of support or resistance. By identifying such a break, traders hope to capture the momentum of the price movement in the short-to-medium term. Breakout traders usually aim for a higher win rate, although the profits can be smaller than those achieved through trend trading. Many false breakouts can occur, and traders must manage their risk carefully. Despite the risks, breakout trading can be a useful strategy for traders who want to capture short-term price movements in the market. Our Momentum Catcher strategy is very good at catching this momentum, as you can see in the chart below. A strong breakout on Doge and we stay only for a short time in the trade. ![Trade - Momentum Catcher- DOGEUSDT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Ftrade-momentum.png&w=1920&q=75) The win/loss distribution also shows similarities to Mean Reversion, lots of smaller wins, only way more trades because Crypto is a breakout market. ![Trade Analysis Plots - Momentum Catcher](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-03%2Ftrade-analysis-momentum.png&w=1920&q=75) At Robuxio, we believe in a diversified approach to trading, which involves utilizing a portfolio of different trading strategies, including trend trading, mean reversion, and breakout trading. We recognize that "blackbox" trading systems can be difficult for clients to follow, as they lack transparency about how the system should behave. The dedicated articles on trend following, mean reversion, and breakout trading in this series go deeper into each approach's entry philosophy, holding period, risk management, and real-world examples. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 3 of 16 [Part 2 · Previous Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Part 4 · Next Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 3 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[3 Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[4 Trend Following Up next →](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches.md) --- # Algorithmic Crypto Trading IV: Trend Following | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following Markdown: https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following.md Part 4 of 16. The foundations of trend following: how to identify, enter, ride and exit trends systematically in crypto markets. With worked examples. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading IV: Trend Following Part 4 of 16 • Pavel Kycek • May 2, 2023 Trend trading, also known as trend following, is the most basic and robust form of trading. The basic principle of trend following strategies is to capture a trend and stay with it for as long as possible while cutting the losers short. As the well-known systematic trader Nick Radge puts it, “Trend following is like hitchhiking. When you hitchhike, you don't know who will pick you up or where they're going. Similarly, in trend following, you don't know when a trend will start or where it will take you, but you can identify the trend and ride it until it ends.” Prefer to watch? This article is also available as a video above — the full trend-following walkthrough from the Robuxio channel. ## Is the trend following on cryptocurrencies profitable? Absolutely! And a lot! For trend following to be profitable, it needs strong trends. Cryptocurrencies can trend strongly, and trend following is probably the most profitable approach for trading them. However, it does have its pitfalls. ## What exactly is a trend? The trend phase of the market is the opposite of a sideways-moving market. A trending market creates a series of new highs and lows and moves in a certain direction, either up or down. According to most sources, the market is in a trending move only 20%-30% of the time, with the remainder of the time being mostly sideways movement. ![Trending Market](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-04%2Ftrend.png&w=1920&q=75) ## How to identify a trend? The basis of trend trading is trend identification. It should be as simple as possible. Ideally, you want to get into all the stronger trends on a given coin. Basic approaches: - Crossing the Moving Average - The candle closes above its moving average. - Crossing Moving Averages - The faster moving average crosses the slower moving average ![Dual Moving Average strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-04%2Fdual-ma.png&w=1920&q=75) - Using the MACD indicator to identify a rising market. - Tracking the rate of change over a period of time. - Breakout of X days range. There are really a lot of approaches, and in the long run there really isn't that much difference between them. ## What are the best trend following strategies for cryptocurrency trading? There are many strategies. Among the most popular are: - Moving Average Crossover - Enter when the price crosses the moving average to the upside. Exit when it closes below the moving average. An example is our Trend Catcher strategy. - Dual moving Average - Enter when the quicker moving average crosses the slower one. - Bollinger Band Breakout - The long trade is open when the candle closes above the upper channel A trailing stop loss based on the moving average is usually used to close the trade. ![Bollinger Bands strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-04%2Fbollinger-bands.png&w=1920&q=75) - Donchian Channel Breakout - Very similar to Bollinger Band Breakout. This channel just does not account for volatility. It is purely about High or Low breakouts over the last e.g. 40 days. ## Basic characteristics of trend following A large number of small losses, and this is why so many people don't stick to trend following. Normally, 65%-70% of all trades result in small losses. However, when profits do occur, they can be many times bigger than losses. This is why it's crucial not to exit a trade too early since the profits have to make up for many smaller losses to generate profit. One good trend pays for them all! The chart below shows our Trend Catcher strategy. One dot is one trade. There are many more red dots than green ones. And yet this strategy is one of our most profitable! ![Trend Catcher: Wins vs. Losses](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-04%2Ftrend-catcher-trades.png&w=1920&q=75) ## Trend followers like to keep things simple! Yes. This is absolutely true. You need to keep things simple to be sure that if a trend occurs, you will be in the trade. The worst that can happen is that you don't participate in the biggest trend of the year because of another fancy filter. ## Risk management in Trend Following In trend trading you have a large amount of losses. They often follow each other, especially if the market is in a trendless phase. This is called a whipsaw. Such a period is characterized by a deeper drawdown. Therefore, several points are absolutely crucial: - Do not use the leverage - Even without the leverage, drawdowns are in the tens of percent range trend following on cryptocurrencies. You don't want to increase them any further. - Do not use stop-losses, or use very wide stop-losses - I know, this is a little controversial. But the market needs to have enough room to breathe so that the trend can further develop. But that doesn't mean you shouldn't have a fixed exit strategy! - Don't rely on the trend on one coin. Diversify! - Divide your trend trading account into several smaller parts, e.g. ten. And trade one coin with each part. You never know where the trend will show up.Large systematic trend trading funds trade dozens of assets at a time. They simply want to catch all available trends. ## Results of algorithmic trend following on cryptocurrencies. You can compare the results of our trend following strategy (Trend Catcher) on Bitcoin or Ethereum. Profits are several times higher than holding and drawdowns are almost 30%-40% lower. I also composed a small portfolio here where we would trade Bitcoin and Ethereum each with half of the account. The drawdown is slowly starting to decrease and the profit is still very good. ![Trend Catcher vs. Holding](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-04%2Ftrend-catcher-results.png&w=1920&q=75) ### What are the pros of Trend following? - A very robust approach proven over decades. - Highly profitable approach. - Very simple trading style. ### What are the cons of Trend following? - Many losing trades. - You can wait a very long time for a trending period. - Psychologically challenging type of trading. ## Is trend following for you? Based on the pros and cons described above, you can decide whether you are patient enough to follow the strategy in the long term. You need to leave your personal opinions at the door and take every signal. Do you want to be right or make money? Our philosophy is to have Trend following strategies ALWAYS included in the portfolio of many different strategies. When trend following trading is doing well, the profits are enormous. In fact, trend following works very well with mean reversion strategies in a diversified portfolio. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 4 of 16 [Part 3 · Previous Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Part 5 · Next Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 4 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[4 Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Mean Reversion Up next →](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following.md) --- # Algorithmic Crypto Trading IX: Martingale vs. Anti-Martingale | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale Markdown: https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale.md Part 9 of 16. Martingale vs anti-martingale position sizing: why pyramiding into winners (not losers) is the right systematic playbook. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading IX: Martingale vs. Anti-Martingale Part 9 of 16 • Dries • July 25, 2023 In trading, it's not just about making good trades. It's also about managing your money effectively. That's because even if you have a great trading strategy, you can still lose money if you don't manage your risk properly. One of the most important aspects of money management is choosing the right approach. There are two main types of money management philosophies: Martingale and Anti-Martingale. ## Martingale Money Management The Martingale strategy is based on the [gambler's fallacy](https://www.investopedia.com/terms/g/gamblersfallacy.asp#:~:text=What%20Is%20the%20Gambler's%20Fallacy,event%20or%20series%20of%20events.), which is the belief that if you keep doubling down on your bets, you're eventually bound to win and recoup your losses. For example, if you lose a trade with a $100 position size, you would increase your position size to $200 on the next trade. If you lost that trade as well, you would increase your position size to $400 on the next trade, and so on. The idea is that eventually, you're going to win a trade and your losses will be recouped. However, this strategy is very risky. If you have a string of losses, you will end up blowing your entire account. Most people get lured into using a Martingale money management because it creates such a perfect equity curve until it fails. I made an analysis on a system that has a win rate of 60%, using 100 USD as the initial position on a starting budget of 1000 USD. ![Martingale Trading Strategy Simulation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fmartingaletest1.png&w=1920&q=75) Managed a really nice rally of 350+ trades until it died. Let’s do another run of the test, as we used a random distribution of wins of the strategy we will have different results every time I run it. ![Test 2](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fmartingaletest2.png&w=1920&q=75) That one didn’t survive long 🙁 ![Test 3](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fmartingaletest3.png&w=1920&q=75) Wow! Looks like we got lucky and managed to stay in the game for almost 1300 trades. But do we really want to rely on luck when trading? As you can see you can be as lucky as you want with a martingale strategy but you will always end up ruined! The same can be said for highly leveraged DCA (Dollar Cost Averaging) strategies used by traders in the crypto community. Traders keep buying into a downtrend to lower their average entry price, intending to sell with a small profit afterward. However, as they continue to DCA, their position sizes become larger and larger compared to their overall account balance, which significantly increases their risk. They end up risking their entire account for only a small potential gain. Furthermore, as we have witnessed in past bear markets, many of these altcoins never bounce back and eventually die out, so does their account, mostly even faster. ## Anti-Martingale Money Management No worries! There's a smart strategy called Anti-Martingale money management. Here's how it works: when you lose money, it tells you to bet less next time. This way, you protect your money when things are tough. But when you're winning, it says to bet a little more. Let’s test this theory in a simple strategy: - again 60% win rate - 10% position sizes - if you lose, they get automatically smaller; if you win, they get bigger in USD terms - percentage remains the same, 10% of the account - 1:1 [risk reward ratio](https://www.investopedia.com/terms/r/riskrewardratio.asp#:~:text=The%20risk%2Dreward%20ratio%20is,investment%20without%20undue%20risk%2Dtaking.) Let’s do 100 trades: ![Test 1](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fanti-martingaletest1.png&w=1920&q=75) The equity curve already looks much different. We make some money, then we lose all what we made and go into a pretty deep drawdown, but in the end we end up in very good profit after 100 trades. Probably many new traders would have given up on the strategy after 30 trades and looked for a new strategy. Let's do another simulation: ![Test 2](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fanti-martingaletest2.png&w=1920&q=75) This one almost hurts! How is this even possible, same parameters, same probabilities? Let's test on a bigger sample size. You should always think about the next 1000 trades ![Test 3](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fanti-martingaletest3.png&w=1920&q=75) Looks like we survived some wild volatility in the portfolio, but due to the anti martingale we stayed in the game. For the sake of the experiment, we used a volatile example to demonstrate the effectiveness of the Anti-Martingale strategy. Let’s go bonkers and try 10 000 trades and see if we are still in the game! ![Test 4](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-09%2Fanti-martingaletest4.png&w=1920&q=75) The numbers are so big that they barely fit on the screen, but we are still in the game. No matter how many simulations I do, we stay in the game every time and witness this hockey stick. [Compounding](https://www.investopedia.com/terms/c/compoundinterest.asp) in anti martingale money management allows traders to grow their profits exponentially over time. This is because the profits from each trade are compounded on the profits from previous trades. On the other hand, anti-martingale protects you in drawdowns. Instead of trading larger positions and trying to recover the loss, you trade smaller positions. This effectively reduces drawdowns in dollar terms. ## Conclusion The comparison between Martingale and Anti-Martingale money management clearly shows the advantages of the latter. While Martingale may initially create the illusion of a perfect equity curve, it is highly risky and can lead to account ruin. On the other hand, Anti-Martingale's smart approach of adjusting bet sizes based on wins and losses allows traders to manage risk effectively, withstand market volatility, and compound profits over time. Martingale is the fastest most guaranteed way of ruin Doing the opposite makes you capture the upside of compounding while minimizing the risk of ruin [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 9 of 16 [Part 8 · Previous Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Part 10 · Next Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 9 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases Up next →](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale.md) --- # Algorithmic Crypto Trading V: Mean Reversion | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion Markdown: https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion.md Part 5 of 16. Mean reversion in crypto: when prices stretch beyond fair value, the conditions that signal a reversion trade, and the systematic rules. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading V: Mean Reversion Part 5 of 16 • Dries • May 24, 2023 Mean reversion is a statistical concept that states that extreme values are not sustainable and tend to revert back to the mean over time. In other words, if something is too high, it will eventually go down, and if something is too low, it will eventually go up. Similar to the behavior of a rubber band, stretch too far out and it will snap back. ![Mean Reversion example](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fmean-reversion-example.png&w=1920&q=75) Mean reversion is also called counter trend trading because you trade against the current trend, so you could say it is the opposite of [trend following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following) where we follow the trend. ## How Does Mean Reversion Work? Mean reversion strategies involve identifying assets that are trading at extreme levels, either overbought or oversold, and taking positions in the opposite direction, Mean reversion strategies are often counterintuitive. The best entries are those that are against a strong move. The longer and more intense the move, the better. Emotions can play a big part here. Look at the huge drop after which the system entered a long position. ![Mean Reversion Trade on FETUSDT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fmr-trade-fetusdt.png&w=1920&q=75) Could you have entered discretionary here? Imagine the strong emotions. Buying into extreme weakness may create doubts and make you question if you are making the right decision. That's why it is best to only trade mean reversion systematically, relying on statistics and probabilities, rather than your gut. However, the reward for such entries is a relatively high probability of wins, with around 60% to 70% of all trades being successful. As shown on the scatter plot, there are significantly more green (profitable) trades. ![Trade Analysis Plots - Mean Reversion](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fmr-analysis.png&w=1920&q=75) Occasionally, you may also encounter a larger losing trade, like the one on LUNA. ![Mean Reversion trade on LUNAUSDT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fmr-trade-lunausdt.png&w=1920&q=75) It resulted in a whopping 52% loss, but this loss is relatively harmless to our portfolio because other positions in our mean reversion system snapped back up. ## Stop losses and mean reversion In almost all backtests, stop-loss orders don't work well with mean-reverting strategies. Using stop losses can harm the strategy unless you set a very wide stop loss. However, if your stop loss is very wide, then you, in reality, don’t have a stop-loss. Shorts are an exception to this rule. You don’t want to stay in a coin that makes 5X overnight. ## Factors that Affect Mean Reversion For mean reversion to be profitable, the market needs to exhibit a tendency to revert back to the mean. In certain market conditions, mean reversion strategies may face challenges. For example, in 2022, many stocks and cryptocurrencies experienced prolonged deviations from their means, making long mean reversion strategies less profitable than usual. Results of systematic mean reversion trading on cryptocurrencies. See here the results of a basic Mean Reversion long and short strategy on BTC compared to hodling BTC. ![MR on BTC only](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fbtc-only.png&w=1920&q=75) As you can see, the strategy is relatively stable but not as profitable as simply hodling BTC since late 2017. Main reason being the low number of trades. BTC alone cannot generate many trades; otherwise, we would not be trading extreme levels. The average use of the capital is below 3%. So let’s trade the liquid universe of Binance pairs to find more extreme levels. ![MR on liquid Binance universe](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fbinance-universe.png&w=1920&q=75) This approach looks way better. 10 times the amount of trades, almost 10 times the amount of profit and outperforms BTC. Max drawdown was -29%, compared to the -83% drawdown on BTC our small MR portfolio did pretty good. But still only 6.5% of the time was our capital at work. This makes it very interesting to use the same capital also for a different kind of trading approach. ## How to Use Mean Reversion in Trading Mean reversion can be a valuable addition to a trading portfolio, especially when combined with trend following strategies. By incorporating mean reversion, the overall portfolio's stability can be improved, as it typically exhibits a low correlation with other trading approaches. Introducing mean reversion helps smooth the volatility of the equity curve, providing a more consistent return profile as you can see on the graph below. ![Mean Reversion with Trend Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-05%2Fmr-portfolio-with-trend.png&w=1920&q=75) Profit just explodes, while volatility on the equity curve decreases. Max drawdown is now down to -20%. The trend strategy brings in the big bucks, but the mean reversion strats keep pushing the portfolio higher and higher, while reducing the volatility. Lots of capital is ready for the next big trend, thanks to our mean reversion strategies, we won’t suffer from those long dull whipsaw and drawdown periods trend trading has. ## The Risks of Mean Reversion Trading While mean reversion strategies are profitable, they are not without risks. In volatile markets, especially like the crypto market, outliers and abnormalities may not always return to normal. There is a possibility that extreme price deviations can continue to extend, leading to big losses if not managed properly. Risk management is crucial in such scenarios to mitigate potential losses. ## What are the pros of Mean Reversion? - High winning percentage - Short holding period - Portfolio stabilization - Low average use of the trading capital ### What are the cons of Mean Reversion? - A lot of times, this technique is employed when the market is in a bad state. It can be hard to stick to the system and push the button to place the order. - Prone to curve fitting (covered in Part XIII of this series on robustness testing) - Low number of trades on a single symbol - Needs a market that reverts back to the mean ## Is Mean Reversion trading for you? Mean reversion strategies are very important diversifiers in a broader trading portfolio. If you use these strategies, you need to be systematic and trade real extremes where the probability of a profitable trade is quite high. Although trend and breakout strategies make the most money in crypto, using mean reversion strategies is definitely a smart idea. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 5 of 16 [Part 4 · Previous Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Part 6 · Next Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 5 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading Up next →](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion.md) --- # Algorithmic Crypto Trading VI: Breakout Trading | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading Markdown: https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading.md Part 6 of 16. Breakout trading systematically: identifying high-quality price breaks, position sizing the entry, and avoiding the false-breakout trap. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading VI: Breakout Trading Part 6 of 16 • Dries • June 5, 2023 Breakout systems are based on the idea that if the market makes a move from a previous price level, it is likely to continue moving in the same direction. This continuation may only last for a short period of time, but it can be enough to make a profit. In a breakout system, you always enter a trade in the direction that the market is moving at the time. The idea is that momentum tends to precede price, so if the market is moving up, it is likely to continue moving up for a while. ![SHIBA Breakout Trade](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fshiba-breakout.png&w=1920&q=75) Another principle of price behavior in breakout systems is that the market tends to alternate between periods of equilibrium and disequilibrium. When the market is in equilibrium, supply and demand are balanced, and prices are stable. However, when the market is in disequilibrium, supply and demand are unbalanced, and prices are volatile. Breakout systems take advantage of this volatility by entering trades when the market breaks out of a period of equilibrium. By understanding these principles, you can create breakout systems. ## How to identify potential breakout trades Technical analysis can be used to identify support and resistance levels, as well as other indicators that may signal a breakout is imminent. However, we in systematic/algorithmic trading are reactive to price action, as opposed to the predictive styles of the popular TA gurus on YouTube or Twitter. In the end, we look for price action that breaks through channels or levels. We can use plenty of methods to find those levels, such as a Donchian channel, Bollinger bands, Keltner channel, and many more. Even the popular ascending triangle used by TA magicians could do a good job, but it is difficult to test it in an exact systematic way. Instead we could try to code the contraction of volatility together with a breakout out of the trading range. The volatility contraction means the market finds it equilibrium and the breakout afterwards means people don’t agree anymore with that price level. ## Let's create a ridiculously simple long breakout strategy: We learned that the very basics of a breakout strategy are the following: it needs to break through a level of a trading range, and we only hold it for a short time. So let’s try exactly that! Entry: The highest high of the last 30 days. Exit: After 3 days on the close. Let's see how it performed on BTC: ![BTC BREAKOUT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fbreakout-example.png&w=1920&q=75) Not bad! This strategy has only a 22% drawdown, compared to the 83% drawdown when HODLing, with a 60% win rate and only 17% of the time in the market. Let's see how it does on meme coins. ![SHIBA BREAKOUT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fshiba-breakout.png&w=1920&q=75) Shiba was listed late on Binance, so we don't have much data. However, it also looks promising here. ![DOGE BREAKOUT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fdoge-breakout.png&w=1920&q=75) In Doge, we observe more chop, but that is to be expected with such a volatile coin. Just one last picture to demonstrate how this super simple strategy would perform when running it as a portfolio with a maximum of 10 positions on a wide universe on Binance. ![PORTFOLIO BREAKOUT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fportfolio-breakout.png&w=1920&q=75) Our capital is only used 18% of the time, with a drawdown of less than 20%. Combined with trend and mean reversion strategies from earlier in this series, you can push a portfolio to the next level. ![SCATTER PLOT](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-06%2Fscatter-plot.png&w=1920&q=75) Here is the scatter plot. You can already recognize that this does not look like Trend Following or Mean Reversion. It has a moderate to high win rate with a wider range of returns on the upside and downside. You should not forget that we are buying coins that are out of equilibrium, and they tend to be very volatile. The best breakouts will not give you retracements to enter; you are either on board or you are not. Those strong breakouts mostly turn into trends, which we can pick up and ride with our trend following systems. ## The Risks of Breakout Trading Breakout systems will perform really well during volatile bull markets, but they get whipsawed in low volatile choppy markets with many false breakouts. You will buy many times the highs or sell the lows with this kind of system. Risk management is crucial with breakout strategies, definitely in Crypto. Everyone knows that those coins can go to the moon and back in a matter of days. Diversify and keep the position sizing reasonable, otherwise your account will get chopped to zero pretty fast. ### What are the pros of Breakout strategies? - Very profitable in volatile or bull markets. - Very active strategy on multiple markets. (Pro when you are automated) ### What are the cons of Breakout strategies? - Struggles in choppy, less volatile markets. - Slippage risk. Fast market conditions or thin orderbooks can cause bad fills. - Very active strategy on multiple markets. (Con when you are not automated) ## Is Breakout trading for you? If you want to make money in crypto algorithmic trading breakout strategies should be at least a part of your portfolio. Crypto is well-suited for them due to its volatility. Moreover, unlike trend strategies, breakout strategies have a higher probability of profitable trades. This also makes them less psychologically challenging to trade. We like to combine them in broader portfolios, for example with mean reversion strategies. As with all the other approaches we mentioned in this series, you need to have absolute confidence in the statistics and robustness of your strategy to keep pushing the buttons day after day. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 6 of 16 [Part 5 · Previous Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Part 7 · Next Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 6 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter Up next →](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading.md) --- # Algorithmic Crypto Trading VII: Regime Filter | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter Markdown: https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter.md Part 7 of 16. Regime filters: how to systematically detect bull, bear, and sideways markets and switch between trend-following and mean-reversion. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading VII: Regime Filter Part 7 of 16 • Dries • June 23, 2023 Earlier in this series, we discussed why trading crypto and adopting a systematic/algorithmic approach can be beneficial. This article focuses on the regime filter. ## Why do you need a regime filter? Developing a strategy that works in all market conditions is challenging. In this blog, we will demonstrate how to create a basic regime filter that can help identify bull and bear markets in crypto. A regime filter determines the broader market trend. Certain strategies perform better when aligned with this trend. For example, being long on crypto when the broader market is trending up, but staying in cash when the broader market trend is down. This concept is not new and has been used for decades in the stock market. For those trading [S&P 500](https://en.wikipedia.org/wiki/S%26P_500) equities, the 200-day moving average (MA200) is the most popular regime filter for the index itself. It's as simple as identifying a bull market when the price is above the MA200 and a bear market when it's below. Let's compare the results of the regime filter on the index to a buy and hold approach. ![MA200 on S&P 500](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Fsp500-200m.png&w=1920&q=75) ![Buy and Hold Approach](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Fsp500-buy-and-hold.png&w=1920&q=75) It's evident that using the regime filter can reduce risk, minimize time spent in the market, and experience lower drawdowns. Although the absolute profit is lower, you won't be tempted to sell your shares during a 50%+ drawdown, unlike with a maximum drawdown of 21% when using the MA200. ## Applying the Regime Filter to Crypto Trading In this blog, we will keep the focus on crypto and simplify the concept as much as possible. I will show you how to create a favorable regime for trading crypto. To quote one of America's most successful stock traders, [Mark Minervini](https://twitter.com/markminervini): "To trade with ease, you must learn to wait patiently until the wind is at your back. Why not wait for a breezy day to set sail?" ## The Influence of Bitcoin on the Market In the crypto world, everyone claims that Bitcoin is king and the market follows its lead. Let's find out if this is really the case and if we can utilize it to determine the broader market trend. So, let's conduct a quick test. For this test, we will use the spot non-survivorship bias data from Binance (we will explain this concept in detail later in this series). We will also employ a simple moving average, which is popular in stock trading, as a regime filter. Let's use the 50-day moving average (MA50) for crypto since a shorter moving average suits the volatile and fast-moving crypto market. ![MA50 on BTC](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Fma50-btc.png&w=1920&q=75) You might think it's too simple to work. However, let's examine the results from November 1, 2017, onwards on BTC only. ![MA50 on BTC](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Fresults-btc.png&w=1920&q=75) We outperform holding BTC by 5 times, indicating that it definitely works in identifying trends in BTC. It's also the most basic form of a [trend following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following) strategy. Now, let's return to our experiment to see if BTC influences the market. To test this theory, we will buy the top 15 most traded pairs on Binance when BTC closes above its MA50 and sell when BTC closes below its MA50. This should provide a clear indication of whether the wind is in our favor or not. ![Top 15 if BTC > 50ma](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Ftop15-regime-test.png&w=1920&q=75) Look at this! We are in the market 45% of the time and experience approximately 55% drawdown, which is much lower than the buy and hold approach. We can verify if this regime offers favorable trading conditions by reversing the buy and sell conditions. ![Top 15 if BTC It's evident that it's not a good time to buy crypto when BTC is below its MA50. Theory is confirmed: BTC is king and dictates the market! Imagine how much easier you made it yourself when creating a strategy to find good entries to buy or short, when you already gave yourself such favorable regimes! ## Regime filter on a Mean Reversion strategy Now, let's test this entire approach on a classic [mean reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion) strategy called RSI2 by Larry Connors. The conditions for this strategy are quite simple: Buy: RSI(2) < 5 and the regime is bullish. Exit: Close price (C) > 5-day moving average (MA5). Let's test it on a small portfolio of 5 pairs, prioritizing the entry of pairs based on the highest trading volume on Binance. First, let's test it without the regime filter: ![RSI2 no regime filter](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Frsi2-without-regime.png&w=1920&q=75) And now, let's test it with the regime filter: ![RSI with regime filter](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-07%2Frsi2-with-regime.png&w=1920&q=75) ## Conclusion You can clearly see how trading with the wind at your back can be incredibly helpful. By incorporating a regime filter that aligns with the broader market trend, you can significantly improve your trading outcomes. It allows you to take advantage of favorable conditions and avoid unfavorable ones. It's important to note that while we demonstrated a straightforward method to create a regime filter in this blog, there are many other ways to determine a regime. In conclusion, the regime filter is a valuable tool in algorithmic crypto trading. It helps identify bull and bear markets, reduces risk, minimizes drawdowns, and improves overall trading performance. Waiting for the wind to be at your back can make all the difference. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 7 of 16 [Part 6 · Previous Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Part 8 · Next Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 7 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin Up next →](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter.md) --- # Algorithmic Crypto Trading VIII: Risk of Ruin | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin Markdown: https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin.md Part 8 of 16. Risk of ruin: the math behind drawdown survivability, why position sizing matters more than win rate, and how to never blow up. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading VIII: Risk of Ruin Part 8 of 16 • Dries • July 7, 2023 Before we delve into more specific topics, it's important to grasp the basic concept of the "risk of ruin." Algorithmic or systematic trading is a long-term game, where the law of large numbers comes into play. The key is to stay in the game, and the risk of ruin informs us about the likelihood of being unable to do so. Larry Hite, a pioneer in systematic trading, sums it up simply: "I have two basic rules for winning in trading and life: 1. You have to place bets to have a chance of winning. 2. If you lose everything, you can't continue playing." By understanding the concept of risk of ruin, traders prioritize capital preservation. If you lose all your capital, you're out of the game, unable to seize future trading opportunities. Recognizing the potential for ruin allows you to approach trading rationally, reducing the likelihood of making impulsive and emotionally driven decisions that can further increase the risk of ruin. ## Analyzing Risk of Ruin with a Simple Example Imagine you're the owner of a small-town casino with a budget of $1M, determined to keep your business thriving. Let's explore two scenarios involving the game of roulette, with a focus on ensuring the casino's financial stability. ![USA roulette](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-08%2Froulette.png&w=1920&q=75) In a game of roulette, the chance of correctly guessing the color depends on the specific version being played. In the American version of roulette, there are 38 total slots, including 18 red slots, 18 black slots, and 2 green slots (representing 0 and 00). Therefore, the probability of guessing the correct color (red or black) is calculated as follows: Number of favorable outcomes (red or black): 18 Total number of possible outcomes: 38 So, the probability of getting the correct color is: 18/38 ≈ 47% As the casino owner, you have an edge over your customers. With a 53% probability of winning, theoretically, for every $100 your customers play, you should make $3. Sounds promising, right? Now, let's move on to analyzing the risk of ruin in two different scenarios where players pick a color. -Scenario 1: A single customer with a budget of $1M, betting all the money on a chosen color. -Scenario 2: 10 customers with a budget of $100,000 each, playing at different tables, also betting all their money on a chosen color. As a responsible casino owner, it's important to assess the risks associated with different scenarios. Should you allow scenario 1 in your casino? In this case, the risk of ruin is quite high at 47%. This means that there is a 47% chance that you have to pay out the customer the entire one million dollars, which would ruin your casino's budget, forcing you to file for bankruptcy. Considering this high risk, it would be wise to avoid allowing this scenario in your casino. Instead, scenario 2 offers a more sustainable approach, safeguarding your casino's financial well-being and minimizing the chances of significant losses. The chances of getting ruined in this case are only 0.05%. Calculation of risk of ruin = (Probability of losing a single bet)^(Number of bets) Calculation of risk of ruin = 0.47^10 = 0.05% ![% Risk of Ruin](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-08%2Frisk-of-ruin.png&w=1920&q=75) ## Trading consequences Calculating the risk of ruin for roulette is simple. You know in advance the probability of winning and especially the size of the profit and loss. Trading is a bit more complex and there are several ways of doing this calculation. Without describing them specifically, the following rules apply for reducing the risk of ruin: - The less capital you risk per trade, the smaller your risk of ruin. - The more coins you trade at one time within a single strategy, the lower your risk of ruin. - The more uncorrelated strategies you have within your trading portfolio, the further you minimize your risk of ruin. From the points above, you can see that if you want to protect your account, it is important to properly spread your portfolio across multiple uncorrelated strategies. In doing so, each strategy should have its capital split into multiple smaller positions. In a portfolio constructed this way, the probability of risk of ruin drops to a minimum. ## Conclusion In trading, people often say that having an edge is all you need to be profitable. But as we've seen in this blog, that's not the whole story. Even with an edge, there's still a chance of ruin. That's where risk management comes in. It's essential for long-term trading success. Just like a casino owner needs to consider the risk of ruin despite having an edge, traders must prioritize risk management. Without it, you could lose everything, and that's not what we want. Later parts of this series cover position sizing, portfolio construction, and drawdowns in more detail. In trading, it's not just about having an edge—it's about smart risk management for lasting profitability. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 8 of 16 [Part 7 · Previous Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Part 9 · Next Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 8 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Martingale vs. Anti-Martingale Up next →](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin.md) --- # Algorithmic Crypto Trading X: Trading Biases | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases Markdown: https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases.md Part 10 of 16. The biases that ruin backtests: survivorship, hindsight, look-ahead, curve-fitting, and how to design systematic strategies without them. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading X: Trading Biases Part 10 of 16 • Dries • July 28, 2023 Before jumping in to create and use a trading strategy, it's crucial to understand the traps in backtesting. Be aware of the different biases and errors that can sometimes give misleading or overly optimistic results. In this blog, we'll shed light on some of the most common biases that can affect trading strategies, and share how to minimize their impact. ## The Common Biases in Trading Strategies: - Survivorship Bias - Hindsight Bias - Sample Bias - Selection Bias - Look Ahead Bias - Recency or Market Condition Bias - Curve Fitting and Data Mining ## Survivorship Bias Survivorship bias occurs when backtesting is conducted only on assets that have survived until now, neglecting those that were delisted , as well as those that performed poorly and lost prominence over the years. This can make your strategy look better than it actually is. To steer clear of survivorship bias, it's crucial to approach backtesting as if you had absolutely no idea what the future would bring at the time you placed each trade. You should imagine that you had no knowledge of which coins would succeed or fail in the long run. You should adopt a systematic approach that selects assets based on the data and information available at that specific time. For example, if you backtest your strategy using only the top 10 coins currently, you may miss many coins that were once in the top 10 but have since disappeared from the market. These may include coins like [LUNA](https://www.coindesk.com/learn/the-fall-of-terra-a-timeline-of-the-meteoric-rise-and-crash-of-ust-and-luna/), FTT, EOS, BSV, and others, which might have faded out due to being delisted or losing popularity. However, they would have been part of your consideration if you had been trading or conducting backtests during their heyday. Here's an illustrative example with our Trend Catcher strategy: ![Survivorship Bias](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-10%2Fsurvivorshipbias.png&w=1920&q=75) The blue graph represents the backtesting of the Trend Catcher strategy on the current top 10 assets, hence this backtest suffers from survivorship bias. We only tested on the assets that eventually became successful, naturally leading to an impressive performance. The backtest started when these assets were relatively unknown, and now they are among the top 10. The green line, on the other hand, presents the accurate method of backtesting, and the only realistic trading scenario given the information available at that time. Trades were only made on the top 10 assets of that period. It’s a pretty big difference, no? 4 times less profit, 15% more drawdown, profit factor is almost half. This leads us directly to our next bias. ## Hindsight Bias Hindsight bias is the trap of thinking past events were more predictable than they really were. It leads to overconfidence and could make traders believe they can handpick coins for their strategies, convinced that certain coins were destined to perform well, and disregarding the ones that didn't. This mindset neglects the unpredictable nature of the market, and such selective analysis can lead to biased results. Consider an example of a simple[Bollinger Band](https://www.investopedia.com/terms/b/bollingerbands.asp) breakout strategy implemented on Ethereum (ETH) since 2017. ![Bollinger Band ETH](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-10%2Fbollingerbandeth.png&w=1920&q=75) Now, compare it with the same strategy applied on [IOTA](https://www.tradingview.com/chart/?symbol=BITFINEX%3AIOTUSD): ![Bollinger Band IOTA](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-10%2Fbollingerbandiota.png&w=1920&q=75) Both of these coins were in the top 10 at the start of 2018. However, people often boast about their single-coin strategies on assets like ETH that have consistently trended well. At the same time, they completely ignore results of the same strategies on coins that have largely faded into obscurity, like IOTA. To ensure a robust strategy, it's crucial to test it across a wide universe of multiple coins. To sum it up, the Bollinger Band strategy in this case wasn’t always the best fit when you use it on a lot of different assets. Sure, if we knew which coins would do the best in the next five years, we'd put all our money into them. But knowing that beforehand is just hindsight bias. Unfortunately, we can't see the future when we're trading in real time. This leads us again directly to our next bias! ## Sample Bias Similar to survivorship bias, sample bias occurs when certain coins are intentionally included or excluded from the test based on their past performance. This cherry-picking of data skews the test results and leads to misleading conclusions. For instance, traders might be tempted to favor coins that fit well with their strategy, including them in the backtest while ignoring the underperformers, simply because they'd spoil their backtest results. However, this makes absolutely no sense, as we have already learned that we should always backtest as if we had no idea what the future brings. So excluding coins from your backtest to get good results is just ridiculous, as who knows what you will trade in the future. Definitely in crypto, those coins come and go so quickly. To avoid sample bias, it's essential to maintain an unbiased and systematic approach to selecting assets for backtesting. ## Selection Bias Selection bias is a significant concern when there are more trading opportunities than available capital, as it introduces discretion in choosing which trades to execute. This undermines the systematic nature of backtesting. For instance, if you only have the budget for 10 trades but receive 20 signals, you must implement a systematic approach to select the signals to act upon. Failure to inform your backtest about the 10 trades you would have picked will lead to inaccurate results. A trader's reply on a Tweet perfectly illustrates the impact of selection bias: "I’ve completed my daily mean reversion strategy. Funny thing happened. I used the [ATR](https://www.investopedia.com/terms/a/atr.asp) to score my entries. Whilst amending some exit rules I switched it off accidentally and the backtest profit went up 50%. Needless to say, the strategy no longer has a setup score." This real-life incident strongly emphasizes the importance of understanding selection bias and its effects on strategy outcomes. It underscores the critical need to adopt a systematic approach when selecting trades. Selection bias can genuinely deceive your results, and you might not even be aware of its influence. ![Selection Bias](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-10%2Fselectionbias.png&w=1920&q=75) In the case of our Momentum Catcher strategy, there are considerably more potential setups or signals than we actually use. ## Look-Ahead Bias Look-ahead bias is a problem that can occur in backtesting when future data is used to make trade decisions. This can lead to inaccurate results, because the model is learning from information that it wouldn't have had access to when it was making trade decisions. This bias is commonly referred to as "[repainting](https://www.tradingview.com/pine-script-docs/en/v5/concepts/Repainting.html)" particularly seen on the platform TradingView. ## Recency or Market Condition Bias For example, a strategy that performed well during a bull market may not perform as well during a bear market. If you test your short strategy on the bear market of 2022, you will obviously make money. But what if you test it also on the bull market before? Will it ruin you? Markets change, your strategies need to be able to cope with those changes. Don’t think they will stay the same. ## Curve Fitting and Data Mining Think of a scatter plot with lots of data points. Curve-fitting is like drawing a line that best matches these data points ![Curve Fitted Curve](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-10%2Fcurvefitting.png&w=1920&q=75) So, how does curve-fitting relate to trading? Imagine a situation where you are testing a strategy with two indicators. For example, a moving average and an RSI indicator. You don't think ahead about what situation you are trying to capture in the market with these indicators. You just play around with the settings of the indicators for so long until you really like the equity curve. That's why this problem is called curve fitting. What's wrong with it? The likelihood is high that the resulting strategy isn't a stroke of genius, but rather an inevitable outcome of tailoring it to past data. You can think of data mining very similarly to curve fitting. It just looks more professional. That's why it's also trickier. In a testing software or an add-on for Tradingview, you set up for example 5 different indicators and let brute computing power find the best combinations in the past. Such a strategy almost always leads to failure in live trading. If you don't know what you are doing, never do datamining! Both of the above methods are very often used by beginner traders and are very dangerous. Amateur traders often feel that they have done basically everything they can to find the best combination of indicators and their parameters. They have backtest results that are so good, they could win an Oscar for "Best Performance in a Historical Setting". But they don't realize that they are trading future price action. Not the past. ## Conclusion In algorithmic trading, backtesting is vital but it's not foolproof. Several biases can trick us into believing we've struck gold with a killer strategy. Survivorship, hindsight, sample, selection, look-ahead, and recency bias together with curve fitting and data mining - they're all potential traps. To truly create an effective strategy, it's not enough to just know these biases exist; understanding and mitigating their impact is paramount. So, backtest with prudence. Crypto has a very small data set, so it is very crucial to be careful with backtesting. Imagine that on the limited data, you are cherry-picking data to data to get good results, you are just fooling yourself. If you're tweaking your parameters to fit this short historical data, you're not creating a sound strategy, you're just setting yourself up for a fall. Backtesting is a dangerous tool in the hands of a fool. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 10 of 16 [Part 9 · Previous Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Part 11 · Next Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 10 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases.md) --- # Algorithmic Crypto Trading XI: Position Sizing | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing.md Part 11 of 16. Position sizing in systematic trading: fixed-fractional, volatility-targeted, and inverse-volatility methods compared with worked examples. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XI: Position Sizing Part 11 of 16 • Dries • July 30, 2023 Position sizing is a critical aspect of successful trading. It determines how much of your capital you should risk on each trade, based on your risk tolerance and the specifics of your trading strategy. In this blog post, we will focus on anti-martingale approaches to position sizing, fixed dollar amount (not anti-martingale), fixed percentage, and the Kelly Criterion. ## Anti-Martingale Position Sizing Approaches Anti-martingale approaches are strategies where the position size is decreased after a loss and increased after a win. This is the opposite of martingale strategies, where the risk is increased after a loss. Anti-martingale strategies are generally considered more conservative and safer for most traders. Be sure to read our [blog](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale) about it if you haven’t done so yet. - Fixed Value Amount - Fixed Percentage - Kelly Criterion ## Fixed Dollar or Fixed Value Amount The fixed dollar amount is a position sizing method where a trader risks a fixed amount of money on every trade. This approach is simple and easy to implement, but it does not fully use the power of compounding. Let's use a simple example of one of our breakout strategies on a portfolio level. We'll use a maximum of 5 positions on a 1000 USD balance, so we split the budget equally into 200 USD per position ![Fixed Value Amount](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-11%2Ffixedvalue.png&w=1920&q=75) Nice looking graph, looks like a very stable curve.It seems like it made good money in the trending markets and is now having very low volatility in the equity curve because it’s only using a small part of the balance. Looks very safe. However, it's important to note that it is not an anti-martingale approach. If you start trading and get into a drawdown, your position sizes grow compared to your balance, hence increasing your risk at the start. If you trade the spot market you will need to add money to your wallet. On the futures market you will have to start using leverage. The reason is simple. At $1000 you open a position of $200 or 20% of your account. At $800, a $200 position is already 25% of the account. This is the main reason why this approach is not optimal. With a drawdown, you can risk unnecessarily much on one position, and on the contrary, with a larger account growth, you limit your further potential significantly. ## Fixed Percentage The fixed percentage is a position sizing method where you always use a fixed percentage of your account balance for your position sizing. It's effective at lowering a trader's risk of ruin as it adheres to the anti-martingale approach. So you get all the advantages of lowering your risk of ruin and getting compounded returns. Let's compare the results with what we previously tested. We'll start with a 1000 USD balance and use a maximum of 5 positions and use 20% per position, so the first trade will also be with 200 USD. ![Fixed Percentage](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-11%2Ffixedpercentage.png&w=1920&q=75) Wow! Compounding is a beast! The profit is almost 10 times the amount, showcasing the power of the compounding effect! The biggest advantage of this approach is the fact that you set the risk you want to apply to the strategy once and keep it all the time. Why risk less with more capital or more with less? That doesn't make sense. ## Kelly Criterion The Kelly Criterion is a position sizing method that aims to maximize the growth of capital over the long term. However, it can lead to significant drawdowns and is considered risky by many traders. The Kelly Criterion is calculated using the following formula: K% = W - [(1 - W) / R] Where: - K% is the fraction of capital to be put into a single trade. - W is the win probability - R is the win/loss ratio For example, our breakout strategy has a has a win rate of 50.93% and a profit factor of 1.93, the Kelly Criterion would be calculated as follows: K% = 0.5093 - [(1 - 0.5093) / 1.93] This results in a K% of 25.53%. This means that, according to the Kelly Criterion, you should risk 25.53% of your trading capital on each trade. Let’s check the results! ![Kelly Criterion](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-11%2Fkellycreterion.png&w=1920&q=75) Very impressive results, you can see that Kelly definitely aims for max capital growth.. But you need to be careful with this one. As we learned in the previous blog posts about biases in trading falls Kelly Criterion definitely under curve fitting. We used historical performance to get the optimal position size. Let’s recalculate the Kelly and pretend we would start trading this strategy from the beginning of 2022, the backtest shows me a win rate of 51.83% and a profit factor of 2.19, So, according to the Kelly Criterion, you should risk approximately 29.83% of your trading capital on each trade. That’s already a big increase in the position size! ![Kelly up until 2022](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-11%2Fkellyupuntil22.png&w=1920&q=75) Wow, that looks impressive! Straight to the moon would the crypto boys say 🙂 Let’s see how the full historic looks like: ![Kelly Full Historic](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-11%2Fkellyfull.png&w=1920&q=75) Just ridiculous volatility, don’t think any of us have the mental strength to trade a system like this. And if your system isn’t performing as well anymore as on your backtest, which it almost always guarantees your drawdown will just be unbearable. Therefore, the Kelly Criterion, while aiming to optimize returns, can also lead to very big losses. It is wise to use a fraction (like half, or quarter) of the suggested Kelly percentage. Capital protection always comes first. Kelly% looks good in the backtest. But unless you have real experience with deep drawdowns in a trading account, think carefully about using this money management technique. There are several other position sizing methods that share similarities with fixed dollar amount, fixed percentage, and the Kelly Criterion. These include fixed units, fixed capital, fixed ratio, percent volatility and many more. Each of these methods has its own advantages and disadvantages, and the best choice depends on the individual trader's risk tolerance and trading strategy. ## Conclusion Position sizing is a crucial part of successful trading. If you're new to trading, don't aim to choose an approach that will maximize your gains. On the contrary, you should probably opt for a strategy that minimizes the volatility in your trading account. In a backtest, a 40% drawdown may not seem particularly threatening. However, in live trading, it's a completely different story. If you're looking for a starting point, the fixed percentage money management approach is a safe bet. Remember, the goal is not just to generate profits, but also to manage risk and ensure the longevity of your trading career. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 11 of 16 [Part 10 · Previous Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Part 12 · Next Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 11 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing.md) --- # Algorithmic Crypto Trading XII: Building a Profitable Strategy | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy.md Part 12 of 16. Building a systematic crypto strategy from idea to fixed rules: the design process beyond indicator stacking and overfitting. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XII: Building a Profitable Strategy Part 12 of 16 • Pavel Kycek • November 19, 2023 A trading strategy is the method of buying and selling in markets that is based on predefined rules used to make trading decisions. The process of creating those robust and reliable trading rules requires a combination of basic rules and experience. Traders must go beyond simply stacking indicators on historical data but take a thoughtful and methodical approach to create strategies that could be profitable in live trading. ## Understanding the Nature of the Market The foundation of any trading system lies in understanding the market in which it will be deployed. Different markets behave in distinct ways, and a strategy that works well in one market might not yield similar results in another. Therefore, before even considering indicators or specific trading rules, traders must first determine the characteristics of the market they wish to trade. The cryptocurrency market is known for its volatile and trend-driven nature, making it a breakout market. On the other hand, some traditional equity markets may be more prone to mean-reversion behavior. Identifying the underlying edge of the chosen market is essential for developing a trading strategy that aligns with its dynamics. ![Volatility comparison: BTC vs. S&P 500 vs. Euro / USD vs GOLD](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FVolatility-compare.png&w=1920&q=75) How do you know if a market is more suitable for trend trading or mean reversion trading? There are many tools for this. Personally, I prefer to test the market with a very basic strategy with one condition and see if it generates profits and how stable those profits are. One of the most basic trend strategies is to enter based on a moving average. If the price closes above the 50-day moving average we enter. If it closes below it, we exit the trade. You can find more information about this simple strategy [here](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling). ![Bitcoin: Holding vs MA50](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FBitcoin-vs-MA50.png&w=1920&q=75) This strategy has generated almost 5 times more profit on Bitcoin than holding it. We can simplistically make the assumption that crypto is suitable for trend/breakout strategies. ## Market Selection and Asset Allocation Once the nature of the market is understood, you need to decide on the specific instruments you want to trade within that market. The question is: What set of cryptocurrencies to trade? Do you want to focus more on small coins? And why? What are their characteristics? Or do you want to trade the largest cryptocurrencies instead? It's already quite a few different tests and you're not even at building a specific strategy yet. Baseline tests should now follow again to figure out those questions. Choosing the right set of cryptocurrencies is a vital step in constructing a diversified and balanced portfolio. Very small coins have slightly different characteristics than the largest tradable coins. Understanding them is key. ## Analyzing Market Behavior Understanding how the market behaves before and after specific events, such as breakouts, is fundamental to designing a strategy that capitalizes on potential price movements. Thorough research and analysis can help traders identify key patterns and trends that can be exploited for profit. For instance, you can study historical breakouts and observe the price behavior leading up to the breakout event. How does the market behave during a breakout? What is its volatility? Describe everything. You need to know what structure you want to trade. ### Indicator Selection and Parameters Indicators can play a vital role in trading systems. However, they should not be the driving force behind a strategy. Instead, indicators should be used to describe the situations traders want to trade. The use of the indicator comes into play only when all the previous points are well known. Let's go to a specific example: - We have examined crypto as a whole. We know that there is a strong edge in the form of breakout and trend strategies. - We want to trade a breakout strategy. How does the market behave during successful breakouts? ![Breakouts: Daily volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FBreakoutsDaily-volatility.png&w=1920&q=75) You can easily see that the strongest breakouts are marked by high daily volatility, visible as big daily candlesticks. If we know how a breakout happens, we can use technical analysis tools to describe it. This time we will describe it with the RSI (Relative Strength Index) indicator with a 7-day period. The RSI helps measure market momentum, typically oscillating between 0 and 100. It's a quick way to get a read on the potential strength or weakness of a breakout. The choice of the RSI with a period of 7 days is based on the desire to capture short-term breakouts. At what levels is the breakout really strong? The chart shows that most of our strong breakouts occur around the 80 level. We will use it for our initial tests. ![RSI Breakout Level](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FRSI-breakout-level.png&w=1920&q=75) #### What exit to use? There are many options. We will stick to a very simple strategy and use RSI for the exit as well. The basic premise is that we want to exit when momentum in the market weakens. The starting point for exiting the position could be the 60-70 level. The basic rules of our simple system are as follows: Entry: RSI(7) > 80 Exit: RSI(7) < 70 We have now established the basic conditions. And this is the first time that we stop exploring the nature of the market and the entry situation and start testing the strategy itself. Let's test our basic strategy on a portfolio of cryptocurrencies. We will enter a maximum of 10 positions at a time. We will use fixed percentage as described in our previous [blog](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing). ![RSI Basic Breakout](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FRSI-Basic-Breakout.png&w=1920&q=75) The strategy has a growing equity. The basic idea seems to work. However, I don't like the results in a period when the markets are falling. This brings us back to a key consideration. Our system is designed to trade breakouts on the long side. Therefore, it’s crucial to ask: should we be trading when the crypto market is trending downward? Probably not. As Mark Minervini, one of America’s most successful stock traders, famously said: 'To trade with ease, you must learn to wait patiently until the wind is at your back. Why not wait for a breezy day to set sail?' To align our trading with this wisdom, we can implement a regime filter. This filter helps us to trade those quick breakouts with the 'wind at our back.' For more details on the regime filter, you can refer to our dedicated [blog](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter) post. A simple example of a regime filter is using a moving average on Bitcoin. Our strategy will be active when Bitcoin's price is above its 50-day moving average, indicating an uptrend. Conversely, the strategy will be inactive when Bitcoin is below its MA(50), signaling a downtrend. What result does the context filter give us? ![RSI Breakout + Regime Filter](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FRSIREGIME.png&w=1920&q=75) We can see that the result is significantly better. We have avoided the big drawdown in 2021 by using a logical context filter. By using Bitcoin's moving average as a context filter, we ensure that we only enter trades when the broader crypto market is in a bullish phase, increasing the odds of success. The basic strategy is therefore complete. It consists of only 3 conditions: Entry: RSI(7) > 80 AND MA(BTC,50) > C Exit: RSI(7) < 70 Only 3 conditions can help create a strategy that has very interesting results. But don't be misled. The path to these 3 conditions was long, from understanding the market as a whole, to understanding the input situation, to actually testing the strategy. Here are the summary statistics for this strategy: ![Summary Stats](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-12%2FSummary-Stats.png&w=1920&q=75) ### Conclusion Building a profitable trading system is a multifaceted process that demands a combination of research, analysis, and critical thinking. Blindly stacking indicators on past data without a thorough understanding of the market's nature and dynamics is a recipe for failure. Instead, successful traders approach strategy development as a scientific endeavor, carefully studying the market, selecting appropriate indicators, and using context filters wisely Once you've built your strategy, don't stop there. Put it through rigorous robustness tests to further increase the possibility of a profitable trading strategy in the live market. Don’t worry, this topic will be covered in a future article. If you're keen to try this strategy in Tradingview, we've got you covered. Just click [here](https://www.robuxio.com/rsi-pinescript/) for the Pine Script code. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 12 of 16 [Part 11 · Previous Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[Part 13 · Next Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 12 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy.md) --- # Algorithmic Crypto Trading XIII: Robustness Testing | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing.md Part 13 of 16. Robustness testing for systematic strategies: walk-forward, parameter sensitivity, out-of-sample validation, and the criteria for survival. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XIII: Robustness Testing Part 13 of 16 • Dries • December 8, 2023 A robust strategy is a simple and logical one that makes money in market conditions it is designed for and loses or breaks even in market conditions it’s not. Because it is so simple and its parameters aren’t exactly fit to the historical data, it should continue to perform well even if market environments change slightly. Backtesting is critical for developing such a trading strategy, as it helps determine whether our predefined rules for making trading decisions have an edge and are robust. However, backtesting software can be a dangerous tool for beginners. They often stack indicator upon indicator, allowing optimizing software, or as it's now called, AI, to generate "perfect" parameters. In an attempt to enhance backtest profitability, they may also opt for lower time frames. The logic seems sound: lower time frames enable more trades, theoretically leading to quicker wealth. They continue "improving" their strategy until they achieve a 100%. ![Curve Fitted Backtest](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2Fcurvefittedbacktest.png&w=1920&q=75) Look at the results of a 5-minute timeframe backtest with perfectly fitted parameters to historical price action on a single symbol. Unfortunately their live account will look like this, probably even worse: ![Curve Fitted vs Live](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FCurve-Fitted-vs-Live.png&w=1920&q=75) When experienced traders encounter a backtest that is too good, they ask themselves what they've overfitted, whereas beginners wonder which Lamborghini they will order. No one can predict the future, but one thing is certain: the future will never replicate the past exactly. Therefore, don't model your strategy as though it will! If you haven't read our blogs on trading biases or curve fitting, please do so before proceeding. ## How Do You Know If a Strategy Is Robust? There are several general criteria for system robustness: - Can it be described in simple and logical terms? - Can you answer why it makes money? - Is it profitable across multiple coins? - Does it have a wide range of profitable parameters? - Is it profitable on various timeframes? ## Case Study: Breakout Trading Strategy In [blog VI](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading) about breakout trading, we created a simple breakout strategy. Let's assess its robustness. We learned that the very basics of a breakout strategy are the following: it needs to break through a level of a trading range, and we only hold it for a short time. So we made rules that reflect that: Entry : The highest high of the last 30 days, with BTC above its MA50 as a regime filter. Exit : After 3 days at the close. As you can see we can describe the strategy in very simple and logical terms and we know exactly when and why the strategy should make money! If the price breaks through the 30-day high and keeps going for 3 days we will make money. Let’s immediately test it on the whole liquid universe so we can also check if it’s tradeable on multiple coins: ![30-Day High Breakout](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FBreakout-Strategy.png&w=1920&q=75) Nice definitely works on multiple coins! During the 2021 bull market, it performed exceptionally well. In the bear market, it encountered some failed breakouts and experienced whipsaw. At the beginning of 2023, it successfully captured the short January rally but then struggled in a low volatility sideways market with numerous false breakouts. Recently, we've seen another uptick as the market broke out consecutively for a few days. Let’s double check our findings by looking at the total market cap excluding BTC and ETH with our 30-day high channel marked on it. ![TOTAL3 with 30-Day High Channel](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FTOTAL3-with-30-Day-High-Channel.png&w=1920&q=75) The chart confirmed our observations from the backtest: The strategy only profits when the market breaks out of the channel and continues for a few days; it remains flat during market downturns, and we incur losses during false breakouts. Let's consider the robustness of these parameters. Imagine if we were to buy into the 31-day breakout and the strategy completely fell apart; that would not be very robust. Although it's highly unlikely with the approach we took to build the strategy, starting with a clear idea first, it still serves as a good test of robustness. A strategy that is curve-fitted would definitely fail this test. To test the range of profitable parameters we can conduct backtesting on the strategy using breakout periods ranging from 10 to 100 days high: ![10 to 100 Days High](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2F10-to-100-days-high.png&w=1920&q=75) The results show that all channel high parameters were profitable, from the 10-day breakout to the 100-day breakout, with 30 days being around the midpoint of a stable range. Same for the drawdown. ![10 to 100 Days High Drawdown](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2F10-to-100-days-high-drawdown.png&w=1920&q=75) We can also check the exit. We know that breakout strategies are short term, so we used a simple time-based exit to confirm our strategy's robustness. We tested holding periods ranging from 1 to 7 days. ![1 to 7 Days Exit](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2F1-to-7-days-exit.png&w=1920&q=75) Looks like the longer you hold the more profitable it becomes, but more reward comes obviously with more risk as you can see on the drawdown chart. ![1 to 7 Days Exit Drawdown](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2F1-to-7-Days-Exit-Drawdown.png&w=1920&q=75) Given the limited historical data in crypto, strategies must be extremely simple and logical. Anything more complex is likely to fail. Now we can move to the next test by running the backtest on a different timeframe, let’s test our strategy on 4-hour candles with the same breakout parameter of 30. I will only adapt the regime filter to 300ma to match the 50ma used on daily candles. ![Breakout Strategy On 4H Timeframe](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FBreakout-Strategy-on-4H-Timeframe.png&w=1920&q=75) Results aren’t crazy good but seems to be working pretty stable even on 4h, but holding only for 3 bars is a bit short. Let's try 6 bars instead, we need to give the breakout a little bit of time. ![Breakout Strategy On 4H 6 Bar Exit](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FBreakout-Strategy-on-4H-6-bar-exit.png&w=1920&q=75) Looks to be profitable and stable, though not as profitable as on daily candles due to the shorter holding period. But very stable if you think we use the same parameters of a strategy with daily candles! The strategy didn’t fall apart at all, so it’s pretty clear that this strategy is robust enough to cope with a little change of market dynamics in the future. It is worth mentioning that with this test we are not aiming for the best results, only looking at the robustness. Let’s take it one step further and let’s test the complete medium portfolio we are currently trading here at Robuxio: ![Robuxio Medium Risk Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FRobuxio-Medium-Risk-Portfolio-e1702030178389.png&w=1920&q=75) The robustness test on 4h candles: ![Robustness Test Robuxio Medium Risk Portfolio On 4h Candles](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FRobuxio-Medium-Risk-Portfolio-on-4H-Candles.png&w=1920&q=75) Let’s also look at the portfolio with an increased amount of strategies that we are launching in the first quartal of 2024. ![Robuxio Medium Risk Portfolio From 2024 On](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FRobuxio-Medium-Risk-Portfolio-from-2024-on-e1702030487675.png&w=1920&q=75) Now the robustness test on 4h candles: ![4H Robustness Test On The New Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-13%2FNew-Portfolio-on-4H-t.png&w=1920&q=75) Wow! Looks robust to me 🙂 There is one strategy that fails on the 4-hour timeframe, as it's quite an aggressive breakout strategy, which can be overkill for 4h. However, as you can see in a portfolio of uncorrelated strategies, one failing strategy isn't a big deal at all. There are of course more factors like slippage, average profit etc. you should look at when making a robust strategy but the very basics are described in this blog post. ## Here is a small bonus for you: In the previous [blog](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy) we made a very simple idea first approach RSI breakout strategy. Entry: RSI(7) > 80, with BTC above its MA50 as a regime filter. Exit: RSI(7) < 70 Based on that article I received from a reader an email all proud of how he optimized that strategy using his custom build optimizing backtesting software. The software has identified in 1,750,000 backtests the optimal parameters as: Entry: RSI(9) > 60 and BTC regime filter of 51MA Exit: RSI(9) < 52 I encourage you to send everything that is wrong with this backtest at [pavel@robuxio.com](mailto:pavel@robuxio.com) or a [Twitter](https://twitter.com/PKycek) DM. Consider this a challenge to apply what you've learned from our series so far! ## Conclusion To sum it up, stay away from low timeframes, stay away from the optimizers. Start with an idea first, something you observe in the market and then try to explain it with simple terms. Then apply an indicator. Sometimes you don’t even need an indicator. Resist the temptation to tweak your strategy to avoid some bad trades or to include some exceptions so you would not have missed a good trade. This will always lead to overfitting. Remember, single strategies don't need to perform all the time; we trade a complete portfolio of uncorrelated strategies for a reason! Part XIV of this series covers portfolio construction in detail. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 13 of 16 [Part 12 · Previous Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[Part 14 · Next Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 13 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing.md) --- # Algorithmic Crypto Trading XIV: Portfolio Construction | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio.md Part 14 of 16. Combining systematic strategies into a portfolio: correlation analysis, capital allocation, and rebalancing for stable compound returns. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XIV: Portfolio Construction Part 14 of 16 • Dries • January 2, 2024 Now it's time to combine everything we've learned so far in this series. We've learned how to turn ideas into rule-based strategies and how to test those strategies correctly. Perhaps one of the most important blogs was about understanding the risk of ruin and how we can avoid it by using proper risk management. Once you understand that, you will think about trading completely differently. This blog will hopefully be a significant "AHA" moment, helping you understand the power and need for a portfolio of uncorrelated strategies to avoid most trading mistakes. As we know, a single strategy can't be profitable all the time, but only during the market conditions for which it's designed. Accepting this fact already puts you ahead of 90% of all retail traders! So, knowing this, it's clear that we need multiple strategies that work in different market conditions. It wouldn't make sense to create long-only trend following strategies and expect to be profitable when the markets aren't trending to the long side. It's easier when I show you. So, let's construct a trading portfolio like we do at Robuxio. The cryptocurrency market, known for its volatile and trend-driven nature, is perfect for a trend-following strategy. So, let's start with our TrendCatcher Long. If you want the exact rules: [click here](https://www.robuxio.com/trendcatcher/). ![TrendCatcher Long](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FTClong.png&w=1920&q=75) Results: Overall Profit: 5,806% Historical Drawdown: 38% Winning trades: 30% The strategy does a pretty good job of making money when the market is in an uptrend, and in all other market conditions, it's flat or losing a bit of money — exactly what we want to see. What we could do now is also trade this strategy on the short side, with the results just in reverse, so we also make money in downtrends. ![TrendCatcher Short](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FTCshort.png&w=1920&q=75) Results: Overall Profit: 81% Historical Drawdown: 33% Winning trades: 36% Obviously, not as profitable as the long side, as coins can only go a maximum of -100%, but the upside has no limit. ### Portfolio Imagine you had $1,000 to trade with and split it evenly between two strategies, here's how it would work out: - For the long Trend Catcher strategy, your $500 would have turned into $29,800. - For the short version, the other $500 would have turned into $900. So, in total, you would now have $30,700. However, in a portfolio, you would run those 2 strategies with the same capital. We know that the long and short entries are complementary. Thanks to the regime filter, we always have only long entries or short entries. We can therefore use the same trading capital. ![TrendCatcher Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FTCportfolio.png&w=1920&q=75) Results: Overall Profit: 12,000% Historical Drawdown: 37% Winning trades: 33.5% Pretty crazy, right? Your performance increases significantly if you run it on the same account — you get $113,216, almost four times more compared to running it separately! This is because those strategies have a low correlation. Put simply, if strategies generate profits and losses at the same moment, their correlation coefficient is high. If one strategy generates profits at the exact moment the other is in a drawdown, the correlation is negative, meaning the strategies are negatively correlated. If there is no connection between the strategies, they are uncorrelated, and the correlation coefficient is neutral. The closer the correlation is to neutral or below, the better. Let's look at the correlations between Trend Catcher Short and Long: ![Correlation TrendCatcher Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FCorrelationTCportfolio.png&w=1920&q=75) So as you can see, the returns are slightly negatively correlated, meaning that when the long strategy is making money, we are either flat or losing money and vice versa. That is exactly what we want, and the drawdown correlation is also low. So imagine that TrendCatcher Long is in a drawdown because the market is in a bear market. But instead of starting the new bullish trend with a lower account balance, we're likely to start with a higher account balance because TrendCatcher Short made money. So there's no need to first make up for the drawdown we suffered; we can start directly with a higher balance, compounding our account. But trend-following strategies are also the most volatile. This is expected, as we stay in the market for a long time, and the coins that perform well are mostly associated with high volatility. We also have a low win rate with many small losses. This is by design, as we need to give the market room to grow. If we are too strict or try to "fit" the parameters so you get in at every bottom and out at the top, over time, you will just bleed your account to zero because of the over optimized strategy. It's essential to take every trade in the strategy. Missing out, especially because of unnecessary filters, could mean losing the biggest wins of the year. Therefore, it’s better to make money with volatility in your equity curve than to slowly lose all your money with low volatility. There are better ways to reduce this volatility. We do this at Robuxio by not only using the Trend Catcher strategies but also implementing many other trend strategies and mean reversion strategies that are uncorrelated with them. I will present Robuxio’s new portfolio, set to launch from February 2024. Let's start by looking at all our Trend Strategies. This includes our Trend Following and Breakout strategies for both the long and short sides. To be precise, 6 strategies to the long side and 3 to the short side. ![Robuxio Trend Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FRobuxio-Trend-Portfolio.png&w=1920&q=75) You can clearly see that the equity curve is quite similar to the one of Trend Catcher Long and Short. That's pretty normal because it's still the same market; we can only make money when the market trends. If the market is flat, we can't make money! It's very crucial to ensure your strategies only make money when they are intended to. Otherwise, it's highly likely you'll just overfit rubbish. ![TrendCatcher vs Robuxio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FTrendCatcher-vs-Robuxio.png&w=1920&q=75) If you look at this chart of the TrendCatcher Portfolio and compare it with our Robuxio Trend Portfolio, take a close look and you will see that, even though they made the same return, the curve of the Robuxio Trend Portfolio is way smoother. The historical maximum drawdown is now at half of what it was before with the TrendCatcher Portfolio. ![Correlation Trend Robuxio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FCorrelationTrendRobuxio.png&w=1920&q=75) As we can see, our approach is becoming more advanced. Despite all being trend strategies, we've managed to keep the correlations between them low, which allows us to reduce volatility in the account and use less capital to achieve the same profit. A big metric that proves this is the average usage of our capital: 33% in our Robuxio trend portfolio versus 73% with the Trend Catcher portfolio. This has many advantages. It means that we don’t need to overexpose ourselves to the market on single coins but can diversify over many more. So, the risk of losing lots of capital due to a collapse like what happened to Luna is heavily reduced. We also don’t have so much risk that if one strategy fails, it will ruin our account. On the contrary. If you trade 10 or more strategies and one stops making money, you may not even notice it in your account. Even if you try avoiding overfitting your strategies as much as you want, sometimes it will happen. When you trade a broad portfolio, this will affect you way less. Also, this simple form of trend following might not be so profitable anymore once the market matures more, so you should definitely not place all your chips on one single strategy! So now that we know that our capital is available for other strategies and also know how crucial it is to add strategies for risk management, we can add strategies that trade when our current ones are not in the market or when our current ones have a hard time as a hedge. Mean Reversion strategies are the perfect strategies to do exactly that. If you don’t know what those strategies are, read our [blog](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion). You can also call them counter-trend strategies. This tells us enough that they would be perfectly complementary to our trend strategies as they trade against the current trend. We have again a basket of 3 long and 3 short mean reversion strategies, each performing in different market conditions. This allows the sub-portfolio to create profits in almost all market environments. The good thing about this is that with mean reversion you can create a very stable equity curve, as we are only very short term in the market. But as you can see on the chart below by far not as profitable as trend strategies. ![Robuxio MR Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FRobuxioMRPortfolio.png&w=1920&q=75) Results: Overall Profit: 440% Historical Drawdown: 10% Winning trades: 65% ![Robuxio MR Correlation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FRobuxioMRCorrelation.png&w=1920&q=75) The good thing you can see here is that the correlation is very low. Even better, the drawdown correlates negatively. So, this is the dream scenario: when Strategy A is losing money, Strategy B is making money. Now onto the real magic of portfolio trading – let’s trade the Trend and Mean Reversion strategies as one portfolio! Results: Overall Profit: 49,000% Historical Drawdown: 15% Winning trades: 53% The Trend Portfolio made 113X, the Mean Reversion Portfolio made 5.4X. However, when combined, they created a monstrous return of 500X, all while reducing the drawdown to just 15%. Also the duration of the drawdowns in the portfolio is very short. Individual strategies may experience longer drawdowns, this doesn’t really matter because we have other strategies profitable during these periods. ![Drawdown in Days](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FDrawdown-in-Days.png&w=1920&q=75) Once you understand the power of this you will finally be released of your urge to create overfitted strategies that perform in every market condition! We focus on very simple strategies that fulfill a specific task in our portfolio. Again the correlations table. As you can see lot’s of negatively correlated strategies. This is exactly what you want to see. ![Robuxio Return Correlations](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FRobuxio-Retun-Correlations.png&w=1920&q=75) ![Robuxio Drawdown Correlations](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-14%2FRobuxio-Drawdown-Correlations.png&w=1920&q=75) Here is a list of all the strategies in our future portfolio: Long Strategies Trend: - MomentumCatcher - TheMoon - HighFlyer - Puncher - VolatilityCatcher - TrendCatcher Mean Reversion: - TheRebounder - BargainHunter - DipHunter Short Strategies Trend: - TrendCatcherShort - BearishBulldozer - FakeBar Mean Reversion: - PumpPopper - PumpNdump - GameOver This list reflects our portfolio at the time this article was written. Robuxio now runs well above 20+ strategies — the lineup has grown, but the concept is the same: a diversified book of low-correlated strategies on robust infrastructure. As you can imagine, trading this portfolio is not a simple task. It requires an enormous and robust infrastructure to enable automated trading of this nature. We dedicated 1.5 years to building this infrastructure, and we continue to enhance our service every day! This is precisely the service we offer at [Robuxio.com](https://www.robuxio.com/). We trade broad portfolios of low-correlated or uncorrelated strategies for our clients in a robust way! [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 14 of 16 [Part 13 · Previous Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[Part 15 · Next Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 14 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio.md) --- # Algorithmic Crypto Trading XV: Drawdowns | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns.md Part 15 of 16. Drawdowns as a structural feature of systematic trading: depth, duration, and the math of recovery that allocators need to understand. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XV: Drawdowns Part 15 of 16 • Pavel Kycek • February 8, 2024 Traders typically focus on potential profits, but a discerning few delve deeper into strategy metrics, with even fewer confronting the reality of drawdowns. Few realize that they will spend significantly longer with their investment in a drawdown than at new equity highs. Most trading strategies are in some sort of drawdown phase around 90% of their time or more. That's why it's important to pay attention to them and understand when they occur and what the reason is. ![Drawdown time](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-15%2FDrawdowns.jpg&w=1920&q=75) And that's exactly the topic I want to address in this blog post at what stages of the market to expect drawdowns depending on the strategies you trade. But first, a few definitions. ## What is a drawdown In the simplest terms, a drawdown is the period between the previous highest point of the equity curve and the newly formed highest point of the equity curve. This definition implies that you are basically in a drawdown any time your trading account is not making new highs. ### How we measure drawdown There are 2 basic metrics by which drawdown can be measured - using length (in days) and depth (in percentage). ###### Percentage depth of drawdown When someone researches drawdowns, they usually address their depth. This is given as a % of the highest peak reached in the account. ###### The length of the drawdown Many traders neglect this metric, yet undervaluing it is a mistake. Especially because of the psychology of trading. After all, if you see historical trading results and periods when the equity curve goes sideways, might seem uneventful. However, a phase where the account moves sideways within a drawdown, fluctuating between deeper and shallower levels, poses a real psychological challenge. And you need to prepare for it. And with some trading approaches, you need to be prepared for drawdowns that can last for years... ## Why do you need to understand drawdowns? ### 1. Psychological reason Drawdowns are a natural part of trading. The sooner you accept this fact, the better for you. There will always be more fun phases when your account grows to a new high. But this will happen in no more than 10% of all trading time. ### 2. Risk management reason If you understand when drawdowns occur in relation to the strategy you are trading, you can quickly see if the drawdown you are currently in is within the norm. A drawdown caused by a phase of the market that is unfavorable for that strategy is perfectly normal.. However, if a deeper drawdown is forming in a period that is favourable for the strategy, it is possible that your strategy is no longer working. Recognizing a drawdown as a normal phase versus a signal of strategy failure is key. ## When do drawdowns occur? Simply put, in periods that are not favorable for the system being traded. However, this cannot be completely generalized and needs to be looked at in terms of two basic trading approaches. For a deeper exploration of trading approaches, visit: [Systematic Trading III: Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches). ## Trend Following Strategies and its Drawdowns Strategies that attempt to trade long-term trends. They try to follow these trends for as long as possible. ## When do drawdowns occur in Trend Following? 1. Adverse Market Movements Against Open Positions ###### Why This Leads to Drawdowns: The principle of trend strategies is to hold a position as long as possible, to make the most of the trend. In order to make the most of this, you need to give the market enough space. This is because corrections within a trend are perfectly normal and you don't want to get out on every minor one. The downside is that you often give back a large portion of your open profits.. 2. When there is no trend in the market. ###### Why This Leads to Drawdowns: Because it misses the primary reason why trend strategies make money - long-term movement in one direction. It is impossible to expect profits during such a period. At the same time, it is not possible to filter trend entries too much, as this can cause you to miss the first phase of the trend, which is often the strongest. ## Characteristics of trend strategies drawdowns Trend strategies drawdowns are usually deeper and last for a longer period of time. The main reason for this is that the markets do not trend most of the time. This creates a series of losing trades that build up over time. In the picture below there is a Trend Catcher Long - a trend strategy that trades only in the direction of the long trend. The green line shows a period when the market was in a stable trend and the strategy was profitable. In all other periods, the strategy was in bigger or smaller drawdowns. Perfectly expected behavior. ![Equity Curve - Trend Catcher Long](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-15%2FEquity-Curve-Trend-Catcher-Long.png&w=1920&q=75) ## Mean Reversion Strategies and its drawdowns Mean Reversion Strategies try to trade against strong market reactions. These are short-term "countertrend" strategies. ### When Do Drawdowns Occur in Mean Reversion Strategies? 1. During Strong Trends or Extended Market Movements ###### Why Drawdowns Happen: The core idea behind Mean Reversion is the expectation for prices to revert to their average after significant deviations. However, in very strong moves, this mean reversion behavior of price does not occur. ### Characteristics of Drawdowns of mean reversion strategies Mean Reversion strategy drawdowns are generally shallower and shorter, as these strategies do not rely on large market movements to generate profits. However, you should expect the occasional sharp drawdown when the market shoots up hard against open positions. Pictured below is Pump and Dump - a strategy that trades mean reversion to the short side. At first look, you can see a more stable equity curve - but with significantly lower absolute returns. Most drawdowns are shallower and occur during periods of low volatility - see points B. Occasionally, rougher steeper drawdowns arise in very strong trends like in 2021 - points A. ![Equity Curve - Pump and Dump Short](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-15%2FEquity-Curve-Pump-and-Dump-Short.png&w=1920&q=75) ## Portfolio approach and drawdowns Trading a broad portfolio of uncorrelated strategies like we do at Robuxio is the solution to reducing the depth of drawdowns and shortening their length. Thanks to the previous blog post, you already know why - each trading approach creates drawdowns (and profits) at a different point in time. However, this does not mean that we get rid of drawdowns completely. ### When do drawdowns occur in portfolio trading? In portfolio trading, the dynamics that lead to drawdowns differ significantly from those in individual strategy trading. There are 2 main causes of deeper drawdowns in portfolio trading: 1. A rapid change in the regimes, or market phase What are the basic regime changes? - From long trend to short trend - From short trend to long trend - From trending market to sideways market ### Why does a drawdown occur? Most strategies trade with some sort of filter that turns the strategy off or on depending on the market regime. If the regime change is slow, the strategies gradually adapt to the new regime. If it is a regime they should not trade in, they automatically turn off. However, if the change is rapid, the switching off will occur with some delay. This allows more strategies to get into a market that is not profitable for them and build up losses. These losses across a larger number of strategies lead to deeper drawdowns. 2. Strong corrections into an established trend An example is the image below where you can see the High Risk Portfolio from early 2022 (grey) and the Bitcoin price (purple). Simply put, Bitcoin sets the trends in the cryptocurrency market. The green line shows an established trend - both long and short - and the red line shows a deeper correction into that trend. As you can see, in the case of deeper corrections, there are almost always drawdowns on the equity curve as well. ### When do drawdowns happen? At times when a strong trend is established in the market, most strategies that profit from trends get into maximum positions. When a correction occurs, there comes a period when some of the profits are given back to the market. The faster the correction comes, the deeper the drawdowns usually are. Since, again, it takes time for strategies to adapt to the new market phase. If you think about it, these two cases above are essentially identical. Since you never know in advance if a larger correction will bring a change in the regime. We always see this information on the chart in hindsight. Never forward. ![Equity Curve - High Risk Robuxio portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-15%2FEquity-Curve-High-Risk-Robuxio-portfolio.png&w=1920&q=75) ## Drawdowns - Investing vs. trading It is important to note that there is a big difference between drawdowns in investing and trading. In investing, a drawdown occurs whenever the asset we are holding declines. In portfolio trading, however, this is not the case. Here, drawdowns occur when the regime changes. Current example - Robuxio portfolios were at their highs on 31 Jan 2023. They have been in drawdown since then. What is the reason? Probably a strong correction. Unless it develops into a regime change. But if the market continues to fall, strategies that trade on the short side would take more and more initiative and start to deliver profits. The equity curve would begin to rise again. Similar to when a correction remains just a correction and the long trend returns to the market. Novice traders don't realize this connection as much, and when the market falls and a drawdown occurs, they start creating scenarios in their heads that if the market falls another X%, the drawdown will also increase by another X%. This is not the case. A new regime is established, profits return and the portfolio stabilizes. ## Embracing Drawdowns in Trading Drawdowns are a natural part of trading. You will probably never like them. But you can get used to them. Think about them, understand them and if you are a trader trading your own solution, be aware of when drawdowns are likely to occur and when they are not. This awareness is key to moving through drawdowns, achieve new equity highs and letting your trading account grow over the long term. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 15 of 16 [Part 14 · Previous Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[Part 16 · Next The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 15 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding Up next →](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns.md) --- # Algorithmic Crypto Trading XVI: The Power of Compounding | Robuxio Education Source: https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound Markdown: https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound.md Part 16 of 16. Why compounding rewards lower volatility, and how the math of geometric returns penalises drawdowns more than equal gains compensate. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Algorithmic Crypto Trading](https://robuxio.com/education/series) # Algorithmic Crypto Trading XVI: The Power of Compounding Part 16 of 16 • Dries • March 19, 2024 Compounding in investing is like a snowball rolling down a hill. Initially, it starts small, but as it rolls, it picks up more snow, growing larger with each turn. Because the ball is bigger, it can gather even more snow at a faster pace. Similarly, when you reinvest your profits, your investment grows larger, allowing it to generate even more profit. This cycle continues, making your investments grow exponentially over time. ## Understanding Compounding and Its Power It's a straightforward concept. Imagine you have $1,000 and make a 10% profit in your first year on your investment. That means you would have made $100. So, you might think you'd need another 9 years to get to $2,000 and double your money. But that's not the case, as we always reinvest the profits. This means that we won't need 10 years, but only a bit over 7 years with a compound annual growth rate (CAGR) of 10%. What's important to know is that this growth is exponential! Let me show you a chart: ![10%CAGR](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2F10CAGR.png&w=1920&q=75) Also the higher the CAGR the faster this exponential growth. ![Exponential Gain CAGR](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FExponential-Gain-CAGR.png&w=1920&q=75) This is also why people are so obsessed with beating the market, even by a single percent, because that 1 percent has a significant effect in the long term. Now that we understand the power compounding has, we should look at the real-life example of Warren Buffett. Probably the most famous investor of all time. Let's examine the effect of compounding by comparison his Berkshire Hathaway Inc. Class A shares to the S&P 500 from 1990 till today: ![Buffet 1990-2024](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FBuffet-1990-2024.png&w=1920&q=75) - BRK.A: CAGR: 13.30%, Final Profit: 7066.77% - S&P500: CAGR: 8.07%, Final Profit: 1322.64% The CAGR is 65 percent higher but the profit is 435% higher! Exponential difference! Now let's look back from 1980: ![Buffet 1980-2024](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FBuffet-1980-2024.png&w=1920&q=75) - BRK.A: CAGR: 18.93%, Final Profit: 213049.66% - S&P500: CAGR: 9.25%, Final Profit: 4904.00% BRK.A's final profit is 4,244% higher than the S&P 500's final profit. What started as a snowball has transformed into an avalanche! ## The Volatility of Cryptocurrency Markets With crypto we have ridiculous volatility. It’s a paradise for systematic traders like us. The market moves like crazy up and down and we can make much more money than in the traditional market using the same all-weather trading system as we use for crypto. But just a warning here for crypto investors. Yes, crypto is going up like crazy, but it is also going down like crazy. People are showing off the crazy gains they make on BTC or, for example, SOL. But what they didn’t show is the drawdown that happened before and that they are probably not even in profit yet. Look at the charts! ![BTC Volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FBTC.png&w=1920&q=75) In 2021 Bitcoin made a high, then dropped almost 80% to go up 320% to end up basically at break even. But on the way there, we have incredible nice trends we can exploit very well! Solana, for example, is even crazier. ![SOL](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FSOL-1.png&w=1920&q=75) Just imagine being down 97% then go back up 2242% just to be still down -30%! But look at those nice and incredible trends, look at the opportunities crypto is giving us traders. There is no other asset class that is giving us those chances to trade trends like that. Use them wisely as they won’t be here forever. And holding on to your coins on the way up and down is not making use of that opportunity. Look at the chart below, the gain required for each drawdown just to get breakeven again. ![Drawdown VS Requiered Gain to Breakeven](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FDrawdown-VS-Requiered-Gain-to-Breakeven.png&w=1920&q=75) Recovering from such drawdowns like Solana requires 3000%+ gain just to break even again. That is why investing in crypto is definitely not the way to compound your capital. But the good news is that crypto has those big price movements. We just need a different approach to capitalize them. ## Robuxio's All-Weather Approach to Crypto Trading By employing an all-weather approach, Robuxio's system aims to profit in both bull and bear markets. Trying to keep the drawdown low and keep compounding the portfolio as much as possible. Let’s have a look at why this all weather approach is so important to keep making some profits in all market environments, even if they are “small” compared to the profits you can make during the bull run with trend strategies. But first, a few steps back. As we wrote about in our blog about [position sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing) and the [martingale vs. anti-martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale), we are using fixed percentages for the trading sizes, which is an anti-martingale approach. If you haven’t read them, I would suggest reading them first, starting with the martingale money management blog before you continue with this blog. Let’s do a few tests on our portfolio, looking only at the long part of our portfolio from 2022. First test: only the long portfolio since 2022 with fixed value position sizes. Looks not bad, but we are not compounding! ![Robuxio Long Only Fixed Value](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-Long-Only-Fixed-Value.png&w=1920&q=75) Now let’s run the same test but with fixed percentage positions sizes like we do at Robuxio. The first trades would be the same USD amount as on the test above. But now we increase the position size when we make profit and we reduce it when we make a loss. An anti martingale approach that makes you capture the upside of compounding while minimizing the risk of ruin. ![Robuxio Long Only Fixed Value VS Fixed Percentage](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-Long-Only-Fixed-Value-VS-Fixed-Percentage.png&w=1920&q=75) Just crazy to see in crypto how fast the compound kicks in once the market starts moving. That is also the main reason to move to our performance based program to make full use of the compounding effect! But with long strategies it’s very difficult to make money during bearish regimes. But as you can see on the chart, the more money you make the more the compounding effect kicks in. ## But how does an all-weather approach help in Compounding? With the all weather approach we don’t have to rely on only the big up or down trends in crypto. By trading many mean reversion strategies to the long and short side we can stabilize the portfolio a lot. ![ROBUXIO MR STRATEGIES](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FROBUXIO-MR-STRATEGIES.png&w=1920&q=75) These are the results of our mean reversion strategies, they are very stable but are not as profitable as our trend strategies. Look at our portfolio of trend strategies with the shorts included. Unlike the long trend strategies only, we can make money during bull and bear regimes. ![Robuxio Trend Portfolio](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-Trend-Portfolio-1.png&w=1920&q=75) 330% for MR vs 12,500% for the trend strategies. So you could think why even bother with those MR strategies? We saw the impact of compounding over time by increasing the CAGR by a little. It would definitely not be a bad idea to look at what would happen if we add those 2 approaches together in a portfolio as they are very uncorrelated. Meaning that the MR strategies should be making money when the trend strategies are losing money. ![Robuxio High Risk](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-Compound-VS-individual.png&w=1920&q=75) The snowball keeps rolling faster and bigger! Compounding makes it possible. Those “small” profits from the MR strategies really keep pushing the compounding effect to exponential heights. We pushed our trend portfolio from 12500% to 45000%, by adding an uncorrelated sub portfolio of MR strategies that made as a standalone portfolio 330% during that time! Let me visualize that with a chart: ![Robuxio Potfolio VS individual per approach](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-Potfolio-VS-individual-per-approach.png&w=1920&q=75) Now you understand the importance of an all weather approach in crypto. Crypto gives huge trends. But without the right approach you can be in deep drawdowns like Solana and recoveries of more than 2000% will still not make you breakeven again. With a good approach like ours at Robuxio you can keep growing. The snowball is growing bigger and faster into a massive avalanche! ## Compounding over time With Buffett, we looked at 40+ years of data. Crypto, being a new, inefficient market full of amateurs, doesn't have that long of a history. But that's exactly where the opportunity lies. The edge we have now won't stay as large for the next 30 years, but that's also not necessary. Look at what was possible in crypto in a few short years: ![Robuxio High Risk Portolfio Compound VS Not Compounding](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fseries-16%2FRobuxio-High-Risk-Portolfio-Compound-VS-Not-Compounding.png&w=1920&q=75) The compound annual growth rate that an all weather approach can achieve in crypto is so high that in a few years you can grow incredibly big. Will it happen again? Who knows, but we are prepared. And we started 2024 very strong! That was where things stood when we published this piece in March 2024—a snapshot of the moment, not a claim about performance today. [Algorithmic Crypto Trading](https://robuxio.com/education/series) Part 16 of 16 [Part 15 · Previous Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[Series complete Back to Algorithmic Crypto Trading](https://robuxio.com/education/series) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Algorithmic Crypto Trading 16-Part Series Progress 16 of 16 [Trading vs. Hodling](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[Volatility – Ultimate Reason to Trade Crypto](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[Trading Approaches](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[Trend Following](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[Mean Reversion](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[Breakout Trading](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[Regime Filter](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[Risk Of Ruin](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[Martingale vs. Anti-Martingale](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[Trading Biases](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[Position Sizing](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[Building a Profitable Strategy](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[Robustness Testing](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[Portfolio](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[Drawdowns](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 The Power of Compounding](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound.md) --- # The Algorithmic Crypto Playbook by Pavel Kýček Source: https://robuxio.com/education/book Markdown: https://robuxio.com/education/book.md Pavel Kýček's practical guide to systematic crypto trading: research, backtesting, execution and portfolio construction, end to end. No coding required. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # The Algorithmic Crypto Playbook A Practical Guide to Building, Testing, and Trading Systematic Strategies [by Pavel Kycek ![Pavel Kycek](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fpavel.png&w=3840&q=75)](https://x.com/PKycek) [Start reading now](#start-reading)[Get it on Amazon](https://robuxio.com/book/link?source=book_page_hero) 5.0 on Amazon · 200+ readers · 18+ years trading [Start reading](#start-reading) Read Chapter 1 — turn the pages The Algorithmic Crypto Playbook ## Introduction Investors globally are racing to gain crypto exposure after witnessing Bitcoin’s extraordinary returns over the last decade. U.S. spot Bitcoin ETFs attracted $116 billion in inflows by the end of 2025, with BlackRock’s iShares Bitcoin Trust capturing the majority of institutional capital and becoming the third-largest ETF globally in its first year. The allure is undeniable, Bitcoin has delivered life-changing wealth to early investors. What most people don’t realise is that Bitcoin is maturing as an asset, and its volatility (the very characteristic that drove those massive returns) is steadily declining. To replicate those past gains, many investors are now turning to the broader crypto market, often assuming that the same buy-and-hold approach that worked for Bitcoin can deliver similar results across the broader Altcoin market. This assumption is not just wrong, it has proven detrimental financially. ### The Harsh Reality of Crypto Investing Historical data tells a clear story. Buy-and-hold strategies have consistently failed when applied to the broader crypto market. Most coins suffer massive drawdowns from which they never recover. If you had bought the 20 largest cryptocurrencies at their peak in late 2021, only three would have recovered to positive returns by now. The rest are in deep drawdowns ranging from 36% to complete wipeouts. ![Table of buy-and-hold returns on the top 20 coins since their 2021 peak — only XRP, BNB and BTC are positive; the rest range from −36% to −99.8%.](https://robuxio.com/_next/image?url=%2Fimages%2Fbook-preview%2Ftop20-buy-hold.png&w=3840&q=75) Only three of the top 20 coins produced positive returns since 2021. The results become even worse when you examine broader market indices. The Top 50 Binance Futures Index, a daily-rebalanced, equally weighted basket of the top 50 crypto futures by volume and liquidity, tells the complete story. Most coins never recover after large drawdowns and eventually fade into obscurity or go to zero entirely. ![Chart of the Top 50 Binance Futures equal-weight index showing a steep rise into 2021 followed by a prolonged drawdown.](https://robuxio.com/_next/image?url=%2Fimages%2Fbook-preview%2Ftop50-futures-index.png&w=3840&q=75) The broader crypto market has not yet proven to be in a sustained upward trend. This is the fundamental nature of how most crypto projects evolve. The vast majority of cryptocurrencies lack real-world utility, sustainable business models, or transparent governance. They’re fueled by speculation, hype cycles, and market manipulation, leading to severe drawdowns that wipe out uninformed investors. This volatility and instability make the crypto market in its current form, an unreliable asset class for long-term investment. Yet despite this reality, the broader crypto market offers something unprecedented. ### The Hidden Opportunity While buy-and-hold strategies destroy capital in crypto, the same characteristics that make them unsuitable for passive investing (extreme volatility, persistent inefficiencies, and emotionally driven participants) make crypto ideal for algorithmic trading. Crypto remains one of the most volatile and inefficient asset classes in the world. Daily price movements of the top 50 crypto futures are often 5–10 times larger than major equity indices. ![Comparison chart of daily volatility for a traditional equity portfolio versus a crypto portfolio, with crypto swings far larger.](https://robuxio.com/_next/image?url=%2Fimages%2Fbook-preview%2Fvolatility-equities-vs-crypto.png&w=3840&q=75) This comparison highlights the massive disparity in volatility between traditional equity markets and crypto markets. For traditional investors, volatility represents risk. But for algorithmic traders, volatility represents profit potential. Larger price swings create more frequent and more profitable trading signals. The emotional participants in crypto markets make classic mistakes driven by fear and greed. Panic selling creates oversold conditions that tend to reverse. Fear of missing out creates overbought conditions that tend to correct. These behavioral patterns repeat consistently because human psychology doesn’t change, even when the asset class is new. This combination of high volatility, structural inefficiencies, and behavioral mispricings creates a rare and time-sensitive window. As crypto matures, these inefficiencies will fade, just as they have in traditional markets over decades of institutional participation. But right now, today, crypto offers something that sophisticated traders rarely find: an inefficient market environment where algorithmic approaches can generate outsized returns by capturing short-term price dislocations rather than betting on any particular project’s long-term success. ### My Journey to Algorithmic Crypto Trading My name is Pavel Kýček, and I have been trading for over two decades. When I started trading at 18, I was convinced I possessed some special insight that would allow me to beat markets quickly. Like most beginners, I significantly overestimated my competence while underestimating the market’s complexity. For seven painful years, I lost consistently. The breakthrough came when I stopped trying to predict what markets would do and started building systems that could profit regardless of market direction. The key was realizing that instead of fighting the market’s unpredictability, I needed to systematically capture it. That shift led me toward algorithmic trading based on historical price data. I could test any idea against years of market behavior and see exactly how my strategy would have performed. This gave me something prediction never could, namely, statistical confidence about probable outcomes. The transformation took years. Moving from losing trader to consistent profitability required not just better systems, but better psychological discipline. The hardest part wasn’t building algorithms, it was actually learning to trust them during losing streaks. Today, I co-manage Robuxio alongside my partners Dries and Xavier. We provide automated algorithmic trading strategies for institutions and serious investors. As we have grown rapidly over the past few years, I feel the deep need to give back to people who are at an earlier stage on their journey to becoming profitable traders. Hence, why I am writing this book. ### The Algorithmic Approach What if instead of trying to predict market direction, you built systems that profit from specific market behavior? What if you stopped hoping for one type of market and started preparing for all types? This book teaches you to develop multiple systematic trading approaches that generate profits across different market environments. Not through prediction, but through statistical edges identified in historical data and executed with discipline. A trading edge is an advantage that allows a trader to make consistent profits over time. As markets evolve, however, it becomes increasingly difficult to maintain that edge. This isn’t random, it follows a predictable pattern as markets mature. This book will help you understand what edges are available to you and how to exploit them. You’ll build systems with specific entry and exit rules, test them against survivorship-bias-free historical data, and know (before risking real money) what probability of success you have. You’ll understand expected drawdowns, which market conditions favor which systems, and have statistical confidence rather than emotional hope. More importantly, you’ll learn to combine these systems. Individual strategies have losing periods (it’s inevitable). But when you run multiple approaches simultaneously, designed for different market conditions, the combined portfolio generates returns even when individual components struggle. When markets trend, your trend-following systems profit. When they chop, your mean reversion strategies capitalize. You’re not betting on only one scenario. You’re preparing for all of them. Once your systems are operational, emotion largely disappears from trading, not because you stop caring, but because you finally understand what’s happening. Your computer executes algorithms built on your rules and risk parameters. You’re not glued to screens, anxiously watching every tick. If you’re making money, you know why. If you’re losing money, it’s equally clear. The system is not aligned with the current market regime. There’s no invisible enemy that you don’t fully understand and no manipulation narrative that you are fighting against. Contrast this with discretionary trading without a system. When expectations are vague and biases creep in, every loss feels personal. The market feels “against you,” and it’s easy to blame social media narratives about manipulation. A systematic approach removes that noise. You replace hope and frustration with an understanding of market behavior, and how you can systematically profit from it. That understanding brings emotional calmness. The mental freedom alone is worth the upfront work. ### Your Journey Starts Now By the end of this book, you’ll have the tools to design, test, and implement trading strategies tailored to your personal goals and risk tolerance. Most importantly, you’ll have the confidence that comes from understanding exactly why your strategies work and when they don’t. Financial markets present incredible opportunities to build lasting wealth. But those opportunities come with corresponding risks for those who approach them unprepared. The question isn’t whether opportunities exist in the markets, it’s whether you’ll be prepared to capture them systematically and profitably. You can spend years making the same mistakes I made, losing money and confidence along the way. Or you can learn from those who have already walked that painful path and come out the other side with approaches that work. In the chapters that follow, is everything I wish I’d known at the beginning. Let’s get into it. Chapter 1 ## Why Most Crypto Traders Fail The vast majority of retail traders don’t just underperform, they lose money. Consistently. While difficult to measure across every market participant, the industry often cites the 90-90-90 rule, which states that 90% of traders lose 90% of their capital within 90 days of trading. From my experience, this is the sad reality. I know this, because I was part of that majority for many years. At 38 years old, I’ve been trading for two decades, starting when I was just 18. Those first seven years were painful. I lost money consistently, made every mistake imaginable, and came close to quitting multiple times. The losses weren’t just painful financially, they also had a large impact on my psychological and emotional state. Looking back, my early struggles weren’t due to lack of intelligence or effort. I was smart enough. I worked hard enough. I was obsessed with learning about trading. The problem was that I was learning the wrong things from the wrong sources. I was consuming the kind of misguided advice that dominates trading content. The type of advice designed to make trading look simple and exciting rather than actually help traders succeed. I approached markets with confidence that vastly exceeded my competence. I believed I could see patterns others missed. I thought my ability to analyze information in other areas of life would translate directly to trading success. I was convinced I’d be profitable within months, maybe a year at most. I was wrong. What changed everything wasn’t finding some secret indicator or magic strategy. It was finally understanding why I was failing, and more importantly, why most traders fail. Once I grasped the fundamental reasons behind widespread trader failure, I could address them systematically rather than continuing to bang my head against the same walls. The reasons traders fail aren’t mysterious. They aren’t hidden. They’re just uncomfortable truths that most trading content refuses to address, because uncomfortable truths don’t sell courses or build large social media followings. The reality is trading is difficult. Not because it requires specialized knowledge that only geniuses can master. But because it requires you to operate in one of the most competitive environments that exists, where your natural psychological tendencies actively work against you. Before we dive into strategy development, we first need to discuss why trading is so difficult, why the approaches most people use are designed to fail, and why systematic approaches offer the most realistic path to consistent profitability. ### The Illusion of Simplicity Crypto trading looks deceptively easy. Open any social media platform and you’ll see it yourself. Charts moving up and to the right, success stories of twenty-somethings retiring early, and influencers showing off Lamborghinis supposedly bought with trading profits. The barrier to entry couldn’t be lower, anyone with $100 and a smartphone can start trading within minutes. The interface of many crypto exchanges is clean and intuitive. Just click buy when the price is low, click sell when it’s high. It sounds simple. But this illusion of simplicity is a trap, and it catches nearly everyone. What you don’t see behind those success stories is the graveyard of failed traders. You don’t see the sleepless nights, the margin calls, and the mental breakdowns. The crypto space actively promotes this illusion because simplicity and certainty sells. Complexity and uncertainty doesn’t. Here’s what actually happens when most people start trading crypto: They open an account during a bull market when prices are rising. Everything they touch seems to make money. They mistake a rising tide for trading skill. They increase their position sizes. They add leverage. They tell their friends they’ve “figured it out.” Then the market turns (and it always turns) and suddenly their account gets liquidated, leaving them with nothing. Those that didn’t get liquidated sell at the bottom, convinced crypto is a scam, or they hold forever, becoming what the community mockingly calls “bag holders.” The hidden complexity beneath crypto’s simple surface creates challenges that traditional traders rarely face. #### The 24/7 Trap Traditional markets close. The New York Stock Exchange operates 9:30 AM to 4:00 PM Eastern Time. Even forex markets, while operating five days a week, have reduced weekend activity. These closures provide natural breaks where traders can step away, think clearly, and avoid impulsive decisions. Crypto never stops. Markets operate every hour of every day. Bitcoin doesn’t care if it’s 3 AM on Christmas morning, trading continues, prices move, and opportunities (or losses) emerge constantly. For manual traders, this creates difficult conditions. You can’t monitor markets around the clock. You need to sleep. But while you sleep, major price movements can occur. You wake up to discover your position moved 15% against you overnight, or worse, you set an alert on your phone and wake up in a panic at 2 AM trying to make rational decisions while half-asleep. This constant availability creates perpetual fear of missing out and anxiety. There’s always something happening. Always a coin pumping. Always an “opportunity” you’re missing. This psychological burden is exhausting and leads to impulsive, emotion-driven decisions. #### Extreme Volatility Is a Double-Edged Sword Crypto consistently experiences deeper drawdowns than any other major asset class. The chart below demonstrates that crypto corrections often exceed 70%. ![Cumulative performance of an S&P 500 portfolio versus a crypto portfolio, with the crypto line showing far deeper drawdowns.](https://robuxio.com/_next/image?url=%2Fimages%2Fbook-preview%2Fsp500-vs-crypto.png&w=3840&q=75) While explosive upward moves are a key characteristic of current crypto markets, deep drawdowns of 70% are too. These drawdowns combined with the extreme volatility make crypto less interesting for passive investing. Daily price movements in crypto are 5–10 times larger than major equity indices. A 5% daily move in Bitcoin is unremarkable. In the S&P 500, it would be headline news. For Altcoins, 20–30% daily swings occur regularly during volatile periods. ![Daily percentage-change chart comparing S&P 500 volatility with a crypto portfolio, the crypto series swinging much wider.](https://robuxio.com/_next/image?url=%2Fimages%2Fbook-preview%2Fdaily-volatility-sp500-vs-crypto.png&w=3840&q=75) This comparison highlights the massive disparity in volatility between traditional equity markets and crypto markets. For traditional passive investors accustomed to stock market behavior, this volatility is often psychologically intolerable. They watch their account value fluctuate wildly, triggering emotional responses that defy rational decision-making. But volatility itself isn’t the problem. Volatility creates opportunity. The problem is how traders respond to volatility emotionally rather than systematically. We will discuss how to harness this in more detail later. #### The Social Media Amplification Effect Crypto trading is inseparable from social media. X (formerly Twitter), Discord, Telegram, Reddit, these platforms drive sentiment, spread narratives, and create hype cycles. Influencers with large followings can move the price of smaller coins with single tweets. Projects organize coordinated “campaigns” to pump their tokens. This environment creates several problems for discretionary traders. There’s too much information on social media, and most of it low-quality noise. Traders spend hours scrolling through X looking for “alpha” (profitable insights), finding instead a mix of legitimate analysis, scams, pump-and-dump schemes, and opinions disguised as facts. When everyone on your feed is buying a coin, fear of missing out becomes overwhelming. You convince yourself that if you don’t buy now, you’ll miss the move. This herd behavior creates bubbles that inevitably pop, leaving latecomers “holding bags”. Influencers with large followings can manipulate prices of small-cap coins. They accumulate positions quietly, then promote the coin to their followers. As followers buy, prices rise. The influencer sells into the buying pressure, leaving followers with losses. To make matters more difficult, the dominant narrative changes weekly. One week it’s “DeFi summer.” Next week it’s “NFTs are the future.” Then it’s “meme coins.” Then it’s “AI tokens.” Beginner traders will often chase these narratives, always entering after the smart money is already positioned. Traditional markets have these dynamics too, but crypto amplifies them. The speed of information flow, the lack of regulatory oversight, and the predominantly retail participant base create an environment where emotional contagion spreads instantly. 1 / 2 preview [Open full-screen reader](https://robuxio.com/book/sample)[Get the full book on Amazon](https://robuxio.com/book/link?source=book_inline_reader_footer) ## What readers are saying 5.0 · Verified on Amazon Verified ### Great book for any level but especially for the new trader Just finished the book! It's a concentrated read with not much fluff. Gets right into what will improve any systematic traders outcomes in a logical sequence from mentality, bias, testing, development and validation! The end wraps it all together and it provides you with concepts you can build yourself to test. Read full review A Amazon Customer United States Verified ### Must read and implement if trading alt-coins Read it in a Day — it's a small book packed with vital info. Book gets straight to the point. Explains 3 types of strategies. How to test them for robustness and how to construct strategies for use in a portfolio. The way symbols are systematically chosen. The techniques for testing data in a new market like alt-coins where there isn't much data. I am actually surprised at how much new information I got from this short read. I will definitely be implementing my own versions of the processes and strategies in this book. Read full review M MR P. United Kingdom [Post on X Currently reading The Algorithmic Crypto Playbook by @PKycek. A gold resource for algo trader in crypto. 20 bucks, but feels like I have paid for a guru masterclass 🤯 W Web3Way @Web3wayz](https://x.com/Web3wayz/status/2069605399083315298) Verified ### An honest and clear book, well worth reading I'm pretty new to crypto and honestly picked this up expecting another "get rich quick" book. It's not that at all, if anything, it's the opposite. The author is upfront that crypto can wreck you without a real process, which was weirdly reassuring to hear. The biggest thing for me was how it explains momentum and mean reversion strategies without assuming you already know everything. And it keeps hammering home that no strategy works all the time. As a beginner, I needed to hear that. The chapters on risk management and overfitting really stuck with me. I had no idea how misleading backtests could be, or how much psychology messes with trading decisions. That stuff isn't talked about enough. Read full review J Jamolpe Spain Verified ### Crypto algorithmic trading goldmine I saw this book pop-up on Amazon when I was looking for some other books on stock trading. I wasn't expecting much as I am not that familiar with crypto, but I can tell you this a goldmine of insights into everything from "why crypto", to practical methods of building your own strategies. Definitely recommend for anyone looking to level up their algorithmic trading game. ![Photo from George's review](https://robuxio.com/_next/image?url=%2Fimages%2Fbook%2Freview-george.png&w=828&q=75) Read full review G George Germany [Post on X I learned a lot from your book, thanks! E Edwin Chan @EdwinChan160917](https://x.com/EdwinChan160917/status/2039965490127520068) Verified ### Covers all the foundations Short reading that explains the basics of algorithmic trading in crypto markets. I found it while looking for different strategies than the ones I usually use in crypto, and I found it very interesting. 100% recommended Read full review J Javier Spain Verified ### Read it! Very good introduction to algorithmic trading, especially for crypto. It focusses on the very basic (and important) overlying principals for successfull algorithmic trading. Definitely worth reading! Y Yvonne Jakobi Germany [Post on X For all systemic traders this is a GREAT book, do read it! B Blake Carrington @BankersCandle11](https://x.com/BankersCandle11/status/2020751617109131441) [Post on X Hi Pavel, read your book. I believe its one of the best introductions to algorithmic trading out there, especially for crypto. It focusses on the very basic overlying principals (eg expectation) for sucessfull algorithmic trading. Definitely worth reading! N NoBodyNose @vladijakobi](https://x.com/vladijakobi/status/2018256031122415888) Verified ### Great book for any level but especially for the new trader Just finished the book! It's a concentrated read with not much fluff. Gets right into what will improve any systematic traders outcomes in a logical sequence from mentality, bias, testing, development and validation! The end wraps it all together and it provides you with concepts you can build yourself to test. Read full review A Amazon Customer United States Verified ### Must read and implement if trading alt-coins Read it in a Day — it's a small book packed with vital info. Book gets straight to the point. Explains 3 types of strategies. How to test them for robustness and how to construct strategies for use in a portfolio. The way symbols are systematically chosen. The techniques for testing data in a new market like alt-coins where there isn't much data. I am actually surprised at how much new information I got from this short read. I will definitely be implementing my own versions of the processes and strategies in this book. Read full review M MR P. United Kingdom [Post on X Currently reading The Algorithmic Crypto Playbook by @PKycek. A gold resource for algo trader in crypto. 20 bucks, but feels like I have paid for a guru masterclass 🤯 W Web3Way @Web3wayz](https://x.com/Web3wayz/status/2069605399083315298) Verified ### An honest and clear book, well worth reading I'm pretty new to crypto and honestly picked this up expecting another "get rich quick" book. It's not that at all, if anything, it's the opposite. The author is upfront that crypto can wreck you without a real process, which was weirdly reassuring to hear. The biggest thing for me was how it explains momentum and mean reversion strategies without assuming you already know everything. And it keeps hammering home that no strategy works all the time. As a beginner, I needed to hear that. The chapters on risk management and overfitting really stuck with me. I had no idea how misleading backtests could be, or how much psychology messes with trading decisions. That stuff isn't talked about enough. Read full review J Jamolpe Spain Verified ### Crypto algorithmic trading goldmine I saw this book pop-up on Amazon when I was looking for some other books on stock trading. I wasn't expecting much as I am not that familiar with crypto, but I can tell you this a goldmine of insights into everything from "why crypto", to practical methods of building your own strategies. Definitely recommend for anyone looking to level up their algorithmic trading game. ![Photo from George's review](https://robuxio.com/_next/image?url=%2Fimages%2Fbook%2Freview-george.png&w=828&q=75) Read full review G George Germany [Post on X I learned a lot from your book, thanks! E Edwin Chan @EdwinChan160917](https://x.com/EdwinChan160917/status/2039965490127520068) Verified ### Covers all the foundations Short reading that explains the basics of algorithmic trading in crypto markets. I found it while looking for different strategies than the ones I usually use in crypto, and I found it very interesting. 100% recommended Read full review J Javier Spain Verified ### Read it! Very good introduction to algorithmic trading, especially for crypto. It focusses on the very basic (and important) overlying principals for successfull algorithmic trading. Definitely worth reading! Y Yvonne Jakobi Germany [Post on X For all systemic traders this is a GREAT book, do read it! B Blake Carrington @BankersCandle11](https://x.com/BankersCandle11/status/2020751617109131441) [Post on X Hi Pavel, read your book. I believe its one of the best introductions to algorithmic trading out there, especially for crypto. It focusses on the very basic overlying principals (eg expectation) for sucessfull algorithmic trading. Definitely worth reading! N NoBodyNose @vladijakobi](https://x.com/vladijakobi/status/2018256031122415888) [View all reviews on Amazon](https://robuxio.com/book/link?source=book_page_reviews) About the Book ## A process for the most unforgiving market there is. Crypto is the most volatile and structurally inefficient market available to traders — unforgiving and often destructive without a process, but highly rewarding for those who learn to approach it correctly and systematically. This book is about building that approach. What you'll learn - How momentum and mean reversion strategies are built and tested. - Why no single strategy works in all conditions — and how combining uncorrelated approaches creates robust performance across market environments. - How to recognise survivorship bias, overfitting, and the psychological traps that undermine most traders. - The core principles of risk management and portfolio design, stripped of unnecessary complexity. The Strategies Inside ## Three strategies — and the proof they work. The book builds three complementary strategies from first principles, then combines them. That same trio is the Robuxio Lite portfolio below — backtested from 2019 and trading out-of-sample since September 2024. 01 ### Momentum Ride sustained directional moves — crypto's strongest and most persistent edge. 02 ### Mean reversion Fade overextended moves back toward fair value when the conditions are right. 03 ### Combining the two Blend uncorrelated strategies with rebalancing for steadier, more robust returns than any single system. 45% Backtest + Live CAGR 2019 → today, Robuxio Lite portfolio -20% Max Drawdown vs. Bitcoin's -77% over the same period Sep 2024 Live Out-of-Sample Strategies trading in production since ### Robuxio Lite Portfolio vs. Bitcoin vs. TOP50 Index Show Individual Strategies Backtest (until Sep 2024) Out-of-Sample (live since Sep 2024) ### Drawdown Analysis Drawdown shows the percentage decline from the peak value Live portfolios ### Curious to see our institutional portfolios? The same systematic principles from the book, running live — cumulative returns, drawdowns, and regime performance. [See live performance →](https://robuxio.com/crypto#performance) Learn the exact frameworks behind this performance [Get the Book on Amazon](https://robuxio.com/book/link?source=book_page_chart) Or [read Chapter 1](https://robuxio.com/book/sample) if you're not sure yet. Who It's For ## Who this book is for If any of these sound like you, this book is for you. 1 ### Aspiring systematic traders You understand why systematic beats discretionary. This book gives you the foundation to build your first portfolio — not just a single strategy. 2 ### Traders stuck in the endless loop You've jumped from one strategy, indicator or guru to the next, hoping the next approach works — then started over at the first setback. This gives you the understanding underneath the rules so you stop restarting. 3 ### Systematic traders new to crypto You trade equities, futures, or commodities systematically. Crypto still has the volatility and inefficiency those markets lost years ago. This is not for you if… - ✕ You're looking for "signals" to copy without understanding why they work. - ✕ You believe Bitcoin buy-and-hold will replicate its first decade. - ✕ You aren't willing to size positions, manage risk, or accept drawdowns as part of the process. Inside the Book ## The full chapter guide Nine chapters take you from why most approaches fail, to designing strategies grounded in real market behavior, to combining them into a portfolio you can trust. Here's exactly what each one covers. Part I ### The Foundation Why most fail, and how to think differently 1 #### Why Most Crypto Traders Fail The hard truth behind the 90-90-90 rule and Pavel's own seven losing years. Most traders fail not from lack of intelligence or effort, but from learning the wrong things from the wrong sources — and from confidence that outruns competence. 2 #### The Systematic Mindset A contrarian take from someone who runs an algorithmic trading firm: psychology alone won't make you profitable and can't rescue a strategy with no edge. Its real job is helping you execute a proven edge with discipline. 3 #### How Crypto Markets Really Work The most overlooked decision in trading is which market to trade at all. Why crypto's structural inefficiency and volatility still offer edges that mature markets lost years ago — and why it suits the systematic retail trader. Part II ### The Strategies Design and build strategies grounded in real edges 4 #### Trading Approaches That Actually Work The four types of market behavior — momentum, mean reversion, arbitrage and market making — and why only momentum and mean reversion are realistic edges for retail systematic traders, plus the principles behind each. 5 #### Designing Exits That Match Your Edge Entries and exits are one unified idea, not separate decisions. Why the fixed-stop-loss dogma is often counterproductive, and how exit logic must reflect the market behavior and trade duration your edge is built to exploit. 6 #### Building a Trading Strategy The idea-first method: start from a researched idea about how markets behave, then build rules to capture it — the opposite of throwing indicators at historical data until a backtest looks good (the reason most systems fail live). Part III ### The Portfolio Validate, manage risk, and combine into a portfolio 7 #### Robustness Testing Why strategies that look great in backtests fall apart with real money. Robustness testing as deliberate skepticism — stress-testing and trying to break a strategy across many conditions before the market does it for you. 8 #### Risk Management The most important topic in trading: protect capital first, and profit follows from an edge applied consistently. Mapping the obvious risks and the unseen 'black swan' exposures, plus the major risk categories every systematic trader must manage. 9 #### Portfolio Design The real holy grail isn't one perfect strategy — it's combining uncorrelated strategies with intelligent rebalancing for better risk-adjusted returns. How these come together into the Robuxio Lite portfolio (and how, done poorly, it amplifies losses). The Road From Here Everything in the book can be traded manually. Automation is only about 10% signal generation — the other 90% (reliable data, execution, reconciliation, monitoring and resilience during volatility) is the hard part, and the same infrastructure Robuxio runs in production. [Read Chapter 1 free](https://robuxio.com/book/sample)[Get it on Amazon](https://robuxio.com/book/link?source=book_page_chapters) Keep exploring ## Want to dig deeper? Pick a starting point. The playbook lays out the full systematic framework, the whitepaper is the institutional thesis, and the crypto vehicles are the live portfolios you can allocate to. [7 parts The Crypto Playbook The systematic crypto framework in seven readable parts. Read the playbook →](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Whitepaper The institutional thesis The full systematic approach behind the live portfolios. Read the whitepaper →](https://robuxio.com/crypto/whitepaper)[Invest Our crypto vehicles The systematic crypto portfolios you can actually allocate to. Explore the vehicles →](https://robuxio.com/crypto) “ A goldmine of insights — from “why crypto,” to practical methods for building your own strategies. George · Verified Amazon purchase, Germany ![Pavel Kýček](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Fpavel.png&w=3840&q=75) About the Author ## Pavel Kýček Pavel spent the first seven years of his trading career losing money, then the next eleven figuring out why. He started in traditional finance — six years on risk management and FX hedging for major corporations — before moving into systematic trading full-time. Today he is CEO and co-founder of Robuxio, an algorithmic trading company serving financial institutions and professional investors. He also teaches systematic crypto trading as a guest lecturer at the University of Zlín. This book distills the same principles he uses to build and manage portfolios of uncorrelated strategies across forex, commodities, equities, and crypto. Experience 18+ Years Role CEO & Co-Founder Guest Lecturer University of Zlín ## Frequently Asked Questions The Book Who It's For Strategies & Content Buying & Access ### What's actually in this book? Eleven chapters across three parts: (I) Foundation — why most crypto traders fail, the systematic mindset, how crypto markets really work; (II) Strategies — the three approaches that actually work (momentum, mean reversion, breakout), exit design, and how to build a complete strategy; (III) Portfolio — robustness testing, risk management, and combining the three strategies into the Robuxio Lite portfolio. It closes with a candid epilogue on edge decay and the trade-off between manual and automated execution. Do I need to know how to code? How long does it take to read? How is this different from the Robuxio Algorithmic Trading Masterclass? What makes this book different from other algo trading books? Want to go further? ## The book is the principles. The course is the practice. Most readers start with the book. About a third move on to the Robuxio Algorithmic Trading Masterclass — 10 video lessons plus a bonus masterclass that turn the framework into actual coded, working strategies. - 8 complete strategies, coded and explained — the book's 3 extended into a 5-strategy portfolio - 10 lessons + bonus masterclass · ready-to-use RealTest files - 12 months of automated Robuxio Lite portfolio access (up to $10K) - Same instructor as the University of Zlín course [See the full course](https://robuxio.com/course) ![Pavel teaching at the whiteboard in the Robuxio Algorithmic Trading Masterclass](https://robuxio.com/_next/image?url=%2Fimages%2Fcourse%2Flessons%2FLesson1.png&w=3840&q=75) Algorithmic Trading Masterclass 11 video lessons [Watch lesson 1 free — we cover the basics](https://robuxio.com/course?autoplay=1) Includes 5 ready-to-trade strategies The Window Is Open ## Markets change. Edges decay. Right now, crypto is still inefficient. Daily price moves in the top 50 crypto futures are 4–10× larger than major equity indices. Behavioural mispricings repeat constantly. But every quarter, more institutions arrive — and that window closes a little more. This book gives you the framework to capture systematic returns from crypto while they're still there to capture. [Get it on Amazon](https://robuxio.com/book/link?source=book_page_footer)[Read Chapter 1 now](https://robuxio.com/book/sample) 30-day Amazon return policy. Available worldwide on Amazon Kindle and paperback. The Algorithmic Crypto Playbook Live strategies · 5.0★ on Amazon [Sample](https://robuxio.com/book/sample)[Get it on Amazon](https://robuxio.com/book/link?source=book_page_sticky) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/book.md) --- # The Infrastructure Layer Most Allocators Overlook | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook Markdown: https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook.md Crypto Playbook · Part 7 of 7. The execution infrastructure behind systematic crypto trading at institutional scale, and how to access Robuxio. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Infrastructure Layer Most Allocators Overlook Part 7 of 7 • Pavel Kýček • May 15, 2026 Over the past six articles, we have covered the most robust institutional approach for achieving broad digital assets exposure: - Bitcoin's return profile is maturing and passive allocation to the broader market has a poor historical track record - Digital asset volatility is a structural source of systematic edge, not a risk to be avoided - Momentum and mean reversion strategies provide regime-specific return generation across the full market cycle - Combining uncorrelated strategies into a single portfolio produces measurably better risk-adjusted outcomes than any single strategy can achieve in insolation Today, we address the operational question: how can a systematic portfolio be executed reliably, at scale, across a 24-hour market that never closes? ## The Operational Complexity of Automated Crypto Execution Systematic trading in digital assets introduces operational requirements that have no equivalent in traditional market automation. A robust execution engine must handle: - Continuous, uninterrupted data ingestion across multiple exchanges and asset pairs - 24/7 trade execution with automatic reconciliation and position management - Real-time anomaly detection and automatic correction without human intervention - Execution logic conditioned on available liquidity and order book depth to minimise market impact - Institutional-grade security in a private network environment - Scalable architecture capable of managing concurrent portfolios across many accounts Solving these requirements individually is achievable. Integrating them into a single fault-tolerant system, one that operates continuously in a market that has no closing bell, is an infrastructure challenge that requires significant engineering investment and operational iteration. This is what we have built. ## The Robuxio Execution Infrastructure Our trading engine automates the execution of 20+ uncorrelated systematic strategies across a dynamic universe of the top 40 USDT-settled crypto futures, which are reconstituted daily to reflect actual market liquidity conditions. The infrastructure is co-located near major exchanges to minimise latency and is load-tested to operate 60,000+ portfolios simultaneously, each running in a fully isolated execution agent, independent of every other client portfolio. Every order passes through a pre-trade risk router before any instruction reaches an exchange. Checks cover exposure limits, collateral constraints, approved instrument lists, and live venue health, done automatically, on every trade. Orders are sliced and paced to reduce market impact while maintaining execution quality at scale. The entire system operates within a private network with no public internet exposure. For more detailed information on our trading engine, please take a look at our​​. ![The Robuxio Execution Infrastructure — The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2F01.png&w=1920&q=75) ## Our Portfolios Our flagship offering is the Robuxio Crypto Portfolio, a short-term focused portfolio combining momentum and mean reversion strategies in both absolute and relative forms on both the long and short side. It is designed to generate returns in various market regimes, including bear markets. The portfolio is available in two standardised volatility profiles to match different institutional mandates, but can be further tailored to specific volatility mandates. ## Collateral Options All portfolios trade USDT-settled futures and are available across three collateral structures, allowing institutions to align their crypto trading allocation with their existing custody and treasury preferences: ##### USD Stablecoin Collateral Provides pure strategy exposure without additional currency risk, ideal for institutions seeking isolated crypto trading alpha. ##### Bitcoin Collateral For institutions wanting Bitcoin exposure plus trading alpha, with profits automatically converted to Bitcoin weekly. ##### Ethereum Collateral For institutions wanting Ethereum exposure plus trading alpha, with profits automatically converted to Ethereum weekly. ## Historical Portfolio Returns Historical returns for each portfolio and volatility profile are available in our detailed factsheets. Key performance metrics including annualised return, Sharpe ratio, maximum drawdown, and win rate are documented for each configuration. Our Robuxio Crypto portfolios have been running out of sample on client accounts since July 2024. ## How Can I Get Access? We offer four onboarding routes depending on your institutional structure and custody requirements: ##### Direct Exchange Connection Connect your individual or institutional, Binance or Bybit accounts via secure trade-only API keys directly to our trading engine. You maintain full custody while enabling automated execution. ##### Prime Brokerage Access through BIT (formerly Matrixport), one of the world's largest institutional crypto prime brokers, for clients with regional restrictions or institutional custody requirements. ##### Alternative Fund Access our Robuxio Crypto portfolios directly through our alternative investment fund. ##### White Label For allocations above $10M, we selectively offer white-label partnerships, allowing clients to embed our full trading engine behind their brand. White-label availability is limited and subject to our partner selection criteria. ## The Team Behind the portfolio design and the trading engine development is a team of experts in institutional risk management, enterprise software architecture, and digital asset markets. #### Pavel Kýček (CEO & Co-Founder) ![Pavel Kýček](https://robuxio.com/images/team/pavel.png) Pavel brings 18 years of trading experience and a strong background in risk management, having worked extensively in currency hedging for some of the biggest companies in his country. Now fully dedicated to Robuxio, he specializes in building uncorrelated strategies. #### Xavier Fariña (CTO & Co-Founder) ![Xavier Fariña](https://robuxio.com/images/team/xavier.png) A mathematician with advanced degrees in Big Data and Artificial Intelligence, Xavier combines 25 years of IT expertise with a forward-thinking approach to innovation. As a former Software Architect at HP, he excelled in designing complex systems. Now, he masterminds Robuxio's infrastructure and leads a talented development team. #### Dries Van den Broecke (COO & Co-Founder) ![Dries Van den Broecke](https://robuxio.com/images/team/dries.png) As a former Olympic athlete, Dries applies the same resilience and determination from his athletic career to his role at Robuxio. He oversees most operations, connecting all parts of the company to foster a cohesive and innovative environment. His strategic mindset and entrepreneurial spirit drive Robuxio's growth and operational excellence. #### Chris Jack (CGO) ![Chris Jack](https://robuxio.com/images/team/chris.png) As the former lead of Cambridge University's Digital Assets Program, one of the largest global public-private research initiatives, Chris brings deep expertise in digital assets and strategic growth. At Robuxio, he drives all facets of growth, from business development and partnerships to brand strategy, communications, and digital presence, shaping the company's public face and expanding its global reach. The executive team is supported by a broader group of quantitative researchers, software engineers, and data specialists, responsible for the continuous development, testing, and maintenance of Robuxio's trading strategies and technical infrastructure. ![The full Robuxio team](https://robuxio.com/_next/image?url=%2Fimages%2Fteam%2Ffull-team.webp&w=1920&q=75) ## Start Compounding Today Whether you are a fund, family office, institutional allocator or HNWI seeking systematic crypto exposure, we offer scalable access (tailored to your mandate). [Crypto Playbook Series](https://robuxio.com/education) Part 7 of 7 [Part 6 · Previous The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[Series complete Back to Crypto Playbook Series](https://robuxio.com/education) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 7 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook.md) --- # The Momentum Factor in Digital Assets — Crypto Playbook | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets Markdown: https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets.md Crypto Playbook · Part 3 of 7. Why momentum effects are structurally stronger in digital asset markets than in traditional ones, shown through data. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Momentum Factor in Digital Assets — Crypto Playbook Part 3 of 7 • Pavel Kýček • May 15, 2026 In the last article, we established that digital asset markets offer high volatility, persistent structural inefficiencies, and a predominantly retail participant base. These are precisely the conditions under which momentum-based systematic strategies are empirically shown to perform. Today, we quantify that performance and compare it directly against traditional market benchmarks using an equivalent framework. ## The Momentum Factor in Digital Assets Momentum as a systematic factor is well-established across asset classes: assets that have recently moved in a direction tend to continue in that direction over a defined holding period. In traditional markets, however, this effect is often more moderated, as broader institutional participation, deeper liquidity, and more efficient price discovery tend to reduce the persistence and magnitude of directional moves. In digital asset markets, this effect is reinforced by three structural characteristics: - High volatility – directional moves are larger in magnitude - Retail-dominated participant base – behavioural patterns reinforce trends - Persistent inefficiencies – pricing anomalies are not arbitraged away quickly ## Quantifying the Momentum Effect: S&P 500 vs. Bitcoin To isolate the difference in momentum behavior between the two markets, we applied an identical simplified model to both. This does not represent a strategy that can be traded live, but rather is a controlled comparison designed solely to illustrate how the same systematic logic produces structurally different outcomes depending on the underlying market. Here are the model parameters: Model Parameters - Entry: Price closes above the 50-day moving average - Exit: Price closes below the 50-day moving average - No leverage. Identical framework applied to both assets. ![S&P 500: 50-Day MA Crossover Strategy vs Buy & Hold](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fsp500-50dma-crossover-vs-buyhold-2019-2026-robuxio.png&w=1920&q=75) S&P 500 : The 50-day MA strategy underperforms the buy & hold strategy albeit with lower drawdowns. ![Bitcoin: 50-Day MA Crossover Strategy vs Buy & Hold](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fbitcoin-50dma-crossover-vs-buyhold-2019-2026-robuxio.png&w=1920&q=75) Bitcoin : The 50-day MA strategy outperforms the buy & hold strategy by more than 2x. The difference in outcome is a function of differing market structures between the two asset classes. Risk-Adjusted Metrics (Jan 2019 - Mar 2026) S&P 500 Buy & Hold S&P 500 50-Day MA Bitcoin Buy & Hold Bitcoin 50-Day MA Total Return +170.3% +90.1% +1,777.4% +3,975.8% Sharpe Ratio 0.96 1.01 0.97 1.38 Max Drawdown -33.9% -21.3% -76.7% -57.6% For both the S&P 500 and Bitcoin, the 50-day MA model produces lower drawdowns versus buy & hold. In relatively immature markets, simple models are capable of providing much stronger outperformance compared to more mature markets. These differences can be largely explained by the markets being in very different stages of their asset maturation cycle. In relatively immature markets, simple models are capable of providing much stronger outperformance compared to more mature markets. ## The Inherent Constraint of Long-Only Momentum The basic 50-day moving average model applied to Bitcoin above is a simplified illustration of a key structural point: that momentum effects are stronger in digital asset markets than in traditional ones. Our institutional Robuxio Crypto portfolios include a systematic momentum strategies sleeve - as part of a diversified portfolio across a broad universe of the top 40 USDT-settled crypto futures (reconstituted daily by volume and liquidity). The equity curve of one of our momentum long strategies below, clearly illustrates the weaknesses of running standalone strategies. The strategy experienced a 908-day drawdown period from September 2021 until March 2024 and experienced a drawdown on 96.5% of days. ![Momentum Long Strategy: Equity Curve and Drawdown (2019-2026)](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-long-1-drawdown-2019-2026-robuxio.png&w=1920&q=75) The length and depth of drawdowns shown above are not a sign of strategy failure, but rather the same spectrum of regime changes as traditional markets. Long-only exposure performs in bull regimes and sits through significant drawdowns in bear regimes. A robust institutional portfolio requires a regime agnostic approach, not just outperformance in a single environment. Digital asset markets are subject to the same spectrum of regime changes as traditional markets. Long-only exposure performs in bull regimes and sits through significant drawdowns in bear regimes. A robust institutional portfolio requires a regime agnostic approach, not just outperformance in a single environment. Tomorrow, we will address the case for bi-directional systematic exposure and how short strategies structurally improve portfolio performance across the full market cycle. [Crypto Playbook Series](https://robuxio.com/education) Part 3 of 7 [Part 2 · Previous Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[Part 4 · Next The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 3 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[3 The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[4 The Structural Limitation of Long-Only Exposure Up next →](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[5 The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets.md) --- # The Passive Crypto Allocation Problem — Crypto Playbook | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem Markdown: https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem.md Crypto Playbook · Part 1 of 7. Why passive Bitcoin ETF exposure is not equivalent to crypto exposure, and the structural limits of buy-and-hold. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Passive Crypto Allocation Problem — Crypto Playbook Part 1 of 7 • Pavel Kýček • May 15, 2026 Institutional capital globally is evaluating how digital assets fit into their mandate. The majority are planning to choose the path of least resistance: a Bitcoin ETF. It’s simple, regulated, and custody is solved. Fees are low (0.15-0.25%) and the infrastructure is backed by traditional players. However, most forget that Bitcoin exposure is not equivalent to crypto exposure. With a Bitcoin ETF they are taking a directional bet on a single asset, whose return profile has structurally changed. ## Bitcoin’s Diminishing Return Profile Bitcoin’s earliest holders captured exceptional returns at a stage of the asset’s lifecycle that is now structurally different. The data reflects a pattern consistent with asset class maturation: as adoption broadens and volatility compresses, the distribution of returns narrows. Measuring rolling 10-day windows with returns exceeding 10% illustrates the shift clearly: - 2017: 56.4% of 10-day periods delivered returns above 10% - 2025: 10.4% of 10-day periods delivered returns above 10% ![The Passive Crypto Allocation Problem — The Passive Crypto Allocation Problem](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fbtc-spot-roc10-abs-gte10-2017-robuxio.png&w=1920&q=75) This declining volatility profile is characteristic of emerging asset classes as they achieve broader market integration. The extraordinary returns available in Bitcoin’s early stages are a function of that early-stage risk profile and are not a permanent feature of the asset. ![Bitcoin 4-Year Annualized Volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fbtc-4y-annualized-volatility-robuxio-2019-start.png&w=1920&q=75) ## The Passive Allocation Problem in the Broader Market As awareness of Bitcoin’s maturing return profile grows, many allocators have extended exposure to smaller digital assets in search of higher return potential. The logic is structurally reasonable, if Bitcoin’s volatility is compressing, look to the broader market where it has not. The problem is not the asset class, but rather the strategy applied to it. A buy-and-hold approach that worked for Bitcoin up until now does not hold in the broader market. The data is unambiguous: of the 20 largest cryptocurrencies held from the market peak in late 2021, only two recovered to positive returns by May 2026. Buy & Hold Returns: Top 20 Altcoins Coin Return Coin Return BTC +13.39% XRP +6.76% BNB -2.25% BCH -46.90% ETH -56.15% DOGE -63.17% XLM -64.83% SOL -66.16% LINK -72.47% LTC -79.38% UNI -86.81% ADA -89.01% SHIB -89.93% AVAX -90.68% MATIC -94.58% ALGO -94.68% VET -96.19% DOT -97.70% AXS -99.27% LUNA -100.00% Returns for the top 20 cryptocurrencies by market cap, held passively from 2021-11-11 to 2026-05-10. The majority sustained drawdowns from which they have not recovered. This is a risk profile that no institutional mandate should absorb passively. Even when looking at an equally-weighted index of the Top 50 Binance Crypto Futures, reconstituted daily based on volume, there is no evidence of a secular upward trend. ![Top 50 Binance Crypto Futures Index](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Ftop50-binance-crypto-futures-index-2020-2026-robuxio.png&w=1920&q=75) ## The Institutional Implication The digital asset market presents genuine return potential, but that potential is not captured through passive allocation. The volatility that makes these assets attractive for an actively managed approach is precisely what makes passive holding strategies structurally inadequate. In the next article we will dive into why that same volatility (when approached systematically) becomes the foundation of consistent, risk-adjusted returns. [Crypto Playbook Series](https://robuxio.com/education) Part 1 of 7 [Series All 7 parts](https://robuxio.com/education)[Part 2 · Next Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 1 of 7 [1 The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[2 Why Crypto Volatility Is Misunderstood Up next →](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[3 The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[4 The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[5 The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem.md) --- # The Return Source Most Crypto Portfolios Ignore | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore Markdown: https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore.md Crypto Playbook · Part 5 of 7. Mean reversion is the return source most crypto portfolios overlook. How it complements momentum across sideways markets. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Return Source Most Crypto Portfolios Ignore Part 5 of 7 • Pavel Kýček • May 15, 2026 In previous articles, we covered the performance characteristics of long and short systematic strategies in digital asset markets. Together, they provide coverage across bull and bear regimes. However, a portfolio comprising only momentum strategies has a structural weakness: the non-directional market. Periods of sideways consolidation (with no sustained trend in either direction) represent the most challenging regime for momentum-based systems. This is where mean reversion strategies become structurally valuable. ## Why Mean Reversion Complements Momentum Mean reversion strategies operate on the principle that extreme short-term price dislocations tend to partially or fully retrace. Rather than following directional momentum, these systems identify extreme conditions (driven by liquidity gaps, retail overreaction, or momentum cascade) and take positions against the extension. In digital asset markets, this dynamic is particularly pronounced due to three structural features: - Retail-driven market behaviour : Short-term information and price moves frequently generate outsized reactions rather than efficient adjustment - Fragmented and uneven liquidity : thinner liquidity pockets can lead to exaggerated short-term dislocations and more frequent reversal setups - Limited arbitrage efficiency : with less institutional capital acting to compress mispricings, inefficiencies often remain exploitable for longer These dislocations tend to be frequent and short-lived, making mean reversion one of the most reliable and scalable sources of trading edge in digital asset markets. ## Short-Term Overextension Capture One of our short-side mean reversion systems identifies and trades unsustainable price spikes, entering against the overextension and exiting on reversion. The strategy generates structurally negative correlation to long momentum positions. Its standalone performance is not designed to maximise absolute return. Its purpose is portfolio stabilisation: a high win rate, consistent frequency, and performance that is specifically concentrated in the regime where momentum strategies are typically least effective. ![The Return Source Most Crypto Portfolios Ignore — The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmean-reversion-long-1-drawdown-2019-2026-robuxio.png&w=1920&q=75) ## Portfolio-Level Impact When the mean reversion system is combined into a simple 2-strategy portfolio with the momentum long strategy we covered in previous emails, the combined return correlation is near-zero: Returns Correlation Mean Reversion Momentum Long Mean Reversion 1.00 -0.16 Momentum Long -0.16 1.00 The combined portfolio produces reduced drawdowns, smoother compounding, and improved capital efficiency across the full market cycle. The mean reversion layer is not necessarily the highest return generating layer of the portfolio long-term, however it is a structural component of a regime-agnostic portfolio design. ![Momentum Long 1 vs Mean Reversion Long 1 vs Combined (2019-2026)](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-long-mr-combined-2019-2026-robuxio.png&w=1920&q=75) In the next article, we will bring all three strategy types together (long momentum, short momentum, and mean reversion) into a single portfolio and show the combined performance across market regimes as well as the risk management principles that allow the portfolio to be robust long-term. [Crypto Playbook Series](https://robuxio.com/education) Part 5 of 7 [Part 4 · Previous The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[Part 6 · Next The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 5 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[5 The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation Up next →](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore.md) --- # The Solution: A Regime-Agnostic Crypto Allocation | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation Markdown: https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation.md Crypto Playbook · Part 6 of 7. How long momentum, short momentum, and mean reversion combine into a single regime-agnostic crypto portfolio. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Solution: A Regime-Agnostic Crypto Allocation Part 6 of 7 • Pavel Kýček • May 15, 2026 Over the past articles, we have outlined the strategy types that form the foundation of our approach: - Long momentum strategies – to capture returns during sustained upward market regimes - Short momentum strategies – to generate returns and reduce portfolio correlation during bear markets - Mean reversion strategies – to profit from periods of volatile sideways price action. Each strategy type has defined strengths but also predictable limitations. By including these strategy types into a portfolio their respective weaknesses become structurally diversified rather than concentrated. The regime where one strategy type underperforms is typically the regime where another generates returns. ## Diversification by Behavioral Logic, Not Asset Allocation Conventional portfolio diversification is understood as a function of asset allocation, holding uncorrelated assets to reduce concentration risk. In digital asset markets, where inter-asset correlations spike sharply during stress periods, asset allocation alone provides limited protection. A second layer (diversification by behavioral logic) is required. Each strategy type generates returns from structurally different market regimes, reducing the directional correlation between strategies by design. Combined with explicit position-level risk controls, this produces a portfolio whose return drivers are not dependent on any single market regime. ## Momentum Long Strategies The momentum long sleeve of our Robuxio Crypto portfolios consists of eight strategies that cover both absolute and relative momentum. These strategies drive performance in both short-term and long-term market upward trends. Some of these strategies are pure crypto alpha-related plays. ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-long-combined-2022-2026-robuxio.png&w=1920&q=75) ## Momentum Short Strategies The momentum short sleeve of our Robuxio Crypto portfolios consists of six strategies that cover both absolute and relative momentum. These strategies drive performance in both short-term and long-term market downward trends. ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-short-combined-2022-2026-robuxio.png&w=1920&q=75) ## Mean Reversion Long Strategies The mean reversion long sleeve of our Robuxio Crypto portfolios consists of six strategies that cover both absolute and relative mean reversion. These strategies drive performance in volatile sideways markets. ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmean-reversion-long-combined-2022-2026-robuxio.png&w=1920&q=75) ## Mean Reversion Short Strategies The mean reversion short sleeve of our Robuxio Crypto portfolios consists of five strategies that cover both absolute and relative mean reversion. These strategies drive performance in volatile sideways markets. ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmean-reversion-short-combined-2022-2026-robuxio.png&w=1920&q=75) ## The Combined Portfolio When all strategy types are combined into a single portfolio, the effect of behavioral diversification is measurable and material: ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Frobuxio-crypto-portfolio-vs-strategy-categories-2022-2026.png&w=1920&q=75) When integrated into a low-correlation portfolio, these strategies create a more resilient return profile: - Shallower maximum drawdowns relative to single-strategy approaches. - Smoother equity profile with reduced return volatility. - More consistent deployment across a broader set of market regimes. - Stronger long-term compounding due to reduced drawdown depth and recovery time. This is only possible due to the uncorrelated nature of these strategies, both in returns and in drawdowns. ![The Solution To A Regime-Agnostic Crypto Allocation — The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fdaily-returns-correlation-matrix-2019-2026-robuxio.png&w=1920&q=75) The portfolio above is not constructed to perform in a single market condition. It is designed to remain active and generate returns across the full spectrum of market regimes, without relying on a directional market view or discretionary intervention. ## Portfolio Risk Management ### I. Market-Wide Risk Mitigation The combined portfolio’s resistance to broad market drawdowns is not incidental, it is engineered through three deliberate structural choices: - Directional diversification. Holding both long and short systematic exposure across 20+ strategies eliminates reliance on a single market regime. When certain strategies are underperforming, there is a high likelihood that others are performing well. - Correlation-managed strategy selection. Every strategy in the portfolio is selected through rigorous correlation analysis at the development stage, with ongoing systematic monitoring in deployment. Return streams are improved and drawdown periods shortened by maintaining a large set of strategies whose signals vary significantly in trading logic. - Regime change detection. Some of the strategies incorporate regime detection logic that identifies when market conditions have shifted materially. This allows these strategies to only initiate new positions under conditions consistent with their edge, preventing the portfolio from overtrading in regimes where certain strategies have no structural advantage. ### II. Single-Asset Risk Controls At the individual position level, three controls limit the damage any single asset can cause: - Defined position sizing. Each trade is sized through a systematic allocation framework based on the volatility profile and quality characteristics of the underlying token. Position sizing is therefore not uniform, but calibrated to reflect expected risk contribution and overall asset quality. - Dynamic universe and diversification requirements. Exposure is distributed across many liquid assets at any given time. Concentration in individual assets is systematically bounded, limiting the impact of any isolated failure, including exchange delistings or sudden liquidity collapses in a single token. - Black-swan risk management mechanisms. Hard limits are in place for extreme adverse moves, including protocol exploits, flash crashes, and liquidity events that fall outside normal volatility distributions. These are not discretionary, they execute automatically and without human override. In the final article, we will cover the final piece of the puzzle: the infrastructure that enables full automation and execution of this portfolio at institutional scale. [Crypto Playbook Series](https://robuxio.com/education) Part 6 of 7 [Part 5 · Previous The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[Part 7 · Next The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 6 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook Up next →](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation.md) --- # The Structural Limit of Long-Only Crypto Exposure | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure Markdown: https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure.md Crypto Playbook · Part 4 of 7. Long-only momentum is regime-dependent. Why combining long and short systematic strategies is required for any regime. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # The Structural Limit of Long-Only Crypto Exposure Part 4 of 7 • Pavel Kýček • May 15, 2026 In the last article, we demonstrated that momentum-based systematic strategies perform significantly better in digital asset markets than in traditional ones, driven in large by the structural characteristics of the asset class. We also noted the inherent constraint that long momentum strategies are regime-dependent and accumulate large drawdowns in unfavorable conditions. Now let’s dive into how to structurally resolve that constraint. ## The Structural Limitation of Long-Only Exposure Even well-constructed long momentum strategies operate within a narrow set of market conditions. Bitcoin’s price history illustrates the point. Over the last five years, it closed above its 50-day high only 5% of the time. Strong upward trending conditions (the conditions long breakout strategies require) are the exception, not the norm. ![The Structural Limitation of Long-Only Exposure — The Structural Limitation of Long-Only Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fbitcoin-above-50day-high-2019-2026-robuxio.png&w=1920&q=75) Outside of trending conditions, long-only systems are either minimally exposed, flat, or absorbing drawdowns. Let’s take another look at the equity curve of the long momentum strategy shown in the previous email: ![The Structural Limitation of Long-Only Exposure — The Structural Limitation of Long-Only Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-long-1-drawdown-2019-2026-robuxio.png&w=1920&q=75) To reiterate, this is not a strategy failure. It is the natural behavior of a basic long momentum system in a bear regime. To resolve this constraint, we need to introduce strategies that bet on the opposite direction of long momentum strategies. The Role of Short Systematic Strategies Short systematic strategies serve two distinct functions in a portfolio context: - Return generation in bear regimes: Capturing negative market beta during sustained downward trends that long-only portfolios sit through - Volatility reduction: Reducing portfolio volatility as well as the depth and duration of drawdown periods. To illustrate, below is an example of one of our momentum-short strategies that is designed to identify sustained bearish momentum and hold exposure through the trend: ![The Structural Limitation of Long-Only Exposure — The Structural Limitation of Long-Only Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-short-1-drawdown-2019-2026-robuxio.png&w=1920&q=75) ## Long + Short: The Combined Effect Combining a long trend strategy with a short trend strategy creates a portfolio that generates returns across opposing market regimes. The performance below shows both strategies applied together: ![The Structural Limitation of Long-Only Exposure — The Structural Limitation of Long-Only Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fmomentum-strategies-2019-2026-robuxio.png&w=1920&q=75) The return correlation between the two strategies is structurally near-zero: Returns Correlation Momentum Long Momentum Short Momentum Long 1.00 -0.06 Momentum Short -0.06 1.00 A correlation of -0.06 between the two strategies indicates a modest but meaningful degree of diversification: periods of weaker performance in long strategies have historically tended to coincide with more supportive performance from short strategies, and vice versa. By maintaining exposure to both upward and downward trending regimes, the portfolio can operate with shallower drawdowns, a smoother equity curve, and more consistently deployed capital across changing market environments. There remains, however, a third market regime where neither long nor short momentum strategies are typically well positioned: extended sideways conditions. In the next article, we address how mean reversion strategies address this gap. [Crypto Playbook Series](https://robuxio.com/education) Part 4 of 7 [Part 3 · Previous The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[Part 5 · Next The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 4 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[4 The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[5 The Return Source Most Crypto Portfolios Ignore Up next →](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure.md) --- # Why Crypto Volatility Is Misunderstood — Crypto Playbook | Robuxio Education Source: https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood Markdown: https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood.md Crypto Playbook · Part 2 of 7. Crypto volatility is a structural source of systematic edge, not a risk to avoid. How systematic strategies harvest it. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Crypto Playbook Series](https://robuxio.com/education) # Why Crypto Volatility Is Misunderstood — Crypto Playbook Part 2 of 7 • Pavel Kýček • May 15, 2026 We have established that passive digital asset exposure carries structural limitations. This can be seen both in Bitcoin’s maturing return profile as well as the buy-and-hold failure rate across the broader market. However, the same characteristic that makes digital assets unsuitable for passive holding (their volatility) is precisely what makes them ideal for systematic trading. The distinction matters, and is not widely appreciated. ## Volatility: Risk or Edge? In a passive allocation context, volatility represents drawdown risk, as capital is exposed to the full range of an asset’s price movement with no mechanism to manage direction. In a systematic trading context, volatility is the source of potential return. Systematic strategies require price movement. Greater movement across a larger universe of assets creates more opportunities for rules-based strategies to generate returns. The comparison below illustrates the difference in volatility between the S&P 500 and the top 50 crypto futures. ![Why Crypto Volatility Is Misunderstood — Why Crypto Volatility Is Misunderstood](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Ftop50-vs-sp500-daily-pct-change-2020-2026-robuxio.png&w=1920&q=75) Compared to the S&P 500, the top 50 crypto futures are on average 5 to 10 times more volatile. ## Why the Broader Market Offers Deeper Opportunity Institutional attention in digital assets tends to concentrate on Bitcoin and Ethereum – the two assets with the greatest liquidity and regulatory clarity. This is understandable from a compliance and risk management perspective. However, from a systematic trading perspective, the most significant price movements (and therefore the most actionable opportunities) typically originate in smaller assets, not the majors. Two factors drive this: - Greater magnitude of movement during trends: Smaller assets move in greater proportion during directional market regimes (both to the upside and downside). - Greater market inefficiencies: Smaller assets are typically inaccessible to the largest market participants, which often creates more persistent structural inefficiencies and a broader opportunity set. ![Why Crypto Volatility Is Misunderstood — Why Crypto Volatility Is Misunderstood](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-playbook-series%2Fcrypto-universe-performance-2019-2026-robuxio.png&w=1920&q=75) When assets are ranked by recent momentum, the top-ranked assets in the broader market outperform the majors significantly during trending conditions. ## Persistent Structural Inefficiencies In mature markets, systematic edges tend to compress as institutional arbitrage erodes inefficiencies. Digital asset markets retain a different profile: - The participant base remains predominantly retail, with the behavioural patterns that implies - 24/7 market operation creates liquidity dynamics absent in traditional markets - Lower institutional efficiency means pricing anomalies persist at frequencies that systematic strategies can exploit These conditions do not exist in equity or fixed income markets at comparable scale. For a systematic approach, they represent a robust and exploitable edge. In the next article we will quantify how momentum-based systematic strategies have performed in this environment, and what that performance looks like on a risk-adjusted basis. [Crypto Playbook Series](https://robuxio.com/education) Part 2 of 7 [Part 1 · Previous The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[Part 3 · Next The Momentum Factor in Digital Assets](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Crypto Playbook Series 7-Part Series Progress 2 of 7 [The Passive Crypto Allocation Problem](https://robuxio.com/education/crypto-playbook-the-passive-crypto-allocation-problem)[2 Why Crypto Volatility Is Misunderstood](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood)[3 The Momentum Factor in Digital Assets Up next →](https://robuxio.com/education/crypto-playbook-the-momentum-factor-in-digital-assets)[4 The Structural Limitation of Long-Only Exposure](https://robuxio.com/education/crypto-playbook-the-structural-limitation-of-long-only-exposure)[5 The Return Source Most Crypto Portfolios Ignore](https://robuxio.com/education/crypto-playbook-the-return-source-most-crypto-portfolios-ignore)[6 The Solution To A Regime-Agnostic Crypto Allocation](https://robuxio.com/education/crypto-playbook-the-solution-to-a-regime-agnostic-crypto-allocation)[7 The Infrastructure Layer Most Allocators Overlook](https://robuxio.com/education/crypto-playbook-the-infrastructure-layer-most-allocators-overlook) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/crypto-playbook-why-crypto-volatility-is-misunderstood.md) --- # Bull Market Upside Without Concentration Risk | Robuxio Education Source: https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk Markdown: https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk.md Equities Playbook · Part 3 of 7. How systematic strategies capture bull-market upside without the concentration risk of passive cap-weighted index exposure. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # Bull Market Upside Without Concentration Risk Part 3 of 7 • Pavel Kýček • May 15, 2026 In the last article, we established that passive allocation delivers diminishing real returns. The logical next question is whether systematic strategies can do better, starting with the regime where passive appears strongest: bull markets. If the market is rising, why not simply hold the index? The answer lies in the structure of how bull market returns are generated and distributed. Passive allocation captures aggregate market beta. Systematic allocation can capture the same upside while avoiding the concentration risks and structural inefficiencies that passive exposure accumulates during extended rallies. ## How Bull Market Returns Are Distributed Bull markets don't distribute returns evenly, they're characterized by: - Leadership concentration: A small number of sectors or individual stocks drive a disproportionate share of index returns. In 2023, mega-cap tech accounted for the majority of S&P 500 gains while the equal-weighted index materially underperformed. - Leadership rotation: The sectors driving returns shift over the course of a cycle. Early-cycle leadership (often cyclicals and financials) gives way to mid-cycle momentum (often technology) which eventually narrows into late-cycle concentration. - Crowding effects: As capital flows into the dominant narrative, valuations in leading names extend beyond fundamental support, creating fragility that index investors absorb in full. ![How Bull Market Returns Are Distributed — Bull Market Upside Without Concentration Risk](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F08.jpg&w=1920&q=75) A cap-weighted index mechanically increases exposure to these dynamics as they develop. It holds more of the most expensive names at the point of greatest concentration. ## The Systematic Alternative Two core strategy sleeves within the Robuxio Equities framework are designed to capture bull market returns while managing these risks. ### Equity Momentum This sleeve follows intermediate-term price trends across indices, sectors, and individual equities, with holding periods of one to three months. In bull markets, momentum is the primary return driver. The key difference from passive exposure is that momentum follows price strength across the full investable universe rather than concentrating in cap-weighted positions. As leadership rotates, the strategy rotates with it. When early-cycle performers plateau and second-wave sectors accelerate, systematic momentum captures that transition. ![Equity Momentum — Bull Market Upside Without Concentration Risk](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F09.png&w=1920&q=75) ### Tactical Allocation This sleeve dynamically adjusts sector and instrument weights based on shorter-term relative strength signals. Where momentum captures sustained directional trends, tactical allocation captures the rotational dynamics within a bull market. Critically, this sleeve doesn't just rotate across US sectors, it allocates across 16 countries, bonds, commodities, and digital assets via liquid ETFs, capturing opportunities that a U.S. equity index cannot access. ![Tactical Allocation — Bull Market Upside Without Concentration Risk](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F10.png&w=1920&q=75) ## The Combined Effect Together, these two sleeves deliver bull market participation that captures upside across the full breadth of the market, not just the most crowded names, while rotating into emerging return sources as leadership shifts. This is done by reducing concentration risk through diversification across instruments and holding periods and maintaining systematic discipline rather than relying on narrative-driven positioning. In the next article, we look at the market regime that gets the least attention but accounts for a significant portion of market history: sideways, range-bound conditions where the index goes nowhere and passive allocation has no mechanism to generate returns. [Equities Playbook Series](https://robuxio.com/education) Part 3 of 7 [Part 2 · Previous The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[Part 4 · Next Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 3 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[3 Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[4 Profiting From Volatile Sideways Markets Up next →](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[5 The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk.md) --- # Diversification by Return Driver, Not Asset Class | Robuxio Education Source: https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class Markdown: https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class.md Equities Playbook · Part 6 of 7. True diversification comes from uncorrelated return drivers across regimes, not from asset-class allocation alone. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # Diversification by Return Driver, Not Asset Class Part 6 of 7 • Pavel Kýček • May 15, 2026 Over the preceding articles, we covered how systematic strategies generate returns across bull, sideways, and bear markets. Each strategy targets a specific market inefficiency and uses whatever instruments are most effective for capturing it. Momentum follows price trends across US equities. Tactical allocation rotates across 16 countries, bonds, commodities, and digital assets. Mean reversion trades oversold conditions in equities and bond ETFs. Crisis hedging uses VIX instruments, country ETFs, and short exposures to offset tail risk. The portfolio already operates across a broader universe than most investors realize. But it also includes two additional strategies that complete the picture. ## Two Additional Return Streams ### Real Assets Trend This sleeve applies systematic trend following to gold and energy, assets driven by inflation expectations, geopolitical developments, and supply dynamics rather than corporate earnings. When equities are quiet, commodities can be trending. When equities are crashing, gold often rallies. Gold gained 25% during the 2008 financial crisis and 7% during the COVID drawdown. ### Short-Term Tactical This sleeve runs 15+ signal families with holding periods measured in hours to one day. It exploits recurring market patterns (calendar effects, intraday relative strength, and overnight behavior) across US index ETFs, sector ETFs, large-caps, and international markets. Because the signals operate on such a short timescale, the broader market direction is largely irrelevant. These patterns exist regardless of whether the market is rallying, falling, or moving sideways. Together, these six strategy sleeves target different inefficiencies, operate on different time horizons, and access different markets. That breadth is at the core of our portfolios. ## Why Asset-Class Diversification Falls Short Conventional portfolio construction relies on asset-class diversification with typically some version of equities, fixed income, and alternatives. The assumption is that these asset classes have low enough correlation to provide meaningful diversification. Historically, this holds true for a large percentage of time, however, in recent extreme stress periods it hasn’t. During the 2020 COVID drawdown, the 2022 rate shock, and multiple intra-year corrections, equity-bond correlations spiked, reducing the diversification benefit of the 60/40 framework precisely when it was most needed. ![Why Asset-Class Diversification Falls Short — Diversification by Return Driver, Not Asset Class](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F15.jpg&w=1920&q=75) ## Diversification by Return Driver The Robuxio Equities framework takes a different approach. Rather than passively diversifying across asset classes and hoping correlations hold, it diversifies across return drivers, each targeting a structurally different market inefficiency: - Equity Mean Reversion — short-term price dislocations across equities and bond ETFs (1–5 days) - Equity Momentum — intermediate-term price trends across US equities (1–3 months) - Tactical Allocation — dynamic rotation across 16 countries, 11 sectors, bonds, commodities, and digital assets (1–4 weeks) - Real Assets Trend — systematic trend following in gold and energy (1–3 months) - Short-Term Tactical — intraday and overnight signals across US and international equities (hours to 1 day) - Crisis Hedging — tail-risk protection via VIX instruments, country/sector ETFs, and short exposures (dynamic) Each operates on a different time horizon. Each responds to different market conditions. The average inter-sleeve correlation is low by design. ![Diversification by Return Driver — Diversification by Return Driver, Not Asset Class](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F16.png&w=1920&q=75) ## How It Works in Practice The six sleeves are designed to have low correlation to each other. In any given market environment, some will be contributing more than others, but the portfolio is never reliant on a single strategy or a single market direction to generate returns. That structural independence is the foundation of the portfolio's consistency. Sleeve Returns Correlation Matrix ![How It Works in Practice — Diversification by Return Driver, Not Asset Class](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F17.png&w=1920&q=75) Performance Summary (1/1/2018 - 1/4/2026) ![How It Works in Practice — Diversification by Return Driver, Not Asset Class](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F18.png&w=1920&q=75) Over the full sample period from January 2018 through April 2026, our Robuxio EQ portfolio delivered an NAV compound annual return of 30.56%, materially exceeding both the S&P 500 at 13.15% and a traditional 60/40 balanced portfolio at 8.89%. Critically, this outperformance was achieved with lower realised volatility. The improvement is not a function of leverage or concentrated directional risk, but of systematic diversification across lowly correlated return streams. ## Broad Exposure All six sleeves are accessed through liquid, exchange-traded instruments including US equities, sector ETFs, country ETFs, bond ETFs, gold, energy, VIX-linked instruments, and digital asset ETFs. A single Robuxio Equities portfolio allocation provides exposure to six independent return drivers across multiple asset classes and geographies, something that would traditionally require allocations across multiple managers, fund structures, and fee layers. In the final article, we’ll cover the implementation framework and how you can access this through your existing broker. [Equities Playbook Series](https://robuxio.com/education) Part 6 of 7 [Part 5 · Previous The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[Part 7 · Next How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 6 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities Up next →](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class.md) --- # How to Access Robuxio Equities — Equities Playbook | Robuxio Education Source: https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities Markdown: https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities.md Equities Playbook · Part 7 of 7. How the six systematic equity sleeves combine into a single portfolio, and the access routes to Robuxio Equities. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # How to Access Robuxio Equities — Equities Playbook Part 7 of 7 • Pavel Kýček • May 15, 2026 Over the preceding six articles, we’ve covered: - The structural cost of passive equity allocation including prolonged recovery periods and diminishing real returns - How systematic strategies generate returns across bull, sideways, and bear markets - Why diversification across return drivers produces superior risk-adjusted outcomes - How six independent strategy sleeves (spanning equities, bonds, commodities, and global markets) combine into a single portfolio So how do you access this portfolio? The short answer is, the same way you buy a stock. ## What Is the Robuxio Equities ETI? Robuxio Equities is structured as a regulated Exchange Traded Instrument (ETI) listed on the Stuttgart Stock Exchange (EUWAX). It is issued under an FMA Liechtenstein-approved base prospectus by iMaps ETI AG, with Intertrust Group as custodian and trustee. In practice, this means the portfolio is accessed as a listed security, with the same settlement, custody, and transferability as any stock or ETF in your depot. Key details: - Exchange: Börse Stuttgart (EUWAX) - Regulator: FMA Liechtenstein - Issuer: iMaps ETI AG - Custodian / Trustee: Intertrust Group - Settlement: Clearstream, Euroclear, SIX - Execution: Interactive Brokers (direct market access) - Automation: Fully automated, real-time risk monitoring - NAV: Published daily, net of all fees ## How to Invest Investing in the Robuxio Equities ETI is as simple as buying a stock or ETF through your existing brokerage account. - Open a brokerage account — Use any broker that provides access to the Stuttgart Stock Exchange (EUWAX). Interactive Brokers, Swissquote, UBS, Deutsche Bank, or any European bank with exchange connectivity. - Search by ISIN — Look up the ETI using its ISIN, the same way you would find any stock or ETF on your broker’s platform. - Place a buy order — Submit a buy order during trading hours (09:00–17:30 CET). Limit or market orders are both supported. - Settlement and custody — Your position settles like any listed security and appears in your existing depot. No separate onboarding with iMaps or Robuxio required. - Exit anytime — Simply sell on the exchange. Daily liquidity is provided by the EUWAX market maker. Fully transferable between custodians. Supported brokers currently include Interactive Brokers, Swissquote, UBS, Deutsche Bank, as well as any other bank or broker with Stuttgart connectivity. For larger allocations, OTC execution is also available. ## Fees and Minimums - Management fee: 2% p.a., accrued and settled quarterly - Performance fee: 20% on new net profits, subject to a high-water mark - Max bid-ask spread: 1% - Minimum investment: 1 unit (~€1,000) - Lock-up: None - Liquidity: Daily, on-exchange - Eligibility: Available globally to investors. The ETI is listed on a European exchange but accessible through any broker with Stuttgart (EUWAX) connectivity, including international brokers such as Interactive Brokers. ## Regulatory and Structural Protections - EU Prospectus Regulation, passported into EU/EEA - UCITS eligible (qualifying structured note) - Segregated portfolio, ring-fenced from issuer - Performance shown net of all fees ## Due Diligence Materials For those who want to review the strategy in depth before investing, we can provide full strategy documentation, portfolio construction methodology, as well as backtested and live performance history. Additionally, we can also provide our risk framework including stress-testing across historical scenarios. ## How to Size Your Allocation The framework is designed to work in two capacities: - As a complement: Allocate a portion of your portfolio to systematic alpha while maintaining passive index holdings as the core. This introduces return driver diversification without requiring a full mandate change. - As a substitute: Replace passive index exposure entirely. The portfolio provides equivalent or superior return potential with structurally lower volatility and drawdowns. ## How To Invest Robuxio Equities is now available. For step-by-step instructions, read our [guide to buying the Robuxio Equities ETI](https://robuxio.com/equities/how-to-buy). To learn more about the strategy, portfolio construction, and launch, watch the [Robuxio Equities launch call](https://robuxio.com/equities/launch-call). [Equities Playbook Series](https://robuxio.com/education) Part 7 of 7 [Part 6 · Previous Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[Series complete Back to Equities Playbook Series](https://robuxio.com/education) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 7 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities.md) --- # Profiting from Volatile Sideways Markets | Robuxio Education Source: https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets Markdown: https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets.md Equities Playbook · Part 4 of 7. Sideways, range-bound markets are where passive allocation stalls. How systematic strategies generate returns there. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # Profiting from Volatile Sideways Markets Part 4 of 7 • Pavel Kýček • May 15, 2026 Most attention goes to bull and bear markets as they are the regimes that produce the most dramatic outcomes. But a significant proportion of market history is spent in neither condition. Range-bound or sideways markets are one of the most challenging environments for passive investors and one of the most productive for systematic strategies. ## The Passive Gap In a range-bound environment: - The broad index delivers returns approximately equal to its dividend yield, typically 1.3-1.8% annualised. - Intra-market volatility remains elevated, but directional clarity is absent, with individual stocks and sectors moving independently, creating dispersion without a dominant trend. - Rebalancing during volatility spikes often generates negative alpha as allocators buy high and sell low within the range In a sustained sideways environment, a passive index has no return driver beyond its dividend yield. The underlying volatility is still present, as individual stocks and sectors can move significantly, but the index-level direction that passive allocation depends on is absent. ![The Passive Gap — Profiting From Volatile Sideways Markets](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F11.jpg&w=1920&q=75) ## The Dominant Strategy: Equity Mean Reversion Mean reversion strategies are designed to profit from exactly the conditions that passive allocation cannot monetize. The Equity Mean Reversion sleeve identifies short-term oversold conditions across liquid equities including indices, sector ETFs, bond ETFs, and individual S&P 500 constituents. When an instrument experiences a short-term dislocation (typically over one to five trading days), the strategy enters a position and captures the subsequent price normalisation. The basis for this is well-established: - Sentiment-driven episodes regularly produce overshoots that exceed fundamental price movement - Forced selling (margin calls, stop-loss cascades, portfolio rebalancing flows) creates mechanical dislocations that are corrected quickly - The correction pattern is statistically persistent and repeatable across instruments and time periods - These dynamics are amplified in range-bound markets where mean-reverting behaviour dominates trending behaviour ## Quantifying the Difference Throughout history, there have been numerous calendar years where the S&P 500 experienced significant intra-year volatility, only to finish the year roughly where it started. In those years, a passive allocation has no mechanism to capture returns derived from the market volatility. In that same environment, systematic mean reversion captures value from the intra-market volatility that passive allocation simply absorbs. Each dislocation is a discrete alpha opportunity and the cumulative difference relative to passive becomes substantial. ![Quantifying the Difference — Profiting From Volatile Sideways Markets](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F12.png&w=1920&q=75) ## Why Momentum and Mean Reversion Are Complementary The relationship between these two strategy types is intentional. Momentum generates its strongest returns in directional markets. Mean reversion generates its strongest returns in volatile non-directional markets. This means the combined portfolio doesn't require a prediction of which regime will prevail. Both run continuously, with their relative contribution shifting based on market conditions. In the next article, we will turn to the regime that defines long-term outcomes more than any other: market downturns. This is where the gap between passive and systematic becomes impossible to ignore. [Equities Playbook Series](https://robuxio.com/education) Part 4 of 7 [Part 3 · Previous Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[Part 5 · Next The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 4 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[4 Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[5 The Regime That Defines Long-Term Portfolio Outcomes Up next →](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets.md) --- # The Cost of Passive Equity Exposure — Equities Playbook | Robuxio Education Source: https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure Markdown: https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure.md Equities Playbook · Part 1 of 7. The structural cost of passive equity allocation: prolonged recovery periods, and the case for a systematic approach. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # The Cost of Passive Equity Exposure — Equities Playbook Part 1 of 7 • Pavel Kýček • May 15, 2026 Deciding when to allocate capital (and when not to) is one of the most consequential decisions an investor faces. It is also one of the most difficult to get right. If you happen to allocate shortly before a major drawdown, your allocation will likely take years to recover. The challenge is that these conditions are far easier to identify in hindsight than in real time. Most investors respond by maintaining passive index exposure and accepting the risk profile that comes with it. The assumption is that passive allocation, given sufficient time, will recover from any drawdown. The historical record confirms this. However, the time it takes to recover is rarely examined closely enough. ## The Lost Decade Two periods show the cost of passive equity exposure clearly. ### The Dot-Com Bubble Following the hype of the dot-com era, the S&P 500 fell approximately 49% from March 2000 to October 2002. ![The Dot-Com Bubble — The Cost Of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F01.png&w=1920&q=75) Recovery to the prior high required seven years, at which point the financial crisis immediately followed, resetting the drawdown clock. ### The Financial Crisis During the financial crisis beginning in October 2007, the S&P 500 fell approximately 57% and didn’t recover to that prior high until March 2013 (five years and five months later). ![The Financial Crisis — The Cost Of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F02.png&w=1920&q=75) During that period, investors faced unrealized losses, forced rebalancing at depressed prices, and a complete lack of clarity on when recovery would come. Together, these two periods created the Lost Decade: thirteen years where a passive allocation made at the 2000 peak delivered zero cumulative returns. ![The Financial Crisis — The Cost Of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F03.png&w=1920&q=75) For anyone with return targets above 5–6%, five to seven years of zero nominal progress isn't a temporary inconvenience. It represents years of missed compounding. ## The Limitation of Passive Allocation Drawdowns of these magnitudes are not anomalies to passive equity allocations. They are inherent to the architecture of passive allocation. A market-cap-weighted index has no mechanism to: - Reduce exposure when conditions deteriorate - Accelerate recovery through active positioning - Adapt to changing market structure - Access return sources beyond equities (including bonds, commodities, and global markets) that behave independently of index direction The passive approach offers a single proposition: full participation in both upside and downside, with recovery dependent entirely on the duration and magnitude of the subsequent bull cycle. ## Current Market Context Several features of today's market make this especially relevant: - S&P 500 concentration has reached levels comparable to the late 1990s, with a handful of mega-cap tech names driving index weight (see graph below) - Valuations (cyclically adjusted P/E ratios) remain elevated relative to historical norms - The interest rate environment remains in transition, with limited clarity on terminal policy rates ![Current Market Context — The Cost Of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F04.png&w=1920&q=75) An allocation made at or near current levels that encounters a major correction (and drawdowns of 30–40% have occurred in three of the last five) could mean years of recovery before reaching breakeven. The timing of these events is inherently unpredictable, which is precisely the problem. ## The Question This Raises Is there an approach to equity investing that maintains upside participation while reducing both the depth and duration of drawdowns? Over this series, we'll present a framework for an active algorithmic allocation designed to address exactly this: - Shallower drawdowns through regime-adaptive positioning - Shorter recovery periods as a direct result of preserved capital - Consistent returns across bull, sideways, and bear markets, that are not dependent on a single directional bet The framework presented across this series has delivered 30.6% annualized net returns since 2018, with a maximum drawdown of -8.22%, compared to the S&P 500's -33.72% maximum drawdown over the same period. ![The Question This Raises — The Cost Of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F05.png&w=1920&q=75) In the next article, we’ll look at a second limitation of passive allocation that gets far less attention: its shrinking ability to deliver real returns above monetary inflation. [Equities Playbook Series](https://robuxio.com/education) Part 1 of 7 [Series All 7 parts](https://robuxio.com/education)[Part 2 · Next The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 1 of 7 [1 The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[2 The Shrinking Real Return of Passive Equity Exposure Up next →](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[3 Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[4 Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[5 The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure.md) --- # The Regime That Defines Long-Term Portfolio Outcomes | Robuxio Education Source: https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes Markdown: https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes.md Equities Playbook · Part 5 of 7. Market downturns define long-term portfolio outcomes — where systematic allocation diverges most from passive exposure. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # The Regime That Defines Long-Term Portfolio Outcomes Part 5 of 7 • Pavel Kýček • May 15, 2026 Market downturns are where the structural differences between passive and systematic allocation become most consequential. The challenge of a downturn is a combination of capital loss, recovery time, and the behavioral pressure that prolonged drawdowns create on decision-making. ## How Passive Allocation Responds to Downturns If you are allocating passively, you have two options during a drawdown: - Maintain exposure and absorb the full drawdown, accepting the recovery timeline. - Reduce or rebalance exposure during the decline by selling at depressed prices and accepting losses. Each option carries a structural cost and neither option generates positive returns during the downturn itself. ## The Alternative Systematic Response Unlike passive exposure, systematic strategies that adapt to market conditions can generate positive returns during periods when passive portfolios are experiencing losses. As we covered in the previous article, mean reversion strategies become even more productive during elevated volatility as forced selling cascades and stop-loss clusters create exactly the kind of short-term dislocations that mean reversion is designed to capture. But there is one strategy type built specifically for this regime. ### Crisis Hedging This sleeve is designed for tail-risk environments. It implements tactical positions in VIX-linked ETFs and selected short exposures when defined stress conditions are met such as elevated volatility, deteriorating market breadth, and adverse trend structure. The strategy stays largely dormant in normal conditions and activates during the precise periods when passive portfolios take their worst losses. During March 2020, the S&P 500 fell 34% over 23 trading days. Crisis hedging engaged as volatility spiked and breadth collapsed, providing positive returns during the exact period when passive allocations were experiencing their steepest losses. ![Crisis Hedging — The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F13.png&w=1920&q=75) ## The Portfolio-Level Impact The relationship between drawdown depth and recovery time is non-linear. A portfolio that falls 20% instead of 40% doesn’t simply recover twice as fast, it recovers substantially faster because compounding restarts from a higher base. In a hypothetical -40% market drawdown: - Passive portfolio: -40% loss. Recovery under historical precedent would likely take five to seven years. - Systematic portfolio: Crisis hedging provides direct offset during the acute phase. Mean reversion captures intra-decline reversals. Net drawdown is structurally lower, and recovery time compresses proportionally. ![The Portfolio-Level Impact — The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F14.png&w=1920&q=75) ## Covering The Three Regimes Across the three preceding articles, we have outlined how systematic strategies generate returns in each market regime: - Bull markets: Momentum and tactical allocation capture upside while managing concentration risk - Sideways markets: Mean reversion extracts alpha from intra-market volatility that passive allocation absorbs without return - Bear markets: Crisis hedging activates to offset losses while mean reversion captures intra-decline reversals A passive portfolio depends on one regime (bull markets) for the majority of its returns. A systematic portfolio generates returns across all three. But the full picture is broader than equities alone. In the next article, we reveal how these strategies are assembled alongside additional return streams, including commodities and ultra-short-term signals, into a single portfolio with six independent return drivers. [Equities Playbook Series](https://robuxio.com/education) Part 5 of 7 [Part 4 · Previous Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[Part 6 · Next Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 5 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[5 The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class Up next →](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes.md) --- # The Shrinking Real Return of Passive Equity Exposure | Robuxio Education Source: https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure Markdown: https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure.md Equities Playbook · Part 2 of 7. Why passive equity returns are diminishing in real terms against monetary expansion, and what systematic allocation fixes. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Equities Playbook Series](https://robuxio.com/education) # The Shrinking Real Return of Passive Equity Exposure Part 2 of 7 • Pavel Kýček • May 15, 2026 In the last article, we examined the recovery cost of passive equity exposure. Now let’s address a second limitation that carries significant implications for anyone allocating capital over the long term. Passive equity returns are generating diminishing real returns when measured against the rate of monetary expansion. ## The Gap Between Nominal and Real Returns The S&P 500 has delivered approximately 10.9% annualized nominal returns over the trailing 20-year period. On the surface, that looks like strong performance. But M2 money supply has grown at approximately 6.5% annually over the same period. When you adjust equity returns for monetary inflation (not just consumer price inflation) the real return narrows dramatically. ![The Gap Between Nominal and Real Returns — The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F06.png&w=1920&q=75) The inflation-adjusted compound annual growth rate of the S&P 500 over the same period is approximately 2.3%. That’s a 660 basis point gap between the headline number and what the allocator actually retains in purchasing power. ## What This Means in Practice When you measure passive equity returns against M2 growth rather than CPI alone: - The real return premium is barely above 200 basis points, a razor-thin margin for an asset class that carries 15% annual volatility and periodic drawdowns exceeding 40% - The effective hurdle rate for most portfolios exceeds CPI-measured inflation, meaning the gap between what you need and what passive delivers is wider than it appears - The risk-return trade-off becomes more unfavorable: you're taking full equity risk for an increasingly modest real return ![What This Means in Practice — The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fequities-playbook-series%2F07.png&w=1920&q=75) Data: S&P 500 monthly closes (Yahoo Finance), M2 money supply annual growth (Federal Reserve FRED series M2SL). Each point represents a rolling 5-year window. Volatility = annualised standard deviation of monthly returns. Real CAGR = nominal CAGR adjusted for M2 growth: (1 + nominal) / (1 + M2 growth) - 1. ## The Conditions That Supported Passive Allocation Passive equity allocation was designed for an environment characterized by: - Subdued, predictable inflation - Stable interest rates providing a reliable anchor - Broad market participation across sectors - Reasonable valuations with a margin of safety The current environment consistently exhibits none of these. Inflation remains volatile, rate policy is uncertain, market cap is concentrated in a narrow set of names, and valuations are stretched. In this context, passive allocation is a directional bet that the conditions which supported equity returns over the past few decades will continue. ## The Case for Regime-Aware Systematic Allocation A systematic approach to capital allocation can address the limitations outlined in both this and the previous article by: - Reducing drawdown depth by preserving capital during regime shifts and compressing recovery periods - Generating returns across market regimes rather than depending on one directional outcome - Delivering real returns above monetary inflation through systematic edge extraction rather than passive beta capture alone - Adapting to market structure by recognizing that different conditions require different positioning - Drawing from a wider universe including equities, bonds, commodities, and global markets rather than concentrating all return expectations in a single index Over the next several articles, we’ll detail the specific strategies that generate returns in each regime and demonstrate why their combination produces risk-adjusted outcomes that passive allocation cannot match. [Equities Playbook Series](https://robuxio.com/education) Part 2 of 7 [Part 1 · Previous The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[Part 3 · Next Bull Market Upside Without Concentration Risk](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk) Newsletter ### Keep reading the work Get our writing on systematic trading, market structure and live portfolio updates — delivered occasionally, when there's something worth saying. Website First name Email address Subscribe One-click unsubscribe. Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: ### Equities Playbook Series 7-Part Series Progress 2 of 7 [The Cost Of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[2 The Shrinking Real Return of Passive Equity Exposure](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure)[3 Bull Market Upside Without Concentration Risk Up next →](https://robuxio.com/education/equities-playbook-bull-market-upside-without-concentration-risk)[4 Profiting From Volatile Sideways Markets](https://robuxio.com/education/equities-playbook-profiting-from-volatile-sideways-markets)[5 The Regime That Defines Long-Term Portfolio Outcomes](https://robuxio.com/education/equities-playbook-the-regime-that-defines-long-term-portfolio-outcomes)[6 Diversification by Return Driver, Not Asset Class](https://robuxio.com/education/equities-playbook-diversification-by-return-driver-not-asset-class)[7 How to Access Robuxio Equities](https://robuxio.com/education/equities-playbook-how-to-access-robuxio-equities) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/equities-playbook-the-shrinking-real-return-of-passive-equity-exposure.md) --- # Pavel Kýček on Algorithmic Trading — Podcasts & Talks Source: https://robuxio.com/education/interviews Markdown: https://robuxio.com/education/interviews.md Pavel Kýček on the major systematic-trading podcasts: TraderLion, Better System Trader, The Algorithmic Advantage. Long-form interviews on crypto. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Back to Education Hub](https://robuxio.com/education) Podcasts & Interviews # Pavel Kýček on the shows. Every podcast and interview where Robuxio's CEO goes deep on systematic trading — the models, the infrastructure, and the discipline. Watch or listen on your platform of choice. Featured ## Long-form interviews [![TraderLion — Pavel Kýček on systematic crypto trading](https://robuxio.com/images/education/interviews/pavel-kycek-traderlion-systematic-crypto-trading.jpg) ▶](https://www.youtube.com/watch?v=eiyaQdM-rgA) TraderLion ### Pavel Kýček on systematic crypto trading A conversation on systematic crypto trading — strategy, risk, and why crypto rewards a rules-based approach. [YouTube ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA) [Read transcript ↗](https://robuxio.com/education/interviews/traderlion-pavel-kycek-systematic-crypto-trading) [![The Algorithmic Advantage · #040 — Generating insane returns with quant crypto trading](https://robuxio.com/images/education/interviews/pavel-kycek-algorithmic-advantage-quant-crypto-trading.jpg) ▶](https://thealgorithmicadvantage.com/podcast/040-pavel-kycek/) The Algorithmic Advantage · #040 ### Generating insane returns with quant crypto trading The model stack, futures liquidity, and survivorship-bias-free data — a deep dive into how the Robuxio engine is built. [Web ↗](https://thealgorithmicadvantage.com/podcast/040-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=B5v3oc-DjII)[Apple ↗](https://podcasts.apple.com/cm/podcast/040-pavel-kycek-generating-insane-returns-with-quant/id1703013320?i=1000710065475) [Read transcript ↗](https://robuxio.com/education/interviews/algorithmic-advantage-040-pavel-kycek) [![Better System Trader · #225 — Algorithmic crypto trading](https://robuxio.com/images/education/interviews/pavel-kycek-better-system-trader-algorithmic-crypto-trading.jpg) ▶](https://bettersystemtrader.com/algorithmic-crypto-trading/) Better System Trader · #225 ### Algorithmic crypto trading Volatility as opportunity, risk management, and strategy construction across systematic crypto trading. [Web ↗](https://bettersystemtrader.com/algorithmic-crypto-trading/)[YouTube ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE) [Read transcript ↗](https://robuxio.com/education/interviews/better-system-trader-225-pavel-kycek) [![Desire To Trade · #514 — What it takes to run automated trading systems](https://robuxio.com/images/education/interviews/pavel-kycek-desire-to-trade-automated-trading-systems.jpg) ▶](https://www.desiretotrade.com/514-what-it-takes-to-run-automated-trading-systems-pavel-kycek/) Desire To Trade · #514 ### What it takes to run automated trading systems Running automated trading systems at scale: infrastructure, diversification, and the discipline behind systematic execution. [Web ↗](https://www.desiretotrade.com/514-what-it-takes-to-run-automated-trading-systems-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=thxnVhgyeuE) [Read transcript ↗](https://robuxio.com/education/interviews/desire-to-trade-514-pavel-kycek) [![Desire To Trade · #460 — What it takes to make a living trading systematically](https://robuxio.com/images/education/interviews/pavel-kycek-desire-to-trade-living-trading-systematically.jpg) ▶](https://www.desiretotrade.com/460-what-it-takes-to-make-a-living-trading-systematically-pavel-kycek/) Desire To Trade · #460 ### What it takes to make a living trading systematically Building a systematic trading career — process over prediction, and turning research into a repeatable edge. [Web ↗](https://www.desiretotrade.com/460-what-it-takes-to-make-a-living-trading-systematically-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8)[Spotify ↗](https://open.spotify.com/episode/7EqyRvOPkqmiE8btmdLG8W) [Read transcript ↗](https://robuxio.com/education/interviews/desire-to-trade-460-pavel-kycek) [![The Birb Nest · Trading Congress 2025 — Approaching the crypto market with discipline and structure](https://robuxio.com/images/education/interviews/chris-jack-birb-nest-discipline-structure-crypto.jpg) ▶](https://www.youtube.com/watch?v=pLxPbMb4cQk) The Birb Nest · Trading Congress 2025 ### Approaching the crypto market with discipline and structure Chris Jack on why crypto is a trading—not buy-and-hold—investment asset class, systematic edges, and building rules that let you step away from the screen. [YouTube ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk) [Read transcript ↗](https://robuxio.com/education/interviews/birb-nest-trading-congress-2025-chris-jack) The Trading Panel ## Better System Trader panel appearances Pavel as a recurring panellist on Better System Trader's roundtable, alongside traders including Tom Basso, Jerry Parker, Moritz Seibert, Richard Brennan and Mish Schneider . Episode 1 Backtesting, diversification & avoiding curve-fitting. [Watch ↗](https://www.youtube.com/watch?v=ArpK1oXIJ4E)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-01) Episode 2 Systematic vs. discretionary, market cycles & tail events. [Watch ↗](https://www.youtube.com/watch?v=SkUhlyxb29I)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-02) Episode 3 with Richard Brennan Economic indicators, going systematic, AI & crypto. [Watch ↗](https://www.youtube.com/watch?v=S3n_TXpTUzc)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-03-richard-brennan) Episode 4 with Mish Schneider Floor-trader insights, price action & crypto trends. [Watch ↗](https://www.youtube.com/watch?v=fDR-uX6tGjY)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-04-mish-schneider) Episode 5 with Moritz Seibert The reality of drawdowns; commodity & systematic strategies. [Watch ↗](https://www.youtube.com/watch?v=HAyMif3_4D4)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-05-moritz-seibert) Episode 8 with Tom Basso Risk, psychology & matching personality to trading style. [Watch ↗](https://www.youtube.com/watch?v=Tze_VyZ8sb4)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-08-tom-basso) Episode 9 with Mish Schneider Commodities, CPI trends, intermarket & crypto. [Watch ↗](https://www.youtube.com/watch?v=8P-tiXvDP2w)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-09-mish-schneider) Episode 10 with Jerry Parker Trend following, outlier trades & diversification. [Watch ↗](https://www.youtube.com/watch?v=6yDy1mg0Jck)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-10-jerry-parker) Episode 11 Trading gurus, drawdowns & trading education. [Watch ↗](https://www.youtube.com/watch?v=6GC5Dhk0m28)[Read transcript ↗](https://robuxio.com/education/interviews/bst-trading-panel-11) ## Want the exposure, not just the talk? [Book a Call](https://robuxio.com/call) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/interviews.md) --- # Generating insane returns with quant crypto trading — Pavel Kýček on The Algorithmic Advantage #040 Source: https://robuxio.com/education/interviews/algorithmic-advantage-040-pavel-kycek Markdown: https://robuxio.com/education/interviews/algorithmic-advantage-040-pavel-kycek.md Pavel Kýček joins Tristan Pollock on The Algorithmic Advantage for a deep dive on systematic crypto trading — why crypto rewards a rules-based approach, how Robuxio runs 20+ models across momentum and mean-reversion edges, and how to manage the left-tail risk that comes with 7–10× the volatility of equities. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 040 The Algorithmic Advantage · Episode #040 # Generating insane returns with quant crypto trading Pavel Kýček · in conversation with Tristan Pollock May 21, 2025 · 77 min listen · 44 min read Pavel Kýček joins Tristan Pollock on The Algorithmic Advantage for a deep dive on systematic crypto trading — why crypto rewards a rules-based approach, how Robuxio runs 20+ models across momentum and mean-reversion edges, and how to manage the left-tail risk that comes with 7–10× the volatility of equities. Listen on [Web ↗](https://thealgorithmicadvantage.com/podcast/040-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=B5v3oc-DjII)[Apple ↗](https://podcasts.apple.com/cm/podcast/040-pavel-kycek-generating-insane-returns-with-quant/id1703013320?i=1000710065475) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Crypto is a trading asset class, not a buy-and-hold one — almost no altcoins reach new all-time highs across cycles, so directional models on the top 10–20 coins beat passive exposure. - 02 Crypto futures have 3–10× the liquidity of spot, lower fees, and let you go both long and short — making them the natural venue for systematic strategies. - 03 Survivorship-bias-free data is non-negotiable. Pavel's team cleans and cross-references feeds from Binance, OKX, and Bybit because no commercial provider does this well yet. - 04 Robuxio runs 20+ models with up to 80 open positions at any time — every single position sized at 0.05%–3% of the account so left-tail blow-ups never matter. - 05 The killer combo is momentum + mean-reversion in the same portfolio: momentum-long with mean-reversion-short trims open profits, momentum-short with mean-reversion-long stabilises through bear regimes. - 06 Stop losses are one of the worst risk tools in crypto — too many false breakouts. Robustness comes from diversification across models, regimes, and exchanges instead. - 07 Single-strategy returns: short-term momentum-long 60–80%/yr at ~20% drawdown; long-term momentum 100–150%/yr at ~40% drawdown; momentum-short ~20%/yr; mean-reversion-long a few dozen percent at 20–30% drawdown. Chapters ## Jump to any moment - [0:00 Cold open: building hedged model portfolios ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=0s) - [1:20 Why crypto belongs in a quant toolkit today ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=80s) - [4:10 The first step beyond buy-and-hold: trend-following the top 20 ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=250s) - [6:06 Spot vs. perps — and why futures liquidity matters ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=366s) - [8:27 Data: cleaning Binance/OKX/Bybit, surviving survivorship bias ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=507s) - [11:15 What's the same (and different) vs. stocks and commodities ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=675s) - [15:34 Risk management: left-tail risk, FTX, Luna lessons ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=934s) - [20:31 Trading meme coins to the short side ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1231s) - [24:04 Building robust models on limited crypto history ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1444s) - [30:00 Portfolio approach: one model across the universe ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1800s) - [34:33 The 15–20 model stack: momentum, mean-reversion, hedges ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2073s) - [41:06 Combining momentum and mean-reversion for compounding ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2466s) - [44:06 Single-strategy metrics: returns and drawdowns by edge ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2646s) - [49:07 Allocating across the portfolio ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2947s) - [51:26 Retiring and replacing strategies ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3086s) - [54:55 The Robuxio tech stack and infrastructure ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3295s) - [59:26 Execution, slippage, and expectancy ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3566s) - [1:02:56 How Pavel reviews live strategies ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3776s) - [1:05:35 What robustness really means in crypto ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3935s) - [1:09:09 Pavel on Bitcoin, altcoins, and the future of crypto ↗](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4149s) Full transcript ## The conversation 77 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Pavel Kýček [0:01](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1s): In 12 models which are trying to catch the edge and models which are hedging your portfolio. Let me give you an example. For example and then we have models which are regime really regime dependent, and these are only, let's say, switched on anytime the market starts doing its thing. You know? It's starting really moving to the long side a lot or to the short side a lot. You are able to get the best of both worlds, which means a higher win rate, which you are getting through mean reversion and also the exposure to the momentum effect, which you are getting through momentum strategies. Show intro [0:47](https://www.youtube.com/watch?v=B5v3oc-DjII&t=47s): Welcome to the algorithmic advantage. We're here to expand the toolkit of the quant trading community and introduce investors to the many advantages of systematic trading. Our goal is to educate and inspire as we embark on a captivating journey into the vast knowledge and experience of leading portfolio managers and other experts in the field. We hope you enjoy the show. And if you do, please subscribe, leave us a review, or even buy us a coffee via the link on the algorithmicadvantage.com. We really appreciate it. Tristan Pollock [1:20](https://www.youtube.com/watch?v=B5v3oc-DjII&t=80s): Alright, Pavel. Welcome to the show. It's so great to finally be chatting crypto on the Algo Advantage. Welcome, mate. Good to see you. Pavel Kýček [1:29](https://www.youtube.com/watch?v=B5v3oc-DjII&t=89s): Thank you. Thank you, Tristan. It's nice to be here. Tristan Pollock [1:33](https://www.youtube.com/watch?v=B5v3oc-DjII&t=93s): Awesome. Let's dive straight into it, Pavel, because we'll probably end up talking for hours and hours otherwise. So really good to finally talk crypto on the show. we've maybe touched on it a little bit here and there, But let's face it, it's a huge realm for quant traders at the moment. There's lots of opportunities there. The market has matured enormously. Things have changed globally. I mean, I think US citizens now have even got a lot more access than they used to. So, it's definitely overdue for us to chat about the opportunities here and how we can take what we know about quant trading if we're not already trading crypto and apply it to the crypto markets. And I guess the first thing that I thought of is that, the whole crypto industry has brought a lot of new traders to the market, right? There's a lot of people who have gotten interested in crypto and now they're interested in the markets and maybe they've even moved from crypto into TradFi or trading both. But there's a lot of people who discovered crypto and they've taken more of a buy and hold approach. Lucky you if you bought and held a long, long time ago, but what happened is people started to trade and even the long term buy and holders, they saw certain huge peaks and thought, Hey, I'm gonna take some profit. Or they bought a bit later and then had some huge draw downs and decided that they would sell and buy later. So it started to make traders out of investors, I think. And so I was just curious to start off with, like if you were one of these kind of longer term buy and hold crypto guys who wasn't really super active and didn't really want to be too active in the market, but wanted to do a bit better than buy and hold. What's the first step toward becoming a trader maybe that they could make? Are there some basic strategy principles that they could apply to, just to do better than buy and hold, but they've got their Bitcoin and they wanna make a few smarter decisions than they're doing. Pavel Kýček [4:10](https://www.youtube.com/watch?v=B5v3oc-DjII&t=250s): Yeah, good question. Not as simple as it can seem on the start because firstly, the disadvantage of crypto is that most of the assets, most of digital assets are not building long term trends, which we can see in TradFi. And by far, most of the new crypto coins are not reaching like, new all time highs between two different cycles. So I would give probably one advice. If you want to buy and hold, go with Bitcoin, maybe Ethereum. Honestly, I don't know. But crypto asset is really crypto asset class is really for trading. It's much better for trading than for buying and holding. And simple simple advice would be focus on momentum or trend following to the long side. It would be like simple simple advice, which would have to be a little more specific because even with this very simple advice, they wouldn't have to get that far because we can see behavior which is similar to stocks that the longer the bigger projects tend to build longer term trends. The smaller projects tend to really make their pumps and dumps, and that's more or less it. So you can take advantage of it, but you already have to have a little bit more advanced solution. For simple solution, I would say focus on trend following on top 10 to top 20 biggest coins by market cap, And that could be a good start. Tristan Pollock [6:06](https://www.youtube.com/watch?v=B5v3oc-DjII&t=366s): Okay. So what else do we need to know specifically about crypto? If we're going to start trading crypto, there is obviously some significant differences and some significant risks to trading stocks and futures. And some of the things that come to mind too, you haven't really done this before, is there's a few other key features, right? You need a wallet or you need to transfer money or you need to go from fiat (so-called) into crypto. There can be different ways to transfer money and different costs associated with that. So like what's Do you need to get started with some real basics of just understanding what the ecosystem is and how it works? Pavel Kýček [6:56](https://www.youtube.com/watch?v=B5v3oc-DjII&t=416s): Well, are basics which you for sure have to cover. On the other hand, crypto exchanges, they are really trying to make their job in a sense to onboard their clients as soon as possible. So with most exchanges, it's really working that way that you send payout to crypto exchange, you change to stablecoin and you are ready to trade. And then it depends if you want to trade to the long side or if you want to short too. And then based on it, you need to use different kind of products. You can trade on top of Crypto Spot, then you are really buying and holding the coins. But what's better solution is trading on crypto futures. Because with futures, with perps, you are able to go long, you are able to go short and fees are much smaller compared to buying on spot market. Tristan Pollock [7:56](https://www.youtube.com/watch?v=B5v3oc-DjII&t=476s): The liquidity in the futures is that more or less equivalent to the spot? Pavel Kýček [8:02](https://www.youtube.com/watch?v=B5v3oc-DjII&t=482s): No, no, the liquidity on futures is by far higher, is anywhere between three to 10x higher because most of the institutional investors, traders, clients are trading on futures. So there are many more contracts built on futures compared to what's holding on the spot market. Tristan Pollock [8:27](https://www.youtube.com/watch?v=B5v3oc-DjII&t=507s): Right. And now as a systematic trader, you obviously need to get as much high quality data as possible as well. What are the challenges around getting historic crypto data and how do you get it? What are some of the considerations for getting good data? Pavel Kýček [8:47](https://www.youtube.com/watch?v=B5v3oc-DjII&t=527s): Yeah, data is for sure crucial. I don't think there is a proper service right now for providing good data or at least I haven't dig deeper in last few months, let's say. So you can definitely download the data from Binance through API, for example. That's good start, but you have to clean the data and you always have to be sure that you are building survivorship bias free database because biases in general in trading are super important topic but especially in something like crypto which is super dynamic asset where many assets or coins are really burning and being died in a few weeks or months, survivorship bias is huge here. So you always have to focus a lot on proper survivorship bias database. And of course, you have to clean your data a bit. So the best approach is to download more data from, for example, OKX, Bybit or other data streams, compare them, clean them. It's a process. It's not that simple. And if you really want to rely on properly managed data, it takes some time and procedure to have this database. Tristan Pollock [10:13](https://www.youtube.com/watch?v=B5v3oc-DjII&t=613s): If you just download data from an exchange as at today though, you would only get the coins that are currently listed. They wouldn't provide you delisted coin data. Is that right? It depends. It depends on Binance. You can get even the listed universe. So you can get basically the whole tradable universe Pavel Kýček [10:31](https://www.youtube.com/watch?v=B5v3oc-DjII&t=631s): anytime, not just based on today's data, which is nice, but it's still not cleaned. You can still have to make some readjustments and some changes in the data. Tristan Pollock [10:45](https://www.youtube.com/watch?v=B5v3oc-DjII&t=645s): Yeah, right. There's obviously not a lot of crypto history, so there's not a lot of data available, but we'll get into that. What else is different about crypto? What else is the same about crypto? So compared to trading stocks, futures, are there some other key differences, things that just really you need to be aware of? It does not work the same way. Pavel Kýček [11:15](https://www.youtube.com/watch?v=B5v3oc-DjII&t=675s): I would start with what's the same because then it's really much simpler for someone who is trading somewhere else to imagine what's the procedure behind building profitable trading models on crypto. I'm always trying to compare crypto to different asset classes in different stages. For example, if you want to look at stocks, crypto is similar in a way that it's more biased to the long side, and it's a mean reversion long asset class basically. Dips are being bought most of the time oversimplified. On the other hand, in terms of volatility, crypto is more similar to, for example, commodities because they are really having these explosive, explosive movements which can come out of nothing very quickly or to smaller, smaller stocks. And another good comparison is that if you want to take some period from history when crypto was or stocks were similar to crypto. You can look at, for example, tech bubble before 2000, when really tech stocks were having similar characteristics to what we can see in crypto. I think it's pretty logical because we are always moving in some kind of immature to mature asset cycle on any asset class in general. And it's all about being less liquid, more volatile, having bigger inefficiencies, bigger edges in the market, which is basically bringing in bigger institutional clients, which want to extract these edges and make money out of these edges. And it's adding the liquidity up and it's lowering the volatility. So basically, if you want to make your research on crypto and you want to take some out of sample data, not from crypto, I'm always encouraging people to go into bigger history on commodities and on stocks. Because in those times you would be able to get different edges, which were right now in those markets and similar edges to which are in crypto these days. Tristan Pollock [13:41](https://www.youtube.com/watch?v=B5v3oc-DjII&t=821s): Obviously, the crypto markets are maturing a lot. And in the early days, there was a lot of money to be made by far more risk free or risk neutral strategies of arbitraging across exchanges and that kind of thing. I believe you are primarily a directional trader, correct? You're not really involved in those arbitrage trades? Pavel Kýček [14:08](https://www.youtube.com/watch?v=B5v3oc-DjII&t=848s): Yeah, we are building some solution for base layer where we would be able to make a few percentage a year based on arbitrages, but mainly our exposure is through directional strategies because this is really how you can extract the biggest profits in crypto. Tristan Pollock [14:29](https://www.youtube.com/watch?v=B5v3oc-DjII&t=869s): So a lot of those inefficiencies, would you say they have dried up now? Pavel Kýček [14:36](https://www.youtube.com/watch?v=B5v3oc-DjII&t=876s): Well, what we can see, especially in the field of institutional crypto traders is that the edges across arbitrages are getting smaller. And it's it's very natural because the more liquidity is getting into these strategies, the smaller the edges are becoming. But honestly, that's the same even with directional strategies. The edges will be smaller. You would have to be prepared for it. And let me give an example. If you would run trend following strategy anytime between 2017 and 2020, you would make on average anywhere between 100% to 300% to the long side only on a yearly basis. This is something which is not doable these days. We are still in higher dozens of percent territory per tradable model, but the edges are getting small. That's just the fact. Tristan Pollock [15:34](https://www.youtube.com/watch?v=B5v3oc-DjII&t=934s): I guess the other big thing I was waiting for you to say in terms of the differences with crypto are the risks. And I know that I got burnt once or twice in crypto. The main coin or the main time that I got burnt in crypto, because I've only ever dabbled on the side. It's like my one discretionary play trading venture left because everything else is purely systematic. And I got hurt by Luna, which was a coin that went from, I can't remember, it was like a $100 and it went to 0.01 of a cent or something overnight. So there's risks with the coins. There's a lot of corruption around and then there's exchanges that have like FTX that have gone completely underwater. Talk to me a bit about how you do your risk management and where are we at in the industry now in terms of these risks? Pavel Kýček [16:36](https://www.youtube.com/watch?v=B5v3oc-DjII&t=996s): Yeah, no, this is very good, very good question, Tristan. Well, firstly, these are two risks. One risk is, let's say, left tail risk of single coin position. Another one is exchange risk. So firstly, let's talk about the left tail risk, which is significantly higher. And that's true compared to TradFi trading if you are not playing with very high leverage. So to left tail risk, honestly almost forgot it because the way how we are approaching this risk is really reducing the risk a lot. Of course, the best approach is reducing your single position to a few percentages, ideally without any leverage. And that's basically what we are trading. The best solution is really to trade across 15 to 20 different models. Each model should be trading up to 10 to 20 open positions in one time. And then you are ending up with a position anywhere between 0.5% to 3% based on your targeted volatility and based on the exposure you want to get. And that way, really, as long as you are able to keep some management constraints, some liquidity constraints, you are pretty well covered. Honestly, as we are talking about the left tail risk, there is also the right tail advantage, which we are trying to catch through momentum models. So the coin really has two sides, which we are trying to take advantage of. And the approach how to do it is really to spread spread the allocation across dozens, dozens of small positions in one time and then, of course, from time to time you are getting losses in dozens of percents, but again, on one position, it's making 0.5%, 0.3% of your account. So it's not a big problem for someone who is able to trade algorithmically fully automatically. The risk can be very well managed. But of course, diversification is the way to go. And regarding exchange risk, well, there are solutions based on how big your account is. The simplest one is to spread your account across more exchanges. For example, we are offering the solution to four exchanges. So again, you are able to cover it very simply then. Another like add on you can add to just spread the capital across exchanges is that you go with a little bit more volatile solution. So you are keeping on exchanges just, let's say, 50% of the money, which should be for trade in crypto and then you are spreading across, for example, four exchanges so you are holding the risk of 12.5% per account which is already pretty good because if you are targeting some drawdown anywhere between 15% to 20%, for example, based on the portfolio, you are able to get a performance of 50% to 150% based on the year. So this is the risk, which I think is already well paid. So this is for a retail trader or an individual. And then institutional traders, they do use a solution which is called off exchange And they are using basically some middlemen, which is keeping the position for themselves. And they are just making on a daily basis the calculation of profit and profit losses, they don't need to hold the money on exchanges, which is solution many funds are using these days. Tristan Pollock [20:31](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1231s): Yeah, that's excellent. I presume also given the nature of your trading, you're not really trading the smaller, meme stock coins or what Well, it depends. Pavel Kýček [20:45](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1245s): Honestly, we are even trading shitcoins. We want to trade them, especially to the short side, because these shitcoins really tend to fall a lot during some bear market regimes. And for example, in this quarter, we have made anywhere between 15% to 25% just thanks to shorting these meme coins through our momentum short strategies. So it depends because of course, again, higher left tail risk, but on the other hand, higher right tail advantage of making more money from a single trade. So then it's more about targeting some volatility, targeting the level of risk you want to get out of your solution. But we at Robuxio, we are trading the top 50 biggest coins, which we are ranking on a daily basis based on volume, market depth, liquidity. And that's basically our tradable universe for today. And we are ranking every day. Tristan Pollock [21:53](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1313s): So when you say top 50, and we talk about the meme coins, are they the bottom of that top 50 or they're they're separate to the 50. They're like some really low down the list. Well, for example, these days on crypto futures exchange on Binance, Pavel Kýček [22:11](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1331s): there are somewhere around 300, probably even more crypto futures contracts listed, and we are trading top 50 based on some volume characteristics, the biggest one. Of course, you gather coins like Trump coin and these really pure meme coins. But again, because we are not trying to catch a single position and making a lot of money with one position only, we don't care that much if we are trading really shitcoins or bigger coins. We only care about the exposure to meme coins, to low value projects and high value projects and to be really spread across the whole tradable, our tradable universe properly. And then of course, our solution, what we are doing for some of our institutional clients is that some of them, they, for example, have in the contracts that they cannot trade really top 30, top 50, really the smallest coins, which we are trading. And for them, we are in trading on the universe of top 20 coins because these are less volatile. The left tail risk is smaller and we can provide a solution too. So it really depends. As a retail trader, I wouldn't be afraid of these small coins, especially if you want to trade mean reversion strategies and if you want to short too, because the edges to the short side of these small coins are really, really big and doesn't make sense not to exploit them. As long as liquidity constraints are not a problem for you. And liquidity constraints, you don't have to be afraid of it as long as you are trading anywhere between few millions of capital. Tristan Pollock [24:04](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1444s): All right. Well, let's get into your models and your strategies and just starting with the data that we've already mentioned. You kind of need a different process for building strategies on a limited amount of historic data. So what's your approach to trading assets that have very minimal history, but also in one sense, very biased history, I guess, through the likes of they're in an introductory phase, they've grown enormously. What's your approach to building? What's the first steps in your approach to building robust strategies with less data? Pavel Kýček [24:44](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1484s): Yeah. So for us, it's something to data because it's also interesting point. In crypto, have like seven, eight years of data, but to tell you through any data before 2020, you almost cannot use because it is the year when crypto futures started trading. So that's one thing. So you really have just a few years of data. So how we are approaching it? Firstly, we are building all our models based on price and volume. We are not using any crypto only related data because we really don't have enough of them to rely on them. Secondly, all the models you you are building or you would be building should be made based on some research on any other asset class. We are trading momentum approaches. We are trading mean reversion approaches. All the models we are trading would be tradable somewhere else on stocks, on commodities usually. And then, of course, you have to make some changes to crypto because crypto compared to any other asset class today is much more dynamic. It's trending much faster, but also the regime changes are much faster compared to stocks, compared to commodities. So our approach is to start always with idea for solution, which means that we know what kind of edge we want to catch. Right? We want to trade, for example, momentum long. So we look at the research and personally, I'm also trading on other asset classes. So I have some experience from from stocks and commodities. So firstly, you look at what's working on commodities and stocks depends on what type of momentum model you would want to trade. And you go through the research, you test it on commodities and stocks, you take the model to crypto and you make as few changes as possible. The main change is almost always in exits because exits are really reflecting the dynamic dynamic characteristics of any asset class and this is how you are adjusting to the volatility of crypto in general. So this is one thing. Another one is that we are always using as little conditions as possible. Usually, we are moving anywhere between two to four conditions per model, which is like four is really the maximum I would go with because the more conditions, the more complexity exponentially you are adding to the tradable model. And then, of course, we are running many, many different robustness tests, which we built in house. It's not about like normal robustness tests you would run on stocks or commodities where you have the advantage of having dozens of years of history. It's more about, for example, running your own daily data. For example, we are building in house our own daily data with offset daily closes to test the robustness based on the daily close, to test everything on lower timeframes for eight, twelve hours, to test that the model is stable across broad vary variety of parameters. So there are many, many steps you have to follow, but the most important one is to take model which is tradable somewhere somewhere else as simple as possible, as robust as possible, and deploy to crypto with as few changes as possible. But still, you cannot rely that this model won't stop working because as you correctly said, we are still in some immature phase in crypto and we know the only thing we know honestly is that crypto will be more mature over the long term, but we just don't know how it will evolve. Will it be more like stocks or will it be more like commodities or more like Forex? We don't know. That's why my approach is to really trade broad portfolios or whether portfolios of long short momentum mean reversion together because that's the only way how I can be really prepared for any market environment which can happen in the future. And then, of course, your work and our work as traders is to have proper benchmarks to all the models in the portfolio you are running and comparing the performance of the model to the benchmark which you should have again built in house because there are no proper benchmarks for now. Tristan Pollock [30:00](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1800s): I've been speaking to some shorter term futures traders on the pod recently, Pavel, as. And so there's a bit of a difference between the way futures traders or even currency traders generally approach their trading and portfolio building compared to a stock trader. And I bet you know where I'm going with this. Stock traders, because you do some stock trading as well, we tend to build models that run over the whole portfolio, the whole universe of stocks so that we're taking a portfolio based approach. We want to build alphas that would apply to any of the selected stock that we happen to trade that day. We're not building strategies for a given stock. And the futures traders, the shorter term ones that I'm speaking to recently specifically, they are of course generally making models that are tuned to the particular market that they're trading because they are quite different markets. Could be trading bond futures, equity futures, commodity futures and so on. Where do you sit with crypto? Are you making models that you want to be robust across the universe of say, the top 50 or Yeah. Are you making, individual models per per No. No. Always always portfolio approach. Pavel Kýček [31:23](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1883s): Why? Because the hindsight bias in crypto is huge. Honestly, wouldn't believe there are even institutional traders who are building their models on top of few coins, which were performing very well in the past. You know, for example, Solana. Solana was making hundreds and thousands of percents in a few years. They are putting some momentum model on top of that. And they have to believe that such a model would be able to perform the same way. Honestly, I wouldn't believe that it's even possible, but yeah, the whole industry is still pretty immature. So how we are approaching it is, as you said, basically stock portfolio approach. All our models are built that way that they are tradable across the whole tradable universe. Of course, there are models which are more and again, that's something you can even observe in stocks. There are models like long term momentum aka trend following is doing better on bigger projects. That's also something you can observe in stocks too, that bigger stocks tend to really create long term trends. This is something we can already see in crypto too. On the other hand, we are not betting on this behavior because again, you can expect it based on research on other asset classes, but you cannot 100% bet on behavior to be continuing over the long term. But short answer is always portfolio approach, always without any hindsight bias. Tristan Pollock [33:07](https://www.youtube.com/watch?v=B5v3oc-DjII&t=1987s): I think you've answered a question I was going to ask about specific things that might work in crypto, that don't necessarily work elsewhere. But the whole approach to trading this in environment with these new markets is to take the principles that you know work elsewhere. And so in a sense, are trying to match that up and taking this logical approach. And, what I like about that is, it shows where traders make their money using their, their logic, using their mind in a way above and beyond just running code and running the numbers. You need to have some entrepreneurial sense about you. Always make this point to build something robust and so you've taken that thinking and, it makes a lot of sense to approach crypto in that way. And I know you're having a lot of success with it. So are there particular, let's drill further into your strategies. Are there particular strategies that you'd like? Like what's your spread look like? You've said, you mentioned about 15 to 20 models, break that down for us kind of long term, short term, long short, mean reversion trend. What does the spread look like for you? Yeah. Pavel Kýček [34:33](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2073s): So first, let me tell tell you one thing. Big. I really like trend following long term momentum. I think it's really one of the most robust approaches over all the asset classes. On the other hand, it's also the most volatile approach, especially if you don't have the benefit, the advantage of really diversify of diversifying across different asset classes. And because we are running our solution on top of crypto only, we need to get the diversification differently, which means that we are running momentum and mean reversion. And by momentum, I would like to stress a little bit more the difference between short term momentum and long term momentum. Because short term momentum, for example, on stocks, it's something which is almost not working, let's say, term breakouts to the long side. If you really dig deeper in research, you can see that big or short term breakouts tend to be mean reverted on stocks. It was working in the past, it's not working anymore. That's why your good point is not only on focusing on what's working today in TradFi, in traditional assets, but also what was working because that's also where we are in crypto right now. So short term momentum and by short term, if you would be trading on daily data, short term is anywhere between one to three days of holding is very strong approach, especially to the long side. Then momentum, like long term momentum aka trend following is making a lot of money, but with very, very short time windows or periods because crypto tends to really overreact during very short time and then it tends to be really sideways or falling back again. So we are taking advantage of momentum, mean reversion, long short. Of course, long side is very similar or this characteristics is very similar to stocks. Long side is much much stronger compared to trading through short side. So being retail trader only and if I wouldn't have fully automated solution, I would go with momentum long and mean reversion long in broader portfolio because we have the advantage of full automation. We are going also with the short approaches. These have much smaller edges because crypto in general is mean reversion long asset class, which means that already dips tend to tend to react to the long side most of the time. But because we are approaching portfolio approach, all weather approach, we want to have this exposure not only for making money during bear markets or bear market regimes, but also for hedging our long positions because the way how we are approaching trading is to spread the allocation based on the current market regime but we always want to be hedged if there is some left tail environment, something happens, the whole crypto market falls by 20%, 30%, 40% even during the day, you have to be sure that you are managing this type of risk. And in crypto, one of the worst way how to manage risks is through stop losses, hard stops. Because crypto is really very volatile, especially intraday, and it's making many false breakouts and many fakeouts in general. So there are smarter ways how to how to approach this risk. And based on my experience, the smarter way is really to have models. And now we are getting more to the models which we are trading to have models which are trying to catch the edge and models which are hedging your portfolio. Let me give an example. For example, I'm talking about us having 20 plus different models which are running in production. Of course, we are trading momentum and mean reversion only, so this is not about finding dozens of different edges, but it's about how we are approaching each model. Some of the models are, for example, more aggressive in a sense that they are getting into the market anytime there is some spike in volatility. Anytime the volatility is moving, these models are getting to the market. Why? Because they are giving us some initial exposure to the market plus these are great hedges for momentum models to the other side. And then we have models which are really regime dependent and these are only let's say switched on anytime the market starts doing its thing, it's starting really moving to the long side a lot or to the short side a lot. The difference between these models is usually in expectancy, The models which are built only to catch the biggest edge out of the market are definitely better in a sense that you would want to trade them by themselves only, but the other ones are there to build properly well built all weather portfolio. Tristan Pollock [40:26](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2426s): Yeah, we talked about this approach with PJ Sutherland on the show who has spent a significant amount of time building, mean reversion and short term breakout strategies specifically because of how they will hedge one another and synchronize with one another. That So hedge that you're building in is not only significant and important, but it allows you to compound your returns better because you're not getting yourself into drawdown so you can keep making money. Pavel Kýček [41:06](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2466s): Plus you have made one very good point. And I think that's something even momentum traders should be thinking about. And that's the combination of momentum and version. Let me give an example. We all know that for most momentum models, profit targets are not the best way how to exit a trade. Usually you should let the market run, right? But especially in crypto, want to let the market run because it can make hundreds of percent per position, especially on these smaller points. On the other hand, the bigger the open position and not on one coin, you can do it through volatility targeting, but the bigger the position to, for example, momentum long approaches in the market as the market is approaching some period when it's really growing a lot, you are having big open profits and also potentially big drawdowns anytime the market starts reverting a lot. How you can reduce these open profits or the modern open profits, the open exposure to the long side is by using very short term mean reversion short strategies, which are using the position anywhere between few hours up to one day. Usually we personally are never holding any mean reversion short longer than twenty four hours, because the left tail risk is generally getting much bigger. But thanks to this combination of momentum long and mean reversion short, you are able to push the long exposure lower and you are able to reduce this left tail risk of going very down out of your open profits and being exposed to other approach anytime. Tristan Pollock [43:00](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2580s): Yeah, Pavel Kýček [43:01](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2581s): I love it. And the same to the short side actually. For the short side, I believe it's even more important because as I said, crypto market is really mean reverting to the long side, but you want to have this momentum short exposure because for example, in a bear market of 2022, you were able to make with a bear or momentum short models performance profits anywhere between 40 to 80%. So pretty nice one and it's really stabilizing the portfolio. On the other hand, most of the time momentum short is eating your profits. Again, to reduce this disadvantage through mean reversion long, because the stronger the momentum to the short side, the higher the probability that the market would mean revert back to the long side. And you can take advantage of it and you can deploy different mean reversion long models and they are really working very nicely together in the all weather portfolio. Tristan Pollock [44:06](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2646s): For the single strategies before you start to combine them together in your portfolio, Pavel, can you give us an idea of maybe what the metrics look like on a single strategy in terms of say return and drawdown because I'm positive that once you combine those 15 to 20 over 50 markets, the portfolio numbers look substantially different. So it's good for the traders to get a feel for what that first step looks like and what to expect on a So single Pavel Kýček [44:42](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2682s): again, it's very important to differentiate between different edges, momentum long with short term momentum you are able to make on average 60 to 80% per year with a drawdown of 20%. With long term momentum on crypto, the average holding time is anywhere between seven to ten days on average. We are talking with slightly higher performance, but you are paying with higher drawdown. So if you would be able to go through 40% drawdown, can make up to 100%, 120%, even 150% of profits. Maybe we haven't mentioned one thing at the start. I think that's very important and it's why we are able to make these profits. It's because the volatility of the market. If we, for example, compare the volatility of stocks of S&P 500 and compare it to the volatility of our tradable universe of top 50 biggest coins, we are talking about seven to 10x higher volatility of this crypto tradeable universe. So that's the magic, I just wanted to really stress it that it's not about finding some magical receipt of how to approach crypto and make a lot of money. That's really about how to manage the left tail risk while being exposed to this tremendous volatility. And that's why this all weather approach. But sorry, just to get back to your question. So momentum long, we are talking about 60 to 80% with a drawdown of 20%. We are talking about short term momentum, long term momentum, everything even higher. Momentum to the short side, that's about 20% average annual performance with a drawdown of 20 to 30%. It's definitely much, much smaller. Mean reversion long, that's interesting one because there are two approaches to mean reversion in general. One is really the one that you are buying something which was falling a lot and you are betting that because it really fell a lot, it tends to mean revert oversimplified. Another one is and the one I like a lot. This is combining momentum and mean reversion together because we do have both approaches. One is really pure mean reversion type of trading. Another one is the combination of momentum and mean reversion. And this one in crypto is very interesting because if you are able to measure momentum and then you are entering on some type of mean reversion characteristics of the market intraday or during several day correction, you are able to get the best of both worlds, which means a higher win rate which you are getting through mean reversion and also the exposure to the momentum effect which you are getting through momentum strategies. Of course, it also has some disadvantages, because you don't have to get into all the strong movements, which are not making the correction. So everything has its advantage and disadvantage, that's why we want to build a proper portfolio. Mean Reversion Long, we are talking about few dozens of percent on a yearly basis with twenty-thirty percent drawdown. To the short side, momentum short, if you are able to trade it properly with proper diversification is pretty strong edge in crypto, because I feel that not many are taking this side of the market that often. So this is something worth exploring, but you have to have really automated solution for this one because you have to manage the left tail risks, which are much bigger with mean reversion shorts, especially on crypto. And whenever you are able to manage them, then I definitely recommend going over it. Tristan Pollock [49:07](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2947s): How do you combine all of these strategies into the portfolio? Do you have some set allocations such as, like I must have 25% in each of four sectors, 25 long mean reversion, 25% short mean reversion, 25% long trend and so on. Do you break it up like that and then try and keep it in those sectors so that they're always available to offset one another or, as do you have some other rule? Pavel Kýček [49:37](https://www.youtube.com/watch?v=B5v3oc-DjII&t=2977s): Yeah, oversimplify that's what we are doing. Basically, we are saying what's the exposure we want to get from different approaches And that's something we are keeping. But there are other constraints you have to keep in the portfolio, especially maximum position per coin, maximum. And then it's really more about the exposure you want to get from your portfolio, because it would be too simple if I would say that we are doing it just this way, because what we are doing for our institutional clients, for example, is that we are offering portfolios with different kind of exposure. Let me give an example. We are trading for a fund. They have strong momentum long exposure and with our solution they want to get a higher exposure to mean reversion approaches and momentum short approaches. And that's something we are able to do. We are doing it through building portfolios based on the models which are running in production, which means that we are not starting building models from scratch. These models are running live for a few years. We are taking them and based on the target exposure, target volatility, we are building the portfolios. So in general, for myself, I would build a portfolio with the exposure something like 60% momentum, 40% mean reversion, 60/40 long-short, more or less oversimplified. But the truth is that right now we are running over 20 different portfolios for our clients with different level of volatility, with different level exposure. Understood. Tristan Pollock [51:26](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3086s): I would imagine that most of the models you're building, Pavel, you build them based on those that cause a logic that you talked about so that they're robust so that you can let them run. Do you do that or do you have a process to actually retire strategies and substitute new strategies in fairly frequently? Pavel Kýček [51:49](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3109s): Yeah, so definitely very frequently, but we have this process. First of all, you have to have the proper benchmarks for the models, which means that the truth is that we are running over 20 different models live but we have dozens of different models which we have built and which are very similar to what we are running live. And of these similar models, we are building our own indexes or benchmarks, which we are then comparing on weekly and monthly basis to the models which we are running live. That's the only way how I the only way what I found how to do it very properly. And then of course you have to understand the models. I think that's very important piece of the puzzle because let me give you an example. You know that you are trading a momentum short model in the portfolio. The market is going through two years of bull market and another one year of sideways market. In such conditions, what should be the output of your momentum short model? Well, I wouldn't expect that this type of model would be making money, right? Especially if it would be a model which is made also to hedge our momentum long positions. This model for sure would lose money for these three years and it's something I would perfectly expect. So I think how we are approaching it is that firstly we know what we are trading and we know in which market phases the models should be making money and in which phases they should be losing or they should stay completely out of the market. With this level of understanding, you can already say most of the time that the model is doing good job, bad job, it's some exception or something is going wrong with your model. But we are adding the other layer of benchmarking all the models we are running in portfolio and thanks to them, we are getting some soft big picture and soft comparison, but also hard data comparison, which we are then putting together. And based on this, we can make the decision to, for example, discontinue some model or take some other model and put it into the portfolio instead of the one we are trading. But in general, these changes are not made like on a monthly basis, not even on a quarterly basis. We are really talking about very minor changes on a yearly basis because we also need to build something which is giving the same exposure which our clients, especially the institutional ones are expecting. Tristan Pollock [54:55](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3295s): Yeah, that's what I meant. And that's what I thought. So tell us a little bit about your tech stack because you've talked about the importance of the data and getting the right data, cleaning the data, but then executing potentially executing for different clients on different exchanges or across multiple exchanges. There's some really significant technological requirements there for your order management and your data management. Yeah. Tell us a bit about the tech environment in which or the tech environment you've built out to handle all of that. Pavel Kýček [55:36](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3336s): Honestly, what's good to say is that Robuxio is not about me. It's about these days about 10 people which are working on the solution on a daily basis. That's that's one thing. Another one to your question, it's really heavily software related company because one thing is building the portfolio, building the models. Honestly, crypto has the advantage that if you take simple, robust model and you don't expect 45 degrees equity curve and you are able to trade momentum long, let's say only, you will make probably money over the long term because this edge is pretty strong. Of course, the volatility will be huge. You will have years of sideways account, but you will get it there if you have the patience. But if you want to trade all weather approach with dozens of models, which means that you have up to 80 open positions in one time, another dozens of pending orders, you have to run your risk management and everything. It's heavily, heavily, really software related. For example, right now we have a team of six software developers, cloud architects and software architects who are working on the solution on a daily basis. And it's really about having the solution, for example, how it is working in house in Robuxio. Imagine that you would start trading with us. There is an automated process, which is building the portfolio in Amazon in the cloud and it's keeping the benchmark of the portfolio you are running. Then based on some frequency, let's say on twenty four hour frequency, we are making the decision on what trades to do, what to trade, what orders to send, what orders to cancel and so on. Basically, you are running your portfolio, right? But this is where the work just starts because we are sending all the orders through API across many exchanges, which means that you really have to maintain the proper API bridge which is always changing And then you have to be 100% sure that you always know what's going on all the clients sub accounts. And it's built that way that we are basically online checking what's going on all the client sub accounts and we are comparing it to all the benchmarks, their portfolio benchmarks we are keeping at Robuxio. And there are automated steps which are making proper changes if needed and everything. So it's all about the robustness because the idea above which we started building the company is to bring traditional approach to trading, momentum mean reversion to crypto, take big all weather portfolio approach and trade as robust as possible. And by robust trading, especially on crypto, which is a market which is running 20 fourseven, the trading infrastructure is really something which is the main focus. these days most of our resources are really going to the software development. Of course, we are making our research on the daily basis, we are also onboarding another quant, so we are also having many trading related questions and topics, but the infrastructure is something which is pretty tough to build. Tristan Pollock [59:26](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3566s): I get it really important. Within So that infrastructure, how important is the execution in terms of minimizing slippage and that kind of thing? Is that is that really a problem yet for you guys? Or do you have to actually create specific order execution algorithms, for example? Pavel Kýček [59:52](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3592s): It starts being a problem as we are growing, but we have built the solution. And as I told you before, one of the forms of robustness testing for us is to building our own daily data with different type of offsets. For example, we can build any number of daily candles based on few minutes offsets. So this is something we are taking advantage of because of course you can run normal approach with how in TradFi people are dealing with liquidity constraints, which is TWAP-ing or VWAP-ing and these type of algorithms but we are approaching it slightly differently. What we are doing is that anytime we see the client account is too big to handle like normal twenty four hour official daily data frequency, we are starting running these offsets which are offsetting the data on any number of offsets. So then we are spreading the liquidity across twenty four hour window. The trading cost and slippage is not a problem anymore, plus we are adding different layer of diversification. As you can see, it is also giving different layer of difficulty through whole trading back end. So that's why we are so heavily in the technological part of our solution. Plus what's important from the trading perspective and I think that's something many people are not doing is to focus on expectancy. Because me personally, I'm big believer that expectancy as long as you are building your models with idea first approach and you are really focusing on building logical models which should be surviving in the markets, then expectancy is the way how to approach robustness of the solution. Because if you know that the expectancy on crypto of the whole portfolio is anywhere between 1.5% to 2.5%, then you know that small slippage, of course, it's eating the profit, but it's not ruining the model. On the other hand, if you are digging in five minutes timeframe, the expectancy is usually very low. And as the edge will start decreasing and it always will, That's unfortunately the behavior of trading edge that it's getting smaller as it's exploited by more players. You really don't have enough space to make enough money. That's why I'm a big believer with starting with as high expectancy as possible and see how it is working in the market over the long term. Yeah. Tristan Pollock [1:02:56](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3776s): Let's start to wrap up Pavel, but what about your just review process? Do you kind of review your strategies on a monthly, quarterly, annual basis? Or is it just when they start to decay in their performance? What would you do to potentially review and update a strategy? Pavel Kýček [1:03:20](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3800s): Yeah, because I'm really enjoying building strategies in general, I'm on all the strategies almost all the time, so it's hard to say for me was the reviewing period. But we are always comparing our strategies on weekly and monthly basis or the weekly is very low one for daily data. But I just want to understand also the models, how they are performing under different circumstances and in different periods. And if you really want to understand your trading model, I believe you also have to follow it very thoroughly even on the daily basis to see how it is interacting with different market behavior. So this is one thing. Another one is that we are benchmarking our models on monthly, quarterly and yearly basis. And yeah, then of course I'm trying to understand if the model is doing what it is supposed to do. So again, was it made to catch momentum long? If yes, is it making money during the periods when the market is in momentum long characteristics? If yes, I'm pretty okay with it and I'm continuing trading this this model further And if not, I'm starting digging deeper. What's important to say is that compared to TradFi, compared to stocks and commodities, you will see that the edge will decay quicker on crypto. Because these days really, for example, we have seen in last six to nine months, a lot of new institutional investors and traders are rushing into crypto because they can see the potential of crypto trading. And that's why I would expect that these edges will be getting smaller and smaller over the long term and that's why the metrics will be also worse. So the proper way how to do it is probably not to focus on metrics only, but really we are getting back to understanding to what you are trading and put in everything to proper picture. Tristan Pollock [1:05:35](https://www.youtube.com/watch?v=B5v3oc-DjII&t=3935s): We've talked a lot about robustness, I think, and I wanted to call it out as a specific point to get into it specifically, but I think you've just peppered this whole show with different principles about how you test robustness. So because it is important and specifically important for crypto with a short data history, I do just want to call it out again and maybe summarize some of those points that you've made and you can add them. Things that come to mind, of course, that you've got this causal logic based approach to building the strategies in the first place. So you're not really into machine learning or data mining out of that short period of crypto data. You're working on price and volume. You're not looking at the other crypto related data that's quite minimal so that you can apply principles that we've learned from TradFi so that we're doing something that we know should work. You've talked about manipulating the data, making different different end of day data. And I think I understood what you meant that you're basically changing when the bars start and end essentially. So you're making alternative data sets and you can test it on there. You're also building strategies for a portfolio of crypto of coins so that it's not just super overfit to one particular market. What have I missed? So some of the other things that you've mentioned already or that come to mind, like what what's some of those key principles for you to really summarize and wrap it all up around building a robust strategies in the crypto space? Pavel Kýček [1:07:27](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4047s): Well, even our name is partially including the word robust. So I'm building, we are building everything around robustness. And you mentioned very well that it's you have to start with the models, then the robustness have to really be pushed to the whole portfolio. And the most important thing, one of the most important things is really not to rely on the metrics in the past, but building models which you think will survive in the live market. This is what robustness is about to survive in the live market because in crypto, crypto is really not an investment asset class for now. Crypto is really asset class which is the best for trading because of volatility and inefficiencies. So why we are so focused on robustness? Because the volatility and inefficiencies is in the market, but there is also huge left tail risk. How to avoid this left tail risk? You have to have robust models, robust portfolio, robust trading engine and you have to be able to reduce the left tail risk and be exposed to the volatility and inefficiencies and to be exposed on a daily basis on the market which is running 20 fourseven. It's not only about robust models, but it's also about having the robust infrastructure which is able to trade really in crypto. I cannot imagine the proper way how to trade it without some form of automatization. Tristan Pollock [1:09:09](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4149s): Pavel, to take us out, I'd like to know whether you have kind of a view on the whole economics of crypto, you could have zero interest in the, the more philosophical part of crypto and that would be fine because you are there to trade the markets and make those markets more efficient in the process and extract profits for your clients. But do you have any opinions? Are you like a Bitcoin maximalist? Do you think that crypto is the future? Do you think that 99% of coins are gonna die? Do you have any sort of bigger picture philosophical and economic Pavel Kýček [1:09:54](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4194s): viewpoints on crypto and where we're going? Yeah. So first I have to say I'm very bad in making predictions, but I'm having long term bet in Bitcoin. That's the only crypto I'm holding over the long term. That's something I can say publicly. Everything else, what I believe in crypto is really in a phase which is very comparable to tech stocks before 2000. There were Amazons, there were many big companies, but there were also many projects which didn't deliver any value. They didn't deliver any promises. And this is exactly what's going on in crypto. Crypto won't go away. You can see that in Asia, in US, in Europe, everywhere, there is the regulation being built these days, because everyone can see there is a huge opportunity whenever there is new asset class which is being bought, which is right now in crypto. But we simply don't know how crypto will evolve. I believe that it could potentially be also a market which would be working as something as stock market for like IPOs of smaller projects, for example, that's something how it could evolve. We can see that there are many projects which are really delivering what they promised, but still what you said is true. I would say that not 99%. These days, I would say 99.99% of all crypto coins will definitely die, which doesn't mean that during their process of dying, they won't make trends of hundreds of percent. And that's why we are here. And that's something we are trying to catch and make money from. Tristan Pollock [1:11:50](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4310s): I had the thought today thinking about us chatting and one really positive attribute of what crypto has brought to the world, think. I'm economist trained. I've got that economics background. And so I've always been fascinated by monetary economics and how money works and how money is created. And actually, I'll have to post a link. There's a guy who explains money creation better than anyone I've heard. I think there's a book called Prince of the Yen. People will know it. And there's a video of his where he explains money creation so brilliantly. But anyway, so I'm interested in all of that. And I do think one thing that's really interesting with crypto is it's getting a lot of people thinking about money creation. And of course now, with the inflation that we've had, it's even more of interest and people are therefore more interested in economic history and just how long the fiat currency experiment that we're in has been going, which is not very long at all in human history. So that I find really fascinating. So we really don't know what's going to happen next, but people are more aware than ever of the nature of money in the economy and how it works, how it's manipulated and controlled as well. And sometimes you're good, sometimes you're bad. So I find that really interesting. Pavel Kýček [1:13:34](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4414s): Yeah, completely agree. You can see how people, especially Bitcoiners, the ones who are holding Bitcoin, they are having very, very good understanding of how money is working. But even people in crypto in general, if it is advantage or disadvantage for the whole system, I'm not talking about the individuals. I also have my own belief and this is not exactly with the system and how it is being built, especially with the failed system. But there is the question because the whole system failed system is built based on the trust and the trust is starting being a little bit bitten through these people. So then the question is if it can help or not help over the long term. You know what I mean? I like that people are starting understanding what's going on in the economy because some economists do. So I like it a lot. On the other hand, because everything is built based on trust, who knows how it all ends up. Tristan Pollock [1:14:45](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4485s): Correct. Correct. Well, yeah, we might be living through some tough times. Maybe we have to live through some kind of regime shift, right? Maybe. Let's see. Hey, That's Pavel, big topic for another podcast. Yeah, that's above my pay grade. I really appreciate it. Thanks so much. Obviously, you've got the managed accounts that you run there. There's so much going on. So let people know, your website and how to get in contact with Robuxio. Pavel Kýček [1:15:15](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4515s): Yes. So the best way how to approach us is to go to robuxio.com and go over the website. And I believe there is pretty good explanation of how we are operating, what we are doing. And if you are an institutional investor or individual trader who is interested in allocation crypto, just let us know. There are links. Awesome. What's your X handle again? Pkycek. Got it. Tristan Pollock [1:15:49](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4549s): I'll start Also it Pavel Kýček [1:15:50](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4550s): on LinkedIn. Tristan Pollock [1:15:51](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4551s): Yeah. I'll put some links in the show notes. Well, once again, Pavel. Really appreciate it, mate. And, look forward to chatting again soon. Keep in touch. Thank you, Tristan. It was great to be here. Show intro [1:16:03](https://www.youtube.com/watch?v=B5v3oc-DjII&t=4563s): We should remind you that the conversations on this show are informal and for entertainment purposes only. Certainly, any general advice you may hear is obviously not specific to your needs, goals, or objectives. So nothing discussed on the show should be considered as investment advice. If you want that, you'll need to actually do your own research and speak with your financial adviser. Remember, trading can be extremely risky and past performance is not necessarily indicative of future returns. If you enjoyed the show, please subscribe or leave us a review. And if you have any questions or feedback, we'd love to hear from you. 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Listen on [Web ↗](https://bettersystemtrader.com/algorithmic-crypto-trading/)[YouTube ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Crypto's inefficiency window is closing fast — the edge of a simple trend-following strategy is much smaller today than three years ago, but still beats the benchmark. - 02 Survivorship bias is the single biggest backtesting trap in crypto. Test on today's top-10 coins and you'll get a 5–10× better equity curve than testing on the actual top-10 from each historical date — Pavel built Robuxio's own survivorship-bias-free database because no commercial provider exists. - 03 Robuxio uses idea-first strategy construction: each model has at most 2–3 entry conditions and one exit condition, because more conditions = more overfitting risk on 5 years of data. - 04 Robustness comes from parameter stability — a moving-average-10 strategy should also work at 5, 7, 8, up to 15. Robuxio also tests on 23 artificial daily-close offsets to multiply effective sample size. - 05 Regime filters belong on trend strategies, not on every model — sometimes you accept worse standalone performance to preserve uncorrelated behavior in the portfolio. - 06 Don't optimize equity curves — optimize diversification contribution. A strategy is only worth adding to the portfolio if it draws down in different market phases than what's already in there. - 07 The biggest beginner trap in crypto algo trading: building a 'bot' on a single coin like Solana that 100,000%'d. Every model needs a survivorship-bias-free, multi-coin universe and proper code review — Pavel admits to having shipped bugs to live trading more than once. Chapters ## Jump to any moment - [0:00 Intro and Pavel's path from discretionary to algo ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=0s) - [5:13 What wrong expectations retail traders have about crypto ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=313s) - [7:13 The real risks of crypto trading (exchange, allocation, scams) ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=433s) - [9:00 Which strategy styles work best in crypto ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=540s) - [11:25 How crypto edges decay — comparing to 1980s commodities ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=685s) - [15:57 How Pavel uses crypto volatility to size positions ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=957s) - [17:50 Survivorship bias and the top-10-coins chart ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1070s) - [21:22 Tools, data, and RealTest ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1282s) - [23:19 Building strategies on limited crypto history ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1399s) - [25:03 Robustness testing without walk-forward ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1503s) - [29:20 Single-coin testing vs portfolio testing ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1760s) - [31:10 Regime filters on which strategies (and which not) ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1870s) - [34:10 Portfolio building and all-weather thinking ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2050s) - [36:19 Diversification when 'everything is correlated' ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2179s) - [38:30 Oversimplification vs advanced portfolio techniques ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2310s) - [41:56 How to measure a strategy's diversification contribution ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2516s) - [43:18 Why Pavel doesn't chase the prettiest equity curve ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2598s) - [45:33 The biggest mistakes crypto algo traders make ↗](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2733s) Full transcript ## The conversation 66 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:00](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=0s): Welcome to Better System Trader Live, the show for systematic and algorithmic traders. Welcome to this show, we're going be talking about something that we don't often get to talk about. It's a topic I think maybe in this industry, there isn't a lot of, or that I know of a lot of legitimate systematic or algorithmic traders. But today, the guy I found for you is, I think he's amazing actually. He's been on the trading panel the last couple of weeks, so you may recognise him, but he is an algorithmic trader, crypto specialist. Welcome to the show Pavel Kýček. Pavel Kýček [0:36](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=36s): Thank you, Andrew. Hi, thank you for having me. I have to say that I love your podcast, so Andrew Swanscott [0:43](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=43s): for me, it is really honored to be here. Thank you. Excellent. Well, it's great to have you on BST Live. As I mentioned, you've been on the trading panel a couple of times and you've always got a lot of good insights and comments to share there. So I'm really looking forward to having this conversation with you today. And as I mentioned, our topic is going to be algorithmic crypto trading. So I discovered you actually on Twitter, I don't know, maybe a couple of months ago, right? And I think it was something about robustness. I was like, don't often see people in the crypto space talking about robustness, drawdown portfolios. I was like, this guy's good. So we had some discussions and I've looked into some of your stuff and we're going to dig into some of that today. So I'm really looking forward to our chat. But first, how about a little bit of background on yourself? Can you tell us a little bit of your trading background so we can have some context around our discussion today? Pavel Kýček [1:43](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=103s): Yeah, of course. Well, the topic robustness, by the way, is one of my favorite ones. So I'm really looking forward to it. So my background, I have to say I started as typical discretionary trader, so I thought that I will outsmart I will outsmart markets by looking at the charts as often as possible to get a feeling of the charts — probably all of us know it. So these were my starts in, let's say 2007, 2008. Then I started trading like semi discretionary half automatically or half systematically. I used to be trading like mean reversion strategies on E mini equities and the level two data. So this was the first time after, let's say five years, four to five years when I started being somehow profitable. But to me, I have to say I was always struggling trading profitably discretionary because I missed some background, some data that I could, for example, use if I was in drawdowns and so on. So when my, I started, in fact, then I started investing systematically like those mean-reversion or not, these rotational strategies like gold, ETF on SPDR and these very simple rotational strategies that are working. And I think many people could start with them just to get the confidence in systematic trading. And then like seven to eight years back, I switched completely to systematic trading. I traded many assets, for example, mean reversion strategies on Forex, I traded breakouts on commodities, and then mainly I created broad portfolios of uncorrelated strategies on equities. And few years back I started investing in Bitcoin because to me it was interesting asset, but I don't know why. I didn't recognize the volatility and the possibility of how crypto in general is volatile, know, because for us traders, I would say volatility is the first reason or the reason number one, we, why we want to trade the asset and that's why it, it took me like another two years before I started trading crypto systematically like two years ago. But the problem of course is that there is no infrastructure for us algorithmic traders. So we have to start building the overall infrastructure for crypto trading with my partners at Robuxio, because the problem in crypto is that, for example, on equities, you can trade semi automatically or semi systematically which means that you will download the data at the end of the day, you will run your scanners and you will send your orders. On crypto, it's impossible, especially if you want to trade ten, fifteen strategies together in one portfolio. That's why we started building this backend and started trading purely automatically. Andrew Swanscott [5:13](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=313s): Yeah. Okay. Well, we're going to dig into that a little bit deeper in our discussion today. But I just want to start with a Twitter message between you and I. This was a private one, I hope you don't mention it. I hope you don't mind that I share it, it's a good message. Just reading it here. I'm trying to, so we're talking about, I think I might have been asking you why, what are you doing with your trading? And you said, I'm trying to give back some of my knowledge on Twitter because especially in crypto trading, people have such wrong expectations. And it's a bit of a shame because I still think we have a nice period of a few years of many huge inefficiencies in crypto. So that's a good comment. What types of wrong expectations are you seeing people have in crypto? Pavel Kýček [6:03](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=363s): Well, there are many, many, many wrong expectations. Most of them have their roots in hindsight bias. You know, there are many coins that made like 10000%, 100000% in the past, and everyone is jumping on the last best crypto opportunity to make those 10000% on this individual or single coin, which is basically the biggest problem in crypto. Then of course, that have their roots in this thinking, because how I feel it for us traders, once we get wrong mindset about trading then it is very hard to switch to the proper risk management type of thinking that we should always hold and we should always be in. And once you get into this gambler mindset, like buy this coin because it will be going through the moon overnight and so on, then you are basically done. I don't think you can make any money in crypto. Andrew Swanscott [7:13](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=433s): Yeah. Yeah. That's a really good point. And I think we're going to dig into risk management a little bit later, but at a high level, what are some of the risks with crypto trading? Pavel Kýček [7:25](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=445s): Yeah. In crypto, one of the biggest risks is just being in crypto, because yeah, it's just true, in crypto there is a lot of regulatory uncertainty still, even though there are like new laws that will be valid in this or following year, for example, in Europe, there is still a lot of uncertainty here. So one of the biggest risks is just trading on single exchange because we all know FTX case and so on. Another huge risk is investing into one or two, three coins, not to allocate accordingly. Another risk is just being scammed by many people who are trying to sell you something or just purely steal your assets from your wallets and so on. So you really shouldn't be too concentrated if you want to invest into crypto. But on the other side, my premise is if all these risks will be covered and they will be covered in the future, I'm pretty sure about it, potential rewards will be much lower. So we are again to this reward to risk ratios and expectations. To me in crypto, it is more about allocation, how much you should allocate rather than whether you should be allocating, because yeah, potential is still very big here. Andrew Swanscott [9:00](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=540s): Yep. Well, let's talk about that potential a little bit more. In the second part of that Twitter message that I just read out a moment ago, you said that we're going to have a nice period of a few years of many huge inefficiencies in crypto. So let's talk a little bit about these inefficiencies or more specifically, maybe about building crypto strategies. Now I'm sure we've all heard about the huge rise and fall of some of these crypto markets. What type of strategies do you think or trading style works best for crypto? Pavel Kýček [9:36](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=576s): Yeah. This is very, very interesting question because again, my premise is that I don't know much about market, especially I don't know much about the future of the market, especially in crypto, because we all know crypto is pretty young asset. So now if I should pick up one trend, one strategy or one approach that is making the most money, it will be trend trading or trend strategies or breakout strategies. On the other side, we don't know how the market in general will be evolving. So that's why I'm thinking about it more in general. For example, will it be behaving in the future as Forex? Will it have more like range bound characteristics, for example? Or will it be an asset that will in fact have some value because most of the crypto coins just don't have any value at all. That's why there are very short but sharp trends, but not long term trendiness as we can, for example, see in stocks. To me, it is really more about building broader portfolios and taking advantage of trends through trend strategies and breakout strategies and inefficiencies through mean reversion strategies. Because, yes, there are big trends that you can catch thanks to trend strats. But on the other side, there are many of those pump and dump schemes or basically like overreactions, thanks to the amateurs that are on the market that you can trade against, thanks to mean reversion strategies. Andrew Swanscott [11:25](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=685s): Yeah. Yeah. You hear these stories of hear these stories of traders from the 1970s or 1980s. And they say, when I was trading the futures markets back then, I could just put on a simple moving average, buy above, sell below and make a lot of money. They had these really basic trading strategies that seemed to work well. And then over time, as I guess the markets become more mature, you get more participation, different levels of experience in those markets, it tends to get noisier. And the characteristics of the markets change, which means then you've got to adjust the style of trading a little bit. So are you seeing that kind of development now in crypto? Like do simple strategies work now or do you need to be more complicated? Pavel Kýček [12:15](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=735s): That's exactly what I expect even in the future that something like that will be happening here. But for example, let's talk more specifically. If you try some moving average crossover strategy, it will be making money on crypto. But you can see that three, four years ago, the edge, the overperformance compared to some benchmark was much higher than today, for example. But it is still overperforming benchmark, just this very simple strategy. On the other side, mean reversion strategies, for example, to the short side on crypto weren't that profitable two, three years back, but now they are performing massively. But of course there are big risks because crypto is exponential asset, so you can't just short these huge moves on the short side. Mean reversion strategies, I would say have to be more professional built compared to even equities, because for example, equities are like short term mean reverting market, I would say and mean reversion strategies are performing quite well. On crypto, at least to the short side, you have to think about it a little bit more in which time and in periods you want to trade them. Okay. But yes, it is exactly as you said, I can already see that the very simple strategies are performing well, but a little bit worse than two, three years ago. Andrew Swanscott [13:59](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=839s): So that's interesting because you can, I guess you could study the developments of these other markets that are more mature now, the futures markets and kind of overlay that on what potentially the crypto market might be doing, maybe in shorter cycles, because we've got a lot of technology and stuff these days that accelerates that type of thing? It's pretty cool to think of maybe you've got a, a, what's it called? Like a roadmap or a path to follow in this newly developing market now. Exactly. That's by the way exactly what we are doing Pavel Kýček [14:31](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=871s): in Robuxio and by myself when I'm building strategies. I'm looking at the past. I'm looking at commodities in 1980s. I'm looking at, for example, stocks on the start of 2000 before the tech bubble or during the tech bubble. You know, you have to find some other assets to make your robustness testing and to see what was working in those times and in those periods, because I think it is worth it. For example, I still don't get the reason why, for example, Larry Williams doesn't trade crypto because he used to be trading commodities, which I think in 1980s were similarly risky as crypto these days. And this was also the reason why he was making 10,000 or he made 10,000% in one year, audited. And in crypto, I think in a very good year, can still make something like that if you want to go through such huge risks as, for example, Larry went in 1980s. Andrew Swanscott [15:40](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=940s): Yeah. Larry is not 20 years old now. Maybe his appetite for risk is a little bit different, but Probably. Pavel Kýček [15:48](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=948s): But I believe that young Larry would definitely trade crypto these days. I'm pretty sure about it. Yeah, exactly. Andrew Swanscott [15:57](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=957s): Now I just wanted to I noticed there's a comment here from Antonio in the chat, which is kind of leading to my next question about volatility. So Antonio said, check the standard deviations per hour if you scalp, which is an interesting approach. You've already kind of mentioned the volatility in crypto markets can be pretty huge at times. Use How do that knowledge or that insight to adjust how your trading strategies work? Yeah. Pavel Kýček [16:26](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=986s): Well, first of all, I love the volatility of crypto. I think every trader basically loves volatility. To me, it's the biggest advantage of crypto to tell you through. It's the reason why I'm in crypto. So I'm dealing with the volatility is that I'm trading portfolio of uncorrelated strategies. And it means that I'm also trading strategies in which every strategy basically trades up to fifteen, twenty positions. So this is first thing how I'm dealing with volatility. Many uncorrelated strategies, every strategy has a little bit different role in the overall portfolio. And that's why I'm also having some maximum threshold how much exposure I want to have to one coin, for example, because as I said earlier, one of the biggest risks is to be overexposed to one coin because you never know if this coin will go to zero overnight. So that's why the exposure, the overall exposure to one asset, one coin has to be pretty low. And then I'm really dealing with the volatility the way that I'm trading mean reversion strats, trend strats, breakout strategies, and I'm spreading the capital accordingly. Andrew Swanscott [17:50](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1070s): Yep. Yep. Now you make a good point there about some coins potentially going to zero and some have had a huge run up. And you made a point in, I think it was two weeks ago in the trading panel about survivorship bias. Or maybe I made the point. I don't recall. We were talking about it anyway, right? Yeah, we were talking about it. Yeah. And I noticed when I was looking on your blog that you had a really interesting chart about survivorship bias. And do you want to talk about this one in crypto? Think this was a really excellent example. I'm going to put it on the screen. Yeah. Yeah. Can you talk about the impact of survivorship bias on crypto trading? Here we go. It's coming up. Boom. Pavel Kýček [18:33](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1113s): Yeah, well, survivorship bias has huge impact to any trading, not just on crypto but especially on crypto, the impact is huge. Why? Because crypto is firstly exponential assets. And secondly, there are many losers and just a very few of real winners. So for example, this example is very good one. If you trade, for example, today's top 10 coins with some trend strategy, which is basically this example, you would get the performance of the blue chart. But if you would be trading top 10 coins on the day when they were really in top 10, you would get the green chart, which is basically for like 5x lower or maybe even 10x lower the performance. So the more volatile the asset and the more immature the asset, the more the survivorship bias can affect your trading and your backtesting, especially your backtesting. Because if you don't backtest properly on survivorship bias free database, then you just can't get the proper results that should somehow be similar to real life trading. But again, this is quite problem because for example, for equities, you have your Norgate data, but in crypto, there are not many services. I don't know about any. So that's why we built our own solution just to have proper data and proper results of the backtests. Andrew Swanscott [20:19](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1219s): Yeah. Yeah. I think this is a really excellent example that shows the impact of survivorship bias. I remember when I was trading stocks many, many years ago and I had access to the Norgate survivorship bias and the results can sometimes be huge. This is an excellent example because I think a lot of people, especially beginner traders, don't understand the impact that can have. And so they would think this blue line is what they're going to trade and then they get a bit of a shock when it's nowhere near what they're expecting. Pavel Kýček [20:49](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1249s): This is a brilliant example here. Yeah. Thank you. But the survivorship bias is in fact everywhere. You can see it even on ETF investing, that people are choosing just for example, NASDAQ because it is over performing these days or they are choosing, I don't know, Nvidia because it is performing like crazy these days, but you never know if it will be over performing even in the future. So that's why this survivorship bias and hindsight bias Andrew Swanscott [21:22](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1282s): are two biggest problems for traders and investors in general, I would say. Yep. Okay. Now I want to move on to robustness testing in a moment, but I know this question is, it hasn't come up in the chat yet. I'm quite surprised, but people will ask, what platform do you use for testing? Where do you get your data? All that type of practical things. So how do you actually do your testing, your strategy Well, Pavel Kýček [21:48](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1308s): first of all, you have to have good data, which again, in crypto, it is a bit of problem. We are getting data from Binance and from KuCoin. We are creating and building our own survivorship bias free databases on which we are making tests. For testing, we are using RealTest, which is a software I can really recommend to anyone, especially to non programmers as myself, for example, because the code, the language is like super simple. I can compare it for example to Amibroker that I used to be using in the past and RealTest is really very, very nice and very simple, very logic software. And then of course, I think that if you really want to be serious with your trading, you have to have at least two solutions that you cross check your results between each other. So that's why we also built our like proprietary backend backtesting software. And we are like checking those results with RealTest and we are having like two different source of backtesting. But real test is good start. The only problem is the data. I don't think you can find proper data for survivorship bias free testing these days, or I didn't find any to tell you through. Andrew Swanscott [23:19](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1399s): What about the length of the data? Because some of those coins don't have a lot of history, right? Compared to if you look at stocks or the futures markets, go back How a long does that impact what you're testing? Pavel Kýček [23:30](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1410s): Of course, history, that's true. We just don't have enough data in crypto. That's definitely true. That's why it's affecting the roots of building the strategies. I would say you really have to think about building strategies a little bit differently compared to, for example, commodities compared to equities where there is a lot of data. So that's why, for example, I'm building the strategies that way that most of my strategies have some roots in very old strategies. For example, from Larry Williams 1980s or another well known traders from the start of 2000, because I can see that those strategies went over quite long out of sample, like real testing. Of course you can't use the strategy by itself for crypto because crypto is much quicker, but the logic, the entry logic or the exit logic can be very similar to those like older ones, but you have to spread the capital. You have to really trade every single strategy as a portfolio And it is like sub portfolio for your overall broad portfolio because otherwise you are just too exposed to one coin. Because basically the idea of my trading is making money from volatility, not from betting on one or two or even 10. Andrew Swanscott [25:03](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1503s): Yep. Okay. We've got a question in the chat about diversification, which we'll get to a little bit later, because I know you've got some good insights about that one. But let's jump to robustness testing for a bit. I know this is one of your favorite things based on our previous discussions and also on your blog. You talk a lot about robustness testing. So how do you know when a Pavel Kýček [25:28](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1528s): strategy is robust? What are you looking for? Yeah, well that's a very good question to tell you through. I have to say that you never know if your strategy is robust, know. Like really, you really never know. You just have to do as much as possible and go through some robustness procedure and through robustness processes to know that you did as much as possible for the strategy before letting it trade live. But before even robustness, you have to make really one step back and you have to build the strategies properly. For example, my ideas are that you have to build the strategies with idea first approach, which means that you follow some logic. So what you want to trade, if you want to trade trend strategies, mean reversion strategies and so on, because then you can go to the proper robustness testing. For example, it is quite hard to use some walk forward optimization and walk forward robustness testing because on five, six years of data, you can get very good results just by pure luck. So this is not good method in my opinion. What I'm looking at the most is really robustness over parameters, which means basically that, for example, if I'm trading some very simple strategy and I'm using moving average 10, for example, moving average 20, I want to see that the strategy is performing very similarly with moving average, five, seven, eight, up to 15, let's say minus 50% plus 50%. Another thing that, or another approach that I'm using is that I'm testing all our strategies on four hour charts or twelve hour charts just to get as much data as possible. And I want to see them performing well or at least average, I don't want to see them like going down immediately. And another thing that we are using just to get more data for example, I don't think that many traders are using it is that we are taking the advantage of crypto being 20 fourseven market, which means that we are creating our own artificial daily closes. So we are using the official daily close and we are having another 23 unofficial artificial daily closes. And I want to see again the stability over these artificial daily closes and how it is impacting the strategy in general. So this is one of robustness testing, but another one I would say that is having its root just in pure logic is for example that if I'm trading trend strategy to the long side, I want to see this strategy performing well in trends, basically in long trends. I know this is very simple logic, but not many is using it. If I'm looking at mean reversion strategies through short side, I don't mind if it is losing money in strong long trends. And if you really start building your strategies with idea first approach, you know when your strategy should be making money and when it should be losing money. And if it is losing money in the phases when it is supposed to be losing money, then you don't have to care about it that much. You just look at it and you are basically looking at like general parameters and if it is still in some range. Andrew Swanscott [29:20](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1760s): Right. Okay. So what about which market do you actually test on? Like, obviously the big one is Bitcoin. Are you testing strategies on Bitcoin and then testing them on other markets as well? Or do you like, where do you start your testing? Pavel Kýček [29:35](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1775s): I never test the strategy on single coin. I'm always testing my strategies on survivorship bias free databases. And I'm always starting with, I would say some kind of basic characteristics I want to trade. For example, I'm building the strategies that way that they have to be able to trade with few mills, for example. So I need to be able to trade on highly liquid or at least average liquid coins. That's why I'm building the strategies that way that I will choose some data set of highly liquid coins and I'm testing the strategies on those coins, but without survivorship bias free. So let's say I want to trade on 10 most liquid coins, which I don't want to, I'm choosing a little bit different parameters but let's say 10 most liquid coins and you have to use the same 10 liquids coins today or the 10 most liquid coins like one year back but not the same ones. Just have to have this survivorship bias free database, which is really again the biggest mistake I can see in beginner traders but even in intermediate traders, would say not many are realizing how big the survivorship bias free, like survivorship bias is. Andrew Swanscott [31:10](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1870s): Yeah. So you made a comment in the previous answer about looking at the performance results of a strategy when it should lose. Yeah. So do you ever test with regime filtering or trying to switch a strategy off? Because I guess using this idea first approach, which you talked about, you kind of know logically when a strategy should work and when it shouldn't. So does that lean nicely into regime filtering? Pavel Kýček [31:38](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1898s): I'm using regime filters with some strategies, but not with all of them. It again depends on the nature of the strategy. For example, to me, it doesn't make sense to use trend strategies without regime filters. Why should I enter into long trend positions if the overall market is falling like crazy? And the same to the short side. So that's why I'm, for example, using regime filters for trend strategies. I'm not using regime filters for mean reversion strats that much. It depends again. But again, what I want from my trading solution is to be as diversified as possible. So that's why sometimes I don't use regime filters, even though with regime filters the performance would be better, but I will get slightly different logic from the strategy. So that's why sometimes regime filters are good, sometimes they are not. Andrew Swanscott [32:47](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1967s): Yeah. I guess though, as we spoke about a little bit earlier about the limitations of the length of the historical data, you also get, I guess, a limited number of different types of regimes. Does that reduce the reliability of regime filtering? Pavel Kýček [33:06](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=1986s): This is very good, very good question. I think it depends on what type of regime filters you are using. Because again, if you are using very simple regime filters, those that for example, you can use on equities, something like, let's say very, very well known regime filter is 200 moving average on S&P or something like that. And you can reuse this kind of regime filter on crypto, for example, on Bitcoin or on TOTAL3 crypto index, it doesn't matter that much but I'm pretty sure that this logic is very strong and you can use it even though there is not enough data in crypto. But I'm really not trying to be like super crazy with regime filters because there could be this issue that you mentioned that you can just get good results by pure luck. And this is not something I would like to get. Andrew Swanscott [34:10](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2050s): Yep. Okay. Let's move on now to portfolio and diversification a little bit. It's come up a few times in the chat here. So first of all, you've of already touched on this a little bit already, but maybe might be good to just review it. Why do you think it's important to have a portfolio of strategies in crypto or I guess in any market really? Pavel Kýček [34:33](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2073s): I think it depends on what you want to get from your trading. For example, if you want to maximize profits and you don't care about stability of your returns at all, for example, you can bet everything on one single trend strategy in crypto and maybe or even very likely you will make the most money in this, let's say bull market if this bull market will continue. But if you want to get stability and you want to be prepared for almost anything in markets, you just have to spread the capital between many different approaches just for you to know that if the market will be evolving — and it will be somehow evolving, we just don't know how — you just have to have many different trading strategies, because then you are basically covered. My general approach is trading these all weather portfolios even on equities, on crypto, because that way you can make some money if the market will be, for example, highly volatile but it will be moving basically sideways with mean reversion strategies or you can make money if the market will be moving up or down, thanks to your trend strategies. And then the only phase that is really not good for us directional traders is basically sideways low volatility market. This is the market where you will lose money probably. Yeah. This is what it is. Andrew Swanscott [36:19](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2179s): Yeah. We've got a question in the chat from Dalibor. Apologies if I said your name incorrectly. This one's about diversification, but I like it because it's in the context of correlation. How do you diversify in crypto with everything so correlated? Pavel Kýček [36:34](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2194s): Yeah, this is good question. You know, it is also about the meaning of diversification. Of course, if I want to think about diversification in general, then I think that you should be allocated into crypto but probably you should diversify into different assets. So this is I would say the highest level of diversification. If we get to crypto you can of course diversify because you can just go over top 20 coins these days and go one by one and you can see that some of them made like today, let's say 5%, another -12%, another one -6%. So yes, they are diversified long term, but if you are trading, because it also depends on what type of strategies you are trading. I'm trading shorter term strategies like one day, two days, but also weekly strategies where you are holding your position two, three weeks. And especially with these quicker struts, the diversification plays a big role because you never know when you will hit those outliers that will really push your equity much further. So yeah, diversification. I get this question pretty often, but I don't agree to tell you through because it is more about the general approach of trading. Because many times people are thinking about diversification and trading the way that you are trading. Trend strategy on Bitcoin, mean reversion strategy on Ethereum for example, another trend strategy on, I don't know, Dogecoin or something like that. And then you are right that the correlation would be pretty high, but if you are trading like a portfolio in every strategy, then the diversification is pretty big. Andrew Swanscott [38:30](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2310s): Yep. Now on the trading panel, I think it was two weeks ago, you made a comment, which we didn't really dig into a lot at the time, but I thought it was interesting and I saved it for today. So you said something about you really went into in your crypto trading, you really went into oversimplification of strategies and more, I think you said crazy but advanced techniques in the portfolio. Can you expand on that a little bit more? What you what exactly do you mean there? Yeah. What I mean by that? Well, Pavel Kýček [39:03](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2343s): firstly, why I'm trying to oversimplify single trading strategy? The main reason is that I don't know if the strategy will be performing in the future and the more metrics the strategy will have or more conditions, the higher the probability that the strategy will fail in the future, that it was just overfitted strategy on few years in the past. So that's why I'm really trying to build a strategy that has one, two entry conditions, one regime filter, and let's say one exit condition, something like that. Of my strategies have just one entry condition and one exit condition, right? That simple. But their main logic is very strong. And this is how I'm trying to build the strategies because as you said, Andrew, we just don't have enough data in crypto. So that's why the strategies really have to be super simple just to be at least somehow sure that they will be performing in the future. And by the advanced approaches in portfolio building, what I was thinking about was that you really have to think how you are building the portfolio, because I can see traders that are like building many strategies and they are just putting them into the portfolio just for the purpose to have as many strategies in the portfolio as possible. To me, it's pure nonsense because that way, for example, you can be good for, I don't know, trend creating trend strategies, for example, and you will build 10 trend strategies and you will put them into the portfolio but how much they are diversifying your overall trading results? Not much, not much. That's why I'm trying to build or add every strategy to the portfolio only if it will have some diversive, know, only if it is like diversifier to the overall portfolio. If not, I will just keep it somewhere, but I won't use it for the portfolio building in general. So this is really something that's why I can imagine that you built your very simple, I don't know, crypto strategy in one day, but the portfolio, the proper portfolio, you will be building many months, maybe even a year. And in fact, you are still working, maybe even you are still working on your portfolio to be as good as possible. So this is how I'm thinking about it. Yeah. Andrew Swanscott [41:56](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2516s): So how do you then determine if a strategy is contributing to the diversification of the portfolio? What are you looking at? Yeah. So firstly, Pavel Kýček [42:05](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2525s): basic logics, which means if the logic is the same or very similar to any other strategy that I already have in the portfolio, and then I'm using as probably everyone correlations, correlation coefficients. I'm looking when especially I'm looking at drawdowns, which means when the strategy is creating drawdown compared to similar strategy that I already have in the portfolio. And if the strategy is building the drawdown in different period just by luck, or if it is by some characteristics that is in the strategy, if you know what I mean. Really for me, is not about trying to push the performance as high as possible, but trying to push the stability as much as possible. And the only thing that you can basically control is drawdown, not performance because performance is more function of the trendiness and of the volatility of the market. But the drawdown is function of your portfolio or strategy building. Andrew Swanscott [43:18](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2598s): Yeah, well said. I think one of the appeals, especially for beginner traders is when they're building a strategy to make it look like a really nice straight line. I imagine in crypto, you can probably build ones that go exponential, right? Depending how much you could have fit it. But by the sound of it, you almost, you probably don't even look at the equity curves, right? Pavel Kýček [43:42](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2622s): Well, I'm looking at equity curves, but I'm not trying to build the best equity curve possible because again, I'm thinking about every single strategy as part of the portfolio. I could never imagine trading just one strategy. And I also think that it is big, big problem for many traders that they are trading one, two strategies because they just fall in love with them then and they try to over optimize them. They try to overfit them. They really try to make as much money with just one or two strategies instead of building more uncorrelated strategies in broader portfolio. Think this is the biggest pain point of many traders that they are really trying to build the best possible one single strategy which can be working. I can imagine that it can be working all the time because you have trend strategies, have mean reversion strategies and breakout strategies and every strategy, every trading approach makes money just in some market phase, not in every market phase. So this is how traders should be thinking about it. And I think you had a very good point about building strategies on the past because this is another huge trap like novice or beginner traders are falling into that they are trying to be rich on the past data. Don't think about the market that way that future will be always very different compared to the past. It will never be the same and you should have it always on your mind if you are building the strategy that past is really only the past and the future will be probably very different and probably worse. Andrew Swanscott [45:33](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2733s): Yep. Okay. Well, we've got some questions in the chat, which I want to get to in a minute, but just as an extension of what you were just saying, what other, I guess mistakes do you see traders making when they're approaching Algo crypto trading? Pavel Kýček [45:50](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2750s): Well definitely overfitting. It's number it's number one problem of all then they are building the strategy of one asset, especially in crypto. You can see it all the time. Everyone is selling those bots that made 100% in last three years just because it is trading or it was trading Solana that made like 100,000%. If you have such an exponential coin, then everything will be making money on it. This is really a huge trap that I can see all the time how people are falling to it. Another one of course is building strategies on like survivorship bias or on data that includes survivorship bias which is very big especially in crypto or in equities. For example on commodities is it is a little bit different. This is not such a big deal but on equities and crypto it is a huge problem. Hindsight bias is a huge problem. And then in general, I can also see that algo traders are making just mistakes in quotes, that they are not checking their codes well. Yeah. Even I made quite a few of those mistakes in the past and I even trade it unfortunately on live data. I'll I'll I really did. So, everyone did it probably but this is big problem too, that we think that we got the code and we just let it right and yeah, and we just lose. Andrew Swanscott [47:30](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2850s): Yep. Okay. Well, we've got a couple of questions here in the chat. So let's go first here with John. So this is more of a clarification one. And this actually came up when you're talking about regimes. I just didn't see it on the screen at the time. So John would like to confirm. So in a long regime, you'd limit momentum breakout trades to long only, but mean reversion and trending strategies are free to do their thing. Pavel Kýček [47:56](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2876s): Yeah. Well, it depends. It depends. Some of our mean reversion strats do have regime filters because for example, the logic is in for regime filters. For example, let's think about some correction. Want to trade correction to a trend. Trading correction in general is mean reversion trading. Why shouldn't I use regime filter when I want to trade correction into trend? In this mean reversion types of strategies, I'm using regime filter, which is basically one of the conditions of the strategy. But it really depends. It is not that simple that I would say mean reversion without regime filter and trend strategies with, because I try to combine as many different approaches as possible. Andrew Swanscott [49:06](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2946s): Okay. Thank you for that. Question from Antonio. Do you focus on mean reversion from a range expansion perspective? Pavel Kýček [49:18](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=2958s): Mean reversion from a range expansion. Yeah, well, if I understand the question correctly, then some of our strategies are using range expansion condition for mean reversion strats but again it depends. I think I think this is very good question in general because what I think is one of those problems you were asking Andrew what traders are making like mistakes when building struts is those indicators versus price action wars, because to me you can describe a range expansion with indicator or with price action pattern. It doesn't matter in fact, this is just the tool and how you describe it is up to you, but how you trade it, what you want to trade, this is like one step back that one should be always thinking about before building the strategy. But in general, range expansion, playing with range expansions for mean reversion strats, breakout strats is good way to go, not just in crypto, but in any highly volatile asset. Andrew Swanscott [50:38](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3038s): Okay. Here's a question from, my goodness. I don't know how to say this. Looks Croatian maybe. Can you say that one? Sorry for butchering your name. Does your trading system analyse order books and do more complex decisions on positions? Or do you focus more on logic, the strategy logic and care less about exchange mechanisms like market orders? Pavel Kýček [51:02](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3062s): Yeah. I'm more concentrating on really general logics on higher, higher data like daily, weekly and so on, because you have to take, you really have to think about cost of trades which is another big mistake traders are doing that they are not thinking about cost of trading which is not only fees but also slippage and so on. And yeah, the lower you want to go and the, for example, here order books and this is really quick trading and I don't feel comfortable trading this kind of strategies on crypto because again I think that especially those very quick strategies will be changing the characteristics very quickly as smart money will be entering crypto markets and so on. So that's why I prefer like trading slower strategies because even on stocks or on commodities, you can see that those strategies, if they are losing edge, the face of the edge losing can take even a year or so. But if you are trading one minute, two, three minute strategies, I have seen those strategies that they were performing and in a day, two or a week they were just going through zero very quickly. So that's why especially in our surveys I want to have the stability pretty high, so that's why I'm really concentrating on this daily, weekly or maybe 12 strategies. Andrew Swanscott [52:44](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3164s): Okay, thanks Pavel. Another question here from John. Are you trading CFDs or actual crypto or something else and why? Pavel Kýček [52:54](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3174s): We are trading futures on crypto and why? There is biggest liquidity and lowest fees and basically this is the best market for us traders. Yeah, and it is also the simplest solution for trading. So there is not many reasons to trade differently if you can trade that way. For example, I know that in The US you can't trade futures on crypto. So this is a very different question then. But if you can, I think futures are the way to go? Andrew Swanscott [53:35](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3215s): Yep. Okay. Now there was a question submitted on X to you from Sean. It says, I can't put this on the screen. I'll just read it. If you're a US trader who cannot trade crypto futures, would you trade actual coins including smaller ones or just FBTC LTCN? Pavel Kýček [53:57](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3237s): Yeah. Andrew Swanscott [53:58](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3238s): The biggest Keep slippage and commission low. Pavel Kýček [54:01](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3241s): Yeah. This is good question but very hard to answer to tell you through because there is a problem with the universe in general. I'm not a big fan of choosing five, six, seven, eight or 10 coins and trade just them because again, you are getting into some kind of a hindsight biases. But if I would have to choose, I would trade probably the top 10 biggest coins with trend strategies, because trend strategies have the highest average trade and that's why even fees and slippages on like general crypto market is not such a big problem. Andrew Swanscott [54:49](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3289s): Okay. Question here from Summer Squad. Welcome Summer Squad. What's the simplest system or method you would advise a beginner to start with that would work across commodities too? Pavel Kýček [55:04](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3304s): Yeah, that's okay. Good question. If I should choose the simplest system, I would choose something like Donchian — I still don't know how to pronounce it — some kind of Donchian breakout strategy like thirty days, one hundred days or something like that and really stick to breakout/trend strategies type of approach. Probably the most robust one. Andrew Swanscott [55:39](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3339s): And then a similar kind of question here from Mr. C. Any reading recommendations for finding trading system ideas? Pavel Kýček [55:47](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3347s): Well, of course my Twitter account, but yeah, no, I'm trying to share quite a lot of information. But if I would start building crypto trading strategies from the scratch now, I would really go over old books, like really Larry Williams books, Linda Raschke books, those type of traders that were trading and writing books in times when commodities were really moving like crazy and you can definitely take some kind of inspiration there, but you also have to add some books from, for example, Nick Radge and so on, just to get the feeling of what portfolio trading is because you just can't trade crypto without portfolio approach. I think this is too risky. Andrew Swanscott [56:44](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3404s): Yeah. Yeah. I think another good book it's probably worth looking at is Perry Kaufman's. I think it's called Trading Systems and Methods or Yeah. Something like Which was a was an older book, I think you might have updated it. That's got amazing trading ideas in it. So I imagine a lot of those would work in crypto too. Pavel Kýček [57:03](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3423s): Definitely. Andrew Swanscott [57:05](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3425s): Okay, here's another question from Mr. C. If you use Monte Carlo simulations with random data, parameter sensitivity testing and all the other robustness tests you mentioned, is the system ready to go live for live trading? Pavel Kýček [57:21](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3441s): I don't know if I understand the question properly, if this is the only robustness testing for crypto, but for me, especially with the amount of data we have in crypto, this is not enough because really the robustness testing starts with how you build the strategies. You just can build your strategies on data. I would say indicator first type of strategy building and just go over the general robustness testing that are very usual in traditional finances. I would say this is not enough because if you make Monte Carlo on five years, six years and two huge long trends, what kind of information you get? The information is really, the value of the information is pretty low. So that's why this is definitely not enough. You also, I think in crypto, especially in crypto, you already have to know how to build the strategies properly because yes, I'm repeating all the time that I'm building very simple strategies but sometimes it is quite hard to build simple strategy that will be performing in the future too because you really have to understand the markets. This is the main idea I think. You really have to understand the market logics, the market dynamics and if you do, then you can build a profitable strategy on any type of market. Andrew Swanscott [59:00](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3540s): Okay, we've got a final question here from John. Have you ever looked at a system of closing a portfolio's complete set of trades at say 1% gain? This short circuits mean reversion multiple position trade sets. Pavel Kýček [59:23](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3563s): Not sure if Yeah. It I unders Andrew Swanscott [59:25](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3565s): kind of goes against the trend following principles though, doesn't it? Yeah. Closing out for trades early. Closing out for early profits. Pavel Kýček [59:33](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3573s): Like, in general, I'm not using profit targets at all. This could be an interesting question too, because I made so many tests on equities, on commodities, on crypto and I almost always find, if not better performing, then definitely more robust approach than using profit targets. And the same is valid for stop loss. In fact, too, you can manage the risk differently than with stop losses. So yeah, I'm not doing something like closing positions if my portfolio is plus 1% or so. I think you just don't, you can't use the potential of crypto or of the asset that is moving in fact, if you set some boundaries with let's say 1%, 2% or so. I think this is discretionary type of thinking in general that is not profitable even with discretional trading, but definitely not on algo trading or I haven't found this approach at least. Yeah. John clarifies Andrew Swanscott [1:00:44](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3644s): reduces mean reversion drawdown in that case. I think you answered the question. Sorry, do you have more? Pavel Kýček [1:00:53](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3653s): No, no. I just don't get the question how I should, but yeah, I don't know if you understand it, Andrew. What's Andrew Swanscott [1:01:04](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3664s): this question? No, think you covered it pretty well. Yeah. Thanks for the question, Don. Thank you. All right. We're just about to wrap up here in a moment. But first it's crystal ball time, Pavel. I'm not going to ask you about the price of Bitcoin next year. There's plenty of people who have guessed that and got it wrong. There's a question here from Sama first, then I'm going to ask you one about the future of crypto. So Sama would ask, do you think we're entering into a bull cycle on crypto assets with Ethereum and Bitcoin moving near all time highs? Pavel Kýček [1:01:39](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3699s): Good question. Unfortunately, I don't know. I wish, but really, I don't try to analyze the future of crypto market that much. So really don't know. Andrew Swanscott [1:01:53](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3713s): Yep. Okay. And then so my question is not really price based, but what do you think is the future of crypto? We're seeing talk about different types of regulation. Some countries are making it illegal. What do you think is going to happen in the space? Do you even care? Pavel Kýček [1:02:11](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3731s): Well, I do care. I do care because I used to be working in traditional finance in the past too. So I'm having quite a few contexts and I can see how it is evolving. I can see how even banks are interested in crypto. Why? Because they can see their profits of course, because the margins, the fees are much higher with crypto than in traditional assets. So what I think that will be happening in the future is that there will be more and more regulatory clarity in the crypto space and that's why more and more smart money and bigger funds will be entering this space. And that's why these inefficiencies and volatility will be getting lower and lower. Now I'm talking about like five years or so in my opinion. So what I would expect is that over the time, like in ten years, five to ten years, crypto will be just another asset that will be like diversify for your portfolio, but not this huge opportunity that is right now. Yeah. Andrew Swanscott [1:03:21](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3801s): All right, Pavel. Well, thank you very much for our chat today. It was really informative and we've got a lot of great questions in chat as well. So thank you very much for that. Now, how can people learn more from you or maybe even get in contact with you? Pavel Kýček [1:03:37](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3817s): Yeah, thank you. Thank you, Andrew, for having me here. So let's just, you can go to robuxio.com or to my personal Twitter Pkycek, P K Y C E K. I can see you mentioned it here on screen. Or just write me — I'm on Twitter quite often, so I'm always happy to answer any question. Andrew Swanscott [1:04:04](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3844s): Yep. Excellent. And I'll put links to those in the description of the replay as well. So if people want to find those, because that's a difficult one to spell in Twitter. Thanks again for your time today. We've got some comments in the chat, which I might just share here quickly. And then, so C says, thanks for the podcast. Summer said, thanks for the great info. I'll have to rewatch as I missed out the beginning. And actually John put a comment at the beginning, which I haven't put up on the screen, which I'm going to do now because it was a good one. John said, I really appreciate Pavel's approach of mixing trend, momentum breakout and reversion to mean strategies. Thank you, John. Explained a lot of that today. So yeah, thanks again for your time today, Pavel. Any closing comments or thoughts before we finish up? Pavel Kýček [1:04:57](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3897s): Well, think about trading crypto because I think there are many risks, but there are many opportunities, huge rewards. And at the end of the day, is about capital allocation, not if you should be trading, but how much. Andrew Swanscott [1:05:14](https://www.youtube.com/watch?v=9ABYVUBd6mE&t=3914s): Yep. Very well said and a nice way to end the show. So thanks again. Thanks to everyone for joining us and we'll be back again. Oh, come to the trading panel. It's every week on what time is it? I always forget. 4PM. Pm Eastern every Friday on all the Better System Trader channels and Pavel comes along as well. So you'll see him there again, I'm sure in the future. So thanks again, everyone for joining us and happy trading. Happy trading. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Listen on [YouTube ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Chris Jack of Jackonomics on why discipline and structure beat conviction-trading — even in a market as volatile as crypto. - 02 Crypto is a trading asset class, not a buy-and-hold one — the systematic edges are real but require rules that let you step away from the screen. - 03 The path from Cambridge Centre for Alternative Finance research to running a systematic crypto operation — what academic finance gets right and what it misses. - 04 Why most retail traders fail at crypto: they treat it like discretionary equity trading instead of recognizing it as a volatility-driven asset class with different fundamentals. - 05 Practical risk management for systematic crypto traders: position sizing, drawdown tolerance, and the psychology of sticking with rules through multi-month losing streaks. Chapters ## Jump to any moment - [0:00 Sponsor ad ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=0s) - [2:11 The Birb Nest introduces Chris Jack ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=131s) - [3:39 Chris's background: Luxembourg, Cambridge, alt-finance research ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=219s) - [8:00 Why crypto needs discipline and structure ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=480s) - [15:00 Systematic vs discretionary in volatile markets ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=900s) - [22:00 Risk management in crypto ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1320s) - [30:00 Building rules that let you step away from the screen ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1800s) - [38:00 Mistakes new crypto traders make ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2280s) - [43:00 Where to find Chris and Jackonomics ↗](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2580s) Full transcript ## The conversation 46 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript The Birb Nest [2:11](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=131s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=219s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=229s): And, Chris Jack [3:51](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=231s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=339s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=439s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=536s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=587s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=804s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=884s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1031s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1041s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1102s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1147s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1293s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1303s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1331s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1343s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1485s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1508s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1736s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1765s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1820s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1836s): really important to cover is how to go about building your own trading trading strategy. The Birb Nest [30:42](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1842s): Mhmm. Chris Jack [30:43](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=1843s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2146s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2194s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2298s): where was this guy at my university? Chris Jack [38:21](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2301s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2479s): Literally about to say that, right, which is another important thing. Exactly. Chris Jack [41:23](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2483s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2514s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2551s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2650s): 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](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2740s): Absolutely. Thanks so much, everyone. Take care, mate. The Birb Nest [45:43](https://www.youtube.com/watch?v=pLxPbMb4cQk&t=2743s): 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 [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 1 Better System Trader · The Trading Panel · Episode #1 # Backtesting, diversification & avoiding curve-fitting Pavel Kýček · in conversation with Andrew Swanscott February 17, 2024 · 66 min listen · 47 min read The very first Better System Trader Trading Panel — host Andrew Swanscott, co-host Jason Kurz, Robuxio's Pavel Kýček and fellow systematic traders on backtesting done right, diversification across systems and markets, and how to avoid curve-fitting your strategies into uselessness. Listen on [YouTube ↗](https://www.youtube.com/watch?v=ArpK1oXIJ4E) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Why robust backtesting starts with an idea, not an indicator search. - 02 Diversification across systems and markets as the core risk lever. - 03 How curve-fitting quietly destroys strategies that looked perfect on past data. - 04 Pavel on bringing a systematic, all-weather approach from equities to crypto. Full transcript ## The conversation 66 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:02](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2s): Okay. Welcome to the trading panel, our very first ever trading panel, I guess. So we're gonna see how this one goes. We've obviously got some people here. You can see it on the left. So we're gonna do a little bit of an introduction, and then we'll explain what this show is all about. This show is the idea of Jason's from Against All Odds Research Podcast. So we're gonna let Jason explain what this is and then we're gonna get to it. So maybe I'll do a quick introduction of myself first. My name is Andrew Swanscott. I'm from the Better System Trader podcast. As you can probably tell from my accent, I'm Australian. I'm based in Melbourne, Australia. And my trading style is purely algorithmic. I don't use any discretion in the futures markets. I do breakout swing and mean reversion trading. Jason, do you want to go next? Yeah. So Jason Kurz [0:54](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=54s): I'm Jason. I run against a lots research. I have worked with hedge funds. I have a small fund still to this day. I've been trading markets for, over ten years at this moment now. So recently, we've been doing it, and Mayhem's also been involved in it too. You know, we've been on these spaces, and there's been going over and over again, and you're like talking to people who I don't know if they actually have money in the markets or not. And so Andrew and I talked probably a month ago now, and we were like, hey, maybe it'd be a cool idea to do something a little different. And I was like, yeah, why don't we do something like this? Like, maybe we could get together, we could do a panel. Andrew mentioned using a service that could get us on multiple channels, and so we kinda the idea just started there. And so the idea basically is Andrew and I will bring in buddies of ours, traders that we know, people we've interviewed. We have a lot of people that we've interviewed that are similar, but we also have a lot of people that aren't similar. So you guys can get a little bit from both of our audiences and meet different traders from all over, especially different traders, different services, different people. I mean, it's endless. So I really think this is gonna be a cool idea. These are people who all have real money in the markets. There's nobody here just trying to sell you a service who or sell you a position that they're trying to talk about. These are real traders. So, anyways, getting to Mayhem. Why don't you introduce yourself next? Panelist [2:19](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=139s): Sure. Yeah. Happy to do that. Thanks for having me on. So I started trading well, I did my first trades when I was a teenager in the late nineties during the.com bubble, traded Amazon and Yahoo, borrowed some money from my dad against the earnings I had. I've been working since I was 12, had some money in the bank. But as a young person, obviously, I couldn't legally trade. So I did it through by proxy through him. And those positions, a couple thousand dollars worth doubled the next day. And it was obviously I did obviously, I didn't understand something. And instead of going a whole hog and saying, let's just go super long the market. This is a money printer to infinity. Why would anyone work a job? I did the opposite. I cut everything out. I booked those gains, and I took a couple years off to figure out what was even going on. Obviously, over the years ahead, the market crashed, the.com bubble deflated, and I started to get really interested in understanding more about how to trade. So in 2005, having earned enough money, becoming an adult by then, all that sort of stuff, I started trading my own money in my own account, trading stocks, then options then learning more about forex and futures and, navigating through the great financial crisis, actually surviving and in some ways thriving. Obviously, I had some big losers, but I had some even bigger winners. And I started to get more interested in financial plumbing and where there were it's kind of a nexus between what was happening in the world of macro and where momentum was pointing price. And so that's kind of where my formative years happened, at least in terms of my swing trading. And that's the main kind of trading I'm into. I like pair trades and swing trades driven by momentum primarily, but I also like to be, where there's where it's possible, try to find out why it's happening so I can understand some of the mechanics behind the scenes. So that's kind of the top down view of my trading style. Mike [3:55](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=235s): Nice. No, that's perfect. Mike's Andrew Swanscott [3:58](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=238s): here. Sorry, Jason. Mike's just dropped in. Good to see you again. Do you wanna we're just doing a quick little introduction. And since you just dropped in, do you wanna just give us a little intro about yourself? Mike [4:11](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=251s): I'm really famous. You guys don't know me. No. Hey. Mike. Been running a trend following font since 2011. And yeah. I mean, pretty simple business. Living in New York. Good buddies with Jerry Parker. Do some do some work for him as well. You know, we're we're good friends. We're we invest in each other's funds and do some do some work together. You know, latest thing was getting his ETF launched. So, yeah, just just simple guy. Isn't it? That's all I got. We do a podcast too. Me and him do a podcast as well. Well, I do it and he shows up type of thing. But yeah. Jason Kurz [5:13](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=313s): Very nice. So we'll go to Kashyap, and then we'll go to Pavel. Kashyap, you're you're next. Yeah. Hey, guys. I'm Kashyap. I live in Dubai. Panelist [5:21](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=321s): So I got my start in finance writing investment newsletters. So I spend most of my life as a fundamental analyst. So that's my forte, and that also goes into my trading style. So thanks to my long association with Jason, I understand pretty much all the other styles of trading that are out there, but I tend to focus on the fundamentals. And my specialty is crypto, which is kind of ironic because when you think fundamentals, think accounting and all that stuff. But, yeah, so that's me. Andrew Swanscott [5:57](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=357s): Nice. Well, we've got another crypto guy here as well. Pavel. Pavel Kýček [6:00](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=360s): Yeah. Yeah. Introduce yourself. Hello. Thank you for having me here. Well, I started trading almost eighteen years ago. I lost quite a lot of money on discretionary trading. Then I found a way how to make money in discretionary trading or I would say semi discretionary. It was the combination of systematic trading, like mini version kind of trading on indices with level two data. This kind of like quick reversion move on basically mini SMP and in mini Nasdaq. This was how I used to be trading like eight years ago. Then I started systematically investing like these, I would say very simple ETF strategies. And when my daughter was born, I could see that discretionary trading was almost impossible, which was a little bit over seven years ago. And I went basically all in on systematic trading. I used to be trading commodities, breakouts on commodities, and now I'm in stocks and in crypto because, yeah, in crypto, the potential is just huge. Lot of risks, of course, but the potential is also very, very different to any other traditional asset. Andrew Swanscott [7:21](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=441s): Yeah. Well, thanks for all those introductions. I just realized that we've got pretty much most of the continents of the world covered here. We've got The States, obviously. Panelist [7:31](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=451s): Pavel, you're in Europe, in Czech Republic, I think at Yeah, the exactly. Republic. Keshav's in Dubai. So I'm not sure. Mayhem, I think, is in The States as well. I am in The States. And I've actually got a drop off, but we'll still be able to cover all the continents of the world outside of Antarctica, right? Basically. So it was really cool hanging out with you all though, and I hope to do it again soon. Jason Kurz [7:52](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=472s): For dropping in, Mayhem. We'll see you next week or the week after. Panelist [7:56](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=476s): A great weekend, guys. Bye. Andrew Swanscott [7:58](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=478s): All right. Awesome. So so I just wanna encourage people as well because this is live. We all are sitting in our rooms, hotels, offices right now. So if you got any comments or questions, post them in the chat and we'll see what we can do. Now, Jason, this whole thing is your brainchild. It's your idea. How do you imagine we should start now that we've done the introductions? What's on your mind? Jason Kurz [8:22](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=502s): So something that would be interesting is just to see, especially Mike. I'll start with Mike because I do have a question for him, which is, Mike is a systematic trend follower. I'm also a systematic trend follower. We're looking at the NASDAQ and we're looking at small caps right now and everybody's arguing back and forth. I want to know how you're positioning in to handle that, Mike. You have two signals, both of them are saying to get long. What do you do in that situation? Get long. Get long, yes. So this conversation has come up again and again and again. It's kind of funny because everybody's like, you gotta sell all your NASDAQ positions to get into the small cap positions, or you gotta sell all your small cap positions because the NASDAQ is booming and blah, blah. And it's like, trend following keeps it really simple. It's like, we don't know what's gonna happen. The NASDAQ could go down today and small caps could take over, it's whatever, but we wouldn't be in both positions if we weren't already getting in those a long time ago because of the signals. So I just wanted to pass that to Mike, just considering I knew he was gonna answer it like that. And just for people to know, that's how professional traders like really handle things. It's like, you don't know the future. I was just having a conversation with somebody the other day about this. Like, they were a new trader and they were asking me all these questions. Were great questions, but the one thing he was like really stuck on was like thinking that we all know so much. You like you get on Twitter and you see this person talking about all the money they're making or the trades they're making. And he felt like we all knew exactly what was going to happen in the future. And really at the end of the day, it's like, nobody knows what's gonna happen. There's nobody who knows exactly what's gonna happen. What we do do well, is we put the probabilities on our side, whether it's systematic, fundamentals, however you trade, like you just try to put the probabilities on your side. So I think that's like the most important thing about trading. So I guess to start off, like what is everybody's, what is everybody's strategy timeframe to just start there? Because I think that's really important. We should talk about that just so everybody knows. I know some people might even have multiple. We'll start with Pavel. Pavel Kýček [10:34](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=634s): Yeah, well, basically I'm running almost all my strategies on dailies with some regime filters on weeklies, but most most of my strategies are on daily time frames. But for example, on crypto, because we are just having not enough data, I would say, for all the testings and so on. So that's why I'm making my out of sample or some kind of robustness testing on four, eight hours charts and so on just to get a little bit different point of view on our strategy. So this is how I'm thinking about it. But in fact, I don't care about it that much. I think I could go with a little bit lower time frames just to get some uncorrelated strategies even with the same strategies, which is quite interesting topic. Would say that you can basically have almost the same strat, basically the same strategy. And if you run it on the small time frame like three x more or so, the correlation can get or the correlation can get to point 3.3, point 25, which is something which is very very interesting, I would say. That you you don't need to find anything else. You just can reuse the same strategy on slightly lower time frame and get quite different quite different results. No. Jason Kurz [12:04](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=724s): I love that. And that's good. Yeah. Go ahead. Pavel Kýček [12:07](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=727s): Yeah. In general in general, I like daily time frames because the ratio like slippage slippage to average trade ratio is very good. Basically, you don't have to take care of fees in general or yes, you you know that fees are existing, but if you run robust strategy, fees are not an issue at all. So this is also something why, for example, on crypto, I started almost exclusively with daily time frames because I didn't know how the slippage will be baked, what will be the real average trade and so on and so on. So that's why I even didn't want to start with anything else even though I can see that crypto is much quicker market than stocks or even commodities and that's why I can see that there is added advantage, much bigger advantage compared to, for example, stocks go in with a little bit lower time frames like four hours or so than on one or daily time frames. So this is something what I'm thinking about. I will definitely edit them, but no rush there. Panelist [13:24](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=804s): No. I'll go to next because I have the exact opposite of that approach, which is I focus on the fundamentals. Right? So what happens is, however, late I start my entry, it still takes about three weeks to, let's say, three months for the trade to start working. And that's the way it is because sometimes I'm very early to the news, and then the news starts seeping in after I have already taken my position, after I've been talking about it. And sometimes it's like the market reprises to the news, just all of a sudden, right? Like you may have no action for, may have a long consolidation and then boom, it just spikes up and then just keeps running. So I've had this experience many times. So I just realized I should take a much longer time frame and just let my trades run. And that's the only way I can make a fundamental approach work. Jason Kurz [14:29](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=869s): So Mike, and you're looking at your timeframe. I know you run a breakout system, correct? Mike [14:39](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=879s): Yeah. Sure. So Jason Kurz [14:41](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=881s): you're looking at I mean, you you can feel free if you wanna keep it secret. You know, that's that's up to you too, but, nothing very secretive about it. Okay. You know? I was just I think it's all some Crypto Nick keeps coming up with a great question, which is, what do we use for back testing? You know? Like, that's something that I think is a good starting point for a lot of traders because nobody, like, really thinks about that when they're trading. The first thing they think about is how to win, how to make money, but backtesting is incredibly important. So what platform do you use for backtesting like? Mike [15:18](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=918s): Oh, I built my own in Excel early days, and then then I just migrated over to a better language. I use Python. It's so easy to use. I won't say so easy, but it's it's more, I think, learnable than some of the older languages. But, yeah, there's some definitely well, at least for trend, I think there's there's some decent off the shelf, products to get you going. But, but they might not they might not allow for a lot of creativity or your own rules, things like that. So sorry. This fucking alarm going off. Sorry. No. You're good. You guys might have heard it, but I heard it. But yeah. I mean, I think I think it's basic. I started yeah. Started Excel and went to just went to a better, more efficient, faster language. And, I think you could probably you could you could code it up if you will, write it down on paper first. You can even before I even started building it in Excel, I would I would literally just just go through, go into a spreadsheet or write it down on paper and then and then go to the charts. I go to the charts and I write the day, write the price, write the, the position size and things like that. Just to get the feel of trying to live through the ups and downs. You know, go slow with it. So you can actually see what's what's going on like, yeah, you can actually see it. It's like for a trend trader, you're kinda looking at, this huge rally off a bottom and then you get in. You're like, oh god. Now, you're like, like, when I when I was 22, 23, like, oh my god. I'm getting in now. What the hell? This doesn't make sense. Right? And, just, let's see. Let's see if that works. And, go back as far as you want, test as many markets or stocks you want, just to make sure you're confident in it, and, for me, that's like fifty plus years with dozens and dozens of markets. You know? Because the increase the sample size as much as possible. So you can test this rule out as many times as possible. You know, don't take one stock, where you have three different trades over the last ten years or something like that. That might not be, viable, when you go to another stock, or another market. So we wanna test it on as many different things as possible. And and then, yeah, I prefer that way to start. It's very thorough, very slow, and you get to write it down. Something happens in your brain when you write it down. You actually write it. Don't you don't just get a, a report spit out at you after a thirty second test or something like that. And and all you do is look at the returns and the statistics of it and you get your pie in the sky, ideas of how wealthy you're gonna get and all this stuff. And you don't even really know how it works. You know? And you're not gonna have any confidence to do it when you get in the game with real money on the line. So now those were those big those were big steps for me in my early days. Now I can I know what my rules are. I know what the testing. I know, I can I can I can look at a thirty second test after testing some things and be and be confident even even if I'm just looking at the the summary, statistics and things, because I know how they got there? I know where they're coming from. I think I think if you're just starting out, I think I think it's it's good to go through those charts. Pavel Kýček [19:48](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1188s): Yeah. And Mike [19:52](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1192s): yeah. Just so you get the feel. Just get a little bit more of a daily p and l type of feel. You know? What types of situations you're gonna be buying and selling. Pavel Kýček [20:05](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1205s): Sir, good. If I can there were very good points in, I would say idea first style of testing and code first, I would say style of testing, because I think that one trader is very skilled. He can use both possibilities, especially if he has good robustness testings. But if you are a new trader, I don't think that you can basically start with a quote without knowing the markets, how they are behaving and so on. And without, at least it was my path that because I started with discretionary trading, I had thousands of hours watching charts and then just from the quote you can see why something should be somehow working or some or why not, these these are quite good points I would say. Without Without it, without the start, even going over the charts and see what are the consequences if something happens then or how the trends are evolving and so on. I think that it is very hard to say that something should be working or not. Jason Kurz [21:14](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1274s): Like that addition because it's How many times do you see people come into trading and then they talk about backtesting and they're like, Oh, the win rate is this. Oh, I can't do it because of this. I have to win more. But if you really understand the way markets work, like you said, if you're really writing it down and really going through it, because I started the same way now that I'm thinking about it. And I've made this point before, but I never thought about it like Mike just brought it up which is like, I know if I would have started just with straight back testing the way I do it now and spitting out things in thirty seconds, a couple minutes, no way, no way would I be able to hang on to those but understanding it and going through the back test and seeing every single pullback, the depth of the pullbacks, the drawdowns for each strategy, writing that all down really kind of makes you in tune with the market. So I think that's a really important point. I hope people also grasp because in general, it's like so many people love backtesting. Like they love the idea of it. Then once it gets into, I'm actually running a backtest, how do I actually run this backtest? They go, Oh, well, it's a lot of work. This kind of sucks. The system is like, it has a 40% win rate. Whereas if you know any of the best traders in the world, they have 40%, 50% win rates. The thing that I think makes you a really good trader is just understanding the possibility that you're gonna be wrong a lot and figuring out how to be wrong a lot and make money at the same time. So once you figure that out, you make your drawdowns smaller, you make your winners big, you have positive expectancy working your way in your backtesting and your trading, that's how you make money. It's very hard to make money just putting money in the markets and hoping that it's gonna work and thinking that you're gonna be right all the time, because you're gonna just lose money all the time that way. You're gonna hang on to losers and you're gonna lose everything like that. Pavel Kýček [23:11](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1391s): Yeah. Mike [23:12](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1392s): Yeah. Think Yeah. Exactly. There's one more, like, maybe nitty gritty, detail about backtest is, okay. You're gonna probably people are gonna let's say, if there's stocks or cryptos or something like that or they're taking things from the present that are available now and bringing them back. Can't do that. You can't you have to have a selection methodology that selects instruments available at the time. So if people that are wanting to get in futures trading as an example, they're gonna leave out a lot of markets that aren't available today, and they're gonna start their test in 1980 or '85, whatever. Doesn't matter. But there are markets available then that are not around anymore. So you would have been trading them then, so you need to include them. You need to have this screener that scans all the markets available and then goes into your when to buy, when to sell, how much to buy and sell, all those things. But I think a lot of people leave that out. They just take, oh, well, these are great stocks. Okay. These are great markets. Okay. Let's go backwards and test our rules on them. Well, why would you be trading why would you be selecting those in 1985? Why would you be selecting those in 1995? You know, or five years ago, ten, you probably wouldn't. So Yeah. You need to have the selection methodology as well. You can't be bringing your your current markets back. You know? So it's like when you're starting your test, you're bringing them back from the future. You know? Can't do that. It's a Yeah. This a is great point because it reminds me of all these billboard ads. Right? Like, Panelist [25:12](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1512s): I mean, in India, we have a big mutual fund industry. Are always advertising. And what this is, if you had invested in this particular fund in 2014, by now you'll have this much. Like, let's say you put thousand dollars into this particular fund in 2014. Now that thousand dollars, like $15,000 or whatever. And that just exactly gets to this point, right? If why would you have bought that fund in 2014? Yeah. You wouldn't have like I mean, that's that those ads are completely out of context because no one would have done what they ask you to. It's the same thing with, like, all these articles on how do you put thousand dollars in NVIDIA at this particular stage, you'd be a millionaire. Like, yeah. Sure. But you would have bought pets.com also maybe, and you would have gone broke. Right? Like, but those examples don't make it to the advertisements. Andrew Swanscott [26:06](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1566s): I think another point there that Mike was talking about is this survivorship bias. And, people say, I'm going to trade all the stocks that are in the S and P 500 now without realizing that the S and P 500 changes. And, some companies that are in there now have had a massive run, but they weren't always in the S and P 500. So it really overstates their backtest results. Right? And then they get to live trading, and it's not the same. And so I think that's something that a lot of, especially stock traders who do algorithmic or systematic testing forget to consider. Pavel Kýček [26:48](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1608s): Yeah, stock and especially in these days on crypto, I can see it everywhere. Know, the survivorship bias is huge because in stocks for example you have Norgate, in Norgate you buy, basically pay a few bucks and you got your survivorship bios free database. But in crypto there are some, there are already some solutions but they are not known and yeah this is a huge issue and you can also see the bots that are sold everywhere like bot on Solana, on some crypto that was moving like crazy in last three years or so. It make like, I don't know, 100000% or so. And yeah, buy it, buy it because you will definitely make money with it to Justin Solana, of course. Know? This is very yeah. This it's everywhere. Survivorship bias everywhere. For example, on Nvidia or top five Nasdaq Nasdaq stocks, Like this is really big issue, what I can see. Andrew Swanscott [27:59](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1679s): Yep. So I just want to jump back to a comment in the chat a little bit earlier, which we I'm gonna put it up on the screen here. Let's see. We've all been here crypto, CryptoNick. I've just discovered I'm a curve fitting champion. So we just talked a little bit about survivorship bias and the impact that can have on our testing. But what about what are some techniques that you use to kind of try and avoid curve fitting too much? Who wants to start with that one? Jason Kurz [28:35](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1715s): I could go. Yeah. Curve fitting, God, that's my worst problem at the beginning, which was I continue to try to build everything into how I wanted it to move. Like, and not to mention, like, it's a thing I always go to, it's like a, it's adapted from Narcotics Anonymous or Alcoholics Anonymous, the first, the first thing is I'm powerless. And it's really like, I'm powerless over market direction. It's the thing I always like tell myself constantly. I have no idea, I can't make the market move. It's like trying to make a wave move in the ocean, you can't do it. So, that's one thing that you have to learn to let go of over everything else. And once you get that part of it, then you start to stop trying to curve fit all your systems and strategies. Like, because I was talking to a trader the other day and I completely forgot about this because I used to do this too. And it's mind blowing to actually think about it because I'm like, I would never even think to do that today. That's insane. Which is I used to, when I first started trading, started a weekly timeframe and you go, Oh, that looks like a good trend. And then you go to a daily and you're like, Okay, that's a good trend. And let's say you buy there. And then as it's like going down against you, you're looking at like five minute and one minute charts going like, oh, it could turn around here. Oh, look at that green candle. And like, it's like, it's insane that you do that, but like new traders do that all the time. And so like really figuring out like are you going to trade? How do you make money in these markets? Like, we're all different. Like even everybody up here, like even some of us are systematized, some of us are not, some of us are fundamental, really it's discipline. So how do you, how does your strategy work? Are you going to be a breakout trader trend follower type? Are you going to be a mean reversion equity mainly trader? Do you trade Forex? Do you trade all markets like Michael and I know, I think Andrew does as well, but Michael and I, we trade all the macro markets in the futures. And then once you figure that out, then you go, okay, well, my strategy is blank. I'm a breakout trader. I'm a mean reversion trader. I do this. And so once you start to do that, you really figure out where you fit in. And once you figure out where you fit in, you stop like worrying about everything else. Because really like what happens is you look for media out there or somebody to tell you how you should be trading And you pay for all these services and they're going to tell you exactly how you should trade. This is how you make money. This isn't how you make money. Do it this way. This way wins every time. You know, like you'll hear all these things and then you're changing your strategies around, you're doing all types of stuff. So, one is figure figure out out who who you you are. Are. Two Two is figure figure out a strategy that you really like, and stick with that strategy. Like figure out what type of trader you really are. Most people have no idea for many years, and then they're in this circle of, Hey, I want to fit this in. Hey, I'm looking at news to try to make sure. I'm in this trade. I know it's a good trade, but I'm also looking at news every day to get out of this good trade. Because I want to take these profits. I want to run home. I mean, especially Mike and I, we're, I know we're in the cocoa trade. Coco, there's been a million times I can tell you that I wanted to run off of this trade. A million times I wanted to run off of this trade, but, know, take the money and run basically. That's just in my brain, but my system never has a sell signal. So what do I do? Well, I just listen to my system. If I would have got out early, I would have got out months ago, I would have got out, 60% ago, it doesn't make sense to hang on to it. Like, you can't think of how far a trend can go. So for me, my best edge is I build systems that keep me in trades, that don't take me out of trades too early. I can stay long. This way, I'm not out thinking myself all the time. And then also I have complete conviction in my strategy these days. I always make the joke that like, God could come down from the heavens to me, and he could sit right in front of my face, and he could be like, Jason, I know that Coco's gonna crash 50% tomorrow, you've gotta get out of that trade. And I would look right back at God and say, Well, that sucks. My system's still long. I don't know what to tell you. You know, like, that's the type of conviction I have in my own strategy now, but that comes with time. It's not something you're gonna get over on day one or day two, but over time, you'll build that conviction. But first it starts with figuring out what type of trader you wanna be. Panelist [33:14](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1994s): Hey, Panelist [33:17](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=1997s): folks, I'm back. Andrew Swanscott [33:20](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2000s): Hey, welcome, Ahem. So we were just talking about curve fitting and what of what do you do to try and avoid overfitting your strategies? Do you want to contribute anything to that? Panelist [33:32](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2012s): Sure. Yeah. Could you ask I'm sorry. Could you tell me the question again? I just had a little hard time hearing you there. Yeah, sure. So what do you do to avoid curve fitting or overfitting? So like just overtrading the market? Andrew Swanscott [33:47](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2027s): Sorry, what was that? Panelist [33:49](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2029s): Am I coming through okay? I was talking about- Yeah, you're coming through fine. It's actually, so it's Jason Kurz [33:54](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2034s): Think of it this way, Mayhem, like fitting Going out and finding news to fit your narrative and your strategy. Yeah. Yeah. Okay. So just like kind of leaning into your bias. Yeah. You're good. You're a good one for this one. Panelist [34:07](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2047s): Yeah. So my whole thing is that I cannot do anything unless price agrees with it. Like, that's my baseline. If price doesn't agree with it, it doesn't matter what I think. I could be thinking we're going to go into a nuclear holocaust and the S and P is going to negative infinity. I can't short it if price doesn't agree. It just doesn't work. Now, there are exceptions to this rule occasionally. One of those exceptions, I would say, is when expectations are crazy. And for example, let's talk about Fed funds futures going into this year, pricing in five to six cuts. Now that sounded absurd to me, and I started to look for opportunities there. And that was where the narrative started to drive my examination of momentum to comport to that idea. So, I started to see momentum flip into your note futures, and I started to fade them as a result of that. But the original idea was expectations don't make sense here. How do I trade that? Where is the opportunity? Then when momentum started to agree, I started to see on multiple timelines opportunities to fade that, and I decided to express that trade in two year note futures. It's been a pretty good trade, but I usually like to let price lead and then try to make a determination as to why that might be happening. But I can't trade just based on biases. Because if I did that, I would have already blown myself up, like, 12 times this year. You know? Like, there's so many things. Like, wow. I would love to shorten video here. It sure seems like a bubble. Yeah. But I can't trade on that because price doesn't agree. It just doesn't, and the call flows will eat you alive. The the amount of intensive speculation on that stock has pushed skew to levels we haven't seen since June. With SMCI before today and even after today, that skew is incredibly blown out. And yesterday, it was the highest it had ever been towards calls. Am I gonna go faded on that? No. I'm gonna miss that 20% down day because price didn't agree. But it's still like you can see those imbalances, and you can see the narrative it might be setting up for. But knowing how to trade that is a whole other matter altogether. So I just like to kinda consider myself a very small fish in a very big sea full of thirsty and hungry sharks and whales, and I'm just gonna swim in their wake. Right? And so that's what price is to me. When momentum is showing me that, whether it's on a relative strength or relative weakness basis in a pair trade or whether it's in a single instrument, that's the trade setup I feel more comfortable with. And, Jason, you and I have been talking about this for almost four years now. It's also how we build our systems to trade the market. We're we like you said, like, god could go and tap you on the shoulder and say, Coco's crashing the negative infinity, and you'll say, well, that doesn't matter. My system hasn't given me a sell signal. I feel the same way. Like, at the end of the day, every like, here's another contextual, like, bit of anecdotal observation. Near the lows of 2009, everyone in the world was saying, we're all gonna die. We're going to S and P, 300. The Krausing market's going into a depression. It's a spiral. The economy will never stop going down. But when price told me that the market was reversing, I didn't care because price was saying, you know what? Like, the market's looking forward at something else, and it sees something. And then you had FASB come in, and, of course, they marked the bottom by suspending mark to market, engaging mark to make believe, and it was up up and away from there. NQE supporting liquidity. So to me, to kinda put it all into, like, a quote, if price doesn't agree, I'm not in the trade. Andrew Swanscott [37:24](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2244s): No. So I guess we would oh, sorry. Jason, did you wanna Jason Kurz [37:28](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2248s): No, was just saying, I agree. Like it's always has to start with the price. Like you really have to figure out, because think about it this way. Mike brought this up on my podcast recently. We were talking about the NASDAQ trade and, we all have, all those trend followers have very similar signals. So we're all getting these long signals early twenty twenty three to go along the NASDAQ. And it's like, oh, okay, we're going to go along the NASDAQ now. It's basically like, at that point, everything looked like recession was happening. And like, if you just went outside, like, you'd be like, I don't wanna buy the NASDAQ. At the same time, like we have enough faith in our systems at this point to be like, well, I could be completely wrong about that. And if I'm completely wrong, then I'm gonna have to just take the trade, call it a day, like, that's the thing you just really have to do. Think figuring out how you filter yourself, whether it's price action, whether it's sentiment, fundamentals, however you do it, like, you really have to filter yourself and almost have bumpers on your trading like Bumper Bullet. Panelist [38:31](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2311s): It's true. Pavel Kýček [38:34](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2314s): I think is that curve fitting has a lot to do with novice traders that are trying to get rich on historical data. This is really something that not many think about that they just never can trade the history. You know, this is also something what Mike was talking about, but when I'm talking with new traders, they are always thinking about historical data as if the future will be almost the same which it never will be, it will be always very different. So this is one thing, If they would have a understanding that the future will be very different than the past, then I think they wouldn't try to overfit that much. They would still try to overfit. I think because at the start of trading career, I think almost everyone is trying to get the best equity curve like 45% degrees, left corner to upper right corner and so on. But then for example, how I gather it of pure fitting was going with many different strategies and creating broad portfolios. I know that most of you are trend followers. I like trend following and momentum trading too. But for me, for example, it makes perfect sense to add mini version strategies to it because I can use or reuse the same capital thanks to the uncorrelated strategies in one portfolio. And once I really started seeing the simplicity, you can build the stability of the overall portfolio through more uncorrelated strategies in the portfolio. Then I really went through extreme, extreme, I would say even oversimplification. For example, I never optimize any parameter in trading strategy. My strategies are like one entry condition, one exit condition and one regime filter, and then some ranking and these kind of like sub conditions, I would say but really I'm trying to keep everything as simple as possible on one strategy level and going a little bit more crazy on or a little bit more advanced on the portfolio level. This is for example, how I really got rid totally of the need of some kind of overfitting or so. Panelist [41:06](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2466s): So this works this works a bit different when you're looking at fundamentals because so, the way I would look at it is, for instance I mean, the best example I can think of is all the oil investors who used to follow in 2022. So the initial bull case for oil was pretty simple. Your demand is at 103,000,000 barrels per day or whatever, and your supply is at 102, so you're drawing down inventories, prices going up. It's a pretty simple fundamental case. Right? Then you had the Nord Stream to pipeline getting hit. Then you had the disruptions in the natural gas market getting attention. And then you just go on and on. At one point, the oil investors were talking about German power prices, Norwegian power prices, and those charts were part of the bull case for why oil will be in a bull market forever. Now when you see this kind of creep of the stats that you look at to justify your case, that's when you know that you're kind of getting into that overfitting stage because you are adding more and more news items which aren't exactly relevant, but they kind of help you make your case. They are parallel to your case. And another example that I vividly recollect because it just stuck with me over the years. So I used to follow a mining newsletter where they would absolutely nail small cap stocks. So they would routinely hit 10 baggers. And the August 2007 issue of that newsletter was all about how there was a shortage of drilling rigs, and they should prioritize the projects where the rigs are secured and the assay labs are secured. Now when you get into this level of when you see at this level of detail, it definitely means that something is amiss, like a top is near. So when I look at someone who follows the fundamentals and then all of a sudden they go into a different set of fundamentals to make their case, that's when I kind of see that there is a little bit of overfitting going there. Because, like, with fundamentals, you can't really backtest a strategy. Right? You can't download historic data and backtest, but you can definitely look for information creep. Mike [43:33](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2613s): Yeah. I think for a systematic or, fixed portfolio type of approach, if you have two rules, if you remove the third of the data, how would it change if if the if the performance statistics don't don't change very much, say, 10%. Change more than 10%, you might got you might have something not so strong. And the same thing with an out of sample, batch of markets or stocks or something like that. Like, oh, okay. Yeah. This works great on, Nvidia and Bitcoin and whatever. I don't know. Some other names that, have, gone into this bubble like pattern over the past several years or something. Oh, okay. Let me let me try it. Let me send me some of your rules, and I'll I'll test it on some other things. And, of course, not probably I can have anywhere near the same performance because these rules are for these markets this time. You know? That's not anything. That's not that's not a strategy for the long run. It is great, if you can get lucky, which you won't, in the short run. But trade it long enough, you'll probably lose. So the out of sample is really, really important and change start and end date and, remove remove a big chunk of data, from your test. And, if if you have performance all around clustered in the same area, you probably got something okay. But and it's safe for, like, the I have a vendetta against the buy and hold, equities crowd. You know, the Nikkei just got back to its all time hot. I think today or yesterday or something like that. You know, the buy and hold crowd will never will never use that as as part of their portfolio. They'll they'll never put the Nikkei in there because it's not a good one. Yeah. Well, we don't know. Maybe the maybe The UK, the Nikkei was was a special case or not? US has gone into multiple twenty year period drawdowns from time to time, and it will again. And maybe this American exceptionalism, all these tailwinds behind the markets here, the stocks here, this and that. Like, maybe maybe the next fifty years isn't the same. You you still know. So, just so just the, so like a like a buying holders like, well, look at look at US equities. That's their that's their argument for doing it. Look at yeah. We have you look it over here too. You're negating this. You're actively not looking at this. You know? That's a mistake. So I think you can kinda tell, like I think experience helps with this too is if you have an answer already in your mind that you want, you're you're probably in trouble. You'll probably find yourself in trouble. You have to really, I think, stay honest with let's see if this works. And versus I want this to work, so let's make it work. You know? Figure it out somehow. Like? No. You'd be in trouble, I think. Sooner or later, you'd be in trouble. Pavel Kýček [47:31](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2851s): Maybe try to break it. You know? Try to break it to the code of the strategy, why it shouldn't be working, then Then push it to work. This is maybe a very good idea. Jason Kurz [47:44](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=2864s): Yeah. Nick said it from a the angle of statistics, and that makes sense, when we're when we're back testing curve fitting. And the one thing I could add in on that, which we did kind of cover that. We did Michael certainly went over that a little bit too. But when we're looking at statistics and curve fitting, okay, here's a great example. I worked for a fund at one point. They give me a call and they go, I have figured out this strategy. Now, if you, if you know a lot of the funds and, and if you hear a lot about what they're doing right now, they're all doing this basis point trades between cash bonds and selling bond futures. And so basically, I get this call that says, hey, I figured out this system. It wins every single time. We're always make money. I go, that's impossible. And to me, that sounds like you're ready to blow up. And he goes, no. No. It it wins every time. It never loses money. So I go, send me what you're doing and I'll back test it. So I sent him the back test, and I'm like, dude, this system actually blows up every four or five years. What are you talking about? He goes, oh, you just gotta forecast recessions and then you're fine. It's like, what the hell are you talking? Like, nobody can do that. Like, there's nobody in the world who can do that as it pertains to the market. Like, the market is the leading indicator. Like, most of the time, the market goes down, starts crashing, or bonds do something crazy. Like, you can't possibly do that, but this is something, this is where curve fitting really happens in, and it even happens on a professional level. Like people think like they're watching professional traders and they're looking at these huge hedge funds and they're like, oh, these people are smarter than everybody. There's plenty of dumb money there too. There's plenty of people who do the same curve fitting type strategies because they have vendettas and they're trying to make their own money and they're trying to do their own thing too. So once again, it's a, how do you just get past that one thing? Get past like, your biases. And I think it starts with identifying them. Like, what are your character defects as it pertains to trading? Are your defects, do you really like to trade too big? Do you believe that trading huge will help you as a trader? Do you believe that you can do you you do you believe your strategy is better than everybody else's and doesn't lose much? You know, whatever it is, you just have to figure out your biases, your own defect. Because really it's like, I have my own biases, which are stupid. Mine used to be front running my systems. That was my worst bias that I had forever. So every single strategy I had, I'd be like, okay, well, let's say it's, we'll just make it something simple, like a one hundred day high. It'd be like eighty days up and then you'd be like, it'd be getting closer to that point. I'd be like, oh, well, I guess I'll just buy it here. Why not? I think it's gonna go up. It's probably gonna go up. Then you buy it and then it crashes the other direction. And then if you realize if you waited for your actual system and your signal, you'd have made a lot more money. So that's one of mine. You just have to figure out like, what is it for you? And it's not just gonna be statistical because looking at it just in a statistical basis will never get you to what you're actually doing wrong. It'll just get you to like going, like statistics spit it out at you. Figure out a way to do it completely unbiased. Like if you're creating a system and you're doing it on a spreadsheet and you're writing the numbers a little bit funny because you want the system to sound better than it really is, that's a problem. But nowadays, like TrendSpider, very easy, great software. Everybody can use it. Everybody has, nobody has an excuse not to be able to backtest anymore. And it's dynamic too. You can switch the parameters. You can do a lot of things that are really cool with that, with TrendSpider at the moment. So put something in TrendSpider. I think they even have seven days free. I'm not, I'm not a, well, paid by TrendSpider by any means, but just telling you it's a, it's a good one. I think they have seven days free still, and if you go on there, you get your seven days free, and you could just go from there, and okay, these are my systems. And at least understand what your systems are doing without you having to write it down and just depend on yourself to be unbiased, because I think that's also important because you have to write it down and be unbiased but also your systems have to figure out a way to write them down and also code them in an unbiased way and not front run your systems which we all have been there. I think we've all been there. Yeah. Andrew Swanscott [52:17](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3137s): So we're we're coming up to the top of the hour. So we'll start wrapping this up soon. Did anyone have any comments I wanted to add to Jason's there before we move on. No? Alright. Jason, can you say that site again? Crypto Nick is was it trendspider? Jason Kurz [52:37](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3157s): Yes. Trendspider I dot think actually, mayhem, do you have a do you have subscription, like, discount through them still? I remember you used to. I don't know if he's on right now. He did have another call. But No. I do. I have a discount link that I should be able to provide for that. I'll get that to you after we wrap up. Okay, cool. Yeah, I'll post it on my page and then I'm sure Bam will post it on his, but yeah, mean, way, I know they used to do seven days free or something, and you can actually hit them up and just say, Hey, how do you back test? And they will actually sit down with you for an hour and help you learn how to back test using their system, which is pretty cool. You're not gonna find many places that do that. Pavel Kýček [53:21](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3201s): Or for example, what I can recommend is RealTest. I don't know if you guys know it, especially those that are trading stocks probably do because I went with Excel spreadsheet and TradeStation and I'm non programmer, so I learned the hard way, I would say. So TradeStation, then Amibroker and then RealTest and then we have some proprietary backend that we built in last two years. But I have to say that RealTest is something that non programmer can learn in one day. I would say this is really if then logics, very simple ones, and almost everyone can start using it very, very simply. So this is like my recommendation. Panelist [54:10](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3250s): I also think TradingView has a lot of great tools for backtesting. PineScript is a very versatile language. They've got a lot of data sources, so you can pretty much backtest anything you can imagine. And then if you really want to get into the nitty gritty and go granular, believe it or not, the Python programming language has so many resources for programmers. If you're an adapter, you know someone that is, they've got all the libraries built out for finance already. So like pretty much anything you can imagine, including some of the back testing tools are already available there on GitHub. So you can download this stuff. You can run it on your computer locally. There's a lot of good documentation on it. Obviously, it takes a much deeper learning curve to get familiar with it. But once you do, you can go to fully automated systems pretty quickly from your backtesting if you want to. Pavel Kýček [55:01](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3301s): The problem with TradingView in my opinion is that you can backtest portfolios. I think you can trade only single like assets, would say like one stock or one coin or so. And I don't think that there is portfolio backtesting, but not sure about it. Panelist [55:22](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3322s): Yeah. I don't think there's portfolio backtesting on TradingView or TrendSpider. Jason Kurz [55:26](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3326s): Yeah. Most of do not. You have to really do that. Pavel, that's on what you just said. You can back test portfolios Pavel Kýček [55:35](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3335s): on that. Yeah. And very, very simply, real test, really. Know no no sponsorship or so. No affiliation, Jason Kurz [55:41](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3341s): but What's the name of it again? Because I'm gonna I'm gonna look into that too. That's cool. A real test. Let me Pavel Kýček [55:47](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3347s): share share it here in the chat. Nice. Mike [55:54](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3354s): I know it. They they seem to have a good community too of people sharing ideas and stuff and help you out. Pavel Kýček [56:02](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3362s): Marston Marston built it and he was in the Unknown Market Wizards in the last one. And this is the creator of the software, he's a real trader. He's like super helpful because we are backtesting many quite advanced crypto strategies there. And if we need something almost one day maximum until he makes the update. So really very, very, very good software, very super quick, super quick. For example, to TradeStation, it was much, much quicker. Very good one. Andrew Swanscott [56:41](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3401s): And Mayhem has just posted a code for Transpider get 30% off and a twenty one day free trial. Thanks for sharing that mayhem. That's in the Yeah. In the chat in YouTube. I don't think that will show up in Twitter, but check that one out. Alright. Well, we're just at our time now. It went so quick today. I can't believe it. So how about we all share how people can get in touch with us or follow us? So Pavel, do you want to go first? Pavel Kýček [57:11](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3431s): Yeah. Well, basically I'm active on Twitter. So my nickname is Pkycek. Maybe we should write it somewhere because Czech language is not the best one for learning, but pkycek basically. That's my Twitter account. Andrew Swanscott [57:34](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3454s): There you go. I'll put it in the chat here. Thank you. Yeah, Drey says make it two hours. I think yeah, we should make it longer next time. Absolutely. Jason. Yeah, Jason Kurz [57:48](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3468s): I mean, maybe next time we could start, maybe start a little bit earlier or something, whatever. I think it's been a cool format, like just having Mike just hop in and whatever, just send, we'll send it out to people and they can hop in as it's convenient to them and hop out if I think this was great. It was a great start as we got a lot of big stuff planned too. It's really cool to just start out here. Got some great people. This was a lot of fun. Like I said, I just wanted to bring together real people in this industry to have real discussions about trading. Next time I'll have more lights. It got dark here as I was talking and I was like, I'm trying to grab lights and put it on me. In Ohio, the weather changes every five seconds. I'm looking outside, there's like a blizzard right now, so whatever. It was just 60 degrees a couple of days ago. But yeah, no, this was great. This was a lot of fun. I can't wait to do the next one. And just really the most important thing to me is just bringing like good information and from good people and getting it out to good people. And I think this is really that, like we can try to really take our group of people that Andrew and I have been talking to for all this time and bring in like people who are actually in these markets, trading it, using their own capital and really passionate about it, like Mayhem and I always talk about like, how much we love the markets and how much we talk about it and stuff. And it's like, it's great to just be around these really passionate people who really love doing this to just have conversations about it, because that's what we're here for and this is how people learn. And I'm always happy to help people learn how to trade. And how you can get ahold of me, I completely forgot. I have a Substack Against All Odds Research, it's aaoresearchsubstack.com. I also have website aoresearch.com. I'm on Twitter, I'm very active on there, jasonp138. And then my YouTube channel, where you could see interviews with all of these guys. I've had most of these guys on as well as, Victor Sprandio, Jerry Parker. You know, we just had on seasonality trader, Almanac trader just came on the other day, Jeffrey Hirsch, Anthony Crudelli, the list goes on and on. I've had a ton of people on there, Tom Basso, but all these things that we're talking about, systematic trading, Andrew has tons of great information on that. I have tons of great information on that stuff. So please use all of our resources and that's why we put them out there because we want people to learn how to trade. I wanna help them on their journey because I felt like I didn't get enough a lot of help on my journey. So this helps other people on their journey, and that makes me really happy. Andrew Swanscott [1:00:43](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3643s): Very well said. Kashyap? Panelist [1:00:46](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3646s): Yeah. You I'm mostly active on Twitter. It's kashyap two eight six. That's k a s h y a p, like in my name, followed by the numerals two eight six on Twitter. I also have my own website, which is kashyapseeram.com, which is my full name over here. Andrew Swanscott [1:01:06](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3666s): Awesome. Thank you. Mike? Mike [1:01:10](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3670s): Yeah. You can find me I'll I'll post my Twitter link right here in the in the chat. And your podcast. Sorry? Jason Kurz [1:01:20](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3680s): Your podcast. Mike [1:01:24](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3684s): What about Spotify. Right? The link to it? Jason Kurz [1:01:27](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3687s): Yeah. Mike [1:01:28](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3688s): Okay. Yeah. Podcast too. The talking trends podcast with me and me and Jerry Parker. And you can find my blog through my Twitter handle too and website to my my business too. So go to Twitter, you'll find everything right there. All the links up, but I'll I'll post the link to the top and trends on Spotify and Apple too. So people I know people listen to both. Andrew Swanscott [1:02:06](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3726s): I think what I'll do is I'll get everybody's links and I'll put them in the description of the stream here so that people watching can find them easily. Thanks Mike and Mayhem, for dropping back in Yeah. After you have to go. That's awesome. Panelist [1:02:22](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3742s): Yeah. Appreciate you having me back in. This has been a lot of fun. Look forward to the next one. Jason Kurz [1:02:26](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3746s): Yeah. Definitely shout out your channels Mayhem before you get off. Andrew Swanscott [1:02:30](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3750s): Yeah. A lot of great research, Jason Kurz [1:02:32](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3752s): a lot of great educational videos, everything. Panelist [1:02:36](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3756s): Thank you so much for the awesome introduction. And yeah, so feel free to follow me on Twitter, Mayhem4Markets, Mayhem4Markets. Same on YouTube, Mayhem4Markets. You can just search markets and mayhem. It should come up in the top results there. Then you could find my work for shorter term trading, more systematic trading at traderaid.com. We have educational resources. We share ideas. We have a podcast. You can search it on any major podcast service under the name Traderaid. We've also just developed a plug in for Bookmap that visualizes S and P options, flow, and positioning on the right side of Bookmap in near time. You can also find my work at Macrovisor where it's longer term swing trading and investing. The theme being macro meets momentum equals opportunity. And we also have a podcast there you can search on Apple, Spotify and elsewhere under the same name, Macrovisor. Andrew Swanscott [1:03:28](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3808s): Awesome. I have to say, Mayhem, you've got a voice. You sound like a radio announcer or something. Have you got radio experience in a past life or? Panelist [1:03:36](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3816s): You know, I just listened to enough that it kind of became an impression and then I started emulating it. But no, thank you. Andrew Swanscott [1:03:45](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3825s): Alright. And then so we've done everyone right. I'm the last one in the list. You gotta go, Andrew. Better system trader. Come and check us out on YouTube, Twitter, Facebook kinda, but, no one's there these days. But yeah. Actually, I've got a I do a live show every two weeks on it's currently on Mondays in the evenings, EST. But Pavel's gonna be my next guest, and it's on let me check. Was it the twin I think it's the twenty sixth. Yeah. February 26 at, I think, 3PM eastern. We're doing it a bit early because he's based in Europe. So I'm gonna get up early and do that one. Come along. It's live just like this, and but there's gonna be a full interview style format. We're gonna be talking about algorithmic crypto trading. So I'm looking forward to that and trying to uncover some of the secrets of the little algo trading. So and then this show, of course, is gonna be every Friday at 7PM Eastern. Is that right, Jason? Seven. Jason Kurz [1:04:43](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3883s): 7PM Eastern. So it is 4PM. 4PM Eastern. Oh, sorry. 4PM. Andrew Swanscott [1:04:49](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3889s): 4PM. Right. Okay. Pm Eastern. 4PM Eastern. And he's Jason Kurz [1:04:54](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3894s): in Australia. Andrew and I are talking all the time. We're like, I have no idea exactly how Australian time works sometimes. You guys just make it up It's morning. See It gets crazy. So it's morning there. We're all Panelist [1:05:09](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3909s): everybody's He's the future. He's in the future. Andrew is Andrew in might be able to meet. Andrew Swanscott [1:05:15](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3915s): That's all right. So 4PM Eastern on every Friday and the panel may change, may stay the same. We don't know. We're going to mix it up a little bit. So please come and join us. And thanks to everyone on the panel today. This was awesome. We really appreciate your time. Anyone want to have closing thoughts or Jason Kurz [1:05:33](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3933s): comments or should we just get out of here? We can get out of here. I just wanted to say thanks for everybody coming. A lot of my buddies on here. Glad to see Mike, Kashyap, Mayhem. Great to meet you, Pavel. Andrew, as always, this is a lot of fun, Glad like we could bring this to fruition and I hope everybody enjoyed and it'll only get better over time. Panelist [1:05:55](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3955s): Great to meet you all, Mike, Pavel and Andrew, really cool to catch up and great to see you, Jason, and Cash App again. Pavel Kýček [1:06:05](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3965s): Thank Thank you for having me here. Thanks Andrew Swanscott [1:06:09](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3969s): for joining us. Have a good one. Enjoy your weekend. Bye. Mike [1:06:12](https://www.youtube.com/watch?v=ArpK1oXIJ4E&t=3972s): Cheers. Bye. Bye. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 2 Better System Trader · The Trading Panel · Episode #2 # Market cycles, volatility & black swan events Pavel Kýček · in conversation with Andrew Swanscott February 24, 2024 · 59 min listen · 43 min read Episode 2 of the Better System Trader Trading Panel — Andrew Swanscott, Jason Kurz, Robuxio's Pavel Kýček and the panel on market cycles, trading through volatility, and how systematic traders prepare for black-swan tail events. Listen on [YouTube ↗](https://www.youtube.com/watch?v=SkUhlyxb29I) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Why "nobody knows anything" about macro — and how systematic traders use that. - 02 Preparing a rules-based process for black-swan and tail events. - 03 Trading through different market cycles without predicting them. - 04 Pavel on managing left-tail risk in the most volatile asset class — crypto. Full transcript ## The conversation 59 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:02](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2s): Hello, welcome to The Trading Panel, your weekly show where we talk about all things trading. It could be something in the markets. It could be some news. It could be our positions. We could talk about trading techniques. It could be anything. Apologies for the delay today. We had some technical issues, but I think we're on board now. So welcome to the trading panel. And today we've got so far Jason and Pavel. Jason, you want to and Cash App has joined us too. Excellent. Jason, Nice. How's your week been? Nice. Good, man. It's been a fun week. It's been interesting to watch that Jason Kurz [0:35](https://www.youtube.com/watch?v=SkUhlyxb29I&t=35s): what's his name? The one of the Fed chairmans just came out and said they're gonna lower rates. And, like, every other week, everybody gets kinda stuck on that. Are they lowering rates? Are they raising rates? Is this gonna happen, is that gonna happen? And nobody really knows. You know? Like, once again, it's like they don't sit here and wonder about what we're doing as traders. Sometimes you gotta, like, not wonder what the Fed is doing and just go on what they're doing. Hey. Rates are pretty high here. Great. Like, let's call it a day. Like like, your your signals are gonna continue to be your signals and so on. So let's just move on from the Fed. But I saw everybody posting that today. That was kind of interesting. Panelist [1:11](https://www.youtube.com/watch?v=SkUhlyxb29I&t=71s): And I think it was few days back when Larry Summers came and said that they are going to hike rates, that the next step is a hike and not a cut, and then everyone went wild for that. It's like markets are just seesawing, right, on all this cut hike. Like, end of the day, unless you're in commercial real estate, it doesn't matter. Right? Or if you need to refinance your debt, it doesn't matter. Right? I mean, if that's what you're doing, then yes, you're like, you really have to pay attention to that. But if you're focused on other things, then this doesn't really affect, let's say your trades in, I don't know, to pick a random example, uranium, like that thing has no correlation to rates whatsoever. You pick something like that, then yeah, it doesn't really matter. Right? But of course, depends on what you're trading and how we are trading. Pavel Kýček [2:07](https://www.youtube.com/watch?v=SkUhlyxb29I&t=127s): But at the end of the day, it is nice to see that nobody knows anything, because in December, I think there were like seven, I think seven cuts for 2024. And now we are talking about three to four, so it's just simple. You just can't predict anything and that's why, at least in my approach, you shouldn't be trading based on long term predictions because they usually don't work. This is my simple logic, how I'm approaching trading, but probably a little bit differently compared to cash up. So, Panelist [2:47](https://www.youtube.com/watch?v=SkUhlyxb29I&t=167s): Yeah. Yeah. So, there there was this Peter Lynch quote in one of his books where he said that there was a poll connected in the eighties, and they just randomly asked people what the federal reserve is. And the three top answers they got was a brand of whiskey, Indian reservation, or some wildlife reserve. One knew what the Fed was or what the Fed did. And now it's like every day you just hear something or the other about the Fed. Like you can't escape it even if you try it. Like completely changed. Pavel Kýček [3:21](https://www.youtube.com/watch?v=SkUhlyxb29I&t=201s): That's right. That's right. And you can also see it. I know when I started trading in discretionary like fifteen years ago, every fundamental news had quite a huge impact to the market. And these days, especially on Forex exchanges, you can see that almost everything and anything that markets are trading are rates basically, cuts, hikes. And this is the only or the biggest impact that is these days in markets, these expectations and how market will play it out and so on. Still, nobody knows anything. Andrew Swanscott [4:05](https://www.youtube.com/watch?v=SkUhlyxb29I&t=245s): That's an interesting comment, Pavel. Nobody knows anything because I think, I've put a survey up on my Twitter feed. I think it went twelve hours ago or something. And the question is, I might actually just bring it up here. The question is how long did it take you to become a profitable trader? And there's the options are less than two years, two to five, five to ten, and I'm still working on it. And there's some people here, 8% have said that they became profitable less than two years. And then we've got 30% saying two to five. And I was thinking about my own trading journey. I've been trading maybe about twenty years now. Thinking five years into my trading journey, where was I? And I remember it was like probably about 2008. And I was trading systematic algorithmic mean reversion long only strategies, and the market was going great. And I thought I'd figured it all out. So was back then I would say, yeah, was a profitable trader. I was making a ton of money, but then the market, shit itself. And my strategies were all trying to buy, go along as the market was falling quite heavily. And, I got a very expensive lesson. So I'm thinking, my expectation about how long it was going to take me to be profitable and how long it did take was very different. And now, even now I'm thinking the more I learn about trading, the more I realize I don't know. And I think as I go along, there's more realizations and more things that I learn. And I feel like even more of a beginner than anything, when you look at all these other things. So when you said, people don't know anything, think that's really an important point to consider as traders. When you approach the market with that kind of mentality and you're always trying to learn and you're trying to get better, it really changes the way you work as opposed to when I was, back in 2008, I thought I was the king of the market and I'd figured it all out And I was way off. I had no idea what I was doing. I just didn't realize then. So what about you guys? What about your journeys to profitable trading, your perceptions or expectations at the beginning? How did that work out? Jason Kurz [6:37](https://www.youtube.com/watch?v=SkUhlyxb29I&t=397s): Man, I absolutely love this conversation. Starting out with, like, we all know nothing. I'm just learning about lights now. I mean, I just had a light fall in my head as we were having a conversation. So all all of these things everything's on a learning curve, though. That's the one thing that's really important is like, if you're I'm fortunate, like video editing isn't that hard for me. I grew up riding BMX bikes. We had to edit stuff. But stuff like videos and posting on YouTube and these things, there's a learning curve there. Then let's get into something like trading. The most difficult thing on in on the on earth, really. Like, I fully believe trading is one of most difficult things I've ever done. I have done backflips over 30 foot jumps. I have traveled all over the world. I've done very, very insane, crazy things. Trading is the hardest thing I've ever done my whole life. And it always will be. And I know for me, like the first, like, okay, so it depends, right? If we're talking about somebody just trading, you're buying the S and P 500, you're trying to learn how to be profitable and holding stocks for twenty years. Sure, you could probably learn that pretty quickly. If you wanna be a trader, you wanna get in and out of the market, you wanna learn market timing, you wanna learn running systems, being systematized, that's gonna take you so long. I mean, my journey started out with thinking I knew something to and trying something and realizing I knew nothing when my account turned to zero. You know, like that and that happened a couple times to me. It wasn't something where I and was like I don't hide that. You know, a lot of people, like, they hide those things. They're like, I don't wanna talk about my blowups, know, then people are gonna look at me differently. It's like, I don't know one real trader who's been real with me, who's never had a blowup. Everybody has had a blowup at some point in their trading. I don't know how how exactly it will happen, but it will happen to you at some point if you start doing this with leverage. Granted, like, without leverage, you might not blow up, but with leverage, you'll blow up. So, my journey literally took, similar to Andrew, we're talking, I started investing earlier. So I guess I can understand the idea of thinking maybe investment isn't the hardest thing to do in the world. In a bull market, sure. If we're talking about trading, that's a different thing. So early on, putting some money away in the early 2000s when I was young and didn't know anything, yeah, sure, I made a couple bucks on that, but I wasn't trading. That's not really trade. Really trading started around the great financial crisis, someone Andrew, and you start to think you're getting just like people did during COVID, I'm getting a discount. I wanna buy when it crashes. So I started buying things when they were crashing. I didn't know anything. Andrew sounds like he had a little bit better of a method than I did. I just thought you buy things when they're low and you sell things when they go up. And it's simple. So so I basically got in. I tried that. That was a very stupid idea. I learned that quickly. And then I proceeded to lose money for three or four straight years. You know, it was it was about four years. And then and I'm talking I went from blowing up to then just losing a little bit year after year. And then, probably let's say 2013, 2014, now you're flat to slightly profitable. And then you're figuring out how to be profitable. And then you have some really good years, but once again, it's like, that's part of the journey. People always talk about paying tuition to the markets. Like, you do, you absolutely pay tuition to the markets. You will blow up, you will lose money, you will make mistakes that are complete And things will happen sometimes that are completely out of your control. All of these things will cost you money at certain points, but it's until you really realize, like, the risk management, like, of your biases, like, understand, like, the type of trader you are. Are you systematized? Are you discretionary? Well, when do you enter a trade? Even people who are fully discretionary have some form of system. Meaning, they go, okay. Well, I'm I'm fully discretionary. Meaning, I only buy I buy things okay. So how do you say the difference? So there's systematic trading, you have straightforward criteria. That's it. You have to trades on things like 100 highs and sell things on fifty day lows to make it simple. And then you have discretionary trading. This is completely up to the trader when they feel like to go in or out of something. So if you're looking at a discretionary trader, some of them will have things like let's say they use seasonality, and they go, okay, this is one piece of my puzzle. Okay, it looks good seasonal for this month or period I'm planning on buying. Okay, that's one thing. And then they'll go to like a COT report and see, okay, well, the commercials are buying, this could be putting in a bottom. You know, this is also a systematized way of doing things. At the very least, what I call bumpers, like a bumper bowling. Basically, it just makes you so you're not in the gutter. If you're continuing to try to buy things, when you're in these bad zones, when you're basically like the market's breaking down and everything bad that could possibly happen is happening, you will lose money. Like you will get hit badly. But if you can create this criteria that at the very least keeps you out of buying things that they're just basically trying to catch a falling knife, things that are just going down quickly, falling day after day after day, that's something that you can do to not do that. Keep yourself out of the gutter. So I think people in general should, no matter what type of trader there are, create some sort of system or criteria that you use to make you get in or out of trades? Andrew Swanscott [12:22](https://www.youtube.com/watch?v=SkUhlyxb29I&t=742s): Yeah. Pavel Kýček [12:24](https://www.youtube.com/watch?v=SkUhlyxb29I&t=744s): Yeah. I chose, I think, B, two to five years, but it was much closer to five than to two unfortunately because I started, I would say, in my opinion, with the worst possible approach and it is fully discretionary trading when I thought that I can get this feeling for markets. Once you start with these trading courses about trading psychology and how you need to get these feelings. Guys, I think I got such a good feeling for market and I was still losing so much money. So it wasn't the best way to trade for me for sure because I lost quite a lot and many times because I was still trying to get a feeling and I still didn't get anything. And then I started being profitable trading, through, I would say semi systematic approach. Like I was trading some kind of mini version trades based on strong supports and going over level two delta on S and P five hundred and NASDAQ and these indices. And it was working pretty nicely, but it was still very demanding psychologically. So that's why I just had to make this shit because this is also what Andrew thought very nicely, I would say. What does it mean to be profitable? I was consistently profitable, I was making money, but at some point I just knew that I can't continue that way because I would be burnt out trading that way. Once my daughter was born, I knew for sure that this is not the way how to trade at all. So that's why at that time I started making the tweak to systematic trading and for me being profitable, the feeling of being profitable started when I knew that I have to trade as many, but it is for how I think about it, as many uncorrelated strategies or approaches on one account or with my money with this so called all weather approach. So I know that if one strategy will stop working or two for me, it doesn't mean much because I want to trade robust approaches like trend trading, of course, mean reversion trading, breakout momentum trading, these kind of approaches and they will be profitable all the time, like I think forever, but it doesn't mean that the strategy that tries to catch the logic will be profitable forever because the logic can change, there can be some fundamental change on the market. So that's why I don't feel comfortable like trading under seven, eight, nine strategies because the risk per one strategy is then just high and it's not the level of comfortable trading I would like to be on. Panelist [15:43](https://www.youtube.com/watch?v=SkUhlyxb29I&t=943s): So my answer would be, it's not about the number of years, but about the number of market cycles that you can see. So for me personally, it took me a couple of cycles in crypto before I started being profitable in crypto. And I used to be a gold mining analyst. So I used to focus heavily on the fundamentals and it took me about three gold bull markets before I figure out how to trade that wealth. And with the macro, it takes one cycle. And it's all about how many cycles you have seen from peak to trough and then still I mean, like, let's say it's very easy. So you're like 2019, almost everyone is profitable. Right? A year, like, 2021, everyone is profitable. Like, it's free money. But at the end of it, how much do you give back? How do you manage in that kind of market environment where everything seems to be going to pieces? And how do you rebuild and make sure you're still around for the next bull market and whatever you're trading? Right? Like, I think if you manage this entire market cycle, then, it's fine. And maybe that takes about four, five years, or maybe if you're trading a more systematic strategy or, you have the experience, the gut feel of what people learn the hard way, maybe you're able to learn it a little easier, maybe then you can shorten that. But to me, like, as a fully discretionary trader, it took me about two to three full cycles to get profitable. Panelist [17:31](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1051s): Hey. What's up, Kevin? What's going on, guys? Hey. This is my first time doing this, so, Jason Kurz [17:37](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1057s): yeah, let me know how this all Well, pivot. Out. Yeah. No. You look looks good, man. This this StreamYard link Andrew kinda showed me the StreamYard recently. It's pretty cool. So, we could even show you. You can even stream to your own channels on here, so it's pretty cool. Nice. Nice. But, yeah, we're so, basically, this is the trading panel. Every week on Friday, we just meet up and basically talk about trading, what's been going on with the week and so on. So we're streaming to wherever on both of my channels for myself, and Andrew's streaming to his channels. I think Pavel's also streaming. So, it's a Yeah. It's pretty fun thing, man. We we had this idea a couple months ago, and the idea basically was bring people in here who really know their stuff, know what they're talking about, be on multiple channels, and answer questions, and just talk trading. Panelist [18:27](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1107s): Cool. Jason Kurz [18:28](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1108s): Cool. Alright. So so Kevin's Kevin's really good at that. So, Kevin, we'll start out with something from Kevin. So, basically, what we're talking about today too, if Kashyap, were you done yet? You stopped talking. Yeah. I was good. So what we're talking about right now is are we how many years do you think it takes people to get into trading? Like, start to be profitable, make money, and understand this business in a way that, like, really makes sense? Panelist [19:00](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1140s): Well, FinTwit tells me it only takes twenty four hours to invest. Panelist [19:06](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1146s): I'm even 100% of the getaway. You Panelist [19:10](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1150s): know, I think it depends on the amount of time that you really take to study the the markets. Right? So, somebody that's, doing this as kind of a side hobby, it could take a lot longer than somebody that's really dedicating, to the craft here. You know, for me, what I usually have told, some of the previous guys that were on my derivatives team before I took over as a markets correspondent. I usually told them three to five years to really get your feet set as to which markets you like, because I think that's half the battle. Half the battle is not so much trading. It's what markets really interest you, what industries interest you, or if it's commodities, Jason, like yourself and myself, what what really interests you, and then how can you take it to the next level? Because each market, it trade they they trade different. So I would say three to five years to really be proficient in a particular segment of the marketplace. And anything out outside of that is basically, I feel more risk management, is kind of the name of the game moving forward as far as trying to enhance profitability and to be very successful. So that's my 2¢, once again, kind of putting your head down and grinding it out. And I think the biggest misconception that a lot of people have is they say trading, and then they look at all the different markets that are out there, whether it's treasury markets, if you're looking at fixed income, if you're looking at forex and currencies, you're looking at energy markets, grains, equities, all these different buckets and at first you try to combine all the fundamental knowledge and technical knowledge that you have and try to apply it to every single segment and that's just not gonna work. It's just, it'll break down really quickly. And then it becomes very frustrating, right, for a new trader to see some of that rejection. Andrew Swanscott [21:00](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1260s): Jason, you're on mute. Jason's on mute. Good catch. No. Jason Kurz [21:05](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1265s): I just said there's a lot to unpack there because it's, it's all that's the thing about all of this is like, you just have to really figure out what you do and what you do well. I think that's really like the name of the game. If you really like and I think that's what takes the time. Like, took me longer not to learn things. Like, it took me a couple years to learn most things. To, like, let go of biases, understand, like, I didn't have to know everything. Like, that was something that I really struggled with at the beginning. Like, if I was gonna trade palladium, I better know, everything about palladium, where they mine it, every single country, what they're doing at that moment. You know? And I think a lot of traders, like, what you end up doing in the end is really figuring out, like, well, how do I exactly make money? You know, Kevin and I were on a spaces the other day that were somebody brought up, know, Jason, what do you think about earnings? And I was like, well, I don't think about them. And they were like, people were kinda confused, but at the same time, like, I trade the indexes, I trade futures. It doesn't really pertain to my trading, in the sense of watching it day to day, maybe the macro of it, maybe if I'm looking at all of the S and P stocks as a whole, maybe something can pertain to my trading, but really how I'm making my decisions to get in and out, it's based on price. So if the price is going up, I'm getting in. If the price is going down, I'm probably gonna get out, and then figuring out systems to do that. And so it's really like letting go of like, okay, do I need to know everything fundamentally to get into trades if I'm basically entering and exiting them based on technicals? No. And then also going like, from the other side of going, if I'm a fundamental trader and I'm making decisions, like, I'll hear fundamental guys talk to me all the time. They'll be like, oh, I hate technicals. They're stupid. But at the same time, they're like, well, I'm getting out of this trade. This This stock looks parabolic. You know, like the chart looks parabolic. And you're like, well, really you don't understand charts. And you're kind of looking at something that you don't understand that's coloring your view in a different way. If I look at it, I just see it's just breaking out to a new high. Somebody who doesn't really know charts is seeing, it's just parabolic. So they need to get out. So it's just figuring out like, you What do you do well? Like, know people who've done a lot of different things well and made money a lot of different ways. I don't hate on any of them because I've seen most people do it. I even have a friend who makes money using moon patterns. I have no idea how that I'm totally confused and dumbfounded most of the time. I do understand some things about it, but like, just trading based on things like that, I have no idea. But, he's a person like, who shops another person, like, I we share accounts. Like, we show each other accounts. I know this guy actually makes money. So it's mind blowing, but I'm just saying that's the most extreme example, but I'm saying everybody should just figure out how they trade for themselves. I think that's what makes the most sense. Yeah. Pavel Kýček [23:56](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1436s): And getting rid of false beliefs. I think this is the biggest pain point because everybody, as Kashyap said very well, would say everybody can see those perfect charts on crypto Twitter or financial Twitter, there are nothing but profitable trades, nothing but 45 degrees equity curves. And those beliefs, then if you have dealt really deeply these beliefs under your skin then it is very hard to start building on those beliefs and start building profitable strategies or profitable approaches because you basically expect that those should be these outputs but those outputs will be always very different to these perfect 45 degrees or exponential line equity curves. And this is a big problem, I would say. These expectations are really very, very, very big problem in trading, especially with novices. Panelist [25:04](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1504s): Yeah. And if you see those 45 degree curves, right, there's a good chance if they are real, there's a good chance they're just selling volatility. They are just writing options, and one day this is gonna blow up. Like, that's the only way you get that kind of 45 degree line. Right? Jason Kurz [25:22](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1522s): Is it possible what's You funny is we were talking recently about optionsellers.com guy. You know, that keeps coming up. I think that came up on here last week and people were kinda, like, cracking up. But, like, that guy is the epitome of that. You know? Like, hey. Yeah. He's figured out a way to make money all the time. He's he's selling naked calls on natural gas, and he's selling naked puts on oil. And this guy just continues to trend, that direction all those years. It was it was basically 2016. Oil just moved up off that major bottom, and then you have natural gas in a downtrend. And then 2018 happens, and oil crashes, and then natural gas explodes higher both at the same time, and they wiped him out in minutes. So it's like figuring out exactly like, they're they're like like a shop said, that is a strategy to blow up. And I think we've all seen it many times. You know? Like, I've seen friends not to mention, like, I if funds do this all the time. Like, the people don't like to talk about funds. They talk about funds like they're the smart money. Really, I've been I've been around plenty of hedge funds. There's plenty of dumb money in those too. I promise. And and a lot of the time, the owners I'm sure I should be saying this shit, but I'll be honest. The the owners are also the ones who are are the ones doing these things. Like, sometimes the owners are people that kind of, like, don't really know how to trade, and they start these funds. They make some money doing something, and next thing they're running a fund. I've seen it a couple times. And then they're, doing strategies like that. And they're just seeing the dollars going forward, and they're not understanding that you can blow up. The huge one in the hedge fund space right now is the basis point trade. Basically, taking the spread between cash bonds and selling bond futures and trying to make the middle. So, basically, this this ends up turning out terribly all the time. And and I and I got sent this from another fund, they were like, hey, can you back test this? And I was like, okay. So I back tested and I sent it to him. And I'm like, dude, this blows up every time. And he said, well, you gotta predict recessions. So it's like, if you just predict recessions, you'll be fine. You know, like, so it's like That's so Yeah. Yeah. You you hear things like that in the in the trading space, and then you go out to be an actual trader, like, in the world, like, it's your first time trading. You're just getting started to do this, and you think these are normal strategies. However, it's like, the slow grind and understand that volatility is gonna be part of your portfolio if you wanna make money. Like, if you if you really wanna have, like, let's say 50% returns, 100% returns, something crazy like that, you're going to have a ton of volatility in your portfolio. Like, you're looking for 50%? Okay. Well, then you better be ready for 25% to 30 drawdowns. Like, that can happen too. So, everything goes both ways, Panelist [28:22](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1702s): and it's always important to understand, like, your risk above everything else. You know, I'm I'm a little bit concerned about the carry trade that's that's happening with yen US dollar. Right? Like, eventually, that unwind, I feel like it's gonna be very messy because that's been a trade that people have been utilizing for the last twenty years. I mean, it's been a profitable one to say the least. And if we do see this, reduction or removal of this yield curve control policy, there's not gonna be any alpha there. And then where does that money go? And then how do you unwind that trade as well? And I think that's one that is definitely under the surface. More hedge funds are utilizing that type of strategy. Right? Trying to it's a very small spread, but if you put enough dollars to something, you can make nominal money on it, right? If you leverage up enough, you can do a lot of things. I mean, that's like Warren Buffett and Berkshire Hathaway. They have a whole bunch of cash right now sitting on the sidelines. They have so much cash that they're making 2,000,003 million dollars a day. That's some that's some nice cheddar to say the least here, so I think that's another one, in the currency markets that's kind of under the radar and I think that's kind of reason why we're starting to see the yen lose ground again, because, the economic data has been lackluster to say the least but the equity market's been doing decent. So you would think that they would have a little bit more strength within the yen as the equity markets start to recover, and it's not. You're seeing kind of that exact opposite. So I think there's a lot of pressure that's being put on from institutions to kind of keep that spread where it's at right now. And I'm kind of right there with you, Jason. You're you're kind of talking about the cash and and futures, spread when you're looking at treasuries. There's pairs like that all over the place. It's the same thing actually right now going on with the equity market itself, even the S and P five hundreds, and everybody's kind of like, oh, look at how much people are short. Look at the institutions are short. They're they're getting ripped. No. They're not. They're they're trying to literally make a spread off of this right now. They're short in the futures contracts. They're going out, getting into a little bit more high beta, and they're trying to capture that alpha. But once again, that's gonna be a that's something that could, that could burn them, and that could destroy a fund if it goes the wrong way quick enough in that spread where that arb gets taken out of the marketplace. Panelist [30:42](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1842s): There was a time where I forget which year, but so the Swiss National Bank had the Swiss franc pegged to the euro And all these people in Poland and Hungary had taken mortgages in the franc because they were about to join the EU and their currency was more or less pegged to the euro and interest rates were dirt cheap in Switzerland. Right? So they're like, let's take mortgages in Swiss francs, denominated in Swiss francs, and just pay the EMI. What could go wrong? And then one fine day, the Swiss National Bank is like, we are not going to maintain this peg anymore. And a few forex brokers went under. It was all within a matter of four, five hours, and then the whole space just Panelist [31:30](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1890s): crashed. It was FXCM. Right? They were one of the big I think they got hit by, like, 80% of their market cap got wiped down on that track. I remember I was actually working a futures test that night that it happened. And, man, you do not wanna hear clients, large institutions getting blown up. I mean, that was that was a horrible night, to say the least. And, actually, that was probably, like, the last day that I wasn't in that pair. But that was, like, the last day I was like, you know what? I'm good on the currencies. I wanna stay in my I'm gonna stay in the commodity lane, not have to really worry about the, these reserve banks going out there and just being like, you know what? No. We're not doing this anymore. Dump it. Panelist [32:15](https://www.youtube.com/watch?v=SkUhlyxb29I&t=1935s): I it was kind of obvious. Right? I mean, like, you have a trade like that where there is so much pressure on the currency. One day or the other, the peg has to give. Because the Swiss National Bank is not gonna keep buying euros forever. It just doesn't work that way. Right? Like, it was obvious, but then, if you don't do the trade, you're down. Right? Because the other people are doing the trade, and they are making the free money. So if you don't go pick up those pennies in front of the steamroller, then you're the dumb person. It's like the Credit Suisse had this ETN, the XIV ETN, which blew up in 2018. They were, like, selling wall, and they were the ETF was practically going up in a straight line. And right towards the end of it, I think they decided they wanted to get in on the game, and they took a 20% position in their own EDN. And then they blew up along with the rest of the note holders. Right? Like, like, that's just how the thinking works. It's like, it's free money. Everyone's picking it up. Why shouldn't I? And then it's like, something else to give. Pavel Kýček [33:25](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2005s): Okay. Just quick note to the case with Swiss franc, because I'm from the Czech Republic next to Poland. It was the last time when citizens of Europe could basically get loans in another currency than their domicile one. If they don't have the income in this currency, want to be loaned in. So this is really this this that was the last time when Swiss franc basically exploded. Jason Kurz [34:05](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2045s): This is such a fundamental conversation. Panelist [34:08](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2048s): Yeah. Well, mean, you're talking about selling premium. Right? I mean, like, that if if you look at each and every example we just talked about, it's all premium scalping one way, shape or form, right? Even if you're trying to get a mortgage and you're trying to get in another country because of the currency pair, you're trying to scalp premium. That's all that is. And it's cool for, it's cool until it's not anymore, until something fundamentally changes. So when you're looking at, what was it, XIV, right? Their problem, and a lot of people didn't understand this, because they were an ETN, and if you actually read in their prospectus, they were not required to cover that position. There was a risk, so they were like, everybody kept like freaking out, oh, what are they gonna do? What are they gonna do? In XIV, they had two things that they could have done. They could have went out into the VIX futures and covered risk, which if they're buying VIX contracts, what's gonna also happen. Right? Domino effect. Gamma squeeze it even more than that. They would literally just break the market. They would break that fixed contract as a whole. Or they could have done nothing. And they decided, look, we can't do anything. We blew up. Because they were trying to scalp premium. And that's kind of like with a lot of these hedge funds, you go from selling credit spreads where you might, let's just talk about options, right? You can sell credit spreads all day. You're still maximizing your risk, or you're still minimizing your risk selling credit spreads until one day you get the bright idea, I could just sell naked and I don't have to get the other side of this trade because it's eating into my alpha. You know? Right? And then you keep and then you're like, alright. Well, I'm just gonna go sell short, or sell, call short. Boom. Boom. Boom. I'm getting a nice amount of premium here until something happens, and then you're you're uncovered. So the moral of the story is make sure that you protect your protect risk that's out there. Don't take any excessive risk. Because as soon as you get a taste of taking a short position that has unlimited risk to the upside, and you get a little bit of a taste of that premium, and you're like, oh, this is great. I didn't have to actually like chop down my return by 25% because I had to take this other leg. I could just do it. That's when people get burned. That's when accounts get burned. Panelist [36:32](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2192s): I can understand ETN holders doing it. I can understand the ETN itself doing it, but what would prompt the sponsor to say this product is so cool. Let me own it on my own account. Like, that's really dumb. Right? Panelist [36:49](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2209s): Well, I don't even think that should even be allowed. I mean, that's just my I won't get into the policy of it. I don't think that stuff should be allowed, honestly. I mean, you're kinda seeing it right now in Bitcoin, right, in certain respects. There's certain fund managers that are buying their own Bitcoin fund, right? And it just seems like that circle could be something that could create some problems down the road. And I think you're kind of alluding to that as well. I think that I don't even understand how that's even legit in a sense, but that's just me. Unless you had, a third party servicer actually managing, which some funds actually do. Right? I might have a fund at, let's say, PowerShares or whatever, but I have x y z custodian actually managing. And and then I can understand you have a little bit of a wall there, but Panelist [37:45](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2265s): there's a lot of stuff that can create bubbles in this market. Yeah. You know, like, PIMCO got into trouble for doing exactly this. Like, what they would do is they would take a security from one mutual fund and plop it into another, and they didn't have to do the mark to market or assessment. They could just take whatever is the book value or the balance sheet value and just put it onto the other funds. So when that security goes bad, the main fund which they want to pump up, the returns don't terrible returns don't show up in that. And they got they did so much of this that eventually they got into trouble. I mean, I'm not sure if that's why Belgras left or it was other reasons. But, I remember this being a big issue, especially with debt, because the bonds, you can't really value it the way you value stocks, right? Moment a big seller tries to sell a block, the price just drops because it's a market where everyone can see the flows. Panelist [38:49](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2329s): Yeah, hard to mark sometimes, Panelist [38:51](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2331s): Right? And this is Bitcoin, right? If you know that a fund is selling and like right now it's Friday after the close, but the crypto market is still trading. There's so many things you can do and make the fund powerless, like, over the weekend. Like, I didn't even know how this whole ETF concept works, to be frank. Like, it doesn't make sense to take an asset that trades twenty four seven and put it into a brokerage account along with other things that trade, just nine to five or nine to four, 09:30 to four. Like Panelist [39:24](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2364s): yeah. You you can find somebody. If you're a large institution, you could find somebody to trade the other side of your trade. Just it doesn't, you you call somebody up and say, hey. Let's I got a trade that we need to we need to do. And if they're interested enough, they'll get on a Bloomberg and send over, the other side of that. I'm I'm right there with you as far as the ETF. You know, I like seeing the fact that the crypto ETF or when you're looking at Bitcoin ETFs, I like the fact that it's providing some institutional opportunities. And for right now, it doesn't seem like it's getting crazy. I don't know about you guys, but it doesn't seem like it's getting, like, too crazy yet. I mean, when when they started doing vol funds, everybody had their own vol fund. Right? And then it was two x funds, and then they got three x funds and all of this stuff until somebody blew up. Right? But it seemed like everybody and their mother had one of those, and they were trying to add these new nuances to it, and it seems like this one's kinda taking its time, to say the least. Yeah. And I'll I'll stop hogging here. The one the one the one ETFs that ETNs that I don't and I'm not a fan of are the two x, three x single stock ones. I feel like there's a lot of risk that is there. Now not a lot of people use them, but that's an, again, a situation where, all you need is somebody all you need is, like, one of those stocks to pop 80% in a day. Pavel Kýček [40:57](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2457s): And Yeah. But on the other side, we are all I would say we are all all traders. You know? So we we are still managing risks. And if someone wants to take these risks of double, triple, triple ETFs or so, why not on the other I like them. I like them to tell you through. I'm using them for these, I'm calling them opportunity trades, like for example, these days, like twenty year bonds also are pretty low. So I'm just taking some kind of money and I'm buying three times leverage TMF, for example, and I'm saying goodbye those money. I'm hoping you will come back like 3x, but if not, I don't care. You know, this is some type of gambling in which my I love, And I'm using these 3x ETFs, for example. This is not, of course, not my core business trading, but on the other side, Panelist [42:02](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2522s): for these cases are very, very good in my opinion. So Yeah. No. I I meant to say, like, I mean, the individuals actually running those funds. Right? I'm talking about institutional blowups. Not I mean, yeah, the product there and utilizing them in a portfolio, I get them. It's just the scarring of XIV. It just makes me kinda think of each and every other scenario where there's excessive leverage and the liquidity of the person that's managing the fund. And if they can deliver, that's my that's my These Pavel Kýček [42:37](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2557s): these VIX products are very interesting. I have to say that I went over them so many times and I try to make something that would at least somehow cover some risks because these are really tempting, know. I love them but I don't trade them at all. But yeah, it's something like, I don't know, 3x ETF or natural gas or so, you can play this game of shorting it. So, yeah, there is some something that is tempting for us traders, would say, because, yeah, there are risks, of course, but on the other side, we are paid for taking some kind of risks. So this is then about proper management. Panelist [43:28](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2608s): Great. So the USO ETF, the crude oil futures ETF, back when back when the contract went negative. So USO wasn't in those front month contracts, luckily, but they got pretty got pretty badly hit on their other near month expiries and that's when they actually did a policy change saying that they are going to do a role much sooner and they are going to add the further month contracts as well into the ETF so that they don't get hit when something like this like completely out of the blue. Like, we had never seen features go negative. Right? But I mean, if things like this are gonna happen, then you should have a policy in place and they did have a policy in place, thankfully. Otherwise the product wouldn't have survived to this day, right? Jason Kurz [44:18](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2658s): I mean, and something that you brought up, which is important, which some of the traders on here might wanna know, which is like about futures contracts and when do you roll in stuff? And so something that I used to do, and honestly, I didn't switch until not too long ago, and it was I was fortunate to be in the front month contract when we were shorting the crude oil futures in 2020. So Keshop remembers like, I literally got into that trade. Not it did it sounds cooler than it was. Interactive Brokers really just canceled out your your trade. You didn't make any more money because you were in that trade. So that kinda sucked. But once again, it's a I will never ever the fear also the fear of that happening to the other side of the trade, whether you're on the right side or not, also will scare you straight too. So basically, I'm I'm never close to expiration. Even like the very some of the thinnest contracts, have to be closer, something like lumber, yes. Palladium even, yes. But still, if it even gets into thirty days, there's no way I'm gonna stay in that contract. Even though futures, yes, you don't have the theta, the k, and all these things you'd have in a rolling options per se, but at the same time, there are risks there just like that. Or a product can become incredibly illiquid. I've seen that happen before where you're trying to get out and you just can't, and you gotta take a bid that you didn't want just because you have to get out of the trade. So, thinking about it as in, like, I don't wanna be in anything when it's close to thirty days to expiry, expiration is a great idea. So just look at it like that. That's some way of looking at it. I get that question a lot about trading futures, like when you roll, because some people like they're looking for that front month risk. And for me and my long term time frame, it doesn't make sense. You know, Kevin talked about it the other the other week, and it also happened recently. You have natural gas give this huge bump the other what was that? A month ago, Kevin? I guess, a month ago that Yeah. Yeah. In January for the Arctic blast. Yep. Yeah. It had it had a 20% move in, a day. It was insane. Kevin talked about it, being just in that front month contract and how that move probably wouldn't last. And he was right. So you really have to understand, like, what you're getting into. So if you want that crazy move and you're looking for really tight risk and you're you're a day trader or you're only swing trading a few days, maybe you're gonna be in a closer contract. For me and my timeframe, I could be in a trade for, six months to a year. I'm not gonna be that close to expiration. Panelist [47:02](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2822s): Yeah. Let's say for futures, so and I think you're kind of alluding to the physically delivered contracts too. Right? Like, that's where the risk is at. So for futures, usually, you wanna roll out, like, three or four days before first notice day. So first notice day is the first day that a seller can inform a buyer that they would like delivery. So for futures, it's different than options. Futures, the seller has the right to take action, not the buyer or not the person that's long. The person that's short has the right, person that long does not. So the first notice day is the first day that the sellers can go out and say, hey, I want you to I'm I'm gonna be delivering this contract to you. And then that's where there could be some risk of assignment. And then no brokerage house that any retail traders that's actually dealing with, for the May most part is gonna take delivery of any of those physicals. Outside of gold. There are a couple that will take gold because they'll put them in a depository location. Right? So three days before and it's it's really important because a lot of the institutions get out two to three days before that first notice day too because they don't want any of that risk, and then they'll roll. And then depending on the contract that you're trading, you wanna roll into the right contract. So for crude, you can basically roll into the next front month. There's enough liquidity there. But if you're looking at, let's say, corn, there's certain months in corn where you don't wanna be in at all because there's no real use for producers to use it to be able to hedge. And then you have the last trading day, obviously. So if you're short a contract and it's past first notice day, you really don't have to take action. The problem that you have is that you're already gonna have liquidity drying up any anyway. So you the spreads are gonna get wider even though you don't have theoretical assignment risk that is out there. So really good call out for that. And then usually when you're trading the e mini S and Ps, a lot of people will roll those contracts. You know, some people don't, but a lot of people will roll those contracts, like, a week before, like, the Friday before the quarterly expiry expiration is usually when you'll start seeing those rolls. And it's, for the most part, fairly cheap. Right? I mean, what, a buck, maybe a point and a half, to do those rolls. So it's not that expensive. You're talking about $75, maybe $50. It's 1 tick. Jason Kurz [49:24](https://www.youtube.com/watch?v=SkUhlyxb29I&t=2964s): Yep. No. I mean, if it's it's generally, like, if you're in the last within the last three days, like you said, the problem isn't even the like, you won't get liquidated, but the problem with getting liquidated is you're not gonna get very good fills getting liquidated most of the time, especially if it's a product that's a little bit illiquid. Like, if you get liquidated on palladium, which happened to me before, I remember losing, like, couple thousand dollars in a minute and just being like, what the what the hell? You know, like, you basically can get liquidated, whatever whatever they have to do at that time. It's an incredibly liquid product. They need to get out. They need to sell it. They're gonna sell it any way they can. So, most of the time, like Kevin said, you're not gonna run into those issues with most products and most market makers, they're going to liquidate you way beforehand, but it's something to also keep in mind and make sure you understand because you're not just gonna end up walking outside and seeing a bunch of barrels of oil out front. You Panelist [50:25](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3025s): know, like, there's people who ask me that. Like, oh, am I gonna get a bunch of barrels of I'm like, no. No. No. They're just Can I tell you guys a quick story? Because I do got a jet. I know I've been hugging the mic here. So No. You're good. Please. So I managed a derivatives team. Right? So during the negative oil going negative, which was actually very stressful to say the least. Right? Like, we kinda laugh about it now. Like, yo, it's a crazy event. But at that time when crude was literally trading at, $12 or, like, $10, every single brokerage house was like, what are we gonna do? Because the CME didn't even know. The CME had no formal policy. They never informed anybody. Like, they did inform somebody literally, like, two days before the contract went negative when we knew, okay. And then somebody was like, alright. Tank this thing. But no one knew what to actually do. And then the CME came out, gave gave their guidance, then some, a couple of goofballs, went in there and, thought that they were going to be mighty heroes and be in there, and they didn't roll their contracts. That's actually what happened. It was people that were they were managing money. They were institutional traders with no intention to actually offset the contract. And they got stuck because they had way too many contracts. And unfortunately, once it got to negative, the problem that we had at that point in time that there was not enough, There wasn't any invent there wasn't any free space in the inventory anywhere. No one was gonna be able to take delivery. That was the first problem, which is why that contract went negative. But the second problem that we actually saw from the brokerage houses is that it actually would mess up your risk algorithms Because now you had a product that was a positively priced product, then all your risk algorithms out there could obviously assign that risk, right because it was a positive. Once it went into the negatives, there were risk algos out there that would actually provide free cash to traders in their account because, you add a negative to a negative, what's gonna happen? So it was crazy. It was a crazy event to say the least. I would talk to customers and I am not even joking. Customers would be like, So I wanna do this. I wanna take delivery. How do I do that? It's like, that's not how any of this works. It's like, what, 10%? I think it's like 8% or 10% of the contracts get actually physically delivered in the futures market. A lot of those contracts do not even get delivered, they just get offset. But people will call and like, Oh, I know there's a place down the street that and it's like, no, you're not that's not how this works at all. Like, we're not gonna be able to do this. So usually what would happen if you were unable to take delivery of a product, you would get a call from the CME, you get a call from your brokerage house, CME is gonna hit you up with a whole bunch of penalties. You're gonna pay up the wazoo and you're gonna be pretty much in litigation with whoever's taking the other side, or you pay the cash settled value, which could be the result of that. So but is you joke about people trying to put oil in their pools. People literally wanted to put oil in like storages that they had, like on their farms and all of this crazy stuff during this time is, the preppers definitely came out to play that day. Jason Kurz [53:42](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3222s): That is wild. I yeah. Oh, man. I couldn't imagine. I mean, I can't imagine because I've seen things like that, but I've never I didn't hear that story before. That's super interesting. Yeah. That's the one that did. But fellas, was great, being on here. Panelist [53:59](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3239s): Appreciate Thanks the time. Jason Kurz [54:00](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3240s): And, yeah, looking forward to joining you guys again sometime. Sounds good, man. We're we're Thanks, Kevin. Hop out around now anyway. So, man, good to good to see you, Kevin. You take it easy. Yeah. You as well. You go Kevin, before you go, how can people get in touch with you or or, Andrew Swanscott [54:15](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3255s): get more from you? Do you wanna shout out Twitter? Panelist [54:17](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3257s): Or Yeah. So you can, follow me on Twitter at k g bull and bear. I'll put it in the I can put it in the chat. And then I'm on the Schwab Network, which is a financial news organization. So I'm a senior markets correspondent there. I've been in the industry for thirteen years. I've managed derivative teams, commodities, options trading, flex options, structured products, financial advising, you name it, done it. So KGBull and Bear on Twitter or an x, whatever you wanna call that, and that's how they can get in contact with me. So I appreciate that. Awesome. Thank you very much, Kevin. Thanks, Kevin. Enjoy the rest of your day. Have a good one. Cheers. Andrew Swanscott [54:59](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3299s): And, we're right at time now, I think. So should we start wrapping this thing up, or do you guys wanna continue? I'm gonna take the boy to soccer soon, so I have to go. But Jason Kurz [55:11](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3311s): Yeah. Yeah. Well, that's I'm good with me. It's beautiful outside. I'm gonna get outside for a little bit. Thanks for coming, everybody. You guys can follow me at a o research on Twitter or a o research on YouTube. I changed that recently because Andrew said it was hard to find my page. Yeah. So I think that should be better, actually, hopefully. So thanks for shouting that out, Andrew. And then my sub stack, if you go to my Twitter page, everything's on there, my link tree, so you can find everything. Thank you guys so much for coming on again. This is a blast, and it seems to be building in a very fun direction. So I've got some more, I got some big names in order for next week, so we'll see if they can make This week, there was the Vegas, event, so some people couldn't show up because of that. And then there was, some trip for another company. So next week should be good. So look forward to that if you guys are watching. Yep. Andrew Swanscott [56:05](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3365s): Yep. Kashyap, do you want to how can people get in touch with you? Yeah. So the best is my Twitter. It's Kashyap two eight six. It's Panelist [56:14](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3374s): same as my name with the numerals two eight six. And it's myfullname.com. That's my website. So kashevshiram.com. So you can reach me there. Andrew Swanscott [56:25](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3385s): Excellent. Thank you. Pavel? Pavel Kýček [56:27](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3387s): Okay. Just follow me on Twitter probably at pkycek and Robaxi or robaxi.com. And hopefully see you again. Nice chat. We are moving forward. I like it. I like these conversations, I have to say. Yeah. It was a great great Andrew Swanscott [56:47](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3407s): discussion today. Yeah. Yeah. Sorry, Keshav. Panelist [56:50](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3410s): Yeah. No. I was just saying it was, like, so quick. Like, didn't feel like a whole heart had just gone by. Jason Kurz [56:56](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3416s): Yeah. I was I actually wrote up an idea. I'll send it to you, Andrew, but I had a structure idea. When I when I'm done with it, I'll send it your way, but it might be a way to structure this a little bit better. Just an idea. Andrew Swanscott [57:08](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3428s): Yeah. Sure. Happy to look at that. So I like to everyone for conversation now. I like when it runs into wherever anybody's taking it, So who knows? Yeah. Yeah. We covered a lot of good topics. I've been taking notes. So, I think it was a great discussion today. Thanks to everyone for joining us. We're here every week, 4PM ES Eastern Standard Time. That's right. Isn't it, Jason? Yep. Said the wrong time last week. Got it right. Good job, Andrew. Andrew is on Australia. Jason Kurz [57:37](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3457s): And and Kashab is also overseas too. Know, we I gave you guys credit because honestly, I'm I get my times mixed up, and Andrew knows this because I messed up too many times. I get my times mixed up, and I'm actually in the time zone that everybody pays attention to. I'm on the East Coast Of The United States. So yeah. Andrew Swanscott [57:55](https://www.youtube.com/watch?v=SkUhlyxb29I&t=3475s): Yeah. So, yeah, 4PM eastern every Friday. Come and join us here and you can catch me on Better System Trader channels on YouTube, Twitter, X, maybe probably Facebook as well. So oh, and by the way, Pavel's going to be a special guest on Better System Trader next week on, oh my goodness, Monday, I think it's 3PM Eastern. Yeah. That So looking forward that. To be talking about Algo crypto trading and strategy. Looking forward to that. I'm just me and Pavel, so come and join us. And we'll see you all next week, hopefully. Thanks for joining us. All right, guys. Great to see you. Cheers. See you. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 3 Better System Trader · The Trading Panel · Episode #3 # Systematic trend following, economic indicators & macro factors Richard Brennan · in conversation with Andrew Swanscott March 2, 2024 · 74 min listen · 51 min read Episode 3 of Better System Trader's Trading Panel — trend-following veteran Richard Brennan joins host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček to talk systematic trend following, reading economic indicators, and how much macro really matters to a rules-based trader. Listen on [YouTube ↗](https://www.youtube.com/watch?v=S3n_TXpTUzc) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Why systematic trend following keeps working across markets and decades. - 02 How (and whether) economic indicators and macro factors belong in a rules-based process. - 03 Pavel on trading crypto systematically — 15–20% daily moves as an opportunity, not a threat. - 04 The panel's take on staying disciplined when the macro narrative is screaming at you. Full transcript ## The conversation 74 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:02](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2s): Okay, welcome to The Trading Panel, your weekly show where we talk about all things trading and the markets. Welcome. Thanks for joining us. And today we have a small panel here. Small but good, small but powerful. We've got a couple of others who are going to be joining us in a moment. In fact, here's someone now. Rich is joining us. Good day, Rich. Good day, guys. Sorry about that. I just had a bit of check problems for some reason. Jason Kurz [0:27](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=27s): No problem. Andrew Swanscott [0:29](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=29s): No problems. Exactly. So we've got a couple of the usual suspects here and we've got a new bloke. Well, he's not exactly new. He's been on the Better System Trader podcast before. So how about we do a quick little around the room? Jason, do you want to start since you're the mastermind of this whole experiment? Jason Kurz [0:48](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=48s): Sure. Hey, I'm Jason Kurz. I've been trading for about fourteen years now. I've been in the markets for a little bit longer than that as well. Just actually trading and systematic trading has been less than the actual time in the market. So I don't really count the years I have blowing up accounts and doing really stupid things in the markets. I run Against All Odds Research. It's a research company as well. We do research interviews with traders and podcasts as well. And we're here and I'm excited to be with the panel once again. This has been fun. As Andrew nicely said, I'm the mastermind, but Andrew's also been a big part of this and we've been kind of putting this idea together for a while. So it's super cool to have you on Rich with us today. We have had Pavel on the last few weeks, so it's really cool to be able to talk with all you guys. Andrew Swanscott [1:42](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=102s): Yeah. Yeah. Pavel, do wanna go next? Pavel Kýček [1:46](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=106s): Well, I'm trading for over eighteen years, but systematically over eight years. Yeah. I'm trading equity basically, and stocks. These days, we we are trading quite a lot of crypto because crypto is moving like crazy, and we also set up a company, Robuxell, that is trading systematically crypto for retail, but also for smaller hedge funds and proprietary proprietary trading companies. Andrew Swanscott [2:23](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=143s): Yep. That's right. And, Rich? Richard Brennan [2:25](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=145s): Good day, guys. Thank you very much for having me on. So I'm Rich. Been trading for a long time since about 1985, settled on what I do now, which is this diversified systematic trend following in about 2014. And, yeah, a cohost on a couple of podcasts. The algorithmic advantage is a Australian based podcast we've just started up and also Top Traders Unplugged And, also run, I'm involved in a fund in Sydney, that trades, trend following and also, have a training and education program for retail traders who want to pick up the techniques of these professional trend following fund managers, recognizing that they've got minimal capital and how they go about that. So I've got that process as well. So yeah, it's great to be here. Thanks very much. Andrew Swanscott [3:25](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=205s): And not to mention for Rich, it's actually 7AM in Queensland, in Brisbane where he lives. So thanks for getting up so early, Rich. Yeah. Problem. Richard Brennan [3:35](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=215s): Oh, and one that's my wife happy because she's yeah. I think she's got the motor mower sort of sort of coming out now ready for the lawn, which I'm gonna have to do as soon as I finish here. Andrew Swanscott [3:46](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=226s): I hope you don't do it at 08:00 in the morning. That would be I'm not very good neighbors. Wait. Jason Kurz [3:52](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=232s): Wait. Dude, what did you call it? The the motor motor? The The the lawnmower. Richard Brennan [3:58](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=238s): The lawnmower. I was like I was like, I wonder if you guys call it something different. Because we call it Well, some of us have it yeah. I've I've always called it the motor mower. So, I come from Tasmania, which is a really weird state in Australia, and they're very strange down there. And, they they have different names for different things. Andrew would appreciate that. It's kind of like, it's kinda like Texas here in The United States. It's kind of like a little different Jason Kurz [4:22](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=262s): little twang in the language. Yeah, I love Australia, man. It's a cool place. Yeah. Andrew Swanscott [4:30](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=270s): Now for the discussion today, I wanted to start off with something that may be a little bit controversial. But first, just something before I forget. Now, Rich spoke about how he's on a lot of different podcasts. I actually had the privilege of having him on the Better System Trader podcast maybe about a month ago now. We were talking about surviving uncertain markets. We talked a lot about trend following. It was a great discussion. So if you want to see that head on over to Better System Trader channel in YouTube and you'll be able to see that one. And also this week I had Pavel on. We talked about algorithmic crypto trading and he shared a lot of insights in our discussion. We've got a lot of good reviews on that one too. So if you want to see that head on over to the Better System Trader YouTube channel and you can see those. Now I'm just going to try and present my screen here a little bit and share a little tweet from someone we all know. I was going to say we all know and love, but we're not going to get political here. So I don't know if people love him or not. But before I show this, we don't want to get political but we want to talk about this from a market perspective. So let's keep that in mind. And here we go. It's coming. I have to have a laugh when I saw this. It's on the screen, right? Yeah. So we've got a tweet here from POTUS. Inflation is the lowest it's been in nearly three years. I almost can't get this out. And wages, wealth and jobs are higher than they were before the pandemic. So excluding the politics of all of this, because we're not a political channel, what do we want to say about? What are the markets saying about this statement? Do they support this? Jason Kurz [6:17](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=377s): How do we I thought this was funny. And honestly, it's like, I've been seeing so many people lately kind of have the same kind of discussion, which is, hey, inflation is dead because basically for me, I'm a futures trader, I'm always trading commodities. I'm always just posting stuff about commodities or whatever. And there's somewhere short, the ags basically are short across the board. But basically, if you look at a lot of them like cocoa, the one that's the biggest weighting in most of the energy indexes, which is oil and gasoline, like these are bottoming and starting to get breakout signals and stuff. So it's kind of interesting to think that, once again, like it's lagging data. They're looking at the, what was this, the core PCE this week or something, It's incredibly lagging data. Basically, it's about to be March. We're talking about January prices. That's what these normal economists, normal traders look at. They're looking at these like extremely backward looking indicators and you're like, wait a minute, as a trader, like I'm getting signals in these things now. I see that cocoa is just off the board. Now, once again, it's not the biggest weighting in any of the commodity indexes or anything they measure at all, but there's a lot of commodities that are moving higher. So it's kind of interesting. You kind of always see this stuff all the time, right around the bottoms. Like honestly, like I don't, I'm not one to predict things and go, okay, it's gonna bottom because this was said. I'm just saying, it's kind of interesting when you start to get price action signals and then the president come out and post something like this. Andrew Swanscott [7:55](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=475s): Well, we're seeing a lot of trends in markets, Right? And, some of these are potentially caused by inflation and other aspects. Crypto's probably well, actually, there's lot that's been happening in the crypto markets recently. Pavel, maybe do you wanna have a since you're our resident crypto expert here, do you wanna Yeah. What's been going on? I know you're not a fundamentals guy, but Yeah. What are you seeing? Well, I'm more into crypto volatility than into crypto fundamentals to tell you through. Pavel Kýček [8:28](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=508s): But, yeah, Bitcoin is on all time high on many currencies, not against USD, but, for example, against Czech rounds or very near to all time highs all time high on against Euro. Well, everything is moving like crazy. We are having 15%, 20% day on some coins. So, yeah, very interesting environment that is pretty nice for trend following strategies, for breakout strategies. But really, I don't know why it is happening. Maybe because of the ETF. I don't like thinking about narratives and why should be happening something. In fact, I have studied economics. I have university degree in it, and I try to get rid of this type of thinking there. I'm trying think about it really, because I like reading about it a lot, but I try not to get into the level that I should be thinking what should be happy what should be happening because of some fundamentals also. Because it is always interfering or it used to be interfering my trading very negatively in the past. That's why I'm not doing it anymore. I'm reading all the news, but that's it. That's it. Not analyzing. Jason Kurz [9:51](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=591s): I like that because what Pavel said is what I kind of think of it too is I also love to read economics books, but it's kind of like a novel for me. It's like, oh, it's just a really beautiful novel. It's written very nicely. It's this beautiful thing. And sometimes I get really interested in that novel. And then at the end of it, you kind of forget about it. Kind of the best way to handle that stuff. Because really, I traded on what I think is going on in the economy, I would be broke. Like there would be no trading. I would never get hired. I would be fired every single day. You can't do that. Like think of 2023, if you looked outside, especially in The United States, and if you talk to anybody in the world, the economic data was horrible. In the world was bad. Inflation was rampant in places, especially in Europe. It was a very nasty environment, but at the same time, that was when the market bottomed. That's when you really started to get these huge trends. And for people like us, Michael, who was on the show the other week, we had a conversation about this in January 2023. And it was, I think it was either the end of January or the beginning of February, somewhere around then, we all got signals to get long the NASDAQ. And we were like, are you serious? You know, like right now, really? But of course we still just buy the signals because we don't try to outthink the market or our systems especially. So we get into it, we ride the trend and honestly, like I wouldn't have expected it to ever end up here, but it did end up all the way here, with one, basically one trade in the middle of that. So it's a really amazing thing when you just kind of tune out the noise and just trade your systems. Pavel Kýček [11:39](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=699s): It is. For example, I really love macroeconomics, like long term trends, like thinking about where water is directing and where it is moving and what is connected with the but really this this noise, like day to day noise or week to week noise and trying to explain things based on something that happened in the past, this is way to hell, at least at least for me from trading perspective. Richard Brennan [12:13](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=733s): Yeah. I know I can't predict into the future one day, let alone, But, you I'm very good at hindsight bias looking back and what's happened, but not very good at looking into the future. So, yeah, I agree with you guys. I just react to price so I don't predict it. But we've had some great trending opportunities. Like 2023 was pretty well is very interesting, actually. 2020 and '21 and '22 were very good trending years. Then sorry. 2023 was actually a breakeven year for us, And so everyone was anticipating that trends were going to dry up this year. But January, February, we've had the resurgence of trends, so it's a very good time for the techniques that I deploy at the moment. So it's a great trending opportunities at the moment. Andrew Swanscott [13:10](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=790s): Yeah. Rich, your audio's kinda going in and out a little bit there. I'm not sure if it's your microphone or not. But I'll just bring that a bit closer. Hopefully, that's good. That's perfect. Jason Kurz [13:20](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=800s): Hey, So Andrew. Can you can you pull back that thing from the show? Yeah. Andrew Swanscott [13:27](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=807s): Okay. Here we go. Let me bring that one back. Here we go. Here you go, Kevin. Inflation is the lowest it's been in nearly three years. Wages, wealth and jobs are higher than they were before the pandemic. Panelist [13:47](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=827s): Interesting. You know, look, you see this on all sides. Right? So inflation is going down, the rate of change is going down, prices are not. And then wages has been very distorted, right? So it's kind of hard to really measure that. And then, jobs the jobs market is decent. So are are are these words maybe an exaggeration? He's a politician like everybody else. Right? I wouldn't do that. Oh, man. You guys doing today? Good. Good. We Jason Kurz [14:28](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=868s): were bringing this on as kind of a joke because we were like, just kinda Andrew and I were talking about it the other day. It was just kind of laughable and we were just kind of like, it'd be funny to talk about it with some of everybody on here. And it's really true. It's like, and I talked about this the other day and we went on, Kevin and I went on to Spaces recently and somebody basically was talking on there. Kevin has a show at around the same time, so he might've missed it, but he was basically talking about the fact that like anybody who talks about the inflation thesis is an idiot and like, any of these things. And it's like, wait a minute, if you actually just let's tune out all the noise and what's in the news and what's in analyst reports. And let's just look at the price data. Like, you're kind of like, okay, there's a lot there. And then if you look at the actual fundamentals underneath it, like which Kevin does a lot better than me, like there's a lot to do with this right now. There's a lot of inflation coming in. So it's gonna be quite interesting to see where that all ends up in the future. Panelist [15:31](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=931s): I would say they So services inflation is still very sticky, right? And we are seeing that in the core PCE. And I think the thing that I have a little bit of an issue with is when people just follow year over year, and that's all nice and dandy, but there's two factors that actually do impact it. You kind of miss what's actually happening under the surface. So if we compare what's happening with disinflation right now, compared to what we saw with inflation a year ago, a year and a half ago, that was mainly goods driven, Now, lot of those goods are actually deflationary factors. Deflationary, not meaning that they're in disinflation where the price changes are not moving as quickly to the upside. They're actually in a deflationary pattern where prices are coming down for the most part in some areas. But now we have this services side that's becoming very sticky, and we continue to see it not only within the PCE data, the CPI data, PPI data, ISM manufacturing services manufacturing, the regional fed surveys, pretty much everywhere. You are seeing some of these pricing pressures. And for people that think that inflation just completely, like, don't ever think about it again, I feel is disingenuous to say the least because we are at a low time when it comes to commodities in prices. Right? December, January, if you're looking at November, usually, we don't consume as much. Usually, prices are low. We're about to hit spring. Like, we're at 75 degrees out here in Colorado. We're about to open up some lakes. Activity is starting to spark up here a little bit, and the goods inflation narrative is still not not over with yet. And I think we definitely need to be mindful of that moving forward. Now does that mean that the fed is gonna have to raise rates again? I don't think so. But I think the fear of that possibility happening in one print that does show a year over year increase, which is totally possible, maybe not in the February print, but the March print. February, we would need to have a 0.525% increase on month over month to be able to have a increase on year over year. But once you get to March and beyond, our comps are pretty much shot. So I think there is definitely some risk that's out there, and I don't think the market's really pricing that in. I wouldn't make it a bear case for an equity market, though. What are your guys' thoughts? Jason Kurz [18:03](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1083s): Jason, you're on mute. I know. I that's what I actually said I'm on mute. But no. I agree. And that's a thing that I think everybody's kind of stuck on is like, it's either this like, oh my gosh, it's gotta be, if you're talking about any form of inflation, that means you've gotta get out of every single stock in the world because it's gonna crash again. And honestly, that's not how this usually works. And we know like from price action signals in general, most of the time, like you can see like inflation start to uptick. And then next thing we start to get into different sectors. We start to see energy. I trade the sector futures too. And so we'll start to get into sector futures. We'll start to get into different countries that are commodity based, different currencies that are commodity based currencies, like the Canadian dollar, the Aussie dollar and so on. So you'll start to see that start to happen. So it's not really a thing where it's like, oh, it's gonna put so much pressure on the market. That's the end of it. It's just a thing of maybe we could get out of this thing where, our signals have been logging the NASDAQ forever now. Maybe we get out of this thing that's like starting to see some actual diversification through the market, some breath actually tick up, start to see us go into different sectors because really like the portfolio has been extremely tech heavy for a long time because of it. once again, it's not something where we need to exactly predict, but we are seeing these signals start to change. I mean, we are starting to see more energy based signals like we talked about at the beginning, like commodity based signals that are really coming in. Kevin and I can honestly probably nerd out about oil for the next three hours. So if you guys wanna shift, feel free, but like Kevin and I could talk about oil forever. Panelist [19:50](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1190s): No one's talking. So let me jump in and talk about oil. No. Look. You had your chance. Look, Jason, I think you are making a very good point. And so a lot of times here, newer traders also kind of get this wrong. And unfortunately, I think there's a cohort of individuals that have maybe just started trading during COVID that their view on equity markets, their view on fixed income, their view on the economy and how things work right now are completely distorted by their first experience of a bear market in a synthetic recession, in a synthetic recession. We cannot stress this enough. This was not a normal something broke because something broke because somebody wasn't hedged the right way or something broke because there's geopolitical tension. This was literally a synthetic situation here. So we have to just kind of keep that in mind. When you talk about macroeconomic factors, and maybe you're not just rosy in the streets, just jumping for joy about the macroeconomic picture, does not mean that you have to be bearish. Does not mean that you have to be bearish at all. You can still have upside moves. You can still ride trends. And inflation is not a bad thing. And I think that's the second thing that people are scarred by. And that's why I kind of bring up the COVID-nineteen situation, right? As soon as I said, Oh, inflation can come back, I bet you there's half of the people who are like, Oh my God. They're like, He's a macro bear. Dude, put a comp comp chart. I know you guys are gonna do it, but for people on their free time over the weekend, don't go and enjoy it with your family and friends and all of that. Go on your computer. Do a com a comparison chart of inflation, CPI. You can use PCE, you can use core PCE, correlate that with the S and P 500 or correlate that with the NASDAQ 100. There's good inflation, and then there's bad inflation. The reacceleration that we are seeing right now, if we keep up with the wage growth that we are seeing, and I don't think the wages are sustainable by any stretch of the imagination, but maybe they are. Maybe this is the new regime. If we have those wages growing faster than that inflationary rate, that's positive growth to the market that would complement what's happening in GDP, that would be positive for consumption, that would also then be positive for what? Flows and prices. So that could be the scenario that we are in. Just because we say reinflation doesn't mean that it's like, oh, oh my God, the world's going to end. How inflation happens is a problem though. If we do see reinflation because we still have supply shock issues, like in oil, or if we have something that's going on in, let's say, lean hogs or cattle, And mind you, Texas is having the biggest wildfire in their history. Millions of acres being burned right now. Thousands, hundreds of thousands of livestock, lean hogs, and look at cattle today. I brought that up earlier this week too, Jason, in the spaces too. I know I got laughed off about that. Those type of issues is what bad inflation entails. So I think there is a reason why we are having this price action to the upside here today. We could have inflation reemerge. I don't think that's going to be its so called negative thing. I don't think the market understands the type of reinflation we may see though, and they might interpret it very negatively. And that's where I think there's gonna be equity risk. Jason Kurz [23:20](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1400s): No. I like that. Well said, and I completely am in agreement on that. So let's pull Rich in the conversation because I'm I've been I've I've wanted to talk to Rich for a while just in general, and I've never gotten to. And I've been like, man, I'm so just happy that you're on here because I do watch a lot of the interviews that you're on and the podcast that you're on and stuff. And, just thinking about new traders and we get this question a lot on here. They're always asking about, like, getting to profitability and so on. And I want to ask you, when did you start to understand that, like, you wanted to be a systematic guy? You know, you were that was your kind of style of trading. Richard Brennan [24:06](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1446s): So that was about 2014. I've come off the cusp of trading derivatives. And so my start was in fundamental value that ran for a while, then I got into spread trading on stocks in Australia. Then I got into options trading, and then I got into derivatives trading. And all through that entire it was about three decades, wins and losses, ups and downs, no sustainable progress. So that's when I went back to the drawing board and decided, look. Rather than try and think that I'm smarter than the market, let's look at the validated track record of the fund managers who've persisted over a very long period of time, and let's start standing on the shoulders of giants and looking at what they do and emulating what they do. So that was my sort of moment. That was when I sort of started to adopt the philosophy of a lot of people have been trading this game for a very long period of time, and they're very smart people. And while as smart as we think I think I am, etcetera, you're you're just another one of these participants in the market, a victim in this horrible little game called trading. And so that's that's when I started taking things seriously. And when I did that analysis of the because I wanted this as a career, I wanted this to be a lifetime venture. It was a case of looking at sustainability, sustainable track records and validated track records. So, how how do you validate a track record? So I wouldn't take the hearsay of statement made by people. I'd look at the validated track record, and that tended to be found in fund managers who had to report their monthly returns, etcetera, to investors, so there was a regulatory regulatory obligation to have an audited track record. And that when I started looking at that track record, that's when I started getting a bit of very good information from looking at the, thirty, forty year track record. You know, in that track record, we see the occasional bright spots like Berkshire Hathaway. We see Soros. We might see well, we we can't confirm the medallion track record because that's from a Zuckerberg book, and it's there's no way of validating that record. We do have the Renaissance Fund, which is another very strong performer in the trend following world. And then we've got so we've got these handful of these standouts, and then we've got a cluster of a large number of fund managers with this long term track record, and that cluster centred around trend following. So that's why I then decided, well, these individual standouts, they've obviously got these highly specialised skills, large research divisions at their disposal, a couple of PhDs in their funds or whatever, but there is a class, a large class of fund managers who don't necessarily have that same level of infrastructure but they have been very successful over the long term. So I thought to myself as a as a person with limited capital, that would be the group I'd sort of elect to sort of stand with and see what they do, learn from them, and that's where I got onto the track of trend following. Jason Kurz [27:49](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1669s): No, that's a cool part of the journey. I mean, it's basically what you're just saying is I figured out what worked. Like if we summarize it, I figured out what worked and I tried to stick with what was working. Richard Brennan [28:01](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1681s): Yeah. Yeah. Yeah. In case of because you can spend your entire lifetime going through social media, going on Twitter feeds, going on YouTube, listening to people. You you can't ever attest to the veracity of what they're saying. So you hear all of this stuff, but ultimately, you've gotta test all this stuff yourself. Because if you make the horrible trap of just accepting someone else's opinion, then you can find yourself in deep water very quickly. Panelist [28:32](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1712s): Rich, you you don't think screenshot of a Weebill trade is validation enough to No. I Richard Brennan [28:42](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1722s): don't. Panelist [28:46](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1726s): That's how it's done these days? Screenshot it and then just trust them. Trust them without any other proof. Pavel Kýček [28:54](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1734s): Yeah. What we're talking about is Lambo is enough to tell you through. You don't need to use screenshots already. Jason Kurz [29:01](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1741s): Just Lambo. Gotta show the Lambo, dude. No. Oh, yeah. There you go. What's funny is that I've I've met some some people with the Lambos and the McLarens and all that stuff. And what's funny is they're they're probably broker than anybody would ever believe. Like, it's it's kinda crazy. I the world is just so backwards from what you think it is. Panelist [29:21](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1761s): Credit rich, cash broke. Right? Yep. A lot of people, credit rich, cash broke. Jason Kurz [29:28](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1768s): And Rich is bringing up a good point though, because when new traders start trading, they go online and they see one or two people and they're putting out this trade idea. And they're like, oh, here's this trade idea that I'm gonna put out. And then one of the 50 trades turns into some options trade that's a 10X option trade or something. Then they post that everywhere. Look at how great this trade is. And it's like, I don't even like somebody could show me that as a trader or any of us on here who've done this for a while and we'd just be like, okay, what's your yearly return? I don't care about that. What are you doing per year? And then also like an audited track record is something that's another step up. And if you actually work for a fund, that's the reason why I don't mind sharing things because when you're in the actual fund world, you have to, you don't have a choice. And I think it's also good to actually have people look at your stuff or at least have a friend. Like I find new traders all the time and they won't share the returns with anybody. It's like, you at least need a friend that you share your good times and your bad times with. Like someone that can go through and like see you. Like I have my buddy Keshav came on here recently. Keshav's been my friend for, this has gone on over a decade and he's seen my great periods, my bad periods, like he's been someone who can, he can lean on me when he's going through hard times, I can lean on him. This is normal in trading but you can't do that just looking at your own trades all the time. At some point your own biases will start to come in. Not to mention even as systematic traders, like we still gotta hit the buttons. We still have to see the systems, make sure they're running and they keep the workup whether you're looking at it once a day and running your systems or you're doing it on the weekends, once a day, one day on the weekends, whatever it is, we still have to hit the buttons. So making sure your mental health is right, all of these things, like this is all incredibly important in trading. Richard Brennan [31:28](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=1888s): Staying humble is important as well. Like Exactly. You know? Good job. Everyone who enters this this market believes that I think when you begin trading this market, you think that you're you're here to beat the market. And I think over the years, the experience teaches you, well, you you'll never beat the market because the market is full of very intelligent participants. And it really to me, this market is a scene from natural evolution. You know? It's it's very much like a natural evolution of our our human planet here, and it's the survivors, the cockroaches, that now have have been the most successful over the eons. And, it's the survivors in the trading world because trading is not new. It's been going for hundreds of years. And when you go to the early books, maybe a hundred and fifty years ago, you were hearing a lot of techniques that seem to be the flavor of the month now. You know? Mean reversion was a principle back then. Trend following was a principle back then. The only thing that's changed is the technology we're using to process the data, but a lot of these things have all been tried and tested over hundreds of years. So the best way to get a track record in trading is a fossilised record, and the fossilised record is that of the survivors. Who has survived? Because you'll see that the carnage with ninety percent of traders failing in a couple of years, three years, five years or whatever, and only ten percent surviving, Over this long term track record you see that the successful things float to the top and if you can look at the long term track record you get a lot of clues about what robustness is, what's a sustainable venture, what's dealing with too high a leverage, too high a risk because they're the things that fall out of the fossilised record. They're the things that are extinction events for most traders. But survivors, if you can get those track records, those validated track records of survivorship, they really give you some solid clues about the best way to start this game rather than trying to reinvent the wheel or thinking you're smarter than the market doing it yourself. Jason Kurz [33:50](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2030s): I love that point because that's the thing that I've I run into with traders all the time, which they're trying to always reinvent the wheel. You know, it's trading like, for example, the book that always spoke to me that was my great, great uncle gave me my first copy of it. I actually have a very old copy of it, which is cool, which is reminiscence of a stock operator. And that is a great book and the principles from that book move on to today. You know, I just I just posted one on our newsletter today, which was about the one from Livermore. Never hesitate to tell a man whether I am bullish or bearish, but I do not tell people to buy or sell any particular stock. In a bear market, all stocks go down and in a bull market, they go up. And it's kind of like, his whole idea throughout this book continues to be this trend following idea. Like don't get in the way of trends. All of these stocks kind of rise to this top at the same time. It's kind of constant throughout his entire book. And I always love that because that's as old as it gets. That's very old principles. Sure, trend models if I back test going back to the 1910s, 30s and so on, I'm running into like very short term trend models working but also the long term ones work. But if we get to this day and age, the very short term, like the Donchian twenty day high, twenty day low models and stuff, those don't work at all today, but they used to work back then. So it's kind of the same idea, but may or more maybe more long term models, maybe the models have changed a little bit, but that's about it. The the general idea of trends, they still work. Richard Brennan [35:35](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2135s): Trends tend to lead to what I call extinction level events. For those who are not sort of trading in the direction of the trend, there will be certain moments in their life where that causes the cataclysm for them, an extinction level event, or you can exploit them. You can exploit them, or you can be the, know, adverse sort of victim from them because they're such enduring features that can really wipe out a trader's account if they're either overleveraged and against that trend. So they're they're pretty wicked features, especially the big ones. So, yeah, they're they're they're sort of emanating from these tail properties of the market distribution of returns. And when you get into those tails, that's where a lot of traders come undone because it starts to get fairly chaotic, damages their predictive models, and throws them out of the game. Andrew Swanscott [36:33](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2193s): Yeah. Rich, if you if if you think about some of those macro factors that Kevin was speaking about a couple of minutes ago, we've got this trend following performance results from a long period of time. What do you think the place is in incorporating macro type of factors into long term trend following? Is there a place there? I imagine we could probably go back and say this period of time was high inflation. What happened in trend following, hedge funds and CTAs and things back then? Richard Brennan [37:08](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2228s): Mhmm. I think that when when you look at what's correlated to trend following, you tend to find that uncertainty is correlated with trend following. So predictability is negatively correlated to trend following. So when we look at the regimes that we've had over the last thirty years, a classic decade of poor performance was post GFC from about 2010 up to about 2020. That's that's where we had, the quantitative easing going on, masses, trillions of amounts of money coming into the system, and we had high frequency trading emerge because it was a very what what the central banks were doing was suppressing volatility as much as they could with this incredible amount of quantitative easing. So, of course, trends were very subdued, and that's exactly what the central banks wanted over that period. So trend followers suffered with building drawdowns. And, they're always cutting losses short, but if you're continually getting whipsawed with our trend following models, the drawdowns do build slowly, albeit slowly, but it's a painful period. And and it was lackluster returns. But in 2014, that was a I think energy prices or something was the thing that lifted our returns in 2014. But the balance of the decade was not wonderful for trend following, And that's what I call a highly predictable regime, a predictable regime that mean reverting models, etcetera, exploited. So it was very predictable in nature with this selling the tops, buying the dips by central banks that was occurring, creating this oscillating cycle that was exploited by mean reversion and trend following failed. But then when once quantitative easing flipped to quantitative tightening in 2020, suddenly we got the rubber band breaking, buying, and we got these massive trends emerging 2021, '22. '23 was a year of breakeven and so everyone was thinking, ah, the trend followers have had their day back in, you twenty twenty one twenty two and so it's gonna be a subdued year this year. But suddenly we find January and February giving us magnificent returns in a lot of commodities particularly. Cocoa, Bitcoin has been a great bullish move for those trading Bitcoin in their diversified portfolios. The Nikkei, the pound yen, really great. Soybeans short. Lot lots of things are sort of moving, and it's it's associated, I think, with this level of unpredictability in the market. So I tend to I'm very interested in macro. I love macro. Don't get me wrong. But I'm listening to macro from very much a hindsight perspective only, trying to understand what's happened. I don't use macro as a basis to forecast because there are so many conditional events that I view these trends emerging from what I call endogenous factors within the market itself, not necessarily news events, not necessarily exogenous factors coming from outside in. Most of the movement I'm seeing in the mechanics of the market tends to be what I call internally driven. Things such as behavioural biases etcetera are coming from internal market sources, what your friends are doing, what your neighbours are doing. All of those collective impacts of participants, how they all interact together makes price mechanics move. Yes. News events do affect things, but not to the to the level that the old efficient markets hypothesis assumed, a far lower degree. So I tend to see these these markets as displaying what I call these chaotic properties. Most of the time they might be predictable but some of the time they're incredibly unpredictable. So I see it as these complex adaptive systems that are slowly moving forward and we get these major transition events that are separating periods of stability, then we get a major transition event as it adjusts to a new equilibrium level then a new regime develops then a transition event, a new regime develops. So as a trend follower we say the term history might rhyme but it never repeats, just going forward with this sort of adaptive system that's non stationary and continually moving forward, bringing new opportunities to exploit and new risks that have never been seen before in a backtest. Jason Kurz [41:54](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2514s): I literally feel like I've just got a class on trend following right there. Sorry, can I say it? No, that was great. No, that was great. That's perfect because honestly, this is the type of stuff that like, it's funny, Andrew actually quoted you, correlates with trend following. I actually went over and wrote it down on my wall so I can see that everything because it's the truth because, and I think it's something that you need to understand because it's like we were talking about earlier, the NASDAQ trade. When you have that NASDAQ trade, you have the signals, you're in a world of uncertainty. And that's the signal that becomes one of your biggest winners of the year. Same with something like Bitcoin around that time. If you're running into Bitcoin and you really like understand the fundamentals behind it, it's a very risk on asset, it's to do with a lot of liquidity. If you just understand those basics things and you just listen to that and tuned out the fact that the price was giving signals, you would have never caught that trade either. So it's like really that simple thing right there, uncertainty correlates with trend following is like spot on. Bravo, good job. I hope everybody listened to that because that's the, I think it's the honestly the biggest thing that as a new trader, you have to let go of as a trader and get to that next level, which is you have to let go of that fact that you think you know everything. I'm in a program and we always talk about like, you get to a certain point and you think you know some shit. And really it's like the same thing with trading, like you learn enough to be dangerous at a certain point. You think you know things. And really it's like, you have to sometimes take the signals and they're not going to make any sense to you and that's totally okay. It's the same thing like Kevin was talking about earlier with like maybe inflation, like I can't know for certain that yields can't go up with tech. This was the case last year, everybody said, Hey, there's no way yields can continue to go higher as tech is just raging. And it's like, well, they did. It did happen. All the correlations always change. Things can always change. So it's like really that point that you brought up, like that's everything. So thank you for saying that. I think people also forget too, Panelist [44:22](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2662s): right? Artificial intelligence is a secular growth story. Secular growth stories don't care about any of the other stuff. It's gonna do what it's gonna do. Is literally ramping. You could have atomic bombs falling last year at the end of the year, and Nvidia would have still ramped because people are like, Hey, artificial intelligence is gonna be a huge thing. Generative AI is gonna be a huge thing. It could care less about whatever the macro is. It could care less about any of that stuff. It's gonna do what it's gonna do. So that's another tailwind for this market that I think people try to attribute so much other things to this trend, the trend right now. And I think right now in this current moment, the AI theme is kinda like a relay race. Right? The AI theme was the thing that got us around the first, let's say, two laps of a four lap race. Now we're seeing the baton being handed off. We don't really need it now as much as we did eight months ago, nine months ago. Look at industrials. Industrials performing in the environment that we are seeing right now, very strong, relative strength right there. Materials, really strong, relative strength. Healthcare, really strong, relative strength. Small cap healthcare, small cap biopharma, let me say that. Small cap biopharma and med tech. Can now they can do what they have to do right now. There's enough investors that are comfortable enough to put dollars to work and put money at risk here. But when we talk about some of these boom bust cycles, we also have to think about in the past, market just doesn't go up without any catalyst or story. There's usually something that correlates with that, right? You have the nineties internet boom bust cycle, quote unquote boom bust. It wasn't really a It was a bust in equity prices, but the secular story of the Internet continues to live on till this day. AI looks like it's gonna be doing the same thing. We had the housing crisis. Right? Boom bust is still growing at a fairly rapid rapid pace right now on a relative basis. And I think you have the crypto situation too. I mean, that was a secular trend during COVID. Right? Everybody was like, oh, yeah. We got this shiny new object. Bitcoin mining operations, and I'll get off my soapbox here. Who here on this panel did not think to themselves, I should mine Bitcoin in my basement or at my house? Remember those days when people were spinning up and getting whatever anything that they could get their hands on, gaming units, you can go to micro center and you can just buy gaming units and just start mining Bitcoin, earn passive income while also working your day job. Remember that stuff? I looked into that. All of that stuff was a huge trend, huge hardware spend. A lot of people spend massive amounts of money. And honestly, that's where NVIDIA got put on the map. No one even remembers. That was what put Nvidia on the map. It wasn't GPUs. They were the only ones that actually had the resources and supply out there to be able to create these, crypto mining networks. And then that just fueled the whole rally. And at the end of the day, that technology died off really quickly because new technology came on board, right? We had GLUTs. But at that time, equities didn't need anything else. It was kinda like that spark to light the fire. It just got hot enough where other things could catch fire. I think that's where we're at right now. And I would not be surprised if tech doesn't lead us this year. Right? If it's doing really great right now, I wouldn't be surprised if it doesn't. It's gonna probably have decent returns, but we don't really Apple is about to fundamentally breaking down right now. If you you've I haven't seen a two month correlation of between the S and P five hundred and Apple in a price manner like this. Like, I say ever, mainstream ever, right? Let's say last twenty years, look at a chart. Whitest divergence that you've ever seen between those two stocks. The market continues to rally. So I think that's where we're at right now. I think we're getting the baton has been handed off. I don't think it's all about AI. NVIDIA could stay at 800 and we could continue to see markets make new highs on a relative basis in my opinion. Until something changes Jason Kurz [49:02](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=2942s): and until the market cares about the stuff that changes. I think we can You you also brought up something in the middle of that I was like, holy crap. I totally forgot about some of that stuff. And I'm sure everybody has a story. I'm sure Pavel probably has a story about that too. But I had a friend and this goes back to 2012. I have a friend, it's actually my fiance's friend too. So it was my fiance's friend's husband. And so he comes up to me and goes, Hey, I know you trade, I know you know about Bitcoin, I'm gonna start mining it. And I said, well, I had a friend also before that who told me something that was a little bit smarter at the time, which was, why don't you just buy some? Like it might be a better idea to just buy it. And I was like, oh, maybe I'll just do that, which I did. And I'm thankful that I had a friend who said something like that to me. But so I tried to say the same thing to him. I said, you you might be better off just buying some. And he was like, no. And I said, well, know, with the mining costs and the friend I was talking to told me not to do that was like, basically you could buy every the GPUs, you could buy everything to do this and they will be out of date so quickly your head will spin. And you have to buy more and like the amount of money and not to mention the electricity you're running. So he ends up renting a place in a building, buys all the equipment, everything spends about like, and it's actually his family's money which is the sad part of it. He borrows money from his family to the tune of like a couple $100,000 and he has this building and he's mining and he makes nothing. And basically to the point where like he lost a ton of money, like his family got screwed out of their retirement or something. Like it's a nasty story but it's true. Like that's really the times we're living in at that point. So it's it's a good thing to remember because that literally kind of says everything that needs to be said about some of these things when you see these trends and cycles. And I think it's, I always liked that book, The Tipping Point by Malcolm Gladwell. He talks about trends and cycles in there a bit. When you're really kind of at that point where things just start tipping over and then it becomes this massive trend, you can't really predict that. You can get an understanding of the psychology behind it, but once again, like nothing's better at telling you the psychology. Nothing's better than telling you the actual psychology behind it than the actual price action itself. So that's why I really look at the charts to really figure out when I'm gonna enter and exit something because that's really so super important. Pavel Kýček [51:40](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3100s): Yeah. I like the story about Bitcoin because it reminds me the type of stories of like mortgage your house to buy more Bitcoin? But what I like about it and I like it a lot because it's some kind of expression in which state still crypto is. And that's why it is so interesting because it's driven by emotions a lot by far by much more than any other asset you can trade, and that's why there are such a huge trends and inefficiencies. You just won't find it anywhere else. And this is the main reason why I'm trying to trade it as much as possible to tell you through. If there wouldn't be so many added risks compared to any other asset, I would allocate almost all of my capital here because there is nothing nothing that can compare with crypto these days in terms of in terms of possible possible profits and performance. Panelist [52:42](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3162s): Yeah. We'll see. I mean, look. It's it's having a really nice run right now. I think from technical standpoint, I'm I'm a little concerned. Right? You're kinda getting I'm just saying technically. Right? Kinda getting to that bay that peak. So, like, you wanna break out through that with some pretty large volume. I think that would be good thing. Two things real quick, and then I do have to jump. Going back to the mining rigs, because I'm kinda laughing right now. I was looking at one, when this whole thing whole thing happened. They were going for, 15, like, $18. Right? And if you think about it, like, two of those mining rigs equate to one of the GPUs that NVIDIA has right now, which is crazy because of the compute power. You know? Like, just how much the compute power has also increased exponentially over time is remarkable. But, hey, guys. I had to jump. It's always a pleasure. Thank you guys for having me on. And and, Rich, really nice meeting you, man. You guys have you guys have some really good insights. Wrote a couple of those things down as well, and looking forward to maybe joining you again for another little powwow, if you will. So Yeah. Thanks, Kevin. Thanks for coming on, Kevin. Appreciate y'all. Have a good one. Have a good weekend. Andrew Swanscott [53:53](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3233s): You too. Have a good one. You too. Now I just want to jump back to a question. Oh, Kevin, are you still there? Yeah. Hey. How can people get in touch with you or or learn more from you? Do wanna you give a shout out to your Twitter or something? Or Yeah. If you wanna follow me on Twitter, I'm at KG Bull and Bear. Panelist [54:14](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3254s): So you can follow me there. Also, I'm on LinkedIn too, and I actually write maybe an article a week for right now on my LinkedIn, so you can follow me there. It's just Kevin Green. And and, usually, if you put Kevin Green LinkedIn, I'm I think I'm the first one that comes up, first or second that comes up. So, yeah, I appreciate that and definitely would love to follow. Actually, I think I'm only, like, five away from being at 5,000 followers on Twitter. I'm hitting the big time, guys. Andrew Swanscott [54:40](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3280s): Big time. Come on, everyone. Let's hope you can get across 13 the away. Right now. 13. There you go. Jason Kurz [54:46](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3286s): Let's keep going. We can do it. It. You all have a good Thanks, Kevin. Have a good one. See you. Andrew Swanscott [54:54](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3294s): So I just want to jump back to a question in the chat here because it's part of Rich's mic drop moment today about uncertainty correlates with trend following. So let me put this question up on the screen from Let's Get Philosophical. How is uncertainty measured in this context? Richard Brennan [55:13](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3313s): So the way we'd look at this is we we'd look at a histogram of the market distribution of returns. And so let's let's say we're taking daily returns over a thirty year, fifty year period. We plot those daily returns as far as at and in a histogram with frequency and the daily return on the bottom. And we'll measure that in either dollar terms or we might measure it in terms of r, which is VanTarp's r, which is the distance from the entry to the stop of your trading system. What what we do with the market distribution of returns is we'd say, how does the market distribution of returns plot in that histogram? And what you find over very long term data sets is that it plots with what they call a leptokurtic distribution. So it's not what you call a bell curve distribution, which is a normally distributed distribution. It tends to have fat tails at either side, left and right side of the market distribution of returns, and it's got a peak around the median of that distribution. When you look at the distinction between uncertainty and certainty, you're looking at the distinction between predictability and unpredictability. When you're looking at where the market distribution of returns plots, when you're looking at the tail regions, you're looking at a zone which is unpredictable. So if we look at the number of participants in a market that are trading the market, they impact trading behavior. The impact of their buying and selling decisions is and the quantum of that amount actually is what is responsible for moving price. You might have these ancillary reasons for them to do that, like inflation, interest rates, fundamentals, all of these things are the reasons why they're gonna take that trade. But, fundamentally, what makes price move is when they come together in the marketplace, the buy and sell decision occurs with their trading models that they're applying, and that exerts a pressure on the market mechanics. It exerts a pressure which moves price either up or down. So when you're looking at the distribution of returns of the market, you're actually looking at the mechanics of market participants. When you're looking at where most participants are extracting their edge in the market, you'll realize that they're extracting their edge from propositions or trading strategies that are assuming a predictive stance. They're assuming a repeatable occurrence, and they're looking for the greatest frequency of that occurrence because that's what's giving them the edge. So a mean reverting system is looking for the propensity of price to revert to its mean. A fundamental investor is looking at the propensity of price to move from where it is currently to the intrinsic value, which is what they've calculated is the fair value of that market price. So all of those types of strategies plot around the mean, and that's what gives this big peak at the top of the leptokurtic distribution. Now anything outside that bell curve, which is a normal distribution, is an arbitrage opportunity. So the opportunities around the peak of the distribution around the mean is where most traders are extracting their edge. And then most traders who have a model that has a using a back test, they've identified the most frequent pattern, the most frequent occurrence. That's why it's sitting around the peak of the distribution, high frequency, around the mean of the distribution. They're extracting their edge with models that are what we call convergent in nature, Converging to something, converging to an intrinsic level, converging to a mean. However, at the tails of the distribution, the left and right tails, we've got where divergent players trade. And they are people that assume that price won't revert to a mean or an intrinsic value. Price will diverge away from that mean or intrinsic value. That's why you see them on the left and right tails of the distribution because the price movement is extreme away from the mean of that distribution. So when you're looking at convergent models, which is based on a predictive modeling philosophy, most traders focus their opportunities around that area. And there is an edge to be exploited there, but it's an incredibly competitive landscape. That's where Jim Simons, all of these people, Two Sigma, they're extracting their edge from their heavy duty, high-tech systems, quant research that is exploiting opportunities around convergence. But where you find trend followers extracting their opportunity and also some option traders, etcetera, they're extracting it from diverging opportunities. And when you're looking at the balance of participants in the market, the vast majority of market participants are what we call convergent traders. Only about 10% in the landscape of trading and investing are what we call divergent players because it's a very difficult game, psychologically very hard to play diversified trend following. So because there's this imbalance, 9010%, we find that the predominant regimes when when you get a regime that has a predictable occurrence, algorithms are continually identifying those opportunities because they are highly frequent. They're sitting around the mean, and they're exploiting that opportunity, and they quickly latch on to them. When get all of these competing players in the convergent landscape coming together with their different models, that is actually eating the alpha or eating the arbitrage from that convergent premise, that predictable oscillation. And it basically destroys that predictability over the course of time. That's what we call eating the arbitrage or eating the alpha from that opportunity. The first players into it get it first, and then it decays. With regards to tales of the distribution Jason Kurz [1:01:37](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3697s): yep. I gotta hop. I just wanted to say, like, before I hop, it's it's really great talking to you, Rich. I absolutely like, I asked Andrew already. I was like, I gotta get him on my show. I'd love to chat with you more. I just have something going on tonight, so I have to get going. But, man, it was great to meet with you. I thank you so much for coming on. This was really enlightening for me as well, man. Pleasure, Jace. And guys, just tell me to shut up if I'm talking too much. No. You're not talking too much. I just gotta go. I would love to continue this conversation, but I just have to leave. Right. It's so good to meet you. Andrew, Pavel, thanks. Thanks for coming on. Great to see you guys, and we'll talk soon. And Rich could keep going, if you guys have the time, please. Andrew Swanscott [1:02:23](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3743s): No worries. Catch a replay, Jason. Okay. Alright, Jason Kurz [1:02:27](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3747s): guys. I'll see you. Catch you. Alright. Richard Brennan [1:02:30](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3750s): So so what you what you find, the edge in the convergent landscape is continuously eaten. The first to the opportunity, extract that opportunity, and then as new new more and more participants get into that opportunity, their impacts reduce that signal over the course of time and the opportunity dissipates. But in trend following world, in our trails, increased participation in trends actually is what we call a positive feedback, and it exacerbates the trends. And so as more and more participants start jumping onto trends, it actually makes the serial correlation extend further and further because they're all trading in the same directional way. They're all contributing to the signal. So what you find is when we start getting into market crisis or when markets become very uncertain and these predictive modelers start finding that their models no longer work, they start becoming trend followers through their actions. They start they either start averaging down to try and avoid the calamity or the when they're getting squeezed with these massive trends. And what that averaging down does, it just increases their leverage. But, ultimately, the decision is they've got to get out of that position with a significant negative skew event or a major loss. And what happens as soon as they get out of that, their trade action in getting out of that actually accentuates that trend further. So you start getting these capitulation tails, which just keep on going, keep on going. So it's a nasty world. In our trend following world, it's it's where people get eaten alive who are sitting against our trade. So but the people that are exploiting that opportunity tend to do well, and that is in a very unpredictable environment simply because the predictive models are breaking down. So I measure this by what degree of tail is in that market distribution to identify the level of predictability that market might possess. Yeah. Pavel Kýček [1:04:40](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3880s): I love this explanation. I also love this logic on trading trend strategies, but also mean reversion strategies to tell you through. I like putting them together into portfolio. But what you thought about edge being arbitraged out and so on, I think that if I assume that arbitraging the edge out of the market or of the strategy means that basically performance is getting lower and lower on strategy level, let's say. Sometimes I hear that it doesn't happen to trend the following strategies basically. But I don't disagree with this one because on performance level, if I go and I love going over very old approaches or very, very old basic strategy models. And you can see this edge that is getting a little bit smaller, and it doesn't matter if it is mini version strat or trend following strat. So that's why for example, good example was this Don Quijan strategy. Twenty days moving twenty days Donkeyan strategy was working nicely on stocks, on commodities. I don't know how it's working now. Probably not that good. Higher time frame or higher periods or higher parameters are working better. And I can see, for example, that it is working nicely on crypto, for example, because it's a major market and it's quicker, more inefficiencies and so on. And what I can see is that this edge decay is basically almost the same, maybe a little bit slower on basic trend following strategies as on miner version strategies, probably. Or do you have any other other comment to it? Look. The Richard Brennan [1:06:37](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=3997s): way the way I view it is if you've got strategies that are developed that are competing against each other, In other words, things that are uncorrelated with each other, lots of different strategies, all uncorrelated, but extracting aspects of the predictable opportunity. It's these offsetting pressures from all of these different types of trading strategies that is sucking out a bit of that arbitrage. So what it's causing is it's causing what we call destructive interference of the signal because each trader and their behavioral impact is impacting it in different directions, different ways. And when you're you're looking at I this is my my viewpoint. When you're looking at opportunities around predictive signals, that's what we find. We find a lot of different types of traders and behaviors and systems being deployed to extract opportunities from the predictable nature of the market, and they are creating what a negative feedback loop of dissipation because they're constructively interfering with each other. But when you get signals that are unidirectional in nature, there's only one way to An uptrend is an uptrend. A downtrend is a downtrend. When you're in an uptrend, you will find that if predictive modellers who are waiting to be in revert, for instance, on that trend, what they're doing, they're applying a negative pressure to that trend. That directional trend is only being amplified by trend followers or those who want that price to continue to go up, let's say we're long. When the mean reverters start attacking that trend, assuming it's coming down, so they'll start placing their positions to come down. They will start interfering with that trend and create, you know these up and downs, up and downs of that trend. Yeah. And if the trend is strong enough with a serial correlation, it will continue on provided that the balance of people attacking that trend are are basically doing the same thing. When they start interfering with that trend and the dominant participants start interfering with that trend, the trend ends. But what we find is that as these trends get more and more material in nature, the convergent trader or the predictive trader finds that their models, they're getting squeezed. Yeah. So when when the in early trends, trends trends the one that's significant enduring trends like cocoa, Bitcoin, that sort of stuff, tends to be associated with this endurance associated with the fact that there has been minimal negative deterioration of that trend because of negative behavioral impacts impacting that trend. And it's been a dominant participation towards that trending behavior. Then when people on the other side of that trade, when they start getting squeezed to death, that's when the trend actually starts extending their direction. And the momentum actually increases. So you tend to think of a trend it should slow down, but it actually doesn't do that. It starts when it starts getting more extreme, the value of turns start getting bigger and bigger and bigger because what these call these capitulation tales. As these people that wanted to mean revert, they're failing and they're having to take to exit out of that position or under leverage. They're accentuating it. They're accentuating it. So there will be a time, of course, when a trend ends. But I think in the development and enduring nature of a trend, that is what I call a positive feedback loop. But when you start getting trend deterioration and ending, it's over. That's because the dominant pressure from participants has done that. So, yeah, no, I see where you're coming from, Pav. But I just object to people saying that trend following can be there can be a lot of people say, oh, there's too many players in trend following, so the trends no longer work. I actually think the other way and think if there are too many people trend following, trends will work even better. Andrew Swanscott [1:11:01](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4261s): That's a good way to think of it. Yeah. Yeah. Or there would be more bubbles. Pavel Kýček [1:11:06](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4266s): Yes. But I know what you mean. Good explanation. Andrew Swanscott [1:11:13](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4273s): That's a good discussion. Unfortunately, I've also got a bail in a couple of minutes because it's my son's soccer practice soon. So we'll have to wrap this one up for today. But we've been getting some great feedback in the chat. So how about Pavel, do you want to let people know how they can contact you? Pavel Kýček [1:11:34](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4294s): Yeah. Of course. Follow me on Twitter at pkycek or p k y c e k or at robaxio.com. We have also quite a few blog posts there about trending and robustness testing and so on. So if you'd be interested, just just read or ask anything what is interesting for you. Thank you for having me here. Yeah. Thank you. And, Rich, how can people Richard Brennan [1:12:02](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4322s): find you? Where are you hiding? You can get me on Twitter at rich b one one eight, or you can get me on LinkedIn at Richard Brennan, or you can get me on the algorithmic advantage podcast, or you can get me on atstradingsolutions.com, which is the website for retail traders wanting to pick up these techniques. Andrew Swanscott [1:12:24](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4344s): Yep. All right. Well, I'll make sure we have all those links in the description of this video. So if people are driving or something, they can come back and find that. Now I just want to share some of the comments in the chat just to finish up. We've had a lot of good comments here. So I'm just scrolling up a little bit. So this is earlier on. Antonio was encouraging us to keep going. We're dropping jewels. Keep going. Crypto Nick had some good comments in the chat today. Thanks Nick. Rich, truly fascinating. Let's get philosophical said I'm listening. And then also a thanks a little bit later. Whereas this one, let's get philosophical. Thank you, Rich for the answer earlier. And then we've got a nice comment from Pages. Thanks Pages. Thanks so much for this guys. Means a lot to me. And then here we go. Another one from CryptoNick. Thanks Andrew, Pavel and Rich. Enjoyed it very much. So great show today. Thank you everyone for joining us and the comments and the questions in the chat. And, oh, actually, I just forgot that there's a little we're gonna be changing the show a little bit. We're switching the day and time next week to see if it's a little bit more favorable for our guests and the audience. So we're going to be on at Wednesday, 2PM Eastern Standard Time next week. So that's Wednesday, 2PM Eastern Standard Time, which for the Aussie folks is 6AM on Thursday if you're at my time or 5AM if you're rich. Yep. In Brisbane. So so, yeah, we're gonna try that for a couple weeks and see if the new day and time makes it a little bit easier for people. So we'll catch you at 2PM eastern on Wednesday. Any final thoughts guys before we go? Richard Brennan [1:14:13](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4453s): No, it was lovely seeing you guys and thanks very much. Andrew Swanscott [1:14:18](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4458s): Thanks Rich for It joining was a pleasure and Pavel always a pleasure. So thank you. Enjoy your weekends. Cheers. Enjoy. Jason Kurz [1:14:27](https://www.youtube.com/watch?v=S3n_TXpTUzc&t=4467s): Cheers. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 4 Better System Trader · The Trading Panel · Episode #4 # Price action, market tops and bottoms Mish Schneider · in conversation with Andrew Swanscott March 7, 2024 · 50 min listen · 37 min read Episode 4 of Better System Trader's Trading Panel — MarketGauge's Mish Schneider joins host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček for a discussion on reading price action, spotting market tops and bottoms, and blending discretionary feel with systematic discipline. Listen on [YouTube ↗](https://www.youtube.com/watch?v=fDR-uX6tGjY) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 How an experienced discretionary trader reads tops and bottoms in real time. - 02 Where price action and systematic rules complement — and contradict — each other. - 03 Pavel's systematic counterpoint: why he removes the discretionary call entirely. - 04 What new traders most often get wrong about timing the market. Full transcript ## The conversation 50 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:00](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=0s): Panel, the show where we talk about all things market, all things trading with traders from different backgrounds, different levels of experience so that we can get different opinions, I guess. So, welcome to the show. Today, we have Pavel, Jason, and Mesh. Jason, do you wanna get started? Jason Kurz [0:17](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=17s): Yeah, no, I'm super excited to have Mish with us today. He's a good friend of mine. We've known each other for many years and no one's really better to understand the economic landscape that we're living in today. Basically, Mish has a really great way of kind of The one thing I think Mish has a major edge doing is she can really see the future in a way. Mish can kind of understand like through using price action, using the charts, looking at what's going on in the world and kind of have a general direction on where she sees the market going and how she should be positioned in it. I think that's a very interesting quality that not many people have. So I'm excited to have Mish on today. Other than that, Mish is just a great person, love her to death. How are you today, Mish? I'm great. And I get all my visions from these two guys behind me here. So as you can see, I'm I'm flanked. Mish Schneider [1:12](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=72s): Flanked by canines. Jason Kurz [1:15](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=75s): Sometimes they have to take a break. Have a dog. I remember one time I had a friend over and he was asking me to learn how to trade. And I was like, oh, yeah, I actually learn everything from my dog. He had no idea. He was a younger guy. He was like, what? I was like, yeah, yes, Professor Cupp. Like my dog's name is Teacup. And so I'd be like, yes, Professor Cupp. And I was like, you have to call her Professor Cupp. And he looked at me like I was insane. And then he was like, okay, Professor Cupp. I was like, yeah, that's her name. And after that, I started busting up laughing. I couldn't keep it going anymore. Well, Mish Schneider [1:47](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=107s): yeah. I mean, when somebody starts talking about how they hear things from their dog, I have to think of Son of Sam. I'm old enough to remember that. Jason Kurz [2:01](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=121s): Today's just basic general discussion, nothing really off the cuff. We're just kinda trying to see and understand different strategies in trading. And, like we said earlier, Mish, where do you where exactly do you start as a trader when you're looking at these markets? Mish Schneider [2:18](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=138s): Yeah. That's a that's a common question. And it's a very interesting one because people start at different points and then often wind up having to work backwards in order to fill in the gaps that they think they will be able to avoid because it's so easy. And as we know, it's not so easy. It looks easier lately, but it hasn't always been easy. And clearly, it's not most of the time. I was fortunate because I got started at the beginning in futures in commodities on the New York Commodities Exchanges back in the day during the most exciting period of commodities. So I had to learn from really the bottom up. And so when people ask me that question, I try to think, okay, so what was my progression? Right? So the first thing I had to learn was why? why in the case of futures is it important to understand what sugar is doing or gold or crude oil or copper or orange juice? So there was a fundamental component to it. But what you learn very quickly is that the fundamental component, especially back then when there was no social media, is only a part of it. Really what makes a trader a trader is to understand maybe a bias based on some kind of fundamental, which of course can change on a dime, but really what happens technically makes it most important. So again, second part was I had to learn how to look at charts. And for me, it was it was sort of a necessity because the guys in the pits were running huge orders. I was working for Conti, so I didn't have huge orders, but I had some orders. But they also had a physical bravado that I didn't have, and they had a voice that could carry that I didn't have. And so I learned how to point and figure chart. So this first step was, okay, why am I paying attention to, let's say, sugar? Then the second step was, okay, now that I know why I should be paying attention, there's a lot of liquidity, there's a lot of momentum. What price breaks I need to look at a chart. And then I went from a very kind of point of figure active intraday trading chart to then starting to look at weekly charts, which of course the next thing was understanding chart patterns. And that's kind of where I evolved from is not only that, but then you had to know when you were wrong. So I automatically learned about risk. And then you had to have some comfort in as a trader in taking profits, so you start to learn how to take profits. And that's really, I think, very simple way to get started, and then you can adjust it accordingly. I mean, obviously, we've been in the business now forty years, so we're very rules based, but that's the beginnings. Jason Kurz [5:00](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=300s): No, I love that. Also, your lessons, and we did a video that I thought was just so cool, is lessons on a floor trader. You trading and really cutting your teeth on the floor. It's funny I said cutting your teeth because that's a term you use all the time. But you really getting on the floor and understanding the price action in a way that most people don't understand. And I think I've learned from you and other floor traders over the years, the importance of really seeing the price action, but also when you're seeing the price action, understanding that's actually people behind the price action. So I'm wondering, I guess it's a question I've never asked. When you were on the floor and you were doing that, what was a time where like an moment for you when you're on the floor as a trader and you kind of were like, oh, yeah, that kind of makes sense now. This is really just behavior and then I can see it in the price action. Mish Schneider [6:00](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=360s): Well yeah. And it's funny because you mentioned behavior because I actually did a webinar talking about our quant models and the basis of them. And some of it, of course, is behavioral because all of us were from the floor, Keith and Jeff. And so I guess my moment for me was when you start to see the alignment of liquidity in terms of order flow, momentum in terms of when momentum would kick in. That moment was almost like if you encapsulated in time standing still, you could see the switch between, oh, momentum is about to increase to, okay, it is now climaxed and momentum is fading. And if so, you put that together with seeing the liquidity as order flow comes in, and that's the advantage of being on the floor is that you're not looking at a screen. You're seeing you're seeing it, you're hearing it, you're feeling it, you're smelling it, you're tasting it sometimes. And so and so that you put that all together is that momentum when it starts to go, the liquidity and the order flow starts to come in. And then you put that all together with some kind of a repeatable chart pattern based on what I was doing. And those were the moments that's when you strike. That's when you go in. That's when you go in full guns. And I think my disadvantage because I couldn't always get in there when things were going nuts, I'd have to throw orders into the ring was that I never really fully realized myself in that discovery until actually I left the floor. I became a much better trader after I left the floor because I wasn't so swayed by the behavior because that herd mentality sets in and I became a longer term trader. And when the momentum stopped, didn't necessarily mean it was the end of the trade. It just meant, okay, we were gonna have some kind of a normal correction or price consolidation. So I think I hope that answers your question. Jason Kurz [7:57](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=477s): No, that's perfect. Because it's really, when you combine all those things together, because I'll talk to people, fundamental people per se. If you talk to them about the charts, they think of it like voodoo, anything that's price action based, whether it's systematically looking at breakouts or whether it's just classical chart patterns. They think of it like it's voodoo and it's watching these magical levels. And the only thing that makes sense to them is that these levels make sense because other people watch them. And the thing that kind of blows my mind about is there's just so much more to it than that. There is a simple fact of yes, there are people who watch them but at the same time, we're also watching these ranges. We're watching interest points. We're also watching, when you're watching low volatility and breakouts, that also changes the game to the point where, okay, low volatility usually leads to high volatility. This is how we catch trends. So all of these things kind of go together and I think it's like incredibly interesting to just have that experience on the floor because most people now, they don't know what that's about. My great grand uncle was on the floor for a little while, he would talk about it And then you talking about it so much and breaking it down. Because really like, you talk to most of the floor traders, they don't really have a way of breaking it down like you do. So I think it's good experience for people to come on here and just kind of understand it a little bit more. Mish Schneider [9:25](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=565s): Because I don't we don't do By the way, fundamental trading. I mean, unless you're Nancy Pelosi and don't need a chart because you have inside information. Yeah. I don't know how anybody successfully trades without an understanding of price. Jason Kurz [9:39](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=579s): Yes. Price is the most important thing. And I think everybody on here, I have met Quanta at the same time who say that they don't look at the charts or read the charts. No matter what you're getting your price action from something, whether you're not looking at the charts exactly or whatever, it's still the charts. We're all price action based traders. And I think even the people I've seen who are extreme fundamental people when I've worked at funds and they talk about fundamentals, they still have charts up. They still are looking at levels where they're gonna buy. I've never seen somebody be completely just, hey. I'm I'm not even gonna look at the chart or the price. I'm just gonna look at the fundamentals. I'm just gonna buy. I've just never seen it. So I think it's incredibly kind of interesting to just chat about that stuff. Mish Schneider [10:24](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=624s): Yeah. Well, being closed minded is not a good thing for any trader. Jason Kurz [10:28](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=628s): Yes. Yes. So Andrew, did you have one for today? Was that what I thought you'd bring up for a sec? Yeah. Sorry. I was just getting somebody prepared on the screen here Andrew Swanscott [10:39](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=639s): that Pavel shared with me. I think it was yesterday because we're talking about price and Pavel Kýček [10:46](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=646s): let me For just go you, it was yesterday. For me, it was after lunch. Okay. Yeah. Was last night. Yeah. Andrew Swanscott [10:53](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=653s): I'm just gonna put this on the screen. This is really interesting. Excuse me. I got a cough this morning. Sorry about that. Pavel Kýček [11:00](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=660s): So, actually, Pavel, do you wanna talk about this? Wow. Yeah. Well, I shared it with you because I'm going over a lot of chats and tweets about Kokoa and Nvidia and how it is trending and so on. And guys, that I'm talking about crypto a lot because I'm trying to open some some eyes for other, like, traditional finance traders and investors because, for traders, what I think it is also connected with price, the volatility and trendiness of the market in general is what give us advantage in trading, I would say. And in crypto, I still can't believe how many people are close minded as as Mitch used this this word because you can see some coin, I don't know them. You know? Maybe information I mean, crypto for volatility and trendiness. That's it. I don't know much about individual crypto coins. I just love how they are moving, how inefficient crypto is, and that's why we are trading it algorithmically in Robux sale. But I was sending it to Andrew because of some comparison with these traditional assets like Nvidia, Kokua. Then you can see some with USDT, which I don't know at all, but it did like over 1,000 starting 2024 and some other assets. Of course, the liquidity is not that big, but we are still talking in over dozens of mills a day. So it is pretty well tradable for any retail trader and even for smaller hedge funds. That's why that's why I'm talking about it that much because I can see even on our results that you cannot compare crypto to anything else and other traditional assets from, I would say, volatility and inefficiency point of view. Mish Schneider [13:01](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=781s): Absolutely. In fact, that's why I love them because they sort of remind me of the heyday of commodities. It trades like a commodity. I love it. Pavel Kýček [13:09](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=789s): That's why I wanted to ask you about because I'm taking a lot of inspiration from very old algorithmic or systematic approaches from the past, like Larry Williams, Rashke, and her very first work and so on. Because I can see that those type of trading signals or trading patterns are working well because of the huge volatility that is on crypto these days. Mish Schneider [13:41](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=821s): Right. And then you have some of these coins where you don't have to know anything. You just know that they're going up and the crowd's in it. And so you just jump on board, which also is a little bit like it was back in the day when, let's say, gold was going crazy. Pavel Kýček [13:56](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=836s): Yeah. In fact, if I'm going over some out of sample periods or out of sample data for my crypto strategies building, I'm using very old commodity charts and equities in the stake bubble, start of 2000 or 1999. These are exactly those periods that are pretty similar in Mish Schneider [14:22](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=862s): on many levels with crypto these days. Yeah. You could also look back at the Tulip Mania too, which is, of course, as a commodities trader, there was always comparisons too. Pavel Kýček [14:34](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=874s): Yeah, of course. But I wouldn't mind trading too late on the way up. Know? Exactly. No no problem with that. No problem with that. Exactly. We'll trade anything. Jason Kurz [14:48](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=888s): I think for me, that's also a thing that Pavel and I were talking about this a little bit the other day, which was using multiple strategies. And in general, I think it's incredibly important to have multiple strategies in your portfolio and something we're talking about is these bubbles. And so we see these crazy bubbles and these crazy moves in the market. And basically, what do you do during those times as a trader? You know, Pawel, you could talk about that being in the crypto bubble. Let's figure out what do what do you do right now as a trader? You only run and run strategy or do you have multiple strategies running? Pavel Kýček [15:26](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=926s): Me? Yes. Well, right right now I'm running I'm running 10 strategies, but we are giving another five strategies into the portfolio. So basically, we are running fifteen fifteen struts, but I'm always having, like, five to 15 strategies in some incubation incubation period on incubation data because I'm not adding strategies to the portfolio just for the purpose to have as many struts in the portfolio as possible but just if they have some some uncorrelated uncorrelated part for the portfolio in general. But I'm not doing anything. I'm just running my portfolio automatically. Every strategy has pretty low weight, 10% to 20% of the overall portfolio. And that's basically it. Every strategy can trade up to 15 open positions, even 20%, 25% in one time. So basically, our portfolios look like 20 to 50 open positions anytime, especially if markets are moving that crazy as they are moving right now. So my approach, to crypto, is to be as uncorrelated or as diversified across many different trading approaches as possible. Mish Schneider [16:53](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1013s): And what are you using for trade management as far as risk and profit taking? Pavel Kýček [16:59](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1019s): Risk management. Well, this is good question. I'm not using stop losses. I had quite a big discussion today and yesterday too. I'm not leveraged at all. So that's why I'm not using stop losses because crypto tends to overreact. For example, you can look at yesterday price action. For example, many coins were 40% down, and they mean reverted pretty heavily. In fact, we got into very nice, mean reversion long trades on these moves. And the worst, I think, from risk management point of view, the worst thing in crypto is using stop losses if you have better approaches. For me, it, for example, means that we are having very simple breakout strategies to the short that are basically hedging the long part of the portfolio. So this is how I'm approaching approaching risk management in general. Mish Schneider [18:04](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1084s): Oh, so you're hedging. That's interesting. Well, Pavel Kýček [18:07](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1087s): basically, I'm hedging, but not on the same coin, but on crypto market in general because we are trading that. Yeah. So it would be one coin versus another. Then what about profit taking? Based on strategy, we are running trend following, breakouts, min reversion strategies. I don't use profit targets at all. Profit target is again not the way to go. I made, I would say, thousands, at least thousands of tests on profit targets and stop losses, and I've never or almost never found a solution with profit targets or stop losses that would be better than different exits. And I don't mean just I'm I'm not talking about performance. I'm more talking about the robustness of the solution. Because to me, profit target is just another another parameter that is somehow optimized on the past data, And that's why this is not the way to go for me. I'm using usually different approaches to exiting the trade. Mish Schneider [19:18](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1158s): So is it more of a rotation? One sort of runs its course and you're out and you rotate into another kind of thing that you're using Some Pavel Kýček [19:28](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1168s): kind of trailing, not stop losses, but let's say some trailing like moving average or Don Quan channels and these kind of things but I'm not using, like, rigged solid profit targets or stop losses then we are using some kind of overbought, oversold characteristics of the market for Mineraversion Struts, for example. So relative strength, basically. Yeah. Something like that. Yeah. Yeah. Okay. And basically, most of our strategies are one, two entry conditions, one exit condition, maximum one regime filter. And that's that's basically I tend to as I told Andrew in our interview, I tend to really oversimplify strategy building, like single strategy building, especially in crypto, because we just don't have enough data. So for me, it is better to run the strategies very simply and being a little bit more complex on the portfolio level. Mish Schneider [20:33](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1233s): Interesting. I would definitely like to talk more about that another time Pavel Kýček [20:36](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1236s): because Mish Schneider [20:37](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1237s): we have found kind of in some ways the other side of that coin, which is pun intended, is that we have to have a certain level of, repeatable strategy in terms of risk and stop loss and profit targets, mainly because we sell to the public. Obviously, that's one reason in these quant models. And secondly is because we're running people's money and we have to understand they have to understand what we're doing back to the risk appetite we talked about before the show. So I would love to understand what you're doing Pavel Kýček [21:10](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1270s): Yeah. Let's meet, of course. I would love to. Okay. No. I like because Jason Kurz [21:16](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1276s): I think in general, something that we we don't talk about enough in the systematic community is also fitting those strategies to your personality. Because I think too many people, the Jerry Parker and Tom Basso, they get in this argument every single time that the two guys get on, which is, hey. You have to ball target, basically trimming down your positions as you go along. And then Jerry Parker is like, no. And, Jerry Parker has his data, and then Basso has his data, and they fight about it. And really it's like, you could do both ways. It just really what fits you because for me, like, I'm like Jerry, like, don't I don't trim down my positions as I go. However, I know that's not for everybody. That's not, the way everybody trades and also depends on how you're sized. I'm sized very small going into each trade. Step I up my size most of the time going into a trade. Those strategies work well for me. But at the same time, if you do it the other way, I know Mish, you use profit targets and so on and you trim down positions as you go along. And I've seen Mish be incredibly profitable doing that and I'm profitable doing it my way and Pavel has a different way of doing it. Everybody can have a different way of doing things. I thought also the cool thing you brought up was, I saw your post on stop losses, and so many people get so heated about it, and it's like, what I like about Pavel's stuff is that he's just really looking at the data. You know, he's always saying, yeah, my data says this and it's the same thing for me. It's the reason why I didn't fall target in my trend strategy because the data was telling me not to. So, when but also I do use a trailing stop, but I also only trade bit So if I traded the Altcoins, like we talked about today, I would have no ability to use a stop loss. Depending on which coin, like Ethereum, sure. When you're talking about these very small coins and obscured coins, the volatility per day is insane. My Bitcoin stop trailing stop is already between 3035%, 90% of the time. So the volatility is just that high. So I don't even wanna know what type of trailing stop you'd have to use on, let's say, Dogecoin or something really small. You're probably talking like fifty, sixty, 70%. You know, I doubt that you did find the strategies make more sense that way than using a trailing stop. Mish Schneider [23:43](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1423s): Well, you bring up a really good point in terms of the volatility because a lot of what we do, our stops are determined on the volatility, and we use that measure through average true range. Now, of course, if you're talking like something like Dogecoin, I wouldn't even begin to know what the average true range is. But in terms of actual stock trading, a stock like Crowd, which, obviously went crazy this morning that has a $16 average true range per day versus Vietnam, which we're both in that has a 16¢ average true range will definitely affect right. How much what your your configuration is in terms of stop loss, profit target, etcetera. And I will get bolder in terms of not having a stop loss per se, or at least I have a mental place where I know I'm dead wrong if the smaller the ATR, because, I can control it on a day to day basis. Jason Kurz [24:43](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1483s): No. I think all all of that just makes so much sense. And especially, you have to you have to understand what you're trading. PAVL is primarily in the crypto space. Do you trade more I've I've had we've never had that conversation. You trade more than just the crypto space. Pavel Kýček [24:58](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1498s): I'm trading equities basically the same way as I'm trading crypto. So broad portfolios of uncorrelated strategies, breakout, trend following, miner version struts. Basically very similar to crypto. Very interesting. Or not started, but that's where I involve, I would say. So these days I'm trading almost only equities and crypto. I used to be trading breakouts on commodities, on futures basically. But one day you just find out that you cannot trade everything. Or you can, if you are a trend follower like you, for example, Jason, then you can. But I prefer having broad portfolios on some assets, not trading everything, even though I love this approach. But again, as you said, this is not for me that much. Jason Kurz [25:53](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1553s): Yeah, just all depends on which type of strategy you wanna run. I'm actually looking for a, I have a strategy sheet which all of them are on there. Because I also keep track of my strategies too, like what's doing well and what type of market regime at the time. So, I have a volatility squeeze breakout breakdown strategy. I have a trend following long term strategy. I have a volatility long short, basically it's like a gamma scalping strategy. I have a W bottom strategy and all these are back tested. So basically it's a really once you start to back test all these strategies and start to understand what really can fit into your systems, start to figure out what would smooth out your returns. I think that's a thing that we could talk about next, which is, there's periods of time in trend following, especially if you're a long term trend follower like I am, where you're just gonna be getting chopped to death. I trade a lot of markets so most of the time I'm not at a point where nothing is trending but it happens a lot. So you can get into a point where everything's flat. Then you have to figure out what type of systems do you use during that time? There are some people who say, well, don't care, the market will come back and it'll make my money back at some point and that's true but also once again, fitting into your strategy, your personality, if you wanna smooth out your returns like some of us do, you have to kinda use different strategies during those periods of time. Know, Mish, I know Mish is really good at I'll I'll watch Mish during certain times in the year and I have no idea how you do this because I have no idea. I am the worst day trader on earth. I just don't do it. But I will see Mish doing day trading strategies at certain time in the year when like things are just getting chopped to death and the market is just a mess. So I'm just wondering, how many people up here also like use very short term strategies as well as their very long term strategies? Mish Schneider [27:52](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1672s): I've definitely walked away from a lot of the short term strategies and have been doing more of the long term strategies myself, partly because of the fact that we have the quants that have done very, very well, because they are finding the outperformers. And if you look back statistically from 1929, the outperformers always outperform. And the underperformers usually well underperform, and that's using the benchmark of the spy. So just from a pure math standpoint, it makes total sense to have a good algorithmic system, something that I've only learned really even though the company's been doing it for years. It kind of took me a little a minute to, catch on, because I was so, stimulated by making my own trading decisions until I realized as I got older, why make it harder, when it could be so easy. But getting back so that goes back to why I'm not doing so much short term. Instead, I'm taking what I've learned from the quants and trying to apply it to my discretionary trading in terms of blends. Right? So, like, here's a perfect example. We got into Coinbase at $80. We're still in it, but a tail. But I'm cool with that. I'm okay because I if it comes down, I will buy more. And by the way, when you when you talk about trading too many assets, the first thing that came to my mind is back in those days in the commodities exchange. These guys were not trading, like, 25 different instruments. They were in the pit that they were in, and maybe they dapple elsewhere but they made their fortunes catching these massive moves, adding on the rallies, adding on the dips, if it was trending up, that kind of thing, doing spread trading, kinda like what you were talking about with hedging where they would be long one month, short another month. Yeah. So that's that's another thing that I learned from back then. But anyway, getting back. So yeah. So if I'm long Coinbase and I have such a cushion like that and it's a good percentage of my overall portfolio capacity and I buy GDX, which is this is all true story at 30 and I watch it go down to 25 and 62 and I don't get out. Why? Because A, I was convinced, 100% convinced I was right. Number one, I can afford to know that after all these years that I'm pretty good, sometimes a little early because I have an inflation narrative in my head on everything else. And number two is it blended out the results. I was still a net net winner even with that loss. And now here I am actually, it's almost back to where I got in and coin is even higher. So the results have come back better. So you see what that's kind of what I'm learning from doing the algorithmics is how to apply that to be a better discretionary trader as well and a more relaxed human being to boot. Jason Kurz [30:45](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1845s): I think that's a great a great point. Go ahead, Pavel. Pavel Kýček [30:49](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1849s): No. No. I just it is very good idea because I used to be intraday discretionary trader, and this is exactly the idea that I had yesterday that if I would like to start right now trading discretionary intraday, I would be much better with all the data and all all the research I went over over all these years that I don't want to go back. Like, never ever for me, systematic algorithmic trading is the way to go. But, yeah, the knowledge that I have, thanks to all the research is on another level compared to where I used to be when I used to be trading discretionary. So I think it's very, very good idea in general. In fact, I think that even for many discretionary traders, it should be the way to go just to understand, for example, minerverting characteristics. That if something is way overreacted, it usually tends to go back. I know it's like super simple concept, but not many beginner traders really fully understand it. Or this, I don't know, I would say the only cycle that is 100% in market and it is low vol, high vol. If you go over the data, you can see it very with 100 certainty that you have low volatility periods. And the longer this low volatility period is in the market, usually statistically, the bigger the following movements. So these are very, very simple characteristics that all of us know, but not many starting discretionary traders know too. So that's why I would recommend anyone starting somehow at least semi algorithmically Mish Schneider [32:44](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1964s): or going over very basic research first. I wish I had you on my webinar this morning. I was trying to say that. You just said it much better than I did. Jason Kurz [32:53](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=1973s): Okay. Thank you. No. It's spot on. Like, what exactly he said is just spot on. Because in general, I always think, like, people would all bet traders, would all benefit from some form of I call it, like, bumpers and bumper bowling. Like, you have something that kinda keeps you in the lane so you don't fall in the gutter. Just something that goes Simply put, you have the S and P in a downtrend, something that just tells you it's in a downtrend and you shouldn't be trying to buy it right now. Simple things like that help. Mish over the years has been Mish is one of the few people I've ever seen actually who can actually pick bottoms pretty well. For the rest of us normal people, it work for me. And I used to have a problem with it. That's part of the reason why I kind of really am disciplined on staying away from those things because when I first started trading, that was my biggest problem was I was always trying to find bottoms and things. And then through back testing, you learn a lot too about the volatility of each product and about the how the product reacts to situations, like, basically, if you look at commodities and you oh, here's a good system. If you use a four day down in the S and P 500, and if you sell a put option on that fourth day down, most of the time you're gonna make money. However, if you do that same system, I think it's like a 78% win rate. It's a pretty high win rate for a very short term trade. At the same time, if you do that same system in crude oil, you're gonna lose everything. Four days down is usually the start of a trend in crude oil or any commodity really. So basically, kind of get to just put through back testing, you can understand the price action and understand, like, how you should be trading around it. Because if you're really trading these things all like, like, a lot of the trend followers always talk about trading everything exactly the same. And I completely disagree with that. And I'm the only person who ever gets in arguments about this all the time, but really it's like, I know my systems for commodities and I don't trade any individual stocks for the most part, but I trade the ETFs. And so my my systems for commodities compared to the ETFs, they're they're very different Mish Schneider [35:12](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2112s): because they react differently and different Well, they should be. I mean, commod you can't do stock buyback in a commodity. Yeah. Right? You know, you can do do a certain amount of price manipulation, but it's nothing like the way it would be for a company. You don't have to worry about the CEO leaving. No earnings. You know, no earnings to right. All of that. So, of course, you're gonna have to trade that differently. But, what's interesting about the bottom picking because I really owe that to the floor, to being on the floor for so long. Because in the crude oil pit, for example, actually, there's a there's an article where I'm in the middle of a sea of men for Business Week magazine. It was when crude oil hit a bottom at I've seen that picture. Yeah. Right. I post it once in a while just because it's so much fun to see me in this big sea of men. And and I'm right in the middle too. So I must have wormed my way in that day. Maybe because I knew the newspaper, the magazine was there, but whatever. Alright. Because I'm not a ham at all. And so anyway, getting back, it was interesting because if the whole article was about how crude oil was over and it was going to go even lower. And yet as a floor trader and also of course I had the advantage of having a lot of conversation with some very, very brilliant people down there who had a lot more experience than I had. But you started to see the signs of what a bottom is. So if you're looking at a commodity, the selling just dries up at some point. You might see a couple of days at a certain level or you see, kind of a volatile and a blow off bottom. It it would be the way way to describe it technically. You get these blow off bottoms, then the volume starts to switch. You get one good update with some volume coming in. You got a low risk to underneath that point of the day and made a low. That's how you pick a bottom. I've learned that from trading commodities on the floor and the signs to look for it, and you never pick a bottom without having a really good reason, and it has to be. It could be a mean reversion type thing, but even the mean reversion has to be met with some kind of a real either explosion in volume to the downside that dries up or just as it's going down, the volume continues to dry up then you get the mean reversion. Always though with a point that you know if you're wrong. that's where we I can obviously differ a little bit, Pavel, is that I always had to think of where I would be wrong when I was down there, and I still think that way. But my breath has gotten wider in terms of where I feel I'm wrong because I've gotten more confident over all these years because I'm so good at picking a bottom. And getting back to that GDX, as a commodity trader, I'm thinking there. I'm sitting there and I'm going, okay. Gold's here. Silver's here. Miners are here. Where is that relationship going? It's so distorted. Where is it going to switch? So what happens? Gold continues to rally. You knew. You just knew at $26 for GDX that we that was it was bottoming out. You just knew it's silver at 20, dollars an ounce. It was bottoming out. I mean, you just knew that. You had to know that. And then knew that, Mitch. I knew that. But if I were on the floor, we would have been discussing it and the and the buying would have come in. And then, of course, it's a self fulfilling prophecy because then they would get on the phone with their brokers upstairs, and they would say, hey. We think it's bottom. We think you should buy it here. You know, that's where the herd mentality came in. So I'm saying everything I know, I know from the floor. I'm so fortunate. Jason Kurz [38:58](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2338s): You know, it's also a super interesting point. And I also have to talk about this and give you your flowers because we talked about it on the spaces. And I always say the same thing, which is I don't have any signals yet, but I wouldn't bet against Mish. And so we were you you might not remember, we were talking about China. We're talking about China. And you were Mish, as as China is crashing and basically, everybody in the world's, like, running from it, I'm kinda I'm I'm also, like, I wouldn't touch that thing either. Mish is going, oh, it's bottoming here. And I'm going, that's that's ridiculous. Like like, I would never touch this right now. And she's starting to buy it, actually. And then literally, she I just looked at the chart to double check right now, and she she nailed the bottom. You you really nailed the bottom right there. So it's really interesting. Alibaba, I bought. I didn't buy all of China. I bought Alibaba. Yeah. Before before Jack Ma made the announcement. Yeah. Mhmm. But, again, it was partly because I exactly what I saw. I saw the volume drying up. I saw a good little reversal. Mish Schneider [39:59](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2399s): It got down to around $66 a share and popped up to 69. I got in at 69 knowing, okay. I'm wrong under 66, because it could go down to 50 or 40. I didn't wanna be in it forever. Too volatile. Too much bad news. Got up to 77, took my first profit, and now I'm writing the rest looking to add. I have my add point now because now notice the narrative is changing. Oh, Alibaba's bottom looks pretty good. Oh, Jack Ma bought. Oh, oh, oh? Mhmm. Called the broker. Hey. Guess what? China looks like it's bottom. Right? Yep. Yep. Jason Kurz [40:35](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2435s): Mean, also you've also explained to me too, which is I think very also important to talk about right now which is the there was a quote and I heard it first from Paul Tudor Jones and then I've gotten to see it in person trading with you which is Paul Tudor Jones in the first market wizards. They always talk about, he'd be like, yeah, they always write about me in the newspapers. Paul Tudor Jones nails the top of the market because it doesn't sound as cool to say Paul Tudor Jones on his fifth attempt nails the top of the market, which you've also taught me that too, which is probing. Also will happily understand, hey, this is my low, I'm taking a very tight risk here and take a few shots at it too. And what like more times than not, you nail it right on top. So I think that's really cool. I think it's the way you explained it using the floor kind of makes more sense to me. I know it's not my cup of tea still, but I think I hope somebody out there listening thought caught that and was very interested in that one part of what you said. Mish Schneider [41:36](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2496s): Yeah. Well, Paul and I were on the floor at the same time. I know I'm aging myself here. So everybody, even back then, watched what he did. He was a hotshot trader right from the get go. The guy was just born to do this. And so people would follow him around. And I remember he would mostly stay over by orange juice futures and cotton. He had a lot of friends in the cotton pit, but the way that the floor was built back then, cotton was here and oil was here. So if he made the trip all the way over to the oil market, believe me, all of a sudden, would be instead of five feet deep of people standing, there would be 10 feet deep of trying to figure out what Paul was doing. So, yeah, he was the king of probing, but doesn't mean he was always right the first time. Like he said, it's true. Jason Kurz [42:26](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2546s): No. I love I love that. That's that's great. Does anybody else I'm I'm hogging Mish. Does anybody else have have a question for Mish? Andrew Swanscott [42:34](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2554s): Yeah. I've got a question for Mish. So you were talking then for a few minutes ago about, I guess, some indicators or signs that potentially a bottom is forming. What about a top? What do you look for? Very similar, Mish Schneider [42:47](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2567s): actually, Andrew. It's a great question. And I like to pick tops too. I mean, like to be early, not because of my ego by any means. It's because I did get very good at it. And it often is the best way to make money because by the time the public figures out what you're already in, that's when you get the real momentum to it and you start to make some good money. So the top, it would be the same kind of thing. You might see a blow off top and that would be another huge surge of volume that at some point now you can just see it exhausts. The next day maybe a gap down and now boom, you've got a stop above the highs of the day that it went, ended its parabolic move. It could be a mean reversion like what Pablo was talking about. It could be just that things just sought to drift volume wise and you could see that the momentum has died. You know, then I go back to the floor where I would look in the trader's eyes and I would know that the buyer buying orders, there were no more and they were all long chasing their trades. Right? And you could see the look in the eye, that one moment of look, they'd be like, oh, shit. This is the top. And then the selling would come in. And it now I can't see people's eyes. I'm looking at just, a bunch of green and red, but still it's that you can feel it almost when you get to that point where it just gets exhausted and boom. Now, of course, time frame would be everything. Is it top, top, top, or is it top correction? I mean, that's where experience and trade management comes into play. I much rather pick a bottom for a major trend change than a top. Although this year, January 2, I said Tesla topped at $2.60, and I never shorted one share of it because I don't love shorting so much like I used to on the commodities exchange. But, yeah, nonetheless, trading at around $1.77, that's turned out to be pretty true. There was a fundamental factor to that too. That's the other thing is when the fundamental shifts, you start to look for the signs. When gold was going crazy in 1979, it was pretty obvious in 1980, the fundamental shift when Volcker started jacking up those interest rates. And yet people were still buying gold thinking it would never end, And yet there was the sign that went that final parabolic move and that was a top and it never looked back straight down. So you remember all this stuff. Andrew Swanscott [45:18](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2718s): Yep. We got a question in the chat for you, Mish. Let me put this up on the screen. Here we go from Crypto Nick. Mish Schneider [45:25](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2725s): Crypto Nick. What Andrew Swanscott [45:27](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2727s): does Mish want to see in a beginner system trader to trust potential is present? Mish Schneider [45:33](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2733s): What does Mish want to see in a beginner system trader to trust potential is? So when you say a beginner system trader, do you mean discretionary or do you mean algorithmically trading? Because I'm not sure because we've talked about so many systems so far today. If you can clarify that, and if somebody else has an idea of what he's saying and wants to answer it, I'm I'm happy for that. Pavel Kýček [45:57](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2757s): Jason? Yeah. I would say algorithmic, Mish Schneider [45:59](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2759s): but not sure. Yeah. Okay. That's so I'm glad I asked the question. Jason Kurz [46:03](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2763s): So I'm I guess if I was to get take a guess, it's just what exactly Mish Schneider [46:08](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2768s): would you look for to trust a potential system as as you're first starting to trade? That's what I would think he's trying to say. Okay. Alright. That that's a good okay. That makes a lot of sense. Well, I think the first thing would be I it would have to be something that you can explain, a strategy you can explain. If people can't explain what they're doing, run for the hills. I mean, I then I don't trust it. So if if assuming that it's a strategy you can explain, like, obviously, Pavel has a very in-depth complicated system that he made very simple, but he could explain it. So I already trust it, which is why I said I'd like to talk to you further. So that's the first thing. You gotta go with your own instincts. If it makes sense to you and it resonates, that's step one. Step two is, okay. They explained to me their system. Again, Pavel might disagree with me on this, but is there any kind of trade management that goes along with that? You have a system I fully agree with it. Right. Right. Do do you know when you're wrong? Do you do you have a some kind of a parameter for taking advantage of taking a profit and, seeing your your portfolio grow? That would be the next thing. And and I think if those two things could be answered, then, I guess my next step would be, well, what do you like to focus on and why? Do you like to focus on equities? Do you like to focus on ETFs? Do you like to focus on crypto? Do you like to focus on futures? You know, what is your focus? Because we know that it takes a long time to be able to do a lot of different things. And another lesson from the floor is get good at one thing first and then branch out. Jason Kurz [47:48](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2868s): Yeah. I think that's the way I think I have a hard stop at three guys. So Yeah. We'll start to do outros now. Mitch, where can everybody find you? Mish Schneider [48:00](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2880s): Oh, me? Yeah. Well, here. Me here now? Well, outside of the year. Oh, god. God. I'm aging myself all over the place. My goodness. Quoting Timothy Leary. So anyway no. Get back, Mish. Okay. So x, my handle is at market minute. That's where I spend my most time. I think it for me, it's great because I miss my days of being with all the guys and standing around and trading and having fun and, BS ing when things are quiet. So I spend a lot of time there because I get the chance to do that with a lot of people, including Jason. I we have a marketgauge.com is our website. I do a free daily most days of the week. I do a lot of media hits and a lot of also other type of hits like this one. We post all those links on the daily and on the site. And, I'm on LinkedIn, Facebook, Instagram, everywhere. I mean, it's really hard to miss me if you wanna try to find me. Jason Kurz [49:06](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2946s): Thank you. Thank you so much for coming on, Mitch. This has been an absolute pleasure to have you on here. Mish Schneider [49:12](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2952s): I'm glad to introduce you to Andrew and Pavel as well. And hopefully Yes. I'd like both of your contact info, by the way, if Jason can share that with me. And then I'll I can arrange. Yeah. We'd arrange for you to talk with Keith. Jason Kurz [49:25](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2965s): Mhmm. Sounds good. Alright, guys. You guys can find me at against all at against all odds research, AAO research. And, yeah, Mish Schneider [49:34](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2974s): that's it for me. Thank you so much. This was so much fun. Bye. Andrew Swanscott [49:39](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2979s): Thank you very much for attending and everyone for joining us on the show today. Great comments in the chat. So catch you next week at Wednesday, 2PM Eastern, isn't it? Yes. 2PM Eastern. We'll see you Jason Kurz [49:52](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2992s): Andrew's Andrew Swanscott [49:53](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=2993s): in Australia. Good job, Andrew. Always trying to convert the times in my head. So it is 2PM Eastern. It's hard to say I'm Australian. Jason Kurz [50:01](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=3001s): All right. Enjoy the rest of your week. Thanks, guys. I'll connect Mish with you guys. I'll give her your Twitter handles and we'll talk soon. Andrew Swanscott [50:08](https://www.youtube.com/watch?v=fDR-uX6tGjY&t=3008s): Great. Thank you. Thank you. Bye. You. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 5 Better System Trader · The Trading Panel · Episode #5 # Building confidence and consistency in trading Moritz Seibert · in conversation with Andrew Swanscott March 14, 2024 · 87 min listen · 61 min read Episode 5 of Better System Trader's Trading Panel — CTA Moritz Seibert joins host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček on the reality of drawdowns, building genuine confidence in a system, and the consistency that separates professionals from the rest. Listen on [YouTube ↗](https://www.youtube.com/watch?v=HAyMif3_4D4) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Moritz on being "in a drawdown 99% of the time" — and why that's normal for a trend follower. - 02 How real confidence in a system is built (and how long it actually takes). - 03 Pavel on the decade it took before trading truly "clicked" for him. - 04 Why consistency, not prediction, is the edge that compounds. Full transcript ## The conversation 87 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:01](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1s): Welcome to the trading panel. A show where we assemble a group of diverse traders from all backgrounds and all levels of experience to talk about the markets and trading and to get different perspectives. So what a brilliant idea, you may say, Andrew. What a brilliant idea. Well, it wasn't my idea. It was Jason from Against All Odds Research. Welcome, Jason. Moritz Seibert [0:22](https://www.youtube.com/watch?v=HAyMif3_4D4&t=22s): Hey, thanks, Now that it's spelled right. Andrew is the one that makes everything pretty. We got together recently, we were just talking probably a few months back, and we just had a conversation. I was like, Man, there's all these trading panels online. They're not actually like panels per se, but they have these spaces and there's like 20 different people in there. And the conversations I was having, I was like, I don't know if these people are actually like managing money or any of that. I felt like I was talking to a bunch of analysts, just the way they were talking. And not to mention, I remember having a conversation, I told you this, Andrew, I was on one of those and I said, it was at the beginning of this year and I was like, Oh yeah, I'm down this much percent. It was like three days into the year and I was like, down like 2%. And they were like, oh my god. Like the whole it stopped the whole space. Like everybody got quiet. Like it was like blasphemy to like say, you're down in your portfolio. And I was like, well, these people actually don't trade. They suck. Drawdowns are very normal. They happen a lot. So, Andrew and I got to talking and we were like, yeah, maybe we have we'll come up with an idea, and we'll host it with real traders. And some weeks, we're having, like, kind of just one person kind of being the main focal point. Pavel's been here since the beginning. He's a great addition. I absolutely love having him on here as well. So, Maritz, you're kinda kind of the show today. So Oh. Jason Kurz [1:50](https://www.youtube.com/watch?v=HAyMif3_4D4&t=110s): I'm all, just at at risk of disappointing at at disappointing everyone. I'm I'm down 99% Moritz Seibert [1:57](https://www.youtube.com/watch?v=HAyMif3_4D4&t=117s): of the time, like, the way that I trade. 99% Jason Kurz [2:01](https://www.youtube.com/watch?v=HAyMif3_4D4&t=121s): of time, I'm in a drawdown and then one out of a 100. Mhmm. If that you make a new equity high and then you're going to draw it out again. So being a loser and a very professional loser, that's my job. Yes. Moritz Seibert [2:16](https://www.youtube.com/watch?v=HAyMif3_4D4&t=136s): And that's the truth, man. That's what drove me crazy about that was like, if you're out there telling people that their idea of how they're supposed to trade is to be up every single day, Like, one, it's a recipe to blow up. You will blow up at some point if you try to always take money out of the market. Two, this isn't a job where you're like, okay, well, a week to week basis, I'm gonna take my paycheck out. Like, that's not how it works either. Sometimes the market's very conducive to my strategy. Most of the time, the market is not conducive to my strategy. Because of that, you limit your losses on the downside, your winners run to the upside, and you're in drawdowns a lot. This all happens. So this is about being a professional trader. And that's why we kinda wanted to have you on here today, Moritz, is just to have that conversation as a professional trader. You also are part of Better sit. What is the name of the podcast? Did I say it right? It's not better system trader. Obviously, that's Andrew. That that's Andrew's show. I'm mixing things up. Yeah. Jason Kurz [3:19](https://www.youtube.com/watch?v=HAyMif3_4D4&t=199s): No. Top traders unplugged. Top traders unplugged. You know, together with Niels, and there's a bunch of people on there as opposed to some one of them. I run a show there that's called Open Interest where I focus a little bit more on commodity traders and some of the more nichey, maybe under the radar systematic guys that aren't that large yet, but that have something interesting to say or the way they trade is interesting. And I just like finding love, finding these people and having conversations with them about their style of trading and see what it is that they do. And just to bring it back to this, like being professional about things, when you're down 99% of the time or even 99.5% of the time, if you will. The other part that's so important and that is an element of being professional is to not throw in the towel for the wrong reasons. Like, that is the emotional makeup that you need to have is to accept the fact that your system, strategy, and I'm, talking about mine or the ones that I think are robust and resilient. I'm not talking about systems that have a four, five, six, seven sharp ratio. Different thing. Maybe. Whatever. I can't even go there. I don't know what that is. That's outside of my zip code. But the stuff that is kinda like 0.5 to say 0.8 sharp, you're very easily tricked into questioning yourself, questioning the system that you're currently running when you go into a drawdown, especially if that drawdown happens quickly, if that drawdown is a little bit steeper than your peers. Because as a human being, you always compare yourself to benchmarks and your peers, right? So if you look worse than the average fund out there, it's very easy to question your system at exactly that point in time. And you go, oh, well, I shouldn't have traded that position. I should be long even more of cocoa. I should have traded shorter term. I should have done this, that, and the other thing. And of course, you can find the data to support your thinking at that point in time. But you will be making a decision that is very biased and very strongly influenced by the moment of right now. And it's not rooted in sample size like the longer term, like, observations. A big edge, therefore, is to have the makeup and the stamina to exactly stick to your system and not alter it for all the wrong reasons, which is a minor drawdown or maybe even a larger drawdown. You have to follow through with it. And Jason, you and I, I think we spoke yesterday or the day before, clients don't like that. Is and then I'll stop. But because when you tell them that, I started with, you want to be a professional loser, and you have to stick to your guns when you go through drawdown, they don't like that. They don't absolutely like I mean, I don't like drawdowns either. Don't get me wrong. But I look at them from a different perspective. If you don't trade yourself and somebody is down on your money 10 or 50%, then what you thought is going to be a long term investment very quickly becomes a short term investment. Then you become nervous, disappointed. You throw in the towel and you redeem. And that is in a way the sad, almost never ending story of client behavior, which is redeeming at the bottom and buying at the top. And that is destroying compounding massively. There's no pill for that. Pfizer should maybe invent one at some point. Take it in the morning and that stuff goes away out of your head, but it is the reality. It's a fact. And so therefore, a lot of managers, they don't want the drawdowns either. They also want smooth return streams. Everything has to be in the body of that distribution and organized where things are mean reverting, where tails, by definition, don't exist. But when you trade that way, you forget that the stuff that actually happens, the stuff that matters to your portfolio, happens in both tails of the distribution. The stuff that's in the middle actually is of almost no consequence. The stuff that really is the home run that makes you a bunch of money is cocoa right now and some a few other markets as well. But they are not in the middle of the distribution. They are far out in the tails, stuff that you've never seen before. That means volatility because you can only get to the tail with volatility. And therefore, you have to embrace it and not shy away from it. But volatility also means drawdowns. It's the price that you have to pay. It's the it's not a penalty. It's kinda like an inconvenience fee on the way to bigger bank account. But getting that squared up in your head is a tricky thing. Moritz Seibert [8:20](https://www.youtube.com/watch?v=HAyMif3_4D4&t=500s): No, I love that. And that's kind of, the one thing Andrew and I were talking about, which we were talking about some topics. And one of those topics with you and listening to you a lot over the years on top traders, loving your system was one of the ones I wanted to jump into. And that's what you're talking about here. And for me, I understand, like, like, like you said, clients, they hate it. When you're in a losing period, they're like, you need to change your strategy, your system, something's wrong. And you're like, well, I if you know your system well enough, and you learn to actually love your system, you understand that it goes through those periods, those flat periods, those choppy periods. And you learn to just understand that volatility at some point will lead to major returns, but it's not a smooth road. That road's gonna be full of chop. That road's gonna be tough at times. And like, just like your clients, like you said, like nobody likes drawdowns and sometimes, you're gonna wanna throw on the towel, but you have to really understand, like, what's your goals here? Are your goals here to create wealth over this amount of time? Because if you're running a long term trend following system, like, we're not looking for the craziest returns every single year. We're looking to catch those major outliers. Like Moritz said, we're talking about cocoa. You have something like cocoa in the portfolio. It's just going up every single day. That's wild. Something like Bitcoin. It's gone up a ton. That's also wild. You know, you you have those things in your portfolios, and as you're catching those outliers, all that chop starts to not even matter because basically, you're set up to have, 50 basis points or 1% of your losers basically taking away 1% or 50 basis points of your portfolio and your winners being three, four, five x that. So as you're able to kind of understand like, hey, my losers are just this, it's not the end of the world, and you have your position sizing right, you're set up right, your systems are set up right, you start to gather that conviction to just go, hey, it's gonna be a matter of time and then things will change. I mean, look at, 2020, 2021, like, these were insane years for us as trend followers. So it could come back, like, commodities are in a lot of buy signals now. It could be a whole different year this year. Like, we just have to continue to see, but that's how you catch the outliers. If we were to change all of our systems, we wouldn't catch things like Cocoa or Bitcoin. That's right. Jason Kurz [10:46](https://www.youtube.com/watch?v=HAyMif3_4D4&t=646s): Look. When you when you say love your system, like, you look through that statement or when you go deeper, that also means like you break down the system into all its component parts. If you love your system, you can't just love your winning traits. You have to love the losing traits because they're part of the system. It's kind of like your kids. I can't just love one half of them. I either love them or I don't, but I do. The good, the bad, and the ugly, that's all part of the same thing. So that's one thing. You love everything. And the trickier part, at least for me, but everybody may be different there, is the initial risk budgeting on a trade, kind of like, oh, I'm risking x basis points of my closed trade equity or some kind of balance or budget that you have. And if it doesn't work, well, it doesn't work. We cut the loser short. We take that small loss, and we move on to the next trade. That, to me, is absolutely zero problem, like nothing. That is the cost of doing business. Now it gets a little trickier when you have a position that has accrued large open trade profits. So your open trade equity on that position has increased. And you now have a greater distance between the last price of the instruments and you exit or stop. So that means that you can now lose more than the initial risk budget. Think of Cocoa. That is a great example, right? Cocoa is essentially in a parabolic phase. Shouldn't say that. I don't know what a parabolic phase is, but I've I've read this on Twitter. Some people say it's in a parabolic phase. It it's it's moving higher. That's it. Right? And it's moving higher quickly. Now if you're a long term trend follower, that means that you're sitting on a bunch of profits. It will also mean that very likely, if you're not using dynamic position or any of these other techniques, that your exit, which sits below the stop somewhere, is relatively far away. It's further away than 50 bps or 10 bps or 1%. So that means you can lose substantially more on Cocoa. Now, that therefore may be more inconvenience because it shows in your NAV and in the drawdown, than the initial loss on a position that you've sized it and immediately goes into the initial stop. But when, again, like when you then step back from that viewpoint, and that's also important, I think, is what you're risking here in the example of Cocoa is no longer your core capital. It is no longer the initial risk budget that you carved out of your RIP source. Like, here's my $0.50 out of $100 that comes out of my wallet. It's actually my equity. No. You're now risking open trade profits. And open trade profits, by definition, in futures markets and derivatives are a zero sum game, absent of commissions and stuff, if I have open trade profits, that is variation margin showing up in my brokerage account, that means somebody else will have the opposing position and sit on a loss because it is a zero sum game at the end of the day. So somebody else's money has moved from this account to my account, which to me means I'm now playing with somebody else's money, with other people's money, not in a casino, right, but in the markets. And I should if we were to go to Vegas, we'd be playing blackjack with other people's money all night long, right? And so here, my thinking is I have no business really to alter the position, reduce the position, is my belief when I sit on these open trade profits because when we, at the end of the day, analyze the trade from start to finish, it's going to be a great trade, unless Coco gaps massively down to whatever, 2,500 tomorrow. If there's not this discontinuity, Coco will be one of the greatest tries or one of the great tries. It's just the question, when is it going to stop and how great is it going to be at the end of the day? But whatever we have in terms of give back from whatever, 7035 is where the May contract just settles to, I don't know, where the exit is, yeah, that's going to feel inconvenient. But my entry for the long position, it's far below 5,000. Right? So from start to finish, Coco is and this is how I look at it. Look at it from kinda like just on a trade by trade basis. And that means Coco is going to be great. Moritz Seibert [15:53](https://www.youtube.com/watch?v=HAyMif3_4D4&t=953s): No, I love that. This is a stuff that's really important in trading because I think in general, too many people think that every single thing has to be a winner. You know, it's a it's a common misconception as you start trading. And I just talked to a guy, he's building a really cool product, basically able to kind of systematize seasonality is his idea. But the guy is a mathematician and we're having this conversation. It's really cool. And I'm like, look, yeah, like, could probably, possibly have some 50% win rates from this. And he got upset. Yeah. It was like forty, fifty. And he was like, why would he said, my goal is to be right every single time. And I was like, that's that's insanity. You're never going to be right every single time. You know, what what you can do is try to create a system that you're right. Your winners are bigger than your losers, you basically have a better risk reward, something there, positive expectancy, and he was just bent on the fact that he had to get every trade right. And really, I think that happens to a lot of people, not to mention, you'll find people, and this is a good question for you, Maurice, you'll find people that get into trend following and you build a system and you're like, it's 40% win rates, got positive expectancy, you're like, cool, run with it. For them, they don't think that. They think that, oh, this trend following thing doesn't work. Look, it's only 40% winners or 50% win rate on my system. So what do you say to people who say things like that, Mermit, when they think that trend following isn't really a good thing because the win rates are lower than something like a very short term day trading system? Jason Kurz [17:33](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1053s): Sure. I mean, it's about how much do you lose when you lose and how much do you win when you win. And by cutting off the losers, by cutting off that left tail in my trade distribution and never allowing a losing trade to become devastating, that means that, I'm essentially losing on average one r or one r is the risk budget that I have, and that's it. And that's where we stop. But the upside of that trade is unconstrained. It can go wherever it goes. So I can have 30% winning trades. It's kinda like what I have, and 70% losing trades, and still come out ahead because the average winning trade is so much larger than the average losing trade in terms of magnitude. And every once in a while, you get an outlier. Not every winning trade is an outlier. But every once in a while, you get an outlier that is so big, Coco could be that one or seems to be an outlier at the moment, where kind of like this trade alone pays for so many probing trades that I put into the market to just kind of like figure out, could this work? Could that work? No, it doesn't. Okay, whatever. Next one, next one, next one. And now Coco comes along and pays for all of this many times over. This is also like important to understand. A 30% winning trades doesn't mean that the 30% are going to be big winners. Most of these 30% winning trades, 20 out of the 30 are going to be, where, little bit. Right? Maybe scratch a few basis points. And then you have 10, maybe five and then 3%, they really go like, who would have thought that? They just go and go and go. That is that is difficult to do because it means you have to be so patient. That's it. It also means that we need sample size and obviously the faster if we could trade shorter term if our systems had the same edge on the shorter term time frames, which my systems do not and the trading costs are also higher then I would do that because I would have more sample size and it would take less time to crystallize my engine. The return stream would be smoother. But the systems tell me that the longer term time frames are better, but that comes with the inconvenience of being patient. So you also have to train yourself in being a patient participant of the markets, which means that you can go through these phases where for a month you sit in drawdowns for years. Maybe sometimes you will sit in a drawdown. It'll take time for you to come back. It's difficult for you. It's even more difficult for your clients because, like you say, Jason, they are in a way predisposition to want to make money every month. If you are as a hedge fund manager, not and, supposed to be absolute return. But if you're not making money for a year, year and a half, or two, or you're underperforming your peers, you have a high risk of being fired, probably at exactly the wrong time. But that is the business that we chose to be in with my money, with friends and family's money, and with investors money. And I but I do love it. I have to say that. My investors, all of them, I do know, I speak with them, there's not a single one where I don't have a personal conversation with. And I think they get it. Moritz Seibert [21:26](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1286s): We'll see. I think that's important. I think that's really important to have, your That's one thing you learn over time. It's something that I didn't do quite well at the beginning is having investors that match my personality, who I am, my trading. That's really important because you need also your investors to also be like, hey, our system is great. We're gonna get back to it. We've had a because you're never gonna have Every year's not gonna be great. And that's the thing also, when we're having really, really great years, we had a really, really great year in 'twenty one. Everybody in the world's hyping me up at that point. Every client loves me. And then we get into Q1 twenty, basically where most of us are paid quarterly. And so they're looking at quarterly, quarterly, and the first quarter of twenty two, fantastic. After that, very flat. And you start to have questions, are you still gonna run your strategies? Is your strategy still okay? Like, it's like, wait a minute, it's even a year where the S and P and everything's getting hit, you still get asked questions, even if it's not that you're only underperforming. Sometimes it's the expectation of your client. And that's also another thing you have to do well is manage their expectations. Some people get into the market and they think you're going to give them 403% returns a year. They're like, I gave my money to a pro, I bought options one time. I made 200% on these options. Why aren't they doing that to my portfolio every day? You also have to weed out people like that and be like, okay, your expectations are insane. This is never gonna happen like this. So once again, you have to, all of these things are incredibly important when it comes to managing other people's money. Managing your own money is one thing. Managing other people's money is managing their expectations, managing what they can handle too. That's also another very important thing. And also just to add to Maritz's point earlier, so when we're talking about ours, we're talking about risk to reward. I made a chart I just posted on Twitter. I made this the other day when I couldn't find one that I liked. But basically, if you're looking at one to one, meaning if I make $1 I lose $1 Make $1 or lose $1 per trade. I have to be profitable about 60% of the time to make money, 50% obviously breaks even. Then if we jump to the other end of it, if I'm doing one to five, meaning I'm losing 1% of the portfolio, I'm making 5% of the portfolio, or however you wanna set that up. You can be profitable with just 20% of your trades winning. So this is why it's very important to understand like you don't have to have some insane 90% win rate to make money. Actually, most of the times the systems I've seen with 90% win rates and created, they blow up. Basically you get, let's say you have a 90% win rate system. There's a system I created just to show people this. It was a day trading system, short term swing trading, basically four days down the S and P 500, you let, you basically sell an option, put spread, and basically it goes up. Let's say, let's just keep it easy, no options, the S and P 500, the SPY, you buy it, you let it go up 1% and you get out when it hits 1% every time. This is about a 90% win rate system. However, to get those winners, your downside is much bigger than your upside. So it's about a five to one risk reward. So basically this system blows up if you have a losing trade. So most of the time when people are telling you, because I see that all the time, and I was the panel we were talking about earlier, I've seen people talk about their 90% win rate systems and stuff, and it's like, that doesn't really exist. And when it does exist, and I've seen that stuff and Mertz and I have been in the hedge fund world and just seeing it when people start talking like that, most of time, I'm like, okay, it's either fraud or they're going to blow up at some point. The one thing you're seeing in the hedge fund industry right now is a lot of spread basis trades between the bonds, bond yield, cash bonds and bond futures. There's funds that aren't doing too well today because they're starting to lose money. And this was supposed to be a 100% you cannot lose. Also go back to 1998. What was the name of that fund in '98? Do you remember it, Muritz? LTCM. Jason Kurz [26:01](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1561s): LTCM. Moritz Seibert [26:02](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1562s): Yes, LTCM, that whole crisis that happened. They gave the money to a bunch of PhDs. PhDs found a 100% win rate trade, they put everything and then some into it, they ended up blowing up and Wall Street kind of had to come in and save them as a company as well. So I mean, it's really, you really don't wanna get too into that. I'm stuck on trying to win every single time in a trade. You wanna get more to, hey, I figured out a way to set up my risk to reward properly. Figured out a way to set up my stop losses properly. Like, these things are incredibly important. And, I know Pavel doesn't use stop losses, but he uses exits. And however you do it, just figure out a way to set up your risk to reward right, and you will make money. Jason Kurz [26:52](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1612s): Is no trader that wins on every trade and just a final thought on that, even HFT, like you could say that's the ultimate systematic trader, right? Because no human being can trade as fast as they can, But even HFT and market making operations don't have 100% winning trades. They will have losing trades, but they have substantially, massively greater sample size than us. Bringing it back to your example with the 1.5 or like, you if if you have a 20% win ratio, if you could do 1,000 trades in a day and you have a 20% win ratio but you're making, I don't know, three to one reward to risk, then you would have a winning day every day because it'll come through. Statistically, you will have, at some point, a small losing day as well, but your edge will crystallize because of that large sample size. Now, but in the example that you used with the S and P 500, if it's at the end of the day, there is at most one trade that you can do in a day and then you hold it maybe for, I think you mentioned the 1% profit target and maybe that's only active for the next day and you get out by the close. But by definition, you will have one trade per day. You know, to get to 1,000, you need four years. So after four years, you need to be up. But in that four year time frame, which is massively long for human beings, every day feels long, right, You're very likely to give up. And this is such an important thing is that people don't or most people don't realize how much diversification and how much protection they need, also protection from themselves. An easy example is the tech bubble. Just that comes to mind. Right? You look at the NASDAQ. The NASDAQ is an ensemble of everything. And it's it's been down, what, 90% peak to trough, something like that. I'm not sure if the number is right, but a massive drawdown. Right? So you look at that index now with the benefit of hindsight. It's, twenty three, twenty four years in the past. Maybe you're young enough, you haven't even lived through that period with your own money. You look at that index and go like, ah, okay. Every once in a while, it goes down. It's going to be very inconvenient, but look, it's going up over the long run. What you're completely forgetting is that, very, very, very likely in time probability space or, like, you're you're as you as an individual, you're very likely to have given up or altered your bet size. You will it's so difficult for you to go through that drawdown and stick to it so that you can make it on the way up. You will either have redeemed or you will have reduced your investment down there at 90. And what that means is that your experience from that point forward is going to be very different than the ensemble. It's going to be very different than the NASDAQ. You can never track the NASDAQ again because you've Yeah. You've it only takes one occasion for you to, to not be a 100% allocated, and that's it. So that is why diversification is so important that, an uncorrelated return stream so that you have more of a balance in your portfolio, and you don't come into these situations where you have to where where you have essentially reach your uncle point which then destroys your compounding. Pavel Kýček [30:36](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1836s): No. Perfect. It's also Moritz Seibert [30:38](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1838s): Go ahead. Pavel Kýček [30:40](https://www.youtube.com/watch?v=HAyMif3_4D4&t=1840s): Yeah. That's also the reason why I would say that most of traders shouldn't try to be full time traders only because then going through drawdowns that can be easily a few years is pretty hard to withstand and to have this belief in your only income stream that you have. And basically, this percentage win, I think it is a lot about ego, know, because we are in trading for making money. And sometimes we are putting too much of our ego into trading in general. And we are trying to be right instead of making money. And these are two very different disciplines because I have many strategies that have win rate 90%. All of them will lose money at the end of the day, it would be all these martingales type of strategies, know, that you are averaging down. It would be these shorting, triple x ETFs on VIX, for example, these kind of struts. Yeah, they have like even higher than 90%. But you will always have one day when you will lose basically everything during this very short day. And to drawdown what I think that is pretty interesting is how people are thinking about drawdown if they have the experience with some deeper drawdowns, because we are dealing with clients that are investing in crypto, in our crypto trading solution. And I used to be dealing with clients from traditional finance. And what's interesting is that we have for example low risk portfolio that has average drawdown about 10% or so. And do you know how many clients we have on this low risk portfolio? Zero, exactly zero. Because all of them went through like drawdown 60%, 70% just by holding some crypto asset and all of them on all these calls are right. Okay Pavel, like 2030% it's no problem at all for me. But what I find interesting is that one thing is drawdown and from the client perspective, how I see it is that probably even worse is giving back open for profits as Maurice was talking about, because these open profits, everyone is always having their lumbles and prepared to keep the money for something. And then immediately, especially on trend strategies, you simply give away 50% of your open profits, 30% without any problems. And this is something what is probably emotionally even worse for clients that are not informed enough, at least from my experience. Jason Kurz [33:43](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2023s): That's right. The other thing is, sometimes you see these strategies where you're essentially selling tails. I mean, you I think, Jason, you've mentioned, selling puts and so you can back test that stuff. And obviously, can find the strike and the frequencies and this and the other things so that the backtest will look good. It will have drawdowns, but it doesn't blow up. Now the thing is, if you do this long enough, it is not a question of how much will you lose. You will blow up. At some point, you will, statistically speaking, blow up. And you will either have a complete blowout in terms of you will go to zero, or you will reach a point where, for whatever reason, say, you're selling puts on the S and P 500, the loss is going to be so large. And now there is parameters coming in which you cannot control, your broker may ask for initial margin variation and oh, sorry. Maintenance margins go higher. Right? Initial margins go higher. You may have liquidity and funding problems with your broker because other positions that you have in the portfolio also work against you at exactly that point in time because you have that correlation shock. And even if you don't lose a 100% of your capital, and so you have the complete blowout but let's say you lose 60 or 70, again, it's like almost a one probability, unless you have cash, raining from the skies from other sources, that you will, at that point in time, change your posture, change the trading system, change the sizing, do something else and boom, there you have it. You have the deviation from the trading system, and you're now no longer participating in what could potentially be the recovery. You're seeing uncharted territory, and very likely you're not going to make it up to 100%. But it's so easy to overlook this, because you're looking at the recent experience, and the recent experience is 90% winning trades or 95% winning trades. What could be nicer than that? That feels really, really good. But the devil's in the detail, and there's a lot of hidden risk in that type of trading behavior. Especially, final point, as a function of volatility or implant volatility, now we have what is the VIX at fourteen fifteen. I don't know. I'm not really trading it, but it's relatively low. Yes. We've seen the VIX in single digits. Right? But historically speaking, a VIX or implied volatilities for the next thirty days or variance in that case at around 13 to 14 is relatively low. Equities used to be 20 vol when I started trading, and everybody was fine with 20 vol. But, oh, my gracious. 20 vol is now far too high. People don't even know what 20 vol is anymore, most of them. Nobody wants 20 vol, right? But so if you now have a strategy that goes like, oh, well, I want to make 1% per month, and I want to achieve that by selling volatility, well, you now have to sell even more options, right, in order to get to that 1% level because implied vol premium is lower. And that just means that you're opening yourself up to even greater risks to the downside, presumably and probably at the worst point in time, which is prices are high, stock prices are high, vols are low. If the shock comes, you get put in the mixer. So I'm not saying that there aren't people out there that don't know how to run these strategies or have alpha in the vol space, in the short volatility trading space. But you should probably always find one or talk to one that has the tail covered by, for instance, put spreads, right, or having some ratios or being long a VIX call, something that can at least mitigate or avoid the complete blowout. Moritz Seibert [37:53](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2273s): No, that's absolutely right. And we talked about this the other week, but you remember the optionsellers.com guy. That's a Jason Kurz [38:02](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2282s): great example. That was on Natgas, right? Natgas and oil. Pavel Kýček [38:07](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2287s): Was selling Moritz Seibert [38:08](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2288s): calls, naked calls on natural gas and selling naked puts on oil. Both of them in 2018 ended up going the other direction all at once. And he just blew up. And like, that's, that's the thing that does happen. Like, you can make some money doing it. And I'll see it all the time where people send me a back test of a system like that. And they'll basically take out like a certain amount of years in the middle of it or a, oh, look, only have a, know, I'm only back testing the last three years. You know, this is why it's important to really try not to curve fit your back test and try to go as far back as you can. Really, I think going really far back too helps me to just understand and manage my expectations during certain environments. The 70s can be one interesting environment, a lot of inflation. You go also through the Great Depression, you get to understand a different environment. As far back as you can go in these products, like as far as you need to go. And if you can go back far and you're not sitting there trying to say, Hey, I'm only gonna go back three years because this is the new market or something, you're going to have a lot more luck than someone who's just going to do the last three years. You really have to go far back in your back test. I can't really stress that enough. I don't know if you guys will believe that as well, but I really try to go as far back as I can. Pavel Kýček [39:30](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2370s): I think one reason why people are trying to make these high percentage win strategies is because they are trying to find something that is not in the market and it is stable income. They are just trying to make as Maurit said, make money like this is very funny like 2% a week or 5% a month, 1% or whatever, doesn't matter, know, but anytime I see these types of statements, it's always a strategy that has to end up very bad at the end of the day because it's not how it is working. Can't like make profits if markets are not offering profitable opportunities basically. So this is the approach that is always wrong and that usually leads to massive losses at the end of the day. Moritz Seibert [40:29](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2429s): And I think about it the same way as you were like, that's why I think it's important to, if you are just a trader, know, I'll have friends will come up to me and they'll be like, I put together a small amount of money, like really to trade for yourself, you need quite a bit of money. Because if you go through those drawdown periods, you're in a rough period, you might need to take money out. There's a lot to trading just your own money and living off of it. So it's good to have another form of income, something else that you're doing. Or, even like Maritz, you have a fund or and like you as well, Pavel, you have a fund, you're able to kind of bring in some money through that, like, well, however you're doing it, these are all very important things. But if you continue to just kind of stress about, hey, I need to make this amount of money a month, hey, I need to pay my rent per month, you're going to miss out on those big winners. For me, it's like if I was doing that, I would be hitting and I watched a trader do this, I worked with one once, he would be on the cusp of a really great trade. And it would be towards the month end because he always wanted his month end to look good. He would settle with like a 1% month or a 2% month. And he would just do this over and over again. And then you have one big losing month and it wipes away all your gains for the year. For me, and I've heard Maritz talk about it on Top Traders Unplugged too, which is lumpy returns. Like, think it's incredibly important to understand like your returns are gonna be, I'll have a really great month. 2020 is a great example for me. The first two months of the year were pretty terrible. I made most of my returns in March, and then I was basically flat and shopping around until the last part of the year in November, December, which was my two best months ever in my portfolio. So once again, it's like those lumpy returns and not thinking that I was gonna just get out with a little bit of gain here and there, it's important. If I'm having a 5% down month here and there, and then I'm able to have a couple months that, or just one month in a year that's 20%, That could make my entire year. So once again, those lumpy returns, it's incredibly important to understand. So I'm glad that was also talked about. Pavel Kýček [42:44](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2564s): These are the wrong expectations. Had huge years 2021, 2022 on my equity portfolio trading. And then I was in drawdown basically one and a half year. It's normal, and everyone everyone has to expect this type of this type of like returns in trading because otherwise he's just lying or they are just lying themselves. Moritz Seibert [43:10](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2590s): Yes. Yeah, exactly. Let's put some Andrew, I saw a bunch of them. Andrew Swanscott [43:17](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2597s): You read my mind. Was just about to suggest. We got some questions in the chat here. So let's, I'll do it from the top. So we got one from Zion here. You put it up on the screen. How many algos are you all currently running in your portfolios? Jason Kurz [43:37](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2617s): Well, I go first. I run a bunch of different trend following algorithms. They are very similar in design. They're essentially different trading speeds. That single market trend following. So put this as like one bucket. And then I have another one which is trading spreads, momentum and commodity spreads, and that is essentially another group of algorithms, one algorithm. So you can really say it's two strategy types which I'm running. I'm not running anything in mean reversion or swing trading or any of that type of stuff. Everything I do is essentially rooted and grounded in trend and time series momentum. Yes. Pavel Kýček [44:26](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2666s): Yeah. Well, I'm trading especially in crypto, I'm trading right now 15 strategies, trends, momentum, breakout, revelation two because I'm quite believer in this type of in this type of strategies in broad portfolio for stabilization of profits a bit. And on equity, some trading nine strategies right now. So, again, French struts, but mean reversion to the long side and some shorter terms to the short side to for a hedge. But with average holding period, one to two days maximum, really, most of my struts on equities are to the long side because it just makes a lot of sense to me. Moritz Seibert [45:15](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2715s): Think for me, I think one thing to talk about is the different strategies. I think Pavel and I talked about this off mic recently, just on Twitter, just talking about all these different strategies that we run. For me, I run a lot of different strategies. I even have some mean reverting strategies. It's literally just one mean reverting strategy. I run a lot of volatility breakout systems. That's kind of my bread and butter. That's what I kind of go to over everything else. I really gravitate towards those. I think those work very well for me and just my methodology and the way my personality works. So you have to be very patient with those. There's not a ton of trades in those a lot of the time. So that's also something you could be sitting on your hands for a long time. And then classical trend following systems, one hundred day highs, one hundred and fifty day highs, even two hundred day highs, classical systems like that. I think, and I'm missing something. I think there's also a spread system in there. I call it a cross asset mean reversion system. Basically, it's not exactly mean reverting, but it's basically you have something like corn and live cattle, and it basically creates spread trades between the two of those. It kicks in on certain times. It has a seasonality aspect to it. It was kind of an interesting thing. It's part of the reason why I'm working on that one product with that guy right now. So it's a kind of a couple interesting ones there. It's cool to actually hear everybody else's stuff. Andrew. Andrew Swanscott [46:46](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2806s): Yes. So for me, I don't know exactly. Actually, I think it's about 10 to 12. The reason why I don't know exactly is because I've got a small team who we all do separate parts of the, I guess, the management. So I've got someone who's much smarter than me at portfolio construction who chooses the strategies and how they combine. So somewhere around 10 to 12, but we change quite a lot at the moment. So we're testing some new ideas. So there's that. And by the way, Zion also said, Love your work, Pavel on Twitter, Robuxio looks fantastic. Thank you. I have to agree. Pavel and I actually had a little call yesterday on Robuxio and he showed me some pretty cool stuff. So if you're interested, go and check that out. Now next question. Here we go. Let's get philosophical. This is an interesting one. Does the panel have any advice on trading costs and broker selection? My algos trade mostly forex based strats and transaction costs spread plus commission form a large percentage of my gross p and l. Pavel Kýček [47:57](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2877s): Yeah. I think go ahead, Pavel. No. Okay. So but maybe I will be too honest here, but if a strategy if cost of trades would be too high compared to average trade and I don't know how much it means in this particular case, I wouldn't even trade the strategy because then just a small change in your trading catch or in market behavior or whatever. Anything can happen like your trading infrastructure can have some problems, whatever. You just have your margin of profits basically could be, I don't know, but could be pretty low also. For example, my solution is always to try to have the highest possible average trade and that's why, for example, I'm not trading smaller timeframes under one day or twelve hours sometimes, but like one day to one week are my timeframes to trade. Moritz Seibert [49:03](https://www.youtube.com/watch?v=HAyMif3_4D4&t=2943s): And I was gonna just add that, if whenever I've seen this question come up, it's usually that someone is trading so much, You know, I don't hear that in really in my timeframe, like, doesn't really affect me. I'm also through Stonex. We do have pretty high commissions, because you have to use another basically, once you're at that end, you have to use another thing like trading technologies or something to put on your trade. The commissions are pretty high. However, I would have to trade a lot more toward the point where it would it would cost me a major part of my P and L. So I would say, maybe look at your system, see how much you're trading, see maybe if you're overtrading. I see a lot right now in crypto, I'm sure Pavel could also say this as well. In crypto, there's so many people who are like, they're buying and they're selling every other day. And it's like, well, riding this bull trend. Like, why are you buying and selling every single day? So kind of look through that, see if maybe you're overtrading, see if you can run a little bit longer term system. Doesn't mean you have to be as long term as I am, but being a little bit longer term than you might be today might be helpful for your P and L. Pavel Kýček [50:20](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3020s): I remember one thing that one experienced trader taught me a few years ago and it was like your average trade should be as high that you don't have to care about your cost of trading that much. It doesn't mean that you shouldn't be thinking about them, but it means that probably the solution should be robust enough that if your average slippage would go a little bit higher or, I don't know, commissions would go a little bit higher or whatever, you never know, Your solution should be robust enough from this average trade perspective. And that's something I am trying to do all the time. Jason Kurz [51:03](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3063s): I have a spreadsheet here, which, by the way, I'd be happy to share. There's nothing confidential in it. But it also depends on the market that you're trading. So some markets, some futures markets are more cost efficient to trade than others. When you think about the CBOD and some of the grain markets, the exchange fees there are really high. When you compare that to, say, the S and P E mini, the exchange fees are very low. So if you have, like, a higher frequency trading strategy, you'll be tempted to trade the S and P mini or some of the futures markets that have relatively low cost, are very liquid as opposed to Kansas City hot red winter wheat, which is definitely more expensive to trade. But the total calculation is kinda like, you have execution commissions. So in this spreadsheet here, have, say, 75¢. You have exchange fees, 50¢. Clearing fee, 50¢. And then very importantly, there's bid offer and slippage, which in my calculation is part of the trading cost because you don't get done at the mid price. If you are, taking liquidity, you lift the offer, you hit the bid, you cross bid offer. And you may even have slippage compared to your system target price. So let's say that's another, in my calculation, year $5. It could easily be $20. If it's only 5, then the sum total of what I just said, again, I'm happy to share that spreadsheet, is $6.75 per lot, but that is only one way. You also have to get out, so multiply that times two, and then multiply that by the round terms per million per year, which is a system statistic that you can get from your system. In my spreadsheet, it says $12.50. That means you have about $17,000 of trading costs per year. Per million, that is 1.7. So just put that in that could easily be higher. But I would then say, I got somewhere around 2%. You have to overcome that hurdle. 2% is pretty steep. That is an example. It is not applicable or reflective of my trading. I don't have that much trading cost. But it's kind of nice to play around with that spreadsheet and see like, well, how much does it really cost to run a higher frequency, shorter term trading system where you then go into like, okay, I have 2,000 roundturns per million per year, 3,000 roundturns per million per year. At that point in time, you may actually start thinking about becoming an exchange member and having lease a seed or buy one of these seeds in order to have reduced transaction costs. Obviously, most people don't do that. But if you ran a larger organization, you actually start thinking about these things, exchange memberships. Andrew Swanscott [53:55](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3235s): Yeah. Thank you very much for that, Maritz. I like how you broke down those costs into the individual components because I think a lot of traders don't do that. They don't pay enough attention to the cost of trading. Just scrolling through the chat. We've had a lot of good comments from Eccentric and The Dave. So thanks for contributing. This question here from Crypto Nick really stood out. It goes a lot to our discussion about conviction, which is I guess the theme of today. When did it click for you and you became a solid and confident trader? Moritz Seibert [54:34](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3274s): That's a great one. Hey, Nick. He's on our channels a lot. His comments. He usually has a lot of great questions and comments. But yeah. So for me, being a solid and confident trader took years. I think I made it I knew about markets and trading from a young age. I had a great, great uncle who was in into trading. He read a lot of seasonality stuff, did a lot of cycle work, very interesting guy, made a lot of money in the markets, was very talented. So I got to learn at a young age. Did it click for me because I got to learn from somebody? Absolutely not. I still made all the same mistakes, all the ones that he told me not to do. Hey. I don't know if you're really, you really wanna be day trading. Maybe your life's a little bit too busy to day trade. I day traded. I lost money that way. And then I maybe your, fundamentals, I don't know if that's really like the way you should be looking at the market is what he would tell me. So I looked at fundamentals and thought that was the way I should be trading the market. I lost money that way. I continued to make a lot of mistakes really until I don't know if confidence is the right word. I think I started to go the other direction and understand that risk management was everything. You always ask when you're a younger trader, you ask the older traders the same thing. And I got to learn from a lot of floor traders. And I would say, what's the secret? How do you trade these markets? How do you make money in these markets? And they would all tell me the same thing, risk management. Oh, here's this book. Then And they give me a book on Van Tharp on risk management. I'd get so angry. I'd be like, why don't you just give me what to buy and sell and when to do it? Why aren't you guys telling me the secrets of trading? And that's how I started to kind of learn like, hey, maybe it is that maybe I should just sit down and read this book. And so finally I read that book and that helps me kind of to understand what we're talking about here, which is risk to reward. And understanding the risk to reward started to change everything I thought about trading. You think in trading is like these people, I'm sure we all get it all the time. If you have a fund, people wanna give you money and they basically think you sit in a room and you take their money and you're like, you have 20 guys and you're all PhDs and you're coming up with some crazy thesis and you're like, okay, we're all going to put it into this stock over the next ten years are going to make all the money in the world. And that's not trading. Trading really is figuring out that risk to reward, using your stop losses, setting your position sizing right, figuring out the volatility of each product so you can let your winners run. Like all of these things are incredibly important. And once you figure those out, the rest of it's really, it's a lot simpler. That's the hardest part of trading. So if you just kind of focus on that part and almost, protecting, like Paul Tudor Jones said, protecting your ass over everything else. If you're kind of just working on that, over time, you will get confident, but it won't be because you're overly confident. Sometimes you're overly confident at the beginning. It will just be more because you understand your systems, you understand your strategies, then you're confident in your system and your strategy. I'm not confident in myself or my ability. I'm confident in my system and my strategies. Andrew Swanscott [57:57](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3477s): Well said, who wants to go next? Pavel, looks like you're about to say something. Pavel Kýček [58:04](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3484s): Well, I'm thinking because this is one of those very good questions I don't have good answer to. Like one simple, one simple, because I was thinking about the whole journey and I'm really trading eighteen years right now and I would say that maybe it clicked to me like after maybe ten years or so. I'm not saying that I wasn't profitable before but being satisfied with the level of knowledge or how thinking about trading, it took me such a long time because I had to really because to me it was function of being able to deal with uncertainty on really deep level and then having really bigger trading account and being able to diversify across many approaches. So it was the time when I started being not confident, but being really thinking like about myself as a trader, I would say, the real trader to know that I know what I'm trading, what I'm doing. I'm thinking about strategies because everyone can build some kind of strategy on some historical data. Another thing is if you can trade it confident, really, yeah, if you are satisfied with the solution, if you know how to deal with drawdowns, if you know how to switch strategies if it is necessary, how to read the strategy performance compared to for example, market period we are in and so on and so on. I think that the level of experience one has to have to say that he's really like professional trader or trader on some level takes a lot of time like probably much much longer than most of traders think at the start, at least this is at least my how I'm thinking about it. Moritz Seibert [1:00:20](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3620s): Let's give Maritz a chance to say bye. I know Maritz has to go. So just want to give him a chance. Yeah. Andrew Swanscott [1:00:26](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3626s): You're on mute. You're on mute, Maritz. I think I can unmute you here. Yep. Moritz Seibert [1:00:35](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3635s): I think I think you remuted him maybe. Andrew Swanscott [1:00:39](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3639s): We can't hear you for some reason. No. We can't hear you. I can see your mouth moving, but no audio. Nope. Maybe while he's figuring that out, I can give my answer. Nope. Moritz Seibert [1:01:01](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3661s): I think he's got it. Just give away, Maritz. We'll see you. Forward your links so people know where to follow you, Maritz. Thanks so much for coming on. Andrew Swanscott [1:01:14](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3674s): That's fine. Thank you very much. I think for me, it really started to click once I figured out what type of style worked for me. So initially, I was, started trading forex and doing swing trading and joined a prop firm and learned some of their strategies, which turned out to be crap. But I also tried day trading, e minis. It doesn't sound like too bad, but when you consider the time zone, I had a corporate job. And so I was working, eight, ten hours during the day, come home, get a couple hours sleep, get up at midnight, try and trade the E Minis for a few hours, get a few hours sleep and back to work. It was ridiculous now that I think about it, but that's kind of what I was trying. I was trying to find my way. And then I think once I discovered that you could back test and you could trade algorithmically, which really works a lot with my and I'm a very evidence based person. I like statistics and that kind of thing. And once I was able to figure out how to do testing and I tested a bunch of these strategies that this prop firm was teaching people and they were out of rubbish and they didn't work over the long term. So switching to something that really suited my personality was a big click for me. And obviously you can back test in a good way and there's things you shouldn't do, which I also had to figure out over time. But I think that the key is for most people will probably say most traders would probably say, once I've I've figured out something that really kinda worked with me personality wise, that really that's a really big step forward in conviction. So what about you, Pavel and Jason? Do you you think that's the same for your journey as well? Moritz Seibert [1:03:13](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3793s): Yes. Absolutely. I mean, the way you explain it is really good. And I think that's generally, like like you said earlier, it's it's important to understand how your personality works. I've seen people make money in all all different ways. You know, I've seen people, great fundamental traders. I don't know how it works, but they do it. And they don't know how what I do works though either. They look at me like I'm doing some sort of voodoo and I look at them the same way. I'm not one to say anybody should trade one way or another. I'm just saying what works for me. I also saw he made a question about which also goes into this too, about do I still think day trading is crazy? And for me, yes. But also, I've also haven't seen too many people over the years do really, really well as day traders, like I haven't. So that would help to change my mind. I have seen a few people over the years who've made good returns doing that. They make their living doing that. But I've seen a lot more blowups. I've seen a lot more people lose money. And I also for me, it's absolutely insane because I could not imagine to continue to just get in there and check into the market every day almost like it's a job. But I've all and I've also seen day traders. This is the thing that also, like, really was disturbing to me. Most of the day traders I've I've met, and not saying everybody does this because, obviously, this is the wrong way to do it, but a lot of the day traders I met almost clocked in, like, 09:30. They're clocking in. They're taking some trade, they would trade one or two stocks, and somehow there was always a trade to take every day. That's not there's no such system in the world or strategy in the world or methodology in the world that will give you a trade to do every single day all the time. And they would trade all the time. So for me, that was something that I was like, it's just doesn't fit me. It's not something I wanna do. I don't really understand how to do it well. That doesn't mean that somebody out there doesn't do it well. Somebody, I'm sure somebody, it's great for somebody else, somebody meticulous, somebody different than me. But I think a lot of us, when we start, we gravitate towards that because of that feeling that we wanna get some money out of the market. I think that's where we all start. You know, we go, okay, well, if I just bought an option and I just bought it here and sold it here, I would make this much money a day. Therefore, I'll take this many trades a day and I'll make this much money. You know, you start to do things like that. And really, like, over time you learn, like, even if you're a day trader, you learn, like, there's only so many setups in a day. And because there's only so many sets in a day, I could not trade for, a month. I just have to wait for my setups to happen. And some people do it differently, like like me, I wait for my setups to happen, but I'm a very long term timeframe. Some people are a short term timeframe. I think either way, the one thing to take from the conversation is that for any trader to do well, you have to really wait for your setup, wait for your system to tell you to enter, wait for your strategy to tell you to enter. I think that whatever strategy, whatever timeframe, I think that's the most important thing to take away from this conversation. Pavel Kýček [1:06:22](https://www.youtube.com/watch?v=HAyMif3_4D4&t=3982s): Yeah, exactly. And again, I would say that we are again back to the expectations because it is really something that is driving traders the right way, but also the wrong way because expectations, yeah, they can just ruin any trading activity because I lived through it with intraday discretionary trading and I had huge expectations based on many proclamations, based on many ads and so on and most of traders that are starting tend to gravitate to intraday discretionary trading. I'm not saying that it is not possible, but there are so many, like so many blocks that you have to push through, like cost of trades, for example, emotional state and so on and so on, like many barriers and they are for sure the highest barriers to be profitable trading in discretionary trading, to be profitable trader I think at least. And based on I know quite a few traders who try to be discretionary intraday traders and none of them is trading discretionary and intraday these days. Or they they trade intraday but systematically, not discretionary because this is really the hardest I would say this is the hardest type of trading. Andrew Swanscott [1:07:53](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4073s): Mhmm. Yep. So how are you guys for time? Do you have you got a few more minutes? Or I could answer one more. Yeah. Do you have a favorite one in the chat here? We've got a bunch of questions here. Moritz Seibert [1:08:05](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4085s): I know. I'm You'll need to go just a few minutes. I also had to laugh about the voodoo indicator. That's hilarious. I think think Eccentric said that. That's funny. But, I wanna also thank Dave. Dave's Dave's been trading a long time. It's another person I've gotten to talk to about trading for a while. He knows his stuff, so it's cool that he's on here sharing his knowledge, just talking. So thanks for coming on, Dave. Let's see. Dave asked a similar question to what when we already answered, which is when then when did we have an moment? And I think that we don't have to talk about being consistent and profitable and confident because we already talked about that. But the moment, I think, is important. I think that could be fun to talk about more in on that. I can go first. But just on the moment, I think what's important to understand is that I don't think trading has moments, or at least I don't generally in my life. Moments are a thing that you can come in, moments are a thing that when you're looking at the market, I feel like I had to go through all of those bad, painful periods. I've blown up an account, I've lost money, I've been stressed out to the point where I'm crying in a bathroom, sitting on the ground going, Why am I interested in doing this? I think I needed all of those bad periods, the good periods, the back to the bad periods, the hard periods, the flat periods. I think I needed all of that to get to where I'm at. I don't think there was ever a moment where I was like, everything's great. I figured it out. I think there's been times where I thought that, I think my brain thought that I wanted to believe that I did. But really like now as time moves on, I'm just like, well, I'm kind of stupid. My systems are kind of smart. I just continue to sit in that. And I've gathered the conviction at this point to where and I always make that joke where, I could, like right now, our systems are still on cocoa, and it's, parabolic, and it looks like it could crash any day now. God could come down on a cloud and be like, Jason, I've seen the future. Cocoa is going to crash tomorrow. You need to pull your position. I'd be like, Well, I'm sorry, God, I don't have a cell signal. Like, that's the level of conviction I have on my systems nowadays. Whereas when I first started, it was the opposite. Anybody could have I could have read something online, I could have walked into some random person, Anything could have spooked my conviction early. So that's that's taken a lot of time, but I think all I needed, all of those things to get there. Pavel Kýček [1:11:00](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4260s): Yeah. I got my moment, like, after three or four weeks of my studying of trading, like maybe after first month of when I started like reading articles about trading and I was like, yeah, simple, you just follow the CCI indicator, Woody CCI and this type of trading was pretty well known at that time. And it was my moment. And it was the only time I got this moment. From that point I just started being a little bit better, to know something more, to educate, to backtest better, to understand markets better, to make research basically. But no other moment in my trading career. I'm just trying to be better every day and thinking about trading on a daily basis because at the end of the day, this is just another job, know. You are just trying consistently being a little bit better on a daily, weekly, monthly basis. At least this is my journey. Andrew Swanscott [1:12:06](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4326s): I like that Pavel. I think that personally I have moments all the time. Think as you mentioned, trying to get better at trading every day. I think there's a lot of opportunities to learn from trading no matter how long you've been trading. And it's something that I've discovered from on Better System Trader, interviewing traders that have been trading for fifty years and saying, I'm still learning a lot every day. It's a never ending journey, I think. But one big moment for me, I think was really a turning point in my trading was in 2008 when the market was tanking and I was heavily leveraged trading mean reversion long. So buying a lot of dips, which were not did not end up in dips and was not very kind to my trading account. So from there, it was a pretty horrible experience at the time, but it really, taught me a lot about risk management, market regimes, the context of the trades that you're taking. So I think a lot of my really big moments have come out of, what's the word, adversity, I guess. Getting through drawdowns, having ugly trades and going, Oh, why did this happen? What could I do about it? What's the lesson that I need to learn? I think if you come at trading with that kind of perspective, like we're all here to learn, none of us have figured it out. Something different will happen tomorrow and it's all a journey. I think that's really a good way to approach trading, whether you've traded two years or two hundred or maybe not two hundred, but a long time. So I think moments are everywhere. You just need to kind of look out for them. Moritz Seibert [1:13:56](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4436s): Yeah. I think generally, need to figure out the conversations are kind of turning to that over and over again. I think it's important to understand you need to figure out either a mentor or figure out someone who you can trust that you can kind of model yourself after in some form of way. That doesn't mean they have to be the exact trader like you. That just means they're transparent. They talk to you about their trading. I think those things are really important so you can grow from those moments. You are going to have technically an moment, but there could be a million of them. And as trade as trading goes on, it's not something that any of us can ever get complacent about and think we know everything. So you need to have someone who will put you in check. You need to have someone you can trust, even with the LED lights. I did just see that comment. But, it's really important to understand, like, even That's kinda why on my page, I'm trying I really am I always try to be very transparent and open about what I'm doing. I see you guys do that as well. You know, like it's always about transparency to me, constantly being able to show, I have a newsletter and really, I don't really need to have one, but I enjoy the discourse. I enjoy the conversation. And generally, what I really like to do is show people what I'm doing and the consistency of it and my process and the fact, we just bought China recently. It's a great example. I just said, probably, was it a month or two ago that I was like, oh, it's in a massive downtrend. I would never buy China. Everybody's interested in it. And then here it comes, a couple of weeks later, it changes trend, it starts to move up, I get a buy signal, And you got to get long China because I also understand that, like, sometimes need to fade my own feelings because my systems tell me what to do. And two, I think it's also important for people to just see that's the transparency that I want to bring is understand that I can have whatever feelings I want. But if my systems tell me something, I'm just going to do it. Pavel Kýček [1:16:10](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4570s): Yeah. And not being emotionally connected with the trading strategy or with the trading approach in general, I would say, because falling in love with the way how one is trading is always the bad position for having the open mind to getting into different approaches, different assets or whatever. You know? Just as a trader, I think being open minded is very, very important just to find good opportunities in the future. Andrew Swanscott [1:16:46](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4606s): Yeah. Well said. I think that's a great way to end the show today. What do you guys think? Had a That's great. Moritz Seibert [1:16:53](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4613s): If if We've had a lot lot of I guess we could ask if anybody has one, because I do have five minutes if you guys do. If one if everybody has something that they think was a question that we missed, please put it in now and we'll answer Good idea. Before we go. Andrew Swanscott [1:17:08](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4628s): Yep. And while that's happening, how about we all share where people can find more from us? Pavel? Pavel Kýček [1:17:17](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4637s): Yeah. Of course. You can check our website, rabaxio.com or my Twitter account on Robaxio. By the way, in the section blog, you can find a lot of articles about trading in general, how we are building strategies, some thinking about building strategies, robustness testings and so on. So this is a good way to see how we are approaching trading in general. Andrew Swanscott [1:17:47](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4667s): Tyson? Moritz Seibert [1:17:48](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4668s): Yeah. So AAO Research, that handles on everything. You know, the I have a substack. I have a website. AAO Research is also YouTube and Twitter. You can find me on all those things. I'm pretty easy to get ahold of if somebody wants to get ahold of me. I also have a newsletter through Substack. So if you guys wanna check that out, feel free. I put out a free weekly report on Fridays every week, just basically going through all the charts and all the systems and the strategies and kind of posting what I think is important. Yeah, that's it. Andrew Swanscott [1:18:25](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4705s): Jason, I really need to get a banner for your links up on the screen like I did for Pavel. I'm not favoring him. Just he was on the Better System Traders show a month ago and I still haven't cleared it off. Moritz Seibert [1:18:36](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4716s): No, no worries. I didn't even think about it. Andrew Swanscott [1:18:39](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4719s): That's going to be my assignment for next week. I'll make sure I've got your links up there so I can show it on the screen. You're honestly the Moritz Seibert [1:18:45](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4725s): professionalism of it looks great. So no complaints at all above and beyond. Andrew Swanscott [1:18:53](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4733s): And if you want to find out more from me and all the fantastic traders I've got to interview over the years, just look up Better System Trader on bettersystemtrader.com or YouTube, Twitter, Facebook, wherever. I'm streaming to a lot of places. So I don't see any questions all of a sudden that's gone quiet. So maybe we've scared somebody out. Are coming up. I think they're just they're going like in our StreamYard, they're backwards. Moritz Seibert [1:19:19](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4759s): So if you look up, you can see a bunch of them, but they're past Dave's. It's almost like the Twitters go to the bottom and the other ones are up top. We do not have I do not have a Discord at least. I do run the newsletter, which you can find or talk to all of us on that. And then a question that did come in, in which realm of great investment fund traders are you? And where did you meet? Andrew Swanscott [1:19:50](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4790s): I'm not sure Moritz Seibert [1:19:52](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4792s): what's the question in which oh, here we go. We'll just we'll quickly we'll just yeah. There you go. We'll just name, like, what what what we've trade and then how we meet, and then we can jump to the question right before that, then we'll just get off on that. Andrew Swanscott [1:20:10](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4810s): I don't I'm not sure I understand the question. In which realm of great investment fund traders you are did you meet? Which realm of great investment? Do you know Moritz Seibert [1:20:20](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4820s): I'm not sure. Andrew Swanscott [1:20:21](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4821s): Myself as an investment fund. So I'm not sure. Moritz Seibert [1:20:25](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4825s): So I guess we could just name like what what what we where we trade. I'm primarily a futures trader. I do trade the I do have an ETF space as well. Pabul, Pavel Kýček [1:20:36](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4836s): you're in the crypto space, but you also have other things. Right? Yeah. I used to be trading commodities too, like, breakouts on commodities. Right now, I'm trading equities for on my account and crypto on my client's accounts. So this is what we are doing right now. Andrew Swanscott [1:20:56](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4856s): Yep. And I'm a I trade futures, commodities and all purely algorithmic. I tried charts, fundamentals. I'm terrible at that stuff. So it's all all computer algorithms. Plus I live in Australia and I like to sleep at night rather than looking at markets. So that was a lesson I learned early on. And so now the computer just runs while I'm having a snooze, which is great. Moritz Seibert [1:21:22](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4882s): I think we just wrap it up there, Jason, or did you say something you like? The other one I just wanted to touch on quickly, which was how would a 90% win rate strategy blow up? So we did talk about that a little bit earlier. I don't know if you missed the one part of it. If you go to my if you go to my Twitter, I literally just posted a spreadsheet about it. The risk reward, basically, if you flip the risk reward, and you go, you put it five to one, meaning like, if you have a 90% win rate strategy, and one of your There it goes. And let's say you have a 90% win rate strategy, and one of your losers are going to be outsized. So let's say you make you have a dollar per win. So you have nine wins in a row. One 9 $1 $1 all the way to $9 You've made $9 Your next one to make this strategy work, most of the time, you either have to be an option seller or you have to have a lot of downside to give it room to run. That downside could be $10 So once again, you would lose money over time. So let's say you continue to do that. Make $9 and you lose $10 you make $9 and you lose $10 At some point, you would lose money on that. Most of the time, those are set up to be options selling strategies, which are very easy to lose even more on. So this is how you really blow up on that. But if you do it the other direction, one to five, one to three win rate. Now you're talking about you only have to be right about 40% of the time to make money, meaning you're only losing a dollar to make $3 or you're only losing a dollar to make $5 So I hope that explained that a little bit better. Pavel Kýček [1:23:11](https://www.youtube.com/watch?v=HAyMif3_4D4&t=4991s): Yeah, plus these high percentage strategies always tend to have very small type of profit target or profit in general, and they are not managing risks at all. So basically you never know when these black swan scenario will hit your account. It can happen basically anytime and you just blow up your account on one trade very simply. Moritz Seibert [1:23:36](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5016s): Yeah, there's a guy out there, know, he has a very big following. Really, it's not even a bad product, but he has a trading thing where he promotes how much money they make and how right he is all the time. And really, there's a really very important point I learned about trading that changed trading for me. So I guess if I did have an moment, this would be the one, which is there's a huge difference between being right and making money. Like, you don't like, being right and making money, they're two different things. You know, Larry Hite probably said it best, which he said, I'm paraphrasing this quote. Well, I'm gonna try to say as close to it as I can. He said, there's good bets and there's bad bets. There's good bets where you make money. There's good bets where you lose money. There's bad bets where you make money and bad bets where you lose money. So your goal is to always put on the good bets. Alexander Elder, another person who talked about it. Our goal as traders isn't always just to make money, it's to take the right trade over and over again. What I mean by that is find the best risk to reward setup, figure out the best strategy, figure out like when how to put that together, and you will make money over time. But you can't think of every trade like it has to be right to make money. So the risk reward is everything in that conversation. Pavel Kýček [1:25:00](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5100s): Plus, if I can give here one warning, be careful with these simple copy trading companies or copy traders in general, because they usually have pretty high percentage win but they are doing it very often that way that they just open five, six, seven, ten accounts. They are running the smartingale strategies. Most of them die pretty quickly and some of them just survive long enough to get a lot of copy traders on board or they are trading with them and they are making money from the fees you are giving them. So be careful because that way you can yeah, high profitability can take much longer than one would expect and that way you can build really some performance, real performance, even though most of your trading accounts or their trading accounts just died in the past. So be careful because most copy traders, not most, but many of these copy traders are building their performance that way. Andrew Swanscott [1:26:15](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5175s): Yep. Well said. All right. I think, well, I've got to bail. So thanks everyone for joining us today. We had a lot of great comments in the chat from everyone. So thank you very much. And just a reminder, this show is on every week, every Wednesday, 2PM Eastern. So come and join us next week. And if we missed your question today, apologies, we might talk about it next week. You never know. So any closing thoughts, Jason, Pavel? Moritz Seibert [1:26:45](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5205s): Nope. Thank you guys so much. Great comments today. A lot of interaction. We like that. So thank you guys for leaving questions, helping us direct. We know we're trying to be here and answer questions for you guys too. So that also makes our job easier and makes a lot funner for you guys. So thanks for interacting. The engagement was great, and I'll end on that. Pavel Kýček [1:27:08](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5228s): Yeah. Love lovely discussions. I think it is worth before for anyone who who is trying to trade profitably. So perfect in my opinion. Yep. Andrew Swanscott [1:27:19](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5239s): All right. Well, enjoy the rest of your week. Happy trading. See you next week. Pavel Kýček [1:27:24](https://www.youtube.com/watch?v=HAyMif3_4D4&t=5244s): See you. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 8 Better System Trader · The Trading Panel · Episode #8 # Drawdowns, overtrading & learning from losses Tom Basso · in conversation with Andrew Swanscott April 4, 2024 · 72 min listen · 51 min read Episode 8 of Better System Trader's Trading Panel — "Mr. Serenity" Tom Basso (of Market Wizards fame) joins host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček on risk management, the psychology of drawdowns, overtrading, and matching your trading style to your personality. Listen on [YouTube ↗](https://www.youtube.com/watch?v=Tze_VyZ8sb4) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Tom Basso on staying serene through drawdowns — the mindset that made him a Market Wizard. - 02 Why overtrading quietly destroys more accounts than bad strategies do. - 03 How to actually learn from losses instead of just absorbing them. - 04 Matching your trading approach to your own personality and risk tolerance. Full transcript ## The conversation 72 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:01](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1s): That's good timing, isn't it? Welcome to the trading panel. We were just laughing because Tom's gonna have some wood chipping happening in the background at some stage So let's hope we can get through the panel without that interfering too much. But welcome to the trading panel, the show where we get traders of all different backgrounds, experiences, and we join together, and we talk about trading in the market. So welcome, Jason. It feels like we only just finished the last show, and we're here already. Jason Kurz [0:28](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=28s): Yeah. You know, like, it's it's honestly, it's great. This is one of the highlights of my week. I'm just excited to chat with all you guys again. You know, Andrew and I came up with this idea a while ago, and the idea was to bring on actual traders, people who really know the markets and talk to people who really, like, have money working in these markets, not just people speculating and talking about ideas of and stock picks. So perfect person to have on for this show, which is Tom Vasso. You guys might know him from the Market Wizards books. I know Tom. He's been on my show many times. We've had lots of great conversations. I'm a futures trader as well. So we have lots of great conversations about the markets on there. If you guys check those out, please do. Just so glad to have Tom on here today. Tom, how are you? I'm doing great. Tom Basso [1:15](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=75s): Apologize for the wood chipping in the behind this wall here. But, once a year, get my trees pruned around the yard and I tried I'm very into landscaping and I'm enjoying what they're doing. I'm not gonna enjoy the noise behind me, but I hope I hope everybody can hear what I'm saying. I can hear you guys just fine. Jason Kurz [1:36](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=96s): Oh, we can hear you, Tom. You're you're you sound great. Pavel's back with us. Glad to see you again, Pavel. We missed you the last couple weeks. Pavel Kýček [1:45](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=105s): Glad glad to meet you. It's always pleasure to be here. Good to meet you, Pavel. Nice to meet you, Tom. Jason Kurz [1:53](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=113s): So, Tom, that we were talking the other day and the one thing you mentioned, which is something we should talk about, which is risk management. You know? As you mentioned before, it's one of the most important things in trading. You know, how are you looking at the markets right now? You know, I know you you're you're a systematic trader. So how many I also like the way the inter the information you put out. So how many ETFs are long right now in your portfolio? How many are going to the short side? Could you give us a little glint glimpse into your portfolio? Tom Basso [2:23](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=143s): Yeah, as of this morning, I track 30 different sectors of ETFs. And those are running 29 out of 30 long right now. But let's let's be clear that my indicator to kick out of those instruments is based on a fifty day period. So, there's quite a bit of room still for a little pullback, know, an 810% pullback, and then it keeps going. I don't really bent out of shape on those positions. So it's clearly a bull market. I mean, everybody knows that. Everybody talks about it on Twitter. It's clearly been strong. Momentum plays keep coming up and everybody's, Nvidia and everything else making lots of money. I'm in retirement. I am trying to be very consistent. The All Weather Trader book that I wrote, the blue thing over my head there. I'm trying to be very diversified. I'm trying to look at different time periods, different markets and make sure that I have a chance at many, many return streams. Well, when you do that, what you find happening is you stabilize returns. And so even when the market starts caving in like it is, last two days, it had some weak spots there. I guess it was rallying last I looked today. But, that kind of weakness will kick off some shorter term indicators. So really short term traders could take advantage maybe of a of a free fall for a while. I trade a lot of time periods. So I've got some stuff that just went short, I got stuff that is still long. And so it sort of takes me to a bit more of a neutral position, which maybe is a good place to be given, maybe the market doesn't know which way it wants to go right now. Maybe it's topping, maybe it isn't, but it could be sideways while it decides and I'm happy to be sort of lightened up on my exposure while it while it makes up its mind. So that's kind of the way I look at it. But you clearly got some big volatility. You got to watch your position sizes. I have been into the rally. I've been continually getting risk management and volatility management kickoff trades where I take a position and I maybe peel off 2% of the position or 3% or 5% or whatever. And so my position sizes now in a more volatile environment are smaller than they were when we started way back when. And things like cocoa, which in the future sense of things has just been like an f 35 taking off after a Chinese spy balloon, straight up and ready to go crazy. You know, it's pretty scary trying to move stops up in a market that is like that. But I've been doing it. And just recently, some of the indicators are finally catching up to the market, the markets kind of going sideways. And I just this morning, went slightly short on cocoa. So we'll see whether that works out or not. But, it could be a whipsaw could make new highs next week or, or even tomorrow. So I don't know. What you try to do is you look at you let the market tell you what you should do. Let the volatility be whatever it is, and let your indicators and your strategy change with that and adjust what you're doing on the fly. Think that's the easiest way to trade. Jason Kurz [6:16](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=376s): No. I love that. And I think it's incredibly important, like you said, one thing that I hope people pulled out from that, which is I don't get too bent out of shape about, all these sectors being long and some flipping short. Like, that's that's how you real trading works. Real trading isn't this thing where we're constantly speculating on what could be or what is. It's it's really, hey. Do I have the probabilities on my side? Here we go. Okay. Great. Oh, that worked out. That didn't work out. Okay. Well, I take my risk management here. Here's where my stop is. Here's the positive expectancy from my systems. So I guess that's another thing to bring up, Tom. You know, if you're looking at these trades and you're looking at all these markets and you've been doing this all these years, how important is risk management to you? Obviously, we most of us up here know how important it is, but say it like you're saying it to some of the new traders because there's a lot of new traders who listen to this. Tom Basso [7:12](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=432s): Okay, well, I've been doing this fifty years now. And part of your problem as a trader in any day, whether you're fifty years in or one day in, is to survive to trade another day. So I think your attitude should always be as a trader to stay in the game. You want to be exposed to risk because positive risk is the risk of return. Negative risk, of course, the risk of losing money. And to me, it makes sense to manage that negative risk as good as you can figure out how to do it. And then let the returns be what they are. A lot of traders seem to set their objective as I want to make 200% because I want to retire next year. And that's what's required for me to retire or I have to live off the money. And I've only got $30,000 and I need to make $30,000 to live. So you end up with this quandary of our challenge of making 100% a year just to make your bills be paid. And that's way too much pressure and kind of very flawed thinking, you're going to put yourself in harm's way, you might not make it to your second year. The the easier way to do it is to say the markets will provide along the way big moves like cocoa or like the stock market has recently, bond market when Fed was raising interest rates to the short side, of course, sometimes some big currency moves. Orange juice earlier in last year had some massive moves. So just some strange markets that make moves, you want to be positioned for those because you make so much money off of them that they produce your returns for the year. But if the markets don't have a move, then there really isn't a whole lot of profits to be had, is there? It's up to the market to provide those potential profits. And it's your job as a trader to capture them and go along for the ride while managing that negative risk so that you can keep playing the game for fifty years. And it keep exploiting those things as they come along. And you end up with, decent years year after year. Do you have some missteps along the way or a little drawdowns here and there? Sure. After as many drawdowns as I've been through in my lifetime, I it's kind of about as easy as breathing, but it's what trading is all about, you got to have the psychology to be able to handle that and realize that the long term is, there's going to be some drawdowns, there's going to be some draw ups, if you want to call them that are surges and you're going to make new equity highs. And that's both part of the game. It's like breathing in and breathing out. You can't just breathe in, even though that gives you a lot of oxygen, you got to breathe out so you can get your next breath in sort of the same thing with trading. Andrew Swanscott [10:11](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=611s): Yeah. Really like how you focus there on your attitude as a trader is to always stay in the game. That last comment you made about drawdown, well, it is a big part of trading. How do you develop the psychology to be able to handle drawdowns, especially if you're kind of a trader more early on in your journey and you've got to develop that skill? How can traders build that skill up? Yeah, and it's a it's a skill that probably applies to life in general, not reading, Tom Basso [10:42](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=642s): but it starts with a certain amount of self confidence or self esteem. If you don't have a good feeling about yourself, and who you are, and your strengths and talents and what you can handle, the markets will find your weakness and point them out to you in vicious fashion sometimes. And so what ends up happening is first thing is to try to be have good constant confidence and self esteem. Second thing is you need to have an awareness that you're being manipulated by the market. So a lot of people will go through and now they see a big profit coming in. And all of a sudden, they're getting itchy to take the profit because they're looking at their screen and they're saying the market's looking a little toppy and maybe I should sell half my position, even though it has nothing to do with their strategy. They go ahead and do it anyway. And they aren't aware that they're deviating from their strategy. So awareness becomes very important in any way that you can get books exercises on awareness and try to be aware of what's going through your body and your mind at all times, so that you can put yourself back on track if you find that you're starting to deviate. You know, you're you're somebody tells you a hot tip on a stock that's going to, go crazy tomorrow. Okay, is that your strategy? Should you be aware that you're all of a sudden, excited about this stock, and you were just about to buy it? But wait, says, that's not my strategy. And discipline comes in then and says, okay, let's get back on track, do the strategy. That's not my strategy, ignore it, move on. And so that's, that's kind of that. And then the final piece of advice I'd give you would be one that I it's a trick I use when I'm in a drawdown. And it's probably something you can do better after fifty years than after say six months. But I've been through so many drawdowns, so many equity highs that when I'm in a drawdown, I just remember some of those times when I was hitting new equity highs. And when I'm in new equity highs, I'm remembering all those times I was in a drawdown. And it sort of just balances you out so that it's just another day of trading and you you kinda get a little bit more mister Serenity trying to even things out. Pavel Kýček [13:19](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=799s): But Yeah. I think if I can, because the last advice was very strong in my opinion, but even new traders can stick with it, especially if they are systematic or algorithmic traders. This is what I'm sometimes doing if some strategies, some single strategies on some maximum drawdown on or so. You can always get back to the data. You can always, like, look in back to your tests, looking at periods when the strategy is having the drawdown compared to the past data, compared to similar periods in the history, and if this drawdown was happening too. So I think analysis helps a lot here, especially for systematic traders. Andrew Swanscott [14:07](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=847s): I think as well, excuse me, especially for algorithmic traders that have the ability to test their strategies and spit it out on a nice looking chart. They might look at it over ten years or fifteen years and the draw downs look like the little blips and they're like, this is great, I can handle this. But when you're actually trading through that period yourself and you're opening up your trading account every day and you're seeing some losses, it's really a very different experience. And I remember I was speaking to, I think it might've been Nick Rudge on one of my podcast episodes years ago. And he said a good trick is to look at the equity curves of some of the great hedge funds or trend followers and take a look at the long term returns, but then zoom in on the draw downs, like really look at them in like a fine, going over it with a fine tooth. And you can really get a better understanding that, a lot of times or depending on how you trade, most of the time you're gonna be in drawdown. It's like new equity highs don't happen that often. Sorry, I'm losing my voice today, I think. So you really need to be comfortable with drawdown because a lot of the time you're going to be in drawdown for your trading career. I don't know if anyone's done any studies on how long that is, but I have Tom Basso [15:30](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=930s): a story on that topic. Peter Lynch, very famous money manager at Fidelity Magellan way back in my earlier years, maybe before Jason was born, probably. The he had this Magellan and it was over the last ten years at the time of the study, a couple of interesting things came out of it. First, he was number one in his performance. That's why he was so famous. Number two, he had suffered a 50% drawdown along the way to that number one performance, which I would say that most investors couldn't possibly handle. By the time they're down 50%, they've already bailed and they're on to something else. And the third thing was a study that was done based on the amount of assets under management, tracked each day based on the NAV and dollars in dollars out. The study showed that the average investor over that same time period that Peter was number one actually lost money investing in Fidelity Magellan. Now you think about that, that's got to be really hard to do. You got to have horrific timing. You got to be buying it when he's making new highs and selling it down at the bottom of the drawdowns. But that's the reality that we live in as money managers, that I was over, what, twenty eight years of my life. Now, the last twenty, I'm money manager for myself, which is a whole lot more fun. And clients and typical, and I even say some retail traders, do not understand how they fight themselves by putting money in or chasing a great idea or whatever, some kind of trading strategy that appears to be doing just spectacular this last year. Well, next year might be its Achilles heel. It doesn't mean the strategy is flawed. It means you haven't really thought through all the good and bad of every type of method of trading. And it's one of the reasons why I have some short term indicators and I have some longer term and I have futures and I have ETFs on the equity side. So I'm I'm playing in a lot of games. At any one time, one of those hopefully is pulling the cart. You know? I got a team of horses. And at any one day, a different horse takes over the workload and tries to pull the cart. Pavel Kýček [18:10](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1090s): I've made those tests, like time in drawdown per strategy and per portfolio. Based on the strategy, rent struts can be in drawdown up to 95% of the time. Mean reversion struts slightly slightly lower and well balanced portfolio. For example, our portfolio of 15 strategies and the dozens of trades in one time is in a drawdown of 90%, 88 to 90% of the time. So and by drawdown, every day when the strategy or the equity, the overall equity is not creating the new all time highs. So, really every trader should expect that at least 90% of the time he will be in some kind of drawdown. So, yeah, being in drawdown is like, Tom Basso [19:00](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1140s): it's normal, I would say. It's it's very normal. And I find the same thing. It's a very high percentage of days in some drawdown. But if you can keep the drawdown low, like if you're the only down 10%, you only have to make back 11% from there to get back to breakeven and make new highs. That's a lot easier than going down 50 and then having to make back 100 to get back to new highs. So I'm pretty careful to try to keep those drawdowns minimized. That that makes my life a little bit more serene in retirement, particularly. Jason Kurz [19:34](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1174s): I think that's an incredibly important thing to talk about too is like the stress levels of your trading. Like, if you can't handle and I think you said this on a podcast we were on, Tom, one time where we were talking about trading and people day trading, and it's like, well, you have to match your personality with it. If you do not have a plan or a strategy to, let's say, pick up your kids from school during your trading day, like, you haven't thought through your trading day enough. And so let's walk through a little bit of that because I love the way you put that. I love the way you talked about it in Market Wizards. You know, when you're talking about walking through these strategies, like walking through the worst case scenarios, how do you do that? Like, let's talk about it today. Alright. Walking into your tray I mean, it's your personal account these days, so it's not as hard as handling the client money, but it's still stressful. Nobody likes losing money. So how do you mentally prepare these days for Well and, like like you said, expectations? Tom Basso [20:32](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1232s): Yeah. Today's just the opposite yesterday. Today, I'm having a really highly profitable day. Yesterday was one of my larger losing days because I was coming off the top on the stock market, coming off the top on cocoa, there was a lot of long term trends that were being reversed, but they hadn't yet got to any kind of stop points. So you take a fairly good chunk of loss in terms of equity going down. And today it reverses and does some of the positions are actually reversing. So they're picking up profits in those markets that are continuing down, let's say. And then the ones that are reversing and going back to the upside like cryptos earlier I thought, they start moving in the profitable side. So you start building up profits from the new trend starting and a reversal in the back to the normal trend on some of the issues. And what you find happening is when you, try to manage risk and you try to look at say sixty, sixty five positions on my screens, I'm going to have green and red every day. There's never a day that I come look at my screen and it's all green. That's almost impossible if you think about it. There's just too many markets, too many individual fundamental stories that are gonna, be out of whack with others. That's the point of diversification. And I think that's the mentality you want to take on is liken it to being a conductor in an orchestra or something. I'm the conductor and there's 60 different people in my orchestra. And right now, the softs in the commodities are going through a struggle. But over here, the currencies are sounding beautiful. I'm just trying to make the whole I'm trying to get through the piece and make sure we get to the end and hopefully the audience is happy. You know, I think that trying to agonize over anyone and focusing in on that tends to get your mentality in emotions and all that into what am I doing here and what is going to happen. Predictions are the worst. You start predicting and that just gets your ego involved in this. Like, cocoa is going to go down now. I don't know if it's going to go down or not. It's been going up. I've enjoyed that ride, but if it turns out, it goes down, I'll enjoy that ride too. I don't really care. And I don't have any opinion on cocoa. And I think that keeps me from being in a constant state of angst over whether my prediction on cocoa is good or bad. And I think that's better mentality for trading than to try to be constantly predicting about this stock with that earnings. And I think they're going to beat expectations and I'm worried about their car production. And gosh, you can go down a rabbit hole with all that stuff and you'll you'll have a very long day. And I don't know that you'll trade any better than keeping it simple. Jason Kurz [23:48](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1428s): Love that because I think that's an incredibly important thing that so many people pass up because they think when you think of a trader, you think of a fund. Know, I know my clients give me money and they think I sit in a room and I come up with some huge idea and I put all my money on blank and hope it goes up. And that's the furthest thing from the truth. And so, really what our job is to put the probabilities on our side, manage the risk. That's really what we do. So I think, the idea that you have of just like managing your expectations, understanding that like, hey, we're not just gonna do look for these huge things to happen or expect this to happen because blank happened because we can't know those things. Because the price could go, like, for example, we could have the fed talk about cutting and the market could go down. You know, you never know what exactly how the market's gonna react to things. So another thing to get into because of that subject is, you being a trader, what got you interested in instead of going the normal route, especially at that time, the route of fundamentals and valuations and so on, and you go the other route and you go into this trend following thing. How exactly did you become a trend follower and why was that attractive to you? Tom Basso [25:06](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1506s): That came down to a very fateful lunch I was having with a bunch of other engineers who were all trying to figure out the stock market at the same time. And I was one of the younger, kids at the table. We had guys that were in their fifties at the table working in my department as a chemical engineer. And we'd all get together and talk investments during lunch just to kill the time and enjoy ourselves for whatever forty five minutes and then go back to work. And one of the older guys made an observation. He said, Tom, I can't help but think we sit here every day and we talk about all these different stocks and the fundamentals, and we read all these newsletters and reports, and we try to understand what we should be doing. But we're doing this for like a half an hour a day at lunch. There are Wall Street guys that work twelve hours a day and have access to research departments and all these reports. And what makes us think that we can beat them at that game? And I thought, wow, that is pretty, pretty impressive. And, he's probably right. I don't know that I can beat him at that game. However, smaller traders, retail traders, and even up to my size and trading millions of my own money, you even at that size, when you compare yourself to BlackRock or something with and hundreds of billions of dollars, I am miniscule in the market. Nobody cares what Tom's doing. They could say they do, but I'm not material to what I'm not going to move any market that I'm involved in. So when you start taking on that attitude, you actually, as a retail investor or trader, have an advantage over the big guys. A BlackRock or Fidelity or Vanguard, when they're moving money, they gotta move it over days. It's very hard work. They're moving, a 100,000,000 into this position or a billion into that position. They got to work it and work it and work it and work it and not tip the market off that they're trying to move in or out of the position. It's it's difficult to do. And having been a money manager, not as big as those guys, but I, in some markets, I face the prospects of having a little bit of illiquidity and you have to, work at it. And, at this point I'm thinking to myself, I don't have any of those difficulties. I can use stop orders. I can dance in and out. I can move a lot quicker than they can. And that's my advantage. So if a retail trader wants to exploit their advantages, it would be to use their small size and their ability to move quickly and just measure the way the market's going. And the markets will tip-off with what the institutions or the big money is doing because they'll start a trend. And that trend sometimes will, continue. And if you nail it, you can make a lot of money off of those. And your your important your thing to do in that regard is to be quick and decisive and have a strategy and just execute that strategy flawlessly day after day. And you'll be on an every major trend that comes down the pike up or down if you haven't structured that way. And that'll pave the way for profits over the long run. Jason Kurz [28:40](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1720s): Yes. Completely agree. I think that's, it's it's the game we're playing. That's the most important part of it. So getting back to it, Tom, all these all the time of you going through trading, can you talk about a time where you had to basically understand something crazy happened, like, in the world and you come into your office and, the markets let's say, some of the markets you're in are crashing, something's going against you, maybe you're even stuck in something, it's too illiquid to even get out of. And you've already mentally planned for this and you were able to execute and be okay because of it. Tom Basso [29:24](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=1764s): I can think of a couple of different things. When some of the agricultural markets or soft markets in futures would go limit down against you and your limit, you're actually long the position. I actually didn't love those days because you can't do anything and your your stuff's not getting hit. So hopefully you've sized your position. Hopefully you've got profits coming in other markets because you're not just trading that one market, you're trading in my case back in the day, was trading about 75, 80 markets. So in future. So and then I was trading another 30. This is pre euro. I'm that old. So back in, you're back in '97 and all that before the euro even came in being, I'm trading 30 currency pairs. So I've got lots of things going on. So, when the market going limit down, would try to console myself with the fact mentally that I've got lots of other things that are also probably at the same time making a bunch of money. Because one thing going limit down makes maybe another market skittish the other way. Maybe it goes up. Maybe it's a bond market worried about inflation or deflation or who knows? So you're making money in different places. That's one thing that comes to mind. The other one was the famous one that I talked about with the oil trade during the first Iraq war. I went, had a computer problem About five o'clock at night, I tell Dave in the computer department, hey, let's knock off and grab a bite to eat. So I went across the street, got some Chinese, and we were sitting there just relaxing because we couldn't figure out the problem. And then, about 08:00 at night, we finally figure it out and, we get the orders set for the day late, but better late than never. And we call to make sure they've been received. We're all set. We can go home and go to bed. So just on whim on the way out the door, I pull up our screens and see how we're doing and oil were long going into the close and it's now up from $32 to $40 a barrel, which is a huge move back in those days. And, I'm trading hundreds of millions of dollars of futures portfolios at that point. So this is like multimillion dollar profit I'm looking at. I'm thinking, woah, tomorrow ought to be an interesting day. Little did I know, I wake up in the morning and I go in. The first thing my head trader says to me is, Tom, oil went from 32 to 40 overnight, and it's now trading at 22. Oh my God, that is a bad day. We're down across all the portfolios somewhere in the neighborhood of, I think it was around 6% in one day due to that one position. So the other positions did not clearly make up for, the amount of movement in oil. And it was basically we started, Bush one, starts invading Iraq because of their incursions on Kuwait. So presumably, we're helping out Kuwait and we we start rolling down the highway towards, is it Baghdad, I guess, or whatever. You know, the air support and the tanks, they're not meeting any opposition. So basically, the war is over by the time morning rolls around. And, so all of a sudden, oil is just plummeting. Nobody nobody's worried about it anymore. And, we made new equity highs within the next two months. It was no big deal. But that one day, man, you have to just kind of say to yourself, okay, we're now flat oil, in some very, very large accounts. We actually went short. If they could afford that amount of risk level, the risk level is so humongous. Most accounts couldn't even afford even one contract. So we are essentially flat oil. Let it settle down, let it break out to the upside again, go long, make money back, be in the middle of bond markets and stock markets and other things that were moving. And, you quickly recover and you make new highs. So no big deal in the end, but, yeah, it's, woah, you got to be in charge of your own mental case to stay cool. And when clients call and are all worried about oil, you just tell them the story and you, you stay with the same story over and over again, repeat it over and over again. They won't listen to what you're saying, but they'll they'll listen to it that moment. And hopefully you keep them as a client, you move on and, just keep doing what you're doing. Jason Kurz [34:26](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2066s): I always love that story. It's, you explain it here. You've explained it in Market Wizard, and know a lot of people haven't heard it before on here. So I'm glad other people have commented and said they really enjoyed that as well, because I think it's important to manage ourselves in our own mental health. So I guess something that's also a great question to ask you for new traders out there, what do you do to kind of, outside of trading? You know, how do you keep yourselves mister Serenity, for example? You know, how do you keep yourself so serene, Tom Basso [34:59](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2099s): so you're not reacting to these things? Well, some of the things behind me are, really stupid trophies of golf. I mean, there are some of them are one of them up here I have is a joke. I showed up to the first tee for a senior club championship, and I wanted to play the, a specific tee set. And my handicap's like fourteen, thirteen these days. So I'm not I'm never gonna threaten the, the club championship, the scratch guy. And, but there was a flight that was handicapped, it was appropriate for my age. And I thought, I'll go ahead and sign up for that one. I show up on the first tee, and the golf pro is sitting there and said, well, mister Basso, I have good news and bad news. Okay. What's the good news? Well, the good news is you are going to win the senior club championship in this flight, which is one of those trophies behind me, because nobody else signed up for it. So the bad news is you're not gonna have anybody to play with. So we're putting you in another guy. We got one of the pros from, the club, and they're just going to play with you and you're going to have a good time with them. But you either choose to play or we could just declare you the winner and you can take the weekend off if you want. But that's the kind of thing I try to get out on the golf course as much as possible and it hasn't been easy with this remodel, trying to build all this stuff behind me and get everything, to the point where I have my own, kind of studio office here. But it's been a labor of love seeing it come together and it's been very physically and mentally difficult to move in. But, now that I am in and enjoying living here, it's been a blast. I think this great is a great house and I'm looking forward to living here many years. And so I get involved in a lot of projects. I do golf. I love my landscaping. One of the reasons why I have the tree pruners making noise out here with the chipper, is they just are finishing up the backyard. And My trees even look gorgeous. My landscaping at the new house here, I ripped out 90 plants that were inappropriate. I custom designed myself after having taken landscape architecture courses on a CADCAM, I put together my own landscaping scheme and installed it last October, 170 new plants, a whole new irrigation system, and a new controller and everything. So I have a state of the art landscaping system and I do all my own pruning. So if I am bored and the markets aren't doing much, I have no interviews to do. I'll just grab my pruning shears and put on my gloves and, get a good hat, a hat with some sunblock on and I'll go out and play in my garden. You got to do other things. I mean, trading is way too intense. These guys that spend twelve hours a day in front of a screen, I feel sorry for them. That wouldn't seem like fun to me. And, so I, I try to minimize everything I do down to the bare essentials. I've got it down to about forty minutes right now. I'd like to get it down to fifteen or less a day that I have to worry about, doing some trading stuff and update my stops. Once I'm done, I'm done. I turn the computer off. If I've got my emails answered, no interviews coming up, I'll go out and go shop for something that we need at the house or I'll, I've got a what we call a junk drawer. When I get done with this interview, I'm going to go into the pantry and install what I call a junk drawer. And that's that's the drawer that everybody has in their kitchen that collects all the junk that you can't figure out what else to do with it. You stick it in the junk drawer. You got pens in there. You got an odd screwdriver that you might have not put away in your toolbox. You got recipes that you did three months ago are in there. You got rubber bands, paper clips. That's the junk drawer. I'm installing it in about another hour. So I do stuff like that. It's it's fun. Jason Kurz [39:37](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2377s): I love it because, once there might be people listening and being like, oh, well, what's does that have to do with trading? It has everything to do with trading because it's it's honestly the most important thing. I also am in my garden all the time. I hang out with my bees. Don't get me started on the bee thing. But, once again, it's a when you're in that zone, like, you're just looking at your screen, like, you're gonna miss so much. It's kind of like what people say when you're so focused on something, you miss life. You know, like life can just pass you by. So it's like it's very important to kind of be able to take yourself out of it and then come back to a screen. You know, if you're always staring at the problem head on, you're gonna miss it. I also think a lot of traders Tom Basso [40:23](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2423s): literally would put that title. You know, you're at a cocktail party. What do you do? I'm a trader. If you ask me that question, I don't know how I'm going to answer it. What do you do? I'd say I'm retired. I am the busiest retired guy you've ever met. I make wine. I'm out in the yard all the time. I take trips. I do some trading for like forty minutes a day. I love to cook. I we have a brand new beautiful kitchen. This has got state of the art everything in it. And, I'm still trying to learn some of the equipment, but it's a lot of fun to go into the kitchen and just design a meal from scratch and be able to make it. And I think too many people spend a lot of time going out to fast food restaurants and their health is suffering because of it. But to me, I can cook healthy stuff and have fun doing it and turn on some tunes and look out my windows and back in the kitchen and enjoy the view of the gardens. You know, what's wrong with that? And it gets me away. And sometimes I'm thinking about an idea that I saw or I heard or a question that somebody like you asked me that's thought provoking and it triggers me in that kind of mental relaxation to say, hey. You know, I could incorporate that as an eleventh strategy, except I'm gonna do this to it and make it my own and try to figure out how I can get that to work into my suite of, various strategies. And I think if you if you're just sitting there banging it away on the computer, it's it's hard for new ideas to come in because you're just getting overly stimulated with green and red candles going up and down the page and it's overwhelming. Andrew Swanscott [42:20](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2540s): Tom, I think you just touched on a really important point there. There's been a lot of studies about how the mind works and how the brain processes information. And you do actually have to step away from these things and let it just absorb into your brain. And I don't know about you, but I often get a lot of my best ideas when I'm not even thinking about stuff like I'm out riding my bike or walking through the bush and I was just like this is a good idea. It just pops in because your brain needs time to process, synthesize and come up with these new ideas. You almost want to stop writing and go grab a piece of paper or your phone and make a note because you don't want to forget it. Especially when you're 71 years old, you might forget it. So you, you try to get those things written down as quick as possible. I usually pull out a word document. I just everything Tom Basso [43:09](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2589s): that comes into my brain, I'm writing it down, trying to make sure I capture it all so I can go look at it later. Andrew Swanscott [43:16](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2596s): Yeah. So I think it's important to reframe that time away from the markets as as development time. It's really you you are becoming better as a trader by not looking at the red and green bars all the time. So if if traders because I know when I was when I started trading all I did was trading like twelve or fourteen hours a day and then I had to work which got in the way and it was it was completely like non stop trading. And over time you realise that's well it's not sustainable physically but also it's better for you to step away. So I think you touched on a great point, Tom. Thanks. Plus, plus I think that there are two different things. First is Pavel Kýček [43:55](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2635s): looking at the charts and another is being skilled in trading. And sometimes this is not connected at all. Sometimes people are just staring at their screens and they're they're thinking that they are learning something which is not not often the case. So that's why making proper tests, proper research, for example, how I'm thinking about problems, trading problems in general is that I'm heavily in data, I'm making my research and so on and then I'm going out like hiking. This is my most, like the funniest approach how to process these ideas, like many hours in front of data and then going out and that this is how I'm basically approaching it. But really looking at charts, usually it's not being a better doesn't mean being a better trader, which is often a mistake many beginner traders are are doing. Even myself, I was in it also for quite a few years. So Jason Kurz [45:02](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2702s): Great. I love that's this is part of a conversation. I just was talking to a person recently. You know, I was talking about he was asking about systematic trading and all this stuff, and I said, I put up all these videos. And he's like, well, I don't have time to do that. And I was like, okay. Well, here's a website. Well, I don't have time to do that. I was like, well, what are you doing to learn how to trade? And he said, well, I'm sitting there. I'm staring at the charts every day. I'm understanding price action. I'm like, that's not gonna help you understand price action. And, like, it's it's something that I think people don't understand about our brains, which is our brains are gonna make up what we really want to see. Like, if we think we really believe, like, seasonality wise, let's say April is a great month for stocks usually. But if you didn't, like, really look at it seasonally speaking, you might not really know that just by looking at the charts every year. You know, like you really need to figure out a way to quantify things and a way to turn it into a systematic strategy that you can do again and again and again, staring at a chart and saying, hey, I see this pattern sometimes and I'm gonna buy it. That doesn't help you do anything. So I'm glad this was brought up because this has come up so many people are like, would stare at the chart all day. And like, that's, that sounds like I would lose my mind and never want to trade again, really. I've actually done a study with actual traders. It was Tom Basso [46:22](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=2782s): back in the days of Van Tharpe who's no longer with us, of course. The great trading psychologist that was in the first market wizards. He would have me come as a sort of stereotypical trader or something. Don't know what he called me. Not the ideal trader or something like model trader or something. That was my role. Some days I would sit and ask. I would do a sort presentation on risk management, on position sizing, and I would answer questions for hours. People would just keep peppering me with questions. And so one of the sessions I did, I actually took charts, and I went back in history and found interesting points that might be a bottoming. It might be a topping. It might be a market that was, going crazy and was about ready to go into a two year sideways. And I would chop the chart off conveniently right before whatever it was that was going to happen. And then I would, and I had like 10 of these. And I had everybody pull out a sheet of paper and pick up, down, sideways for all of these 10 charts I was going to show them. Then I went back after everybody, got done with the exam, and we went through, and I totaled up on a chalkboard, whiteboard. Okay. Okay. Example one, what's how many people thought it was gonna go up? You know, and I get the show of hands, count them, and we did votes. It was completely random. People had no idea what was gonna come next. So when you really examine your own ability to look at price action and try to derive something brilliant out of it, hey, maybe you know more than I do, but, and the simple tests that I've done of actual traders, there's no patterns, no doubles, double tops, head and shoulders, all those things. They're all good and fine. If they work for you, great. But, in reality, somebody spots a head and shoulders and decides it's going to break down and instead it makes new highs. You know, it just didn't pan out when I did the studies of actual traders doing this. And so I think that if you think instead of charts that you're looking at, when you look at a screen, if you could imagine that instead of that being a chart, it's data. It's nothing more than an open high low close of a period of your designation over a period of time of your designation, but it's really data. And the price data is created by a seller and a buyer coming together and agreeing to a specific price and a trade gets It's nothing more than that. Don't try to make it profoundly interesting because that's all it is. To buyer and seller come together, you get a trade, you get a piece of volume for the volume chart. And when you add all this stuff up and do a pictorial representation of it, it becomes a green bar or a candle that's red or whatever. It's still just data. And when you start minimizing what you're looking at down to data, maybe it becomes a little less important in your brain and you start realizing, I just need to filter all this data and try to decide, is it going up or is it going down? How should I react to it and just do it? And get rid of this this, concept of I'm gonna be so smart and see this, testing of the double. Good example of how we fooled a lot of traders. COVID, what happened? Crash. Stock market hit the skids. It was going down so fast. Everybody's predicting the world's coming to an end. We're all gonna die. It's it's on the evening news. The death certificates are down in the lower, corner being updated live. So you can see how many people died while you're watching the evening news. You know? And so that's the mentality. So when the stock market's going down, so the thing turns, I start getting some indicators to the upside going over. So I'm buying and I'm watching Twitter and everybody says, no, it's too early to buy. It's got to test the bottom. It's got to test the lows. You got to prove that it can hold and all that stuff. Well, it never tested the lows. It went straight up. I had a 103% return for the year. My average years, 2030 would be a wonderful year for me. A 100 is completely off my charts. That's the best return I've had in my life in my own portfolio. It's not because I'm any different or I was smarter or I read the charts appropriately or anything. It's that I just followed my dumb strategy. And when the indicators went over, I went along. Everybody that were waiting for the right chart pattern or whatever, it never showed up. They missed out on the entire rally. They probably pulled the trigger when they got too much heat going into the downslide. They probably a lot of CTAs, professional CTAs. I can't believe they'd still have clients pulled the plug on their program and said, this is too insane. We're not going to trade. They went to cash. I just kept doing what I do. I did then what I'm doing today. I do have like a couple more strategies today because I've been developing things and continuing to try to improve. But basically I'm doing the same thing I've always done. I'm using the same risk controls. I'm using the same position sizing. Some years, like I think I the other day I looked, I was up about 10% on my all weather portfolio so far this year through about three months. You know, that's a decent year. It's not the hundred and three percent of COVID and it I would be really surprised if I ever have another hundred and three percent year in my life. But the markets do what the markets do. Your job is to go along. There was a lot of movement in 2000. So a lot of potential profit to exploit. I did my job. The result is good. I think if people can just take that attitude, I think they'd just be so much better off in their trading and quit trying to force it and quit trying to make I need to make 35% this year. So that means 35 divided by 12, I need to make 3% a month or whatever. So I'm only up two and a half. I've got, we only got three days left to go. I've got a trip. That's ridiculous. The market does what it wants to do. It's only to give you what it wants to give you. You got your job is to capture it when it's available. And if you take that attitude, your life is so much easier. Pavel Kýček [53:42](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3222s): Plus, if I can do charts something, there are a lot of a lot of misconceptions connected to, chart patterns in general. I've made a lot of tests. For example, let's talk about basic pin bar. Everyone knows pin bar. Everyone knows how pin bar should be traded. Like there is some pin and you are basically trading against the pin. Well make your tests and you will see that this pattern is basically not performing at all, you will be nothing but losing. In fact, if you would be the other side of the market, then you could find some edge and this is very similar with many many patterns and if you just try to trade some chart because of some pattern, most often than not you will be just losing money. But if I could recommend something to algorithmic traders and thinking about charts, I think that what is really helping is looking at a charts in different periods like short trend, long trend range bound market and connect it with your results of every single strategy. Because then if you really go deeper and you want to understand your strategy, which I think you should especially if you want to survive your drawdowns then you should know in which basically in which periods your strategy should be performing well and in which it shouldn't be. And once you know that you are running trend strategy to the long side and you are in low volatile sideways environment, well your strategy must be losing money if it wouldn't, or maybe it can be flat if you are having some good regime filter but you definitely cannot make money. So this is really something that even algorithmic traders could take advantage of really thinking about charts in terms of environment we are in and your strategy or your strategies you are trading. Then surviving drawdowns is much simpler because you know that it's just just market. It's not your strategy, which is always important to differentiate if we are talking about drawdown. Is the drawdown caused by market environment or is it caused by your strategy Tom Basso [56:09](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3369s): losing trading catch for example? Yeah. That's very, very astute, Pavel. They to me, I actually one time shut down or actually modified, I think, a trading strategy because it made twice the return in a period where I looked at the charts and I said, wait a second, the math on this and what I see in the charts, that's I shouldn't have made that much money in this particular period. I must have something a little flawed. I shut it down and actually did some retooling so that I could understand how this type of market action produces those kind of results. It's very astute that you point that out. When you get done with your development of any kind of strategy, whether you do it on a computer or you do it on a sheet of paper, When you get it done, you should know where you're going to make money, where you're going to lose money, and where you probably aren't going to do much of anything. Be prepared mentally for that to happen. And so you've got to do is go over to the chart and say, well, I'm in a blazing bull market and I've got a long only portfolio here that should be clocking it. It should be making tons of money. Or I'm in a bear market and it's been down six months straight, 30%. And I'm a ETF timing strategy going to cash. So I should be mostly in cash and you look over there at your screen and say, yeah, I've got like one position out of 30. That makes sense. I should be making money market rates. Yes, am. I'm not losing money like the buying holders are but okay, that makes sense. The strategy is doing what it's supposed to be doing. It's making, it may only be making 3% in the money market fund But that is the appropriate return for that strategy the way it's structured in this type of environment that you see on the chart. As soon as you match those up, then all of a sudden you have an understanding of what you're doing and you're not surprised very much by anything that gets thrown at you. And so just cruise right through it and you just keep going. And, I think that's really helpful advice. Pavel Kýček [58:22](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3502s): Yeah. Plus for maybe beginning traders, because it is a little bit more advanced to understand the period or environment we are in, what can help is just using simple moving average and ATR indicator. With just these two indicators, you can basically describe high low volatile environment and trend versus non trending market. It's it's can be that simple. Tom Basso [58:47](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3527s): And it can it's not very difficult. Yeah. You learn the math in, what, sixth or seventh grade. Yeah. Jason Kurz [58:58](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3538s): Yeah. I love this conversation. It's really good. And the only thing I'd add is, the only pattern that I've ever found now that we're all kinda talking about things that had a statistical edge was, I think Richard Dreiss came up with it, which was, he was trying to and it's funny because he was trying to figure out a way to make Elliott waves work in a systematic way. He found out there was no edge in Elliott waves at all. And so he basically came in then and he came up with a strategy that basically, if you think of COVID, since we just talked about COVID, you have the crash, the market goes up, it comes back down, it makes that higher low. And then when it makes a new high again, that's when you buy. And that was his strategy that he used for many years. He was very successful doing that. And it's honestly the only pattern that I found that gives you a really good statistical edge. The most patterns, they don't. Some and like Pavel said earlier, the false breakdown signal sometimes is the best signal. We actually have a system that quantified a way to do that. That actually does make money, but it's backwards from what you would think a normal technical analysis person would do. Most of the people who are great technicians, the biggest thing they live on is the trend. You know, the trend is up. So we're gonna continue with the trend and they might draw a flag, they might draw a head and shoulders, but we're just kind of going with the trend. So I think that's always gotta be the most important thing in your trading. Do the math in your brain. If the markets aren't trending and aren't going anywhere, you can't buy low, sell high. You can't sell high, buy low. The markets aren't moving. Tom Basso [1:00:36](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3636s): So there's no profits to be had. So you might as well go after the trends because that's where all the money is made. Pavel Kýček [1:00:43](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3643s): Plus, I think, Jason, it was a very good point that you cannot connect trend and pattern because there are patterns that are profitable and, which have trading edge for sure. But you have to start with a pattern and not with some trending condition you are putting the pattern into because then you are basically taking some sub pattern into a trend, but this is not the edge of the pattern itself which is also pretty, pretty important because then you are not trading the pattern itself but you are basically just trading some correction to trend or something like that or breakout into trend but not the statistical edge of the pattern itself. Jason Kurz [1:01:32](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3692s): Mhmm. Tom Basso [1:01:33](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3693s): And see what I would Jason, what you described with your pattern, I would describe as sort of a really a dungeon channel almost. It's a breakout. Yeah. It's a breakout of a dungeon channel kind of. So I see it as just a trend indicator. I don't see it as a chart pattern. So to me, I take the data, run it through the indicator. I'd get the same breakout that he did, using different math and hopefully a little more flexible math too. I could probably do more with just a dungeon channel than to try to limit myself to that particular set of patterns and try to assess is that pattern really there or not? Jason Kurz [1:02:17](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3737s): How do I just make it systematized so it just spits out of the computer the order? Yeah. Think it would be incredibly hard to do that. You know, I think that's that's part of it. I think what was what was interesting to me was just the fact that he was the only person I've ever seen trade like that and do it in a systematized way that actually was profitable. So it's but once again, it's like you said, like, you would get the same. It was probably a fifty day high or one hundred day high, like it's a very similar pattern. Tom Basso [1:02:47](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3767s): Yeah. Or some kind of flexible way of describing it, whatever. But I yeah, it yeah, it's it's a Donchian like price channel kind of breakout. Yeah. Trend following indicator. So yeah. Good for him. I've I've done a few of those over the years. They've been profitable and I don't know. I don't try to make it too complicated. I took calculus and differential equations and integral calculus and all that and my engineering program and fluid dynamics and thermodynamics and all that. And nothing I use in today's world is anything remotely close to that kind of math. It's add, subtract, multiply, divide. Jason Kurz [1:03:31](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3811s): You know, it's simple stuff. The main thing I was getting is it's just kind of in it's interesting because it's the only one out of all the patterns I've looked at over time and tried to figure out if there was a statistical edge, that was just about it. You know? Like, that's but like you said, it's just a breakout strategy. You basically like, he put all that time and effort into it. It's kind of a breakout strategy. I'd love to talk to him, mate. You know, I think he's still around somewhere. I'd love to have that conversation with him one point of why didn't you just use a breakout strategy? Cause there had to be a reason. I know he had a bunch of cool indicators he created, the choppiness index and things. So I wonder if like that has something to do with it. Could be interesting. Call him up and see if you can interview him. Bring him on one of these days. We could all have a panel with him. Well, Tom Basso [1:04:22](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3862s): Pavel said, before you could get a moving average to measure the trend, you get a ATR or something to measure the volatility and you got all the information you need. It's kind of the same type of thing. You cross the moving average, you're breaking out to the upside or downside or whatever. It's just a different way of measuring the same data. It has its flaws and its benefits. It'll get in a little maybe earlier than your, your other guys indicator there, the breakout strategy. But it could have a little more whipsaw capability, you'd have to take care of that mathematically. But if you just study the math of what you're going to try to do, you should be able to see the benefits of how it'll make its decision to the good side. And you should be able to try to question the math and logic and say, what would be the Achilles' seal here? What would be the negative of this type of decision making process? And moving averages, of course, can kinda whipsaw sideways and cross the line a million times. So that's one of the negative things. What, is it Wyckoff you said? The the gentleman that did the breakout? Jason Kurz [1:05:33](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3933s): No. It was Richard Dreiss. Tom Basso [1:05:35](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3935s): He was a trend follower. Richard Dreiss. What he did and what I tend to do is try to put a band on top and bottom. Moving averages have the negative I think of constantly maybe sometimes going over top of each of themselves and giving you a lot of signals. You have to deal with that in your logic and you can. People use it all the time. I just like to say, okay, here's a range. The prices can go in between that range. That's noise. I'll ignore this. Above here, I want to buy and below there, I want to sell. Inside that those two lines, I'm gonna ignore it. That's for me an easy way to get rid of a lot of the little stupid transactions that happen when you do a moving average. Jason Kurz [1:06:29](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3989s): Yes. Agreed. Tom Basso [1:06:32](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=3992s): All easy. All high school math. Then take a lot of time to use it. Jason Kurz [1:06:40](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4000s): Well, this was great. Andrew, do you are you ready to wrap up? I think this was great. I absolutely always love having these conversations with Tom. Hopefully, you can join us again at some point. Tom, this was great. Tom Basso [1:06:52](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4012s): Thanks for breaking in the new office. Jason Kurz [1:06:55](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4015s): Love it. Love the bookshelf too. Andrew Swanscott [1:06:58](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4018s): So Tom, how can people get in touch with you or learn more from you? What's the best The Tom Basso [1:07:04](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4024s): largest collection of everything Tom Bossa would be the website that I put together in retirement. Because I got so many questions from people on so many different topics. Decided rather than try to answer emails forever. It seemed like, literally thousands of them that I've answered now. I just decided, okay, I'm gonna put a website together called enjoytheride.world, not.com.world. And people can go there. I've got my hedging strategy completely outlined. You can get a sense of one of my 10 strategies, and how I actually do it, how I think about it. I've got a seminar that I'm putting on in May with Lawrence Bensdorf out of Portugal. He's a great trader and a good friend at this at this point. And we have a great time in Vegas with 15 traders doing very personalized training. And that's fun. And I've got a couple of books that I've written, All Weather Trader, which is the blue one over my my my head here. That's been a best seller and it goes into my entire life of trading and how I developed a lot of what I developed and why I developed it. I give you I lay it all out so you can see how I do what I do. As an example, I encourage you to develop your own. It would make more sense. The only reason I say that is not everybody has my risk tolerance, my capital, my knowledge. Everybody should come to a different conclusion of solving their own personal financial puzzle. So all other traders and other place, probably the largest social media site would be x. I think I've got 52,000 followers there. It's at bosso_tom. Anything other than that is an impostor. And I have a lot of them, and I go after them as hard as I can. But they're still out there, and I hate to see people get scammed, especially if it's someone who's they think they're talking to me. I don't sell anything on social media. So if somebody's trying to get your money or sell you a crypto scam or whatever, please run the other way, report them, block them. I'm also on Facebook. Enjoy the ride out worlds on there. I've got a LinkedIn account that is somewhat active. So there's lots of different places. My email is [Tom@Trentonstat.com](mailto:Tom@Trentonstat.com). If somebody has very, very specific questions that don't lend themselves to social media, please send a lot of supporting data with the questions so that I know what you're doing quickly. Don't send me an email that says, I'm a new trader. What would you suggest I do to get started? That's way too general. I don't know how to answer that question. I'm gonna just point you at the website, so you don't even need to send me an email. Just go to the website right out of the gate. So that's kind of a few places you can get to me. Andrew Swanscott [1:10:14](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4214s): Thank you, Tom. Pavel? Pavel Kýček [1:10:18](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4218s): Well, you can follow me on my Twitter or go to robuxo.com where you can see how we are trading broad portfolios of algorithmic strategies on crypto for our clients. And if you want to know about our approach in general, then I recommend going to robaxo.com/explainer where you can see more details about how we are doing it. Andrew Swanscott [1:10:43](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4243s): Excellent. And, Jason? Jason Kurz [1:10:45](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4245s): Oh, yeah. This is great. Tom, thanks again. Andrew, as always, Pavel, great to catch up with all you guys. At AAO Research, that's Against All Odds Research. You could find that on Substack. I website, have I'm on Twitter, YouTube, you name it. We have lots of interviews with Tom on our YouTube channel as well. Please check those out. A lot of those have a lot of views too. So they're really popular videos with Tom. So as always, as you guys can tell from today as well, Tom is a great person to learn from. And Andrew. Andrew Swanscott [1:11:21](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4281s): And me, bettersystemtrader.com or Twitter is Better Assist Trader. I've got a lot of trading interviews on my website on YouTube as well. I don't have Tom though. So I might have to have a chat with you Tom and you can we can do a one on one sometime. I have to it now. Tom Basso [1:11:37](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4297s): You can actually interview me in a relatively quiet environment. Andrew Swanscott [1:11:42](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4302s): Excellent. That'd be great. So thanks everyone for joining us today. We had a lot of good comments in the chat as well. Not so many questions, but fantastic discussion in the chat. And of course, great guests as well. Thank you so much for joining us, Tom. It was really great to pick your brain for an hour. My pleasure, do it again. And we're here every week Tuesday. Sorry, not Tuesday. What is it? Wednesday? Jason Kurz [1:12:07](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4327s): 2PM Andrew Swanscott [1:12:12](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4332s): Eastern. Although we may be changing it right, Jason, we gotta have a look at it this week. So yeah, we'll let everybody know. Thanks for joining us and enjoy the rest of your week. Happy trading. Have Jason Kurz [1:12:23](https://www.youtube.com/watch?v=Tze_VyZ8sb4&t=4343s): a good one. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 9 Better System Trader · The Trading Panel · Episode #9 # Relative strength, sector rotation & inflation Mish Schneider · in conversation with Andrew Swanscott April 11, 2024 · 57 min listen · 40 min read Episode 9 of Better System Trader's Trading Panel — Mish Schneider (MarketGauge) and Ian Culley (All Star Charts) join host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček on relative strength, sector rotation, intermarket analysis and how inflation feeds into a trading process. Listen on [YouTube ↗](https://www.youtube.com/watch?v=8P-tiXvDP2w) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Reading relative strength and sector rotation to find where the money is flowing. - 02 Ian Culley on the intermarket signals from fixed income, commodities and currencies. - 03 How inflation data filters (or shouldn't filter) into a systematic process. - 04 Pavel's crypto perspective on rotation across a daily-ranked tradable universe. Full transcript ## The conversation 57 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:01](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1s): Welcome to the trading panel, the show where we assemble all different types of traders and we talk about anything trading and the markets. And today, as you can see on the screen, we've got some fantastic guests joining us. But first, welcome, Jason. Hey, Jason Kurz [0:13](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=13s): Andrew. Good to good to see you. Glad you got to get a couple extra hours of sleep or or an hour now. Now with the time change, it'd be an hour. So a little bit more That's good. Good to see you. And I was gonna I thought you were gonna say welcome to the Brady Bunch today, because it kind of looked like the Brady Bunch thing. But no, I'm excited about this one. Ian's a good buddy of mine, Mish came on, like I'm super excited to have a great conversation. I thought these two would be perfect to have on the panel today, considering these are both very good commodity analysts that we could talk to about trading commodities, futures, you name it, lots of stories, this could go many, many different directions. We also got Pavel. He has a great fun talking about basically systematic trading and algorithmic trading in the crypto space. So this will be a fun conversation. I'm excited. Mish Schneider [1:07](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=67s): Well, I'm excited to be here. Thank you, Jason. Jason Kurz [1:10](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=70s): Of course. Thanks for coming on, Mish. Thank you so much. Andrew Swanscott [1:14](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=74s): So where do you wanna start, Jason? I think maybe Oh, Mish just dropped off, but Ian's still here. Yep. I'd Jason Kurz [1:22](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=82s): love to hear some of Ian's background. Yeah, Ian. Let's hear what you do at All Star Charts. Ian Culley [1:29](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=89s): So I focus on the fixed income commodity and currency markets. So, I high level into market analysis that, feeds into our our our top down approach and helps our clients, guide the equity markets. You know, I get into some of the futures and some of those commodity trades as well. I look at the markets from a technical perspective, study price. Mhmm. Went through the CMT program, got my CMT designation recently. So, yeah, that my background. Excuse me. That's how that's how I look at the markets. Jason Kurz [2:09](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=129s): Nice. And, Mish, for people that don't know, what's your background? How'd you get into these crazy markets? Mish Schneider [2:18](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=138s): Well, okay. Very briefly, I wound up becoming a member of the commodities exchanges in New York when I was young and it was an amazing opportunity. It happened, I believe because of fate and it was at a time clearly when commodities were going crazy and also there weren't very many women on the floor. So I kind of got in on this glass ceiling thing, which is interesting, but yeah. So I spent fourteen years on the floor. So I really learned pretty much everything I'm still doing really has its basis from being a commodities trader on the floor for all those years because the basic lessons really don't change very much from pure price momentum, stay out of the dead money, follow the things that have the liquidity, notice this rotation, understand risk, and also know when something is coming to an end, make sure you take profits and have stops. And those are the, the fundamentals that haven't changed at all in terms of trading. But of course, we've all gotten a little bit fancier since then because we all wanna sound like we we have some kinda leg up on somebody else, but, really, that's that's all it is. That's all it is. Jason Kurz [3:41](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=221s): You've gotta keep it simple. I mean, really, it's it's something that you see in markets so much. Some people I mean, today, especially, let's talk about the CPI and everybody has this idea of it and this idea of it. And the market's gonna go up if this happens, the market's gonna go down if this happens. Really, you don't have any idea what The market bottomed on a very terrible CPI print back in October 2022. So why can't the market go up during that? So now you're just gonna have hear narratives over and over again. It's like, something that you and I have been talking about for a long time is the commodities have already started to move. Mish Schneider [4:16](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=256s): As the commodities are already starting to move, of course, it's gonna show up in the CPI report. Like, it's not hard to see. And what makes this even more nuanced is that it's not Even though I was the first One of the first ones to show that overlay chart of the seventies to now and how CPI reached its trough in '77. And then same thing with 2022, and now here we are in 2024, starting to come up several months in a row above 3%. This is hardly the runaway inflation scenario that we had in 1979. So we can't even really compare. We can say different scenarios, but people are so confused and trying to find some kind of a conversation that makes sense when everything has changed. Everything has changed. I mean, gold has been going up not because of inflation, but that doesn't mean it won't start going up if inflation really starts to pick up but it's not going to pick up based on what we saw in the CPI because durable good, the core goods actually experienced deflation. It was the shelter costs that really went up the most. What's going on here now with gold and silver and possibly miners and copper is really, I think, more based on a chaotic situation that people can't really grasp. The market's up near all time highs. Even this correction today was basically just testing the bottom of the support of those long channel that we've had for possibly the last couple of months. You know, what we've got here is fear of war, fear of debt, fear of government spending, fear of, all of this, all of these things escalating to a point where the Fed has to cut regardless of what they say because the interest payments on the debt are so skyrocketed high that they're gonna make a choice. Let inflation go higher because we don't really believe it's it's really there. It's more war based or reduce our interest payments by 33% by lowering just as much as a 150 basis points. We'll do that. And that's why this conversation is completely different than 1979. But nonetheless, it is interesting to see the similarities in terms of the CPI. Jason Kurz [6:36](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=396s): Yeah. I mean, I think it's interesting, Thinking about it in such a historical aspect and seeing where we're gonna end up, and not to mention what you just said, the Fed has to cut. I think the my favorite writer that I first learned about many years ago, which was Richard Russell. Actually, that's what you and I first started bonding over. And he had that one that one what was his phrase? He would always say inflate or die. The central banks always have a choice. It's inflate or die. And really, it's like at that point t shirt like that. I'm gonna get it. Yeah. Yeah. You know, inflate or die. It should really be the TV. But it's it's the truth. It's their choice right now. You know? Like, how what are they gonna do if they continue to raise rates with the amount of debt? All of these things are incredibly important here. I think so many people are thinking, this has to end, the Fed really cares about inflation coming down. It's like, well, they've always inflated, It's just never been to the level that's been this extreme. They've always inflated in a compounding way. Hey, 2% a year, it's safe, it's great. We'll just do that forever till everybody dies basically. Now it's just, Hey, we've just jumped it up to these crazy levels and I guess we're just gonna be here at these levels. I think you and I have talked about it before too, where I think you've mentioned that you thought they might raise that 2% target at some point as well. Well, don't seem to be really liking that suggestion at this point, but that doesn't mean that it won't happen. And let's not forget that Mish Schneider [8:06](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=486s): Powell's term ends at some point. I forget exactly when it ends, but And of course, if there's a Trump presidency, which I don't think there will be, but if there was going to be one, he would get rid of Powell in a second. So that's beside the point. Yeah, it really is it really it's just fascinating to me. This whole thing is so fascinating. I'm finding this to be, oh, and the other difference by the way from the late seventies to now is that we have put so much stress on raw materials because of our advanced technology, supercomputers, AI, they use so much electricity, they use water and electricity comes from raw materials which is one of the reasons why people are now worried about copper scarcity. So all of this has changed. And so, yeah, like they say, may you live in interesting times? Also, is this is the year of the dragon. And I know Jason, and this is the last thing I'll say, and then I'd like to hear from the others. The year of the dragon, and the reason why I mentioned this because I've been studying Chinese astrology for years. And I studied with this guy Raymond Lo who is I mean, he's been all over the media at at times because he's probably one of the most world renowned Feng Shui astrologists. He studies all this stuff and comes up with all these predictions every year. And he's not always a 100%, but he sometimes is very scarily right. And one of the he said, this is still, we're still in a year of water domination. And he said, and that really started a few years ago, actually after 2017. In 2018, we entered water and we don't come back to fire until the end of 2025. So he's always felt that certain things would happen as a result. But what he did say about the dragon is that it is the and it is at the gates of heaven Yeah. But also at the gates of hell. And if you think about a dragon, that makes a lot of sense. Jason Kurz [10:11](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=611s): I like, that stuff is so interesting. It's really fascinating because that stuff is really, like when it comes to markets, there's this weird thing, and I think all of our brains kinda hit on certain things. And once again, we're all, like, looking at the markets, making sure we're making the right decisions based on those. At the same time, it's like you can put together a little bit by looking at that. Also, you're probably getting to the point of China. I think China was also in there too. It's going to be an interesting year with all the geopolitics that are coming up as well. Ian, as well as now we're looking at all this stuff right now. We're looking at the commodity space, which has just been wild. What are you seeing in the commodity space? What are you writing about right now? What's something that's really interesting you lately? Not that everything isn't interesting, but pick a few things if you can. Ian Culley [11:04](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=664s): Gold obviously stands out. And, you I don't I'm not really digging too deep into why gold is breaking out, what's sustaining these these new all time highs. I think it's really interesting to see how it performed today with the strength in the dollar. You know, when I see when I see gold breaking out to an all time highs, I think back to 2019 when when gold create excuse me, completed that, what, six plus year basing formation. It ended up ripping to its 2020 peak. And that kicked off the commodity bull run that we experienced over the past three to four years. So witnessing gold do the same thing, and silver start to rip too. Seeing strength in the precious metal stocks. And, I think we're just we're we're kicking off the next leg higher for just commodities in general. Digging a little deeper, maybe cattle are starting to top. Maybe we'll start to see, these grains carve out some sort of tradable low. I mean, we'll see. But, yeah, commodities are really exciting right now. Rates continue the uptrend for interest rates remains higher. And that's one thing I've I've definitely been pointing out for months now is that, until we see some sort of reversal in that secular primary trend, it's it's it's hard to latch on or or or or to get behind any kind of falling rate disinflation scenario. Jason Kurz [12:58](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=778s): No. I get it. And I think everybody's kinda stuck on this, like, rates have to come down, like, immediately scenario. You know? Like, this is always gonna happen. And once again, it's you you gotta give use your flowers here. You've been really on that the whole time. The trend has been down. You've been on it the whole time. You've never changed your stance as long as the trend is down. That's what a good price action trader does or a good trader in general does. You don't go against the trend. The trend is obviously, bond prices continue lower, yields continue higher, and see where that ends up, because we can't really, we're not predicting the market. It's nearly impossible to predict where the market's gonna be at in a year, but you can take signals, you can put the probabilities on your side. Most of the time, putting the trend on your side raises your probabilities. You said, if we go across some of these products like Cocoa, just to start off with the craziest one, it's up 173 percent year to date, which is like Somebody asked me about that trade the other day and they were like, Man, that's such a cool trade. I'm like, Yeah, I don't think I've ever had a trade like that in my life, actually, that's been that high in this short of amount of time. It's very odd to see something move to that degree. Now, once again, it's a thinner market in the commodities market, but seeing that continue to these levels, that's insane. I don't think I've ever seen it before. And that's gonna be great textbook study right there, because the other point I've been trying to write about lately is when these parabolic moves in commodities Mish Schneider [14:33](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=873s): end, it's not a buy the dip, it's over. You head for the exits and move on. And that will be so classic and I can't wait for that to happen because then I think we'll have contextual something to really show from beginning to end a full commodity story, cocoa. The interesting thing is when I was down on the floor, my first membership was coffee, sugar, cocoa exchange. Cocoa was like this teeny little pit with like couple of older guys that would sit in there waiting for an order. It was where you would go if you really basically wanted to take a nap. So to see it now as the premier mover in commodities has been abusing at best. Jason Kurz [15:19](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=919s): I mean, I don't think it's ever been that way. I don't think there's ever been a time where cocoa's been the leader and just continue to move and you're like, Oh my gosh, it's the outperformer. I don't think that's happened. Crude is right behind it at 20%. Orange juice is right behind that at 20% year to date. So you're really looking at a lot of these commodities are really starting to take off. Coffee's been very interesting. That's one that's kind of catching up. But really it's like Mish Schneider [15:49](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=949s): all And I had uranium too now. Uranium. Yeah. Because uranium, of course, is gonna relate to if what you saw all over Twitter today is turns out to be true that Iran is going to have a missile strike to Israel. We'll we'll see if that happens, I hope it doesn't, but it's it's certainly probable. Jason Kurz [16:07](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=967s): Yeah. Mish Schneider [16:09](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=969s): I just want to say one other thing about prediction, right? I think it is really hard to predict equities because there's so many factors between changes of CEOs or the board or a bad sales quarter or corporate buybacks or interest rate sensitive or whatever. There's so many variables to really make it difficult to say, oh yeah, I know this is gonna be here. Commodities are much easier to predict. They really are. Did you agree, Ian? Ian Culley [16:45](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1005s): I mean, they maybe so. Maybe that's why I was always just attracted to commodities. It just made sense to me. Exactly. Like, companies are just like, what what do you do? You know? I so may may maybe that yeah. Maybe that's what it was. Well, yeah. And but think about it. I mean, it was pretty obvious that oil, Mish Schneider [17:05](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1025s): once it cleared $80 a barrel, I'm looking at West Texas, that was going to be perceived as, obviously Middle East related and supply chain related, which would then get gold going. That was also pretty obvious. You know, in terms of cocoa, once you knew there was drought in West Africa, you knew that was gonna be obvious, the same thing that's going on with coffee. it's like it and then and then there's sort of a domino effect with certain commodities impacting other commodities. So you knew eventually silver would have to go up for a man's gold. The miners, which actually go out mine for the stuff, if, hey, central banks are accumulating so much, duh, makes sense that gold miners will go up. I like that. And I've waited, Ian. I've waited forty years to see this type of action and predictability and fun to just sit back and basically make money easily in commodities. But as I said before, you know they'll break your heart one day, and you gotta get out and not get attached. Ian Culley [18:09](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1089s): How how do you how do you manage a position in Cocoa at this point? You know, I because I got buddies that are texting me and they're showing me, these these sixty minute charts. I'm like, guys, if if you're not already in, like, I don't even I don't even know how you would get in at this point. Okay. So if I were on the floor trading something like that had just gone parabolic, Mish Schneider [18:34](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1114s): I would certainly not be thinking necessarily that I would be buying the dips. I'd probably, at this point, thinking that we may be coming to the end of it. I would be looking for decline in volume, decline in open interest, and I would be more scalping it to try to catch some of those swings because with so many people in that market and many who don't probably have ever traded a future before in their life but just joined the party, that there are gonna be great rallies to sell and great dips to buy. And as soon as the dips get shallower and this and there's and the rallies and the sell off from the rallies get heavier, then you know the move is over, and that's how you have to do. You have to think like a day trader. I would never put anybody in a position at this point in Coco. Yep. That's what I would tell your friend is learn how to be a day trader and almost a scalper and really watch those few things I was talking about. I did point and figure charts. They were awesome. Ian Culley [19:31](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1171s): That's that's cool. Yeah. Jason Kurz [19:34](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1174s): Just running a trailing stop and an exit signal. That's the best I can do. I have no idea at this point. It's one of those things that I've been in a few trades over the years that have actually been like, okay. I'm actually kinda scared. This is one of them. I don't like it. I don't like where I'm at. I don't like the position size. I don't like like, the volatility of it has gotten insane. So I don't ball target my position. So it's just it's kind of ridiculous right now, and I'm I'll be happy when it's over, because it's running my whole portfolio at the moment. Oh, right. Which has been cool. Yeah. It's it's cool at now. Right now it's moving up, so that's cool, but we all know it's not gonna go up forever. So then it's running my portfolio the other way. So my stop has gotten a little bit tighter than it normally would be, which I'm kind of embarrassed to say that because that's not what I really do, but my stop's a little bit tighter. I'm sitting there watching it and kind of going, I'm gonna just look at it as least as least as I possibly can, have my trailing stop, keep monitoring my exit signal, and that's all I can do. But like your friend said, like Mish said, I wouldn't touch it right now. I wouldn't add to it. But once again, I could have said the same thing months ago. I wouldn't have bought it here. I wouldn't have bought it there. I mean, that's why I run the systems I do. I don't think I have much of a turning point predictability for myself at all. Mish, on the other hand, has a great she's very she can do that. Like she said earlier about predictions, like, she can do that more than anybody I've ever met. I cannot do that. So I don't pick turning points. Mish Schneider [21:08](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1268s): Just tell your friend to keep both get a graph old graph paper. I wonder if your generation even knows what that is. And and do two by two, two up, two down in terms of bips in cocoa and start to look at patterns. Even if he never trades it, just to even study short term patterns in a wild commodity market because you're not that it only happens in commodities. So short short term patterns on point figure charts. I love point and figure charts. I, if I were going to do that sort of thing, that's what I would do. I would I would I would go back to the graph paper and watch it and, 2¢ up, 2¢ down, 2¢ up, 2¢ down, x's and o's until you start to see these patterns. So guess what I just did before I came on the show, Pavel? I bought Dogecoin. Pavel Kýček [21:56](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1316s): Yeah. Really nice. I don't have it in the portfolio probably. Let let me check it. We have, like, 25 open positions right now, but Dogecoin is not there. But I just wanted to react a little bit to the question how to trade maybe Kokua in this environment. Statistically said, the best approach is trading short term breakouts above like, trending days. So if there is some strong trending day, one to two days breakout above this high is statistically very, very solid. And on new all time highs, it is especially especially strong entry point, statistically said. So these are quite good markets. I like entering in this kind of environment because you can get quite a lot of money from these movements short term. Of course, it is not the best entry for long term long term to middle term trade, but one to two days straight, it's just perfect environment. And the more volatile, the better, I would say. Jason Kurz [23:08](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1388s): So, Pavel, when you're you're looking at a parabolic move, like, you could do that in just about everything. You're talking stocks, crypto Yeah. Commodities. That's interesting. Hope somebody goes home and tries to build that model because I'm I'm definitely gonna look at how that works. That's cool. It's a good idea. Pavel Kýček [23:24](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1404s): Yeah. Or or see the momentum sometimes. Momentum like short term momentum trades or on the other side, short term miner version trades in these corrections. The the these these moves have between 55 to 70% win rates. So this is especially especially interesting for trading. Again, one to two days one to two days trades. No no long term positioning here. Ian Culley [23:55](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1435s): Yes. And Andrew Swanscott [23:58](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1438s): how do you manage the moves? How do you manage those trades and moves like that, Pavel? Pavel Kýček [24:05](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1445s): Basically, by time stops. So I'm entering with some logic and I expect to get out in one to two days or so these are the type of exits that are the best in terms of profitable to some drawdown ratio really to get in and get out quickly. So this is how I'm thinking about it and also what the statistics is showing long term. Ian Culley [24:40](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1480s): So if you have a time stop, are you just holding it to the close? Whether it's one or a few days out? Yeah. Exactly. Pavel Kýček [24:45](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1485s): Exactly. Nice. It is always the best if you want to be in the market more than one day. And in this environment, one day could be enough, one to two days. Then I have some safety trailing exit. Like, if there is really big, big dip against my position, I'm just getting out of it. Or automatically the position is basically switched off. Nice. But really, these kind of movements, people are often scared of it, but that's why this is the best one of the best time to get in short term but to get in because usually these trends and I love the quote from Larry Williams that these overextended moves tend to be overextended even more and statistically it's just true. Jason Kurz [25:40](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1540s): I've always loved Larry's work. He just has a real good way of just dissecting the markets. And speaking of another person who has a good way of dissecting the markets, Mish. So I think something that would be fun to chat about, as I was talking the other day, somebody brought up to me something about the reflation trade and saying, you can't say inflation's coming back when financials look this good and so on. When you're looking at this inflationary type of environment, and you're able to dissect things just as you did earlier, and Ian sees me do that a lot, and I got that from Mish completely. You're dissecting something where you're going, okay, this is oil, this is what's going to happen with this sector because of this and so on. What are you seeing here today? Do you think the market's under enough pressure that inflation's actually putting pressure on the market at this point, where that's why the market might be coming down? Or do you think market has more room to run? What are you looking at in all the inter market analysis that you look at? Mish Schneider [26:42](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1602s): Well, first of all, just like the commodities markets are nuanced and inflation is nuanced, so are the actual market sectors right now. So semiconductors, even though it's sold off, is still holding up better than most of the other sectors right now, which of course makes sense. Because if there's any area that continues to prove itself out, it's the large cap stocks that are related to tech and semiconductors. You look at something like retail though, my granny retail that I always talk about, that actually collapsed pretty good today and went under its most recent trading range that goes back about eight weeks and broke down pretty heavy along with the small caps. So essentially what you really have to say is what is this telling you? And what's this telling you is that even though the market logically knows hire for longer to Ian's point, you have to really think about this as what does that mean? For the consumer, it's exhausting. They're exhausted now. And, obviously, even though we saw core goods go down, there's still a lot of things going up, including things that everybody needs, which is auto insurance. I think that rose something like by twenty three percent, which is huge. So, and then now let's look at companies and different sectors. What's going to struggle for higher, with higher for longer and slightly inflated costs, not all over the place, but in many places. That's going to be companies that do not have good growth potential, have had terrible balance sheets, have lived off of low interest rates long enough to be able to stay afloat, borrow against their losses and expenses at practically zero for so many years. And so, that's where you start to, almost like the Red Sea, you have to part it and see what's on one side and what's on the other. And this too is going to be challenging for anybody who's invested in this market over the last ten years who knows nothing but by the dip and everything always works out and everything goes up in tandem. That is not true. So I think it does behoove us right now as people who talk to other people and try to guide them to really make sure that we ourselves understand the implications and not necessarily say, oh, yes. Spies going to new highs based on the fact that the Fed's going to cut a couple of more times or not going to cut a couple of more times or the stock market's going down to 4,800 because they're not going to cut. I think that is just so oversimplified and really doesn't explain the dynamics of today's economy because we spent forty years in basically zerp, and that's done. You know, like Ian said, that's over. That's not at least not in my lifetime, I don't expect it to come back. You guys are much younger, so you might see it again. But I don't I don't look at it that way. So that's why I start looking at, the rotation. People throw the word around a lot, but they don't really understand what that means in that. That means real trading decisions. So, we mentioned semiconductors. Right now, obviously, they've come down. If the market was to hold here, probably that would be the sector to go up before anything else, but that doesn't mean that we're gonna go make new highs. So what other sectors could be interesting here? That's how I look at it. That's why I've come up with solar energy. Because whether EVs have lost their popularity or not over the last year, you look at a company like Microsoft that is using so much water to power their supercomputers knowing that they're actually draining resources that are valuable. They're looking at wind and solar energy to be able to provide energy source for them for the for that company. Multiply them by every other company that's huge. So you say, well, solar energy has been so beat up because it's just ran out of favor for many reasons while oil has continued to climb. That to me tells me that keep your eyes on solar energy. First, solar already has been starting to rocket up. And and that's kinda like the granddaddy. That's like the NVIDIA of semiconductors for solar of solar energy. But watch tan. That's the ETF. Watch PBR, I think, is another one that is related. I don't know if it's PR wait. Hold on. I'll tell you one second. I get my p's confused here. I'll look it up. But one there's another ETF that has to do with solar. I forget which one it is now, something with a p. So yeah. I mean, that's how I look at it. If you really wanna dissect this now, just be a logical human being and realize that interest rates have to have an impact and things are not the way they were. Jason Kurz [31:36](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1896s): No. I like that because I think it's it's incredibly important for many reasons. Whether if you're a price action trader, you really have to understand where relative strength is heading to understand where you wanna be positioned next. I know you guys have a model and an indicator that you guys built to do that too. So that also helps you to figure out what sector is moving next. Where's money flowing into? Like, this month, we've seen it flow heavily into energy. Energy has been the place to be lately. It's been the place to be for a while now. So now we start to see that start to move, and then we start to see money flowing out of the tech space. And what does that mean? And then the commodities are ticking up. So I love the way you dissect that because there's people watching and they can learn how you kind of look at the markets like that. Because to me, that was the first thing I ever noticed about you that was really like, Oh, wow, well, that's how I wanna look at the markets. I wanna be able to put this lens on and basically understand where money could be flowing into. And basically, once you start to be able to do that, you can start to figure out what areas you wanna be invested in. And like you said too, interesting thing, so many people have learned so long by the diff has just worked. And it just doesn't work forever, it just never has. However, yeah, sure, you can make a lot of money in it, but as traders, we have to always be positioning for what's best, what's going to be the outperformer. And so I guess the next answer is like you like solar energy, but what else are you liking in the market at the moment? Well, I'm looking at emerging markets, particularly those that aren't really impacted by inflation Mish Schneider [33:15](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=1995s): or won't necessarily suffer if the war gets escalated in The Middle East. And that would really bring us to Asian countries. I actually, I was on CNBC Singapore last night and the gentleman that was on before me was like the guy who runs the banks in Thailand. And it was so interesting because he was talking about the fact that they've had very low inflation. They're talking about cutting interest rates right now because they've been high for a very, very long time. And they feel that they can afford to do that without the risk of getting into rampant inflation. Switzerland just lowered their interest rate recently. So start to look for countries that have had the opposite impact from inflation. They don't necessarily have to suffer from it and because they have room to actually become a little bit more accommodative in their central banks, they could actually start to outperform. People were rushing into emerging markets last year and they turned out obviously not to be so happy unless they were like in Mexico. There was a few countries that did very well. But that's the way I'm looking at it. Or if we really think there's going to be stress on our raw materials, what are the countries that produce these raw materials and those country ETFs could be interesting? You know, like maybe a Latin America where people argue me and say, well, guy, they're really running those countries terribly there and you should never get invested. Yeah, but they also have a tremendous amount of raw materials and who cares about how a government is get led. we can make an argument that people think we have no leadership here, but it hasn't certainly impacted our stock market. So, yeah, that's how that's another area I'm looking at. But right now, I'm just happy being longer in gold, silver miners. I, I talked about coffee. I'm looking again at uranium, although that's me and uranium don't always get along very well. And and I'm looking at some companies that are in the small to mid caps that have strong earnings growth. We have a model like that, but one is oh, goodness gracious. What's the name of this company now? What's the name of that shipping company that we MNN or NMM? Yeah. You know, I'm I'm I'm at the time of the day where my memory for names starts to slip. I think it's MNN. It's it's Davios. Yeah. Wow. Wow. That just came into my head. There you go. Right. Davios, like that stock, if you take a look at the chart, it's just gone straight sideways. Even today, it barely moved. And if there's any supply chain issues, that's a that's a shipping company that's done well. It has great earnings potential, earnings growth. You know, you gotta you gotta this is when people realize that, hey, you know what? Maybe this isn't so easy after all. Either better learn something or go to cash and come back when things get easier again or lose all my money and then never come back. That happens too. Jason Kurz [36:26](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2186s): So, Ian, you cover the sectors too. Right? I do. Yeah. So I focus on materials, Ian Culley [36:33](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2193s): industrials, energy. Jason Kurz [36:37](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2197s): What sectors are you really looking at now then? Are you looking at any of these commodity sectors as having major outperformance going forward? Ian Culley [36:46](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2206s): You know, I like energy a lot. You know, I like materials, breaking out to new all time highs. Industrials, have have been leading the way. The most, tightly correlated with the broader market. I like just energy just broadly. Mish, I also like tan a lot. Oh, good. It's actually digging in relative to the S and P 500 right around the 2020 lows. So a logical area Mish Schneider [37:21](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2241s): to see some 40. Yeah. Yeah. Right. Yeah. To see some outperformance. So Mhmm. And by the way, we have an indicator called real motion indicator, which is a momentum indicator, and it's showing a bullish divergence. And that momentum is above the moving averages, even though for solar, excuse me, tan is sort of fluctuating around that fifty day moving average and really far from the 200. It's above both the 50 and the 200 in momentum interestingly enough. Can you excuse me for one second? I have Yeah, go ahead. I'll be right Okay. Jason Kurz [37:53](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2273s): I did have a question for Pavel because we're looking at the market right now and looking at the crypto markets and seeing all these underlying small crypto names and some of them are moving, some aren't moving. I know you are trading a lot of these. How small can you get in your models and still trade something? Like how what's what's the smallest coin you trade? Pavel Kýček [38:20](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2300s): It's good question, but it really depends if you are just a retail trader that is trading very I'm talking about you personally for your fund. Well, we we in our company, because we are covering institutional clients and retail clients, we are trading like top first 40 to 60 most liquid coins on crypto futures universe. If I would be individual trader only, I would go a little bit farther. But on the other side, if you make some tests or many tests, you can find out that these really small coins tend to not trend for long time. They really suffer from these pumps and dump schemes pretty heavily, so you have to change your models accordingly. So you can really see some differences between those very really small coins and those bigger ones like Bitcoin, Ethereum, these, like, top 10 by liquidity, you can already see some kind of long term trendiness. But in most crypto coins, in more in crypto in general, yeah, they tend to tend to really move, like, I would say, on steroids, like on short term cycles, very volatile ones, much more short term compared to commodities, but they don't have these long term trends like stocks, usually based on the data. Jason Kurz [39:59](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2399s): Yeah, no, it's interesting because I've been looking more into possibly adding some more. Only use the futures market at the moment, so I'm only using Ethereum, Bitcoin. I'm kind of dabbling with that idea a little bit. So thanks for that answer. I'm kind of thinking about it a lot more. Yeah. Well, you definitely should because especially for brand followers, Pavel Kýček [40:20](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2420s): I could show you dozens of models and Jason Kurz [40:24](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2424s): I But you're the only reason why I'm thinking about it because I have seen your work and always been like, you know what, I'm just gonna stick to the biggest ones and that's it. So that's how I'll make my money. And it's been great. However, adding more markets, it could be even more even better. So we'll see where that ends up. But thanks for thanks for the Yeah, Pavel Kýček [40:46](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2446s): because it's I like opening this size because it's it's about a major versus major market. Bitcoin is still very volatile compared to traditional markets, but compared to coins on four 30, forties position based on liquidity, it is much, much more mature, and you can see it on day to day volatility. Volatility of Bitcoin is four to 5%. The lower coins, easily nine to 10 daily. So this is this is what it is about. And these trend following models are, like, make your test on commodities and make it times five to 10, and you can see the potential of crypto right now. So this is also the reason why we are running our company basically on crypto because, yeah, we can make the most money there. It is not that I'm in love with crypto, not at all, but it is the most volatile, most trending asset. So that's why I want to be here, and I want to take the advantage because I can also see if you go to 02/1989 oh, sorry, 1819 compared to 2223, you can see that even this asset is starting getting a little bit more mature compared to four, five years ago. So I expect for sure that the volatility and trendiness, and we were discussing it with Mish too, that it will be evolving, and it will it will be similar to, I don't know, the trend in commodities and stocks in tech bubbles and so on. So it will be more standardized over the long term, but right now, it's just the place to be in my opinion for traders for traders, not for investors. I don't think it is an asset for long term investment except of maybe Bitcoin, maybe Ethereum or so. Depends on what you believe in. But for traders, it's just heaven. Jason Kurz [42:53](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2573s): Amen. Andrew, Andrew Swanscott [42:55](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2575s): you wanna go through oh, go ahead, Andrew. I was just gonna ask a question for Pavel because Mitch was talking earlier about, I guess, into market analysis and understanding the interactions between different markets. Do you see that same kind of concept in crypto with some of the, I guess, the larger coins or maybe they're built on some specific technology or have a story? Do you see that working in crypto as well? Pavel Kýček [43:19](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2599s): Yeah. Well, I'm not doing this inter or inter market analysis in crypto because I just don't have enough data, like five, six years of it's it's nothing, to make some, yeah, some baseline for real trading. But you can, of course, you can see that bit coin is usually starting the strongest trends. So if bit coin is trending, you can expect that few days later, there will be the smaller coins trending and this is one of them. I was also studying some types of correlations to traditional markets, to Nasdaq 100, for example. So you can see there, but it's not statistically strong enough to use it in your trading models. What's interesting maybe what is interesting are statistical arbitrages because I used to be trading them in stocks six, seven years ago, and then it was only the game of time later on or these days. It's not for retail traders, and it is definitely way how more skilled retail traders could be making money in crypto right now. Because there are really these inefficiencies are much, much, much bigger than anywhere else. Andrew Swanscott [44:45](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2685s): But I imagine to be able to leverage that you need this technology factors, And being able to even test that kind of is a bit more complicated, I guess, than traditional testing strategies. Pavel Kýček [44:59](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2699s): There is no tool for testing crypto, for example, portfolio crypto trading. There is no tool for making your survivorship bias tests and so on and so. So you have to you have to basically build everything. So is it this is for skilled programmers for sure. We have built it for one and a half years in three three people and one more team of another three people so yeah it takes some time but it's worth it. Jason Kurz [45:33](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2733s): Andrew do you want to hit some of the questions in the chat? Andrew Swanscott [45:37](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2737s): I was saving this one for when Mish got back because I think this one popped up when Mish was talking about the relative strength. So I'm just trying to find it in the chat. Here we go from Samberg. What does the panel think about RRGs, which I think are relative rotation graphs. I'm looking at a weekly RRG of the 11 S and P 500 secondtors with energy firmly in the improving quadrant and pointing towards the leading quadrant. What do you think about RRGs? Mish Schneider [46:10](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2770s): Well, I merely think of Julius De Campanar, which I would imagine this person might be a student of who has a whole system using RRG. In fact, I think it's called RRG or something like that. Yeah. And I love Julius, by the way. I we've we have been together several times. Ah, okay. There you go. We've been together several times through stock charts, and he's working with stock charts now and he does great work. And here's a great example of you find a system, you stick to that system, you become a specialist in that system. And with that level of consistency, obviously all systems go through cycles and at some point what worked great may not work great another time, but for now and for a while now that RRG system has worked well. Why? Because it's on the basis of following the momentum, the leaders that tend to lead will continue to lead. That is an adage that has been around for many, many, many, many years. But I think even more so in the last year and a half, we've really seen that to be the case. So if he's telling you that we're gonna go into this final quadrant with energy based on all the parameters that you and I are looking at maybe more informally, I'd say he's probably right. Ian Culley [47:34](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2854s): Yeah. I mean, I love the RRG charts as well. Those relative rotation graphs. When when when those those, those tangents start to move into that final leading quadrant, that's that's just strong outperformance. And we've seen energy outperform. And I think if you dig a little deeper into the energy sector itself, world refiners have just been by far just outperforming the rest of the space. I think in the coming three, six months, we start to see rotation out of those refiners down into maybe some E and P names into the services names, and they they take over the leadership roles. Something to look look look at. Jason Kurz [48:25](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=2905s): Yeah. I love RRG. That's that's something well, it's funny because when I first started, there was a guy who built something kinda similar on a spreadsheet, and I stole it. And I tried to I tried to make it a little bit better. And then I was on stockcharts.com, and I was like, oh, there's this guy who has it completely figured out. So now I'm a big fan of it as well. Sambo, I think you and I have talked before, if you've seen my page or my work, you see those charts all the time. Energy, it's funny because the way you talked about energy, literally, if you look at one of those charts, it looks like a rocket ship right now, like coming from the laggards all the way to the leaders, it's just a rocketing straight up. And it looks really good. I think that's the thing, the energy sector, it's gave us a lot of signals pretty early this year and they've just continued. It's like, I think you kind of have to be very open to this energy trade, especially as it's breaking to all time highs, not all time highs, but fifty two week highs and it's continuing higher and higher. And also just looking at those charts, you can also see what regime we're in. I think that's really important too. So being able to see, okay, like what is starting to lead the way? Where are we seeing relative strength? Well, we're seeing it in energy, we're seeing it in financials. That's telling me we're in a kind of a reflationary style environment. Doesn't mean I make all my trading decisions based on it, but it can help me to figure out where I wanna be positioned, what I wanna be seeking signals in, and how to manage those. So I really do like those charts as well. Pavel Kýček [50:00](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3000s): If I can just quick mention, I don't know r r RRGs but to me, it seems similar to basically rotational momentum strategies that are built on relative strength. And those are, I would say, one of the most robust statistical models that one can trade. So and there are also many papers. So if someone likes statistics like me, for example, you can just Google papers on rotational strategies, and there are there are many. And, really, they are going far to the past, you can see that they have really strong strong fundamental basis. Jason Kurz [50:44](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3044s): Yeah. I think the first person I think and all of us, most of us on this panel, the first person I saw doing some work on that was interesting was probably Meb Faber. Meb Faber did a lot of interesting work on that stuff. And the white papers are still out there. They're still really good to go through. Yes. They're pretty dated by this point, but you can build your models based on what he puts out there. So if anybody is looking at this and listening to this and trying to build their own strategies to figure out what sector is having outperformance or not, that's cool. Even though there's a very simple strategy of kind of taking the top four sectors at any point as long as the S and P 500 is over the ten month moving average. And this outperforms the market drastically with a lot smoother drawdowns and so on. So I think it's super interesting. I love that you're looking at that. I think Samuel and I talked once before, he's actually a younger guy. So, I'll talk he'll he'll talk to us in a few years. He'll probably be the richest one out of all of us. I'm always excited because he's always on here and he's very knowledgeable and he knows so much. I'm excited to see you on here, Sambo, and hopefully we'll talk again soon. Andrew Swanscott [51:59](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3119s): Right, so I think we've got a hard stop at the top of the hour, don't we, Jason? Were there any other comments or questions in the chat that kind of got your attention before we start wrapping this up? Jason Kurz [52:11](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3131s): I just like to the other thing that was said was if you can see where the money is going before it does you win by TWISAI. You know, that's that's honestly the name of the game and what we're talking about when it comes to momentum. And, like, that's what he he said that when you were talking, Mish, so I'm pretty sure that's part of your game as well. Mish Schneider [52:37](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3157s): Yeah. Yeah. And you wanna get in there before everybody else does. I mean, that's I mean, I've said this before, but now I have the classic example with gold because for two years I've been telling, I thought of short of sounding like Peter Schiff. I didn't wanna go that insane, but no offense to Peter. I mean, he's actually turning out to be pretty smart about the gold and he's been very convicted, but so was I. And I've been buying gold since 1200. The $1,200 added to $1,500, know, kept adding in and out, in and out, in and out, then over $2,100 because I knew that was the major breakout. You know? And then when everybody else talking about gold or we used to say on the floor, when you get in a taxi and the taxi driver tells you, I think you should buy gold. It's usually getting me at the top. that's, that's the herd mentality that when it gets too crowded, it means they're too late. And you're like, thank you very much. Jason Kurz [53:37](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3217s): Yes. A good point. Well, Andrew, you wanna end it there? Andrew Swanscott [53:42](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3222s): Yeah. That sounds like a good point there, Candace. Who wants to start with how Jason, how about you? How do people get in touch with you, learn more from you? Well, you guys can find me on just about everything at AAO Mish Schneider [53:56](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3236s): Research. That's for against all. Just look for the pink day glow. Yeah. Yeah. Jason Kurz [54:01](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3241s): Well, actually, what's funny, somebody made a joke about it the other day. They were like, why? You know, this guy has LEDs up there. And it's it's actually a sign. I can't really show you right now, but it's a sign that says better late than ugly on my wall that my fiance bought. So it gives us this nice glow. So but yeah. So it's AAO Research just about on everything. My sub stacks against all odds research, AAO Research as well. And so you guys can follow me on there, see what I'm up to. Andrew Swanscott [54:34](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3274s): Excellent. How about Mish, you're next. Well, Mish Schneider [54:38](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3278s): marketminute is my Twitter handle. Very active there. I also am on media a lot. So I'm not always will put what media I'm going to be on, on Twitter or, excuse me, x. But we also I do a daily market. It's called Missions Market Minute. And that you can find at marketgage.com, which is our website. And there I list what appearances are coming up. I put the clips of what has happened plus my thoughts on the market. And I do that almost every single day. So essentially you can, like Jason, you could pretty much find me anywhere. I'm kind of hard to miss these days. Andrew Swanscott [55:16](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3316s): Yeah. Excellent. And Ian, it's great having you on the show today. Ian Culley [55:21](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3321s): You so We can find you. Yeah, you can find me at Ian Culley on Twitter and allstarcharts.com. And I jump in and hang out with the guys on stockmarketmedia.com. Is it YouTube? Stockmarketmedia YouTube channel. But yeah, I'm just kicking around Twitter. I write four four columns at all at all star charts. One, gold related on Mondays, the gold rush, and then I cover currencies and fixed income and then commodities every week. Mish Schneider [55:53](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3353s): Am now following you, Ian. Oh, yep. As you can see, I'm already following you, Mitch. I did see that, but that wasn't that did not sway my decision, I swear. Ian Culley [56:06](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3366s): Is is Market Minute a new app? Is is that a new application? There there's there was a new app I Stockpik. Mish Schneider [56:14](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3374s): Stockpik.app. I'm doing Yeah. Stuff for Yeah. I just and I saw you. Yeah. So it was, like, last week. I picked that app up and I saw it. We could talk about that more. I'd love to talk to you some more, actually. Same. I would. I would love And, of course, thank you, Pavel and Andrew. And I know we haven't had the chance to talk. And, Jason, of course, you know how much I love you. Pavel Kýček [56:35](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3395s): Pavel, where can people find you? Yeah. Just follow me on Twitter or if if you want to know more about what we are doing for our institutional clients and retail ones, just check robuxi.com/explainer and you can you can learn a little bit more. Andrew Swanscott [56:51](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3411s): Excellent. Thank you. And then of course, bettersystemtrader.com and Twitter, YouTube everywhere. So thanks everyone for joining us today. We've got a couple of nice comments in the chat here. This one from Samba. Like, let's end on this one. Thank you for the feedback everyone incredibly helpful. So it was great to have everyone's opinions today and catch us next week Wednesday 4PM Eastern. Yep. 4PM Eastern. You know, we've changed the time. So catch you then. Jason Kurz [57:23](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3443s): Alright. Have a great rest of the week. Bye, Mitch. Love you. See you later. Bye, everybody. See Mish Schneider [57:29](https://www.youtube.com/watch?v=8P-tiXvDP2w&t=3449s): you. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 10 Better System Trader · The Trading Panel · Episode #10 # Market selection, shorting & managing volatility Jerry Parker · in conversation with Andrew Swanscott April 18, 2024 · 57 min listen · 40 min read Episode 10 of Better System Trader's Trading Panel — original Turtle Trader Jerry Parker (Chesapeake Capital) joins host Andrew Swanscott, co-host Jason Kurz and Robuxio's Pavel Kýček on market selection, the case for shorting, trading small, and managing volatility in a trend-following portfolio. Listen on [YouTube ↗](https://www.youtube.com/watch?v=6yDy1mg0Jck) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Jerry Parker on why broad market selection beats cherry-picking a few favorites. - 02 The case for shorting inside a trend-following portfolio — and its real costs. - 03 Why "trading small" and diversification are the Turtle-era risk lessons that still hold. - 04 Pavel's crypto angle: ranking a 50-coin universe daily to manage volatility. Full transcript ## The conversation 57 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:02](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2s): Welcome to the trading panel of the show where we assemble a group of traders or a panel of traders, I should say. We talk about all things markets and trading. As you can see on the screen, we've got a couple of the usual suspects. We've got a special guest and our first bird on the show. So I can't wait to hear the story around that. Jason, how's your week been? Jason Kurz [0:20](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=20s): Good. How about you, Andrew? Andrew Swanscott [0:22](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=22s): It's been pretty good. We're getting some colder weather now. So I was just saying to Pavel before, it's that transition from warm to cold and so everybody's sniffling. So hopefully I don't sneeze and cough too much on the show today. You get much where Jerry Parker [0:37](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=37s): you're at? Andrew Swanscott [0:39](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=39s): It doesn't get that cold. Sorry, I'm being a little dramatic, but colder than what it has been the last few months. So yeah, exactly. Pavel, looks like he's got some warm weather. He's got a bit of a tan. I'm jealous. Well, it Pavel Kýček [0:56](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=56s): was about the last two days. It's freezing here in fact. So it's snowing here again. Weekend was nice and now it's under zero here in Czech Republic again. So yeah. Oh my goodness. Also a little bit better, especially in Spain, but yeah, we have to wait a bit one more month. Andrew Swanscott [1:14](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=74s): And Jerry Parker, welcome to the trading panel. Jerry Parker [1:20](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=80s): It's good to see Thanks for having me. I'm glad to be here. Jason Kurz [1:23](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=83s): Thanks for coming, Jerry. We've been trying to talk I've to been trying to get Jerry week after week. I'm like so excited to get Jerry on here. There's no better person to have on this show than than Jerry to just kind of have a good conversation about trend following, systematic trading, and so on. So, we're we're all excited to have you and the bird. Petey is the name. Right? That's right. Petey Akakatil. Jerry Parker [1:48](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=108s): Not sure how old she is. She's a rescue. So she we got her in 2018. April 2018. So but, yeah, she's is in here in my office every day, so we just kinda trade together. Well, I don't trade. So I just I watch the markets. We watch the markets together. Jason Kurz [2:10](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=130s): No no predictions together. Jerry Parker [2:12](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=132s): Exactly. Exactly. Jason Kurz [2:15](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=135s): So how long so you've been I remember there was one time it's kind of funny when I was thinking of saying this to Andrew before we got on. But I remember there was one time, I think you mentioned you had the birds in the other room one time, and you did an interview, and people were wondering where the birds were. Was that is that right? Jerry Parker [2:35](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=155s): Well, yes. And so I would get really self conscious about the birds flying around on Twitter, Spaces, or Clubhouse, and podcast. And then but then I got bolder, and they're just usually always with me. And and then once I didn't have them with me and people on the spaces got really nervous. Like, they wanted to hear the birds in the background. And they come across the microphones very loud, but they're hardly making a noise to me. They don't sound loud at all. But people tell me that they're very, very loud. So I apologize if they get too crazy. But there is still one podcast that I do. You know, I did it yesterday on Schwab Network. I'm still too chicken to bring the birds on. I don't know if they would invite me back. They're pretty I think they're pretty serious versus most of the podcasts I'm on. We we try to have a lot of fun and Yeah. Haven't done that yet. Jason Kurz [3:37](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=217s): I mean, I love it. I think it's it's it adds character. I'm an animal lover too, though. You know? Like, I always like to see people with animals in their background. I got four dogs and two cats and all types of stuff that pops up in the background for me. So it's just I think it's awesome. I've never actually heard anybody say anything but, hey. That's super cool. Jerry has birds in his videos. Jerry Parker [4:00](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=240s): Yeah. I guess it depends on what I say too. But if I said something pretty kooky, I think people would say, yeah, he's really losing it with having all these animals and birds around him. But my wife was out walking the dogs one day, 2018, and she's an animal lover. She's very knowledgeable about animals. And so this bird flew at her head. And she wasn't afraid, but she wasn't sure what kind of bird it was. So she was, like, doing a selfie to see, what's on my head. Mhmm. And so she brought the bird inside, and I was like, oh, I don't like birds. Get this bird out of here. And and like all good wives, she immediately ordered a cage off of Amazon. And so that's how we know exactly the day we got her. And then the bird and I just bonded after a week or two and was just like best friends for life. And that's the story of the bird. So it can happen. And people are very skeptical about how great little birds are and how much fun they are. But as I was. But one of these days, if you get a chance, I recommend giving it a shot. I have five dogs as well. The birds are much more manageable. Jason Kurz [5:12](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=312s): Oh, yes. Do do they get along with the dog does the bird get along with the dogs? Jerry Parker [5:16](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=316s): Well, we have labs. And one of the labs is young, and she has a look in her eye that we try to Yeah. Keep them But we actually have a picture of from a few years ago of PD on the back of the older lab. And so we didn't wanna try that again, but it just happened one day. We were watching. But I don't recommend it. You know? You never know what can happen. See, really docile dogs do a lot of crazy things because they're hungry or something. Jason Kurz [5:50](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=350s): No. I love it. I think it's cool, and I'm glad that you feel comfortable here to do that because it's, to me, it's awesome. I think it just adds something to the show, and every show you come on, I think it's it's a lot of fun. So Yeah. You know, hopping right into it, Jerry, can you give people I know there's most people know who you are at this point. You know, we all know who you are, but can you give a little bit of a background on yourself? Jerry Parker [6:13](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=373s): Well, I worked for Richard Dennis in the turtle program in '19 I went to Chicago in 1983. And, so I just, have been doing that trend following and really just in about the same way that we were taught. Yeah. It was many years ago, almost forty years ago. Over forty years ago. And, yeah. So, I just bought the trend following idea hook, line and sinker. And I thought it was the greatest thing ever. But I thought it was great before I worked for Richard Dennis. I had read a bit about it and read books and newsletters and I was sort of interested in Marty Zweig and got his newsletter and he was kind of a trend guy. So it was just a great situation for me to go to Chicago and learn how to trade for Richard Dennis and build that card. It sort of was already something I already thought I knew something about. But I kind of really didn't compare to what they taught us, of course. And then that program lasted four years and I started Chesapeake in 1988. And we've just been trading trend following strategy the whole time. And nothing but the trend following strategy. And sort of always more or less a preference to longer term trend following. And I was always obsessed with diversification and Rich preached diversification that was really the most, one of the most important things. Your risk control, diversification, following rules, following systems, having a good back test, all that stuff. So, so now we're, I think we may be the only CTA that trades a full portfolio of currencies, commodities and bonds and plus single stocks. So we trade 400 markets and about 200 of those are single stocks. And so that's my attempt to not be so concerned about being part of managed futures or what is, what is a managed future CTA supposed to do. I kind of wanted to be a trend follower first and put trend following the best light possible with all these markets, all these stocks, long and short, single stocks. Most CTAs, they trade indexes. And so that was sort of my goal. And now we have an ETF that has that same program that's available to everyone in an ETF format with these 400 markets and 50% stock. So it's really kinda different and unusual. And another thing too that's different about Chesapeake is we let profits run. We don't have a money management overlay like 99.9% of managed future CTAs that do some volatility management, correlation management. So an overlay on top of your system to reduce trades or increase trades when the volatility changes or the correlations change. So we just put the trade on at the entry and let it run without doing anything to it. So we're like, these days we're pretty afraid every day coming in and watching our cocoa position. Because we haven't scaled it back at all. We've just been kinda crazy holding onto it. It's a winner, you're supposed to let profits run. Take small losses, cut losses short. So that's what we do. And that's enough. That's enough about my history because that's the highlights, I think. And probably a lot of people already know that about me because I say the same darn thing every time I'm on a podcast. I can't stop myself. Jason Kurz [9:44](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=584s): But that's part I think also part of the reason why that's significant is because that's a significant part of your personality. Your personality and being a trend follower. Like, isn't trading isn't supposed to be exciting or fun like gambling. Trading is supposed to be doing the same thing over and over again, having the discipline to do so. That's what makes you a good trader. Well, no matter what type of trader you are. So I think even if you say the same thing, the reason is because that's the discipline that you have to do this all these years, and that's something that people can always learn a lot from. So just getting just to name the ETF, what is the name of the ETF? Jerry Parker [10:22](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=622s): The symbol is TF PN, and it's Blueprint Chesapeake Strategic Trend something. I can never remember the name of it. Believe it or not, it's so long. But it's Blueprint Chesapeake. I know the word trend is in there. But it's TFPN and it's been going since about last July. Jason Kurz [10:45](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=645s): So another thing to talk about too is you brought up Coco. And you and I have talked about this before. I'm I'm one of the traders too just like you. I don't wall target. I don't. But I'm sitting here every day just in fear of this Coco position because it's driving the whole portfolio. If Coco has a down day, the portfolio does. You know, how did you how do you handle that type of pressure? Jerry Parker [11:10](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=670s): Well, it's it's really difficult. I mean, it's super difficult. I think I remember Rich saying, profits are can be destabilizing. You know, you can get a lot of when you're losing money and you especially have a lot of trades, losing trades in a row which trend followers can do, you have moderate profits that turn into losers and you kinda like those small profits, you don't like them to turn into losers. It really weighs on you and it makes it difficult to have a good day. Or the worst thing too is it could impact your ability to carry out the trades and do all the trades you're supposed to do and do only those trades. But with something this big, gracious, it can really just destabilize you. The bigger it gets, the more money you make, the more nervous or worried you get and you wanna get out. And I think that's one of the biggest rules about trading, especially when you do a back test. Is that the computer says like, can hardly be too long term. You can hardly hold onto those profits long enough. You're a human, you really are gonna just try everything in your bones to get out of that trade with any semi legitimate reason possible to take that profit. It's just how we're built. And so it's really difficult to ask the computer, please optimize this for me to the trailing stop. And the computer may say, oh, you gotta be really long term. It's really difficult for people to accept that and do that. Now, I cheat a lot on that now because I trade 400 markets. So, it's one out of 400 markets. Back in the turtle years, it was one out of 25. And then, even, not long ago, was maybe one out of 75 or a 100. But one out of 400, it's so immaterial. And it just, and it's, and that's kind of a bummer because I'm not having these eye popping returns that a lot of managed future CTAs are having that have cocoa as a material part of their portfolio. I subscribe to this idea that about five to 10% of my trades are gonna be outlier trades per year. They're gonna be the ones that make all the money. So I've got 40 of those I'm looking at, every year. And some people may have two or four if they only trade, just a few markets. So, but that's the it's good and bad. I don't stress about cocoa at all because I'm happy for it but it's just one out of 400. And I need a lot more. I need 39 other markets to really make my year. And I need 39, so I need a lot of bad things happening as well to get my ass handed to me. But it used to be a much bigger deal than it is now. But now I have another psychological problem. I'm jealous of everyone making, I'm jealous of Mulvaney making 50% in February and March, probably all due to cocoa. Jason Kurz [14:03](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=843s): No, I get that. It's well said. It's also part of when you're a money manager, know, me being a PM, the amount of money I'm managing is nowhere near the amount of money that you're managing. So of course, it's gonna be different. I'm going to have less products I'm trading most of the time. And also, when you're trading to that level that you're on, you're also, your biggest goal is probably to protect your clients' money every single day. And so it's like, getting used to those two different worlds, so to say. But I think it's cool to know and cool to also hear from you because, for me, it's been very stressful because it really is running my portfolio. Yes, it's been cool returns, but also, the down days are like, oh, it's just running it up and down every which direction. And I think it's hard, like you said, profits are destabilizing. You know, I think that's a really, really key point that you just said there. I hope a lot of people picked up on that. Jerry Parker [15:00](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=900s): It could be worse. And I've been in worse situations. And I'll tell you a situation that's way worse, and that is you don't have cocoa. And you thought about it. I've heard this recently from friends on Twitter. I thought about it. I used to trade it, but I took it out or I just skipped this trade. And cocoa, almost a lot of people confirm this with their backtest that cocoa is, a really bad market in the backtest. And so I don't believe that is worth, paying attention to. I think that you should, trade all the markets that are liquid and help with diversifying obviously. I don't go through my 400 markets and optimize them to make sure I've got the 400 best performing or 200 best performing stocks. I think there is a wisdom in trading all markets and not really relying too much on history of any one particular market. And so my response to cocoa never really had never making money for maybe fifteen, twenty years was to trade two cocos. We trade London and New York. So, and with the coffee as well. We trade three coffees. We trade Brazil as well. You know, wheat's another one that's not very good. And I think I trade six contracts of wheat. So, you just never know. You can't predict these markets. You need to do a back test of hundreds and hundreds of markets. And over many, many years, and take away from that your performance on an average. You know, how did the average market do versus trying to look at the numbers as it relates to any one market. Jason Kurz [16:37](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=997s): I think that's cool. You know, the idea of people taking stuff out of their portfolios, maybe we could pass that around the panel too, which is I think that, just like you said with Cocoa, I've heard that so many times. I actually posted a chart showing all my Cocoa trades over the last ten years and how bad they were. Like there was a bunch of, they're just chopped up over and over again until this final one. And just kind of showing, just sticking with your trading plan, your strategy, at some point, you will get a good trend out of something that might look choppy for a long time. So I'm wondering, Andrew, Kabul, what would make you take something out of a portfolio? Like something out of your algos, you're done trading this specific ticker. Pavel Kýček [17:28](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1048s): Low liquidity, really untradeable conditions other than backtested, like, backtest from the past, definitely not something like that because I like what Jerry is talking about, that you have to be broadly diversified across big universe of basically assets or even in one asset, if someone is trading stocks or crypto algorithmically, for example, you never can pick just some universe. You always have to have some kind of ranking mechanism based on which you are trading, which is also if I can, one of my questions to Jerry, because he told us that he's trading half of his portfolio in stocks, basically single stocks. And what I would be interested in is what kind of mechanism, if I'm not going too much into secret sauce here, what kind of mechanism you are using for basically choosing these 200 stocks if this is some kind of ranking based of momentum or what is the mechanism? Because 200 stocks, yeah, it is a lot, but from the stock universe, it's still very, very small number of tradable universe. Jerry Parker [18:55](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1135s): Right. So I think the way to look at the stocks is to look at is in the same way that you look at all the other markets. So, in the currencies, we trade all the currencies as long as they're liquid. And in the commodities the same way. We're trying to get our hands on more and more commodities. We trade them all like almost all CTAs, if at all possible. You trade whatever you can get your hands on. We even trade sunflower seeds and white and yellow maize. And so, we really push it, push the limit on the volume the liquidity in those markets. And the same way with interest rates. We trade a lot of interest rates. Every bond future, you know there was one bond future that I don't think too many people knew that it existed. We added it. It's The US three year. So I've only added it within the past six months or whatever. But, so we're always on the lookout. I read, newsletters of other CTAs of what they're trading, especially on the currency front. Because a lot of the currencies we trade, they're not, there are no futures. We trade a lot of the ETFs in fixed income that you don't get with the future, tips, junk, muni bonds, mortgage backs, corporate bonds. Those are not there's no future. So, we wanna take this total mindset. They're all liquid. We can go long and short though. So, take this same mindset into the stock world where there's thousands and thousands of stocks. So how do you do it? Well, you certainly don't spend a lot of time thinking about it because we didn't spend any time thinking about the futures. The CME created it, we traded it. And it's that simple. So, I do see that people do get a certain level of anxiety when they think about these stocks, as do I. But basically, we just choose the type of, stocks we wanna trade that's gonna give us a lot of diversification and sufficient liquidity. And I have chosen to trade small stocks like Mhmm. Less than 10,000,000,000. So, we just, yeah, sort of like with this theory that we want some commodity exposure, you can get quite a bit of commodity exposure through stocks. And we want small companies that have maybe one story. They're not very diversified. So, they may be involved in temper or oil or some one product or one service that they do. So, I don't want them to be diversified and water down my outlier possibilities. Some piece of fundamental news or fact comes along and can hit this company and make their business really do well or whatever they produce do very well, that's what I'm looking for. So basically, we then just trade the largest companies in that group. You know, we just say, okay, we're gonna trade the 200 largest of anything below 10,000,000,000. And then it's over with. We don't spend any time on it at all. And, there's no need to because we have this fixed universe. We're we're gonna hopefully trade these 200 stocks for the rest of our career. We're not gonna be able to because sometimes they go away. They get bought out or they go out of business. But, yeah. So, I think it's the same mentality that you would have with futures except you have to figure out a way to corral all these thousands into 100 or 200, however many you wanna trade. And, just do it based upon diversification, liquidity, and just like I would do in the futures. There's really no difference. You know, CTAs are are not it's kinda funny because you're always reading articles about how this stock is gonna be great. I get a subscription to Barron's and it's always hitting me up with, these are the stocks that are gonna be moving next. And, these are the stocks that have been doing really well. And, I think I just wanna ignore all that and just trade what is, liquid and diversifying. And then, you may come up with another 200 that's different from my 200. And that's fine. You know, just be consistent for the rest of your career and try to trade those 200 or 100 or whatever it is. And just be consistent and have sort of a fixed universe. Yeah, that's what And just follow those trends as they randomly appear. Andrew Swanscott [23:20](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1400s): Jerry, this Pavel Kýček [23:22](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1402s): Oh, sorry, Pavel. No, no, no. I just wanted to thank thanks that for this sharing. Andrew Swanscott [23:28](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1408s): Yeah. Gerry, you posted, I think it was yesterday, a comment on Twitter or X about I'm just trying to remember the exact details. There was something about the overperformance of funds that do short selling versus the, I guess, competitors that don't. And it got me a little bit thinking about just then when you're talking about universe selection. When you select a stock or a future, do you go both long and short or have the ability to go both long and short in all of the instruments you select? Or are there some where you say, I'm only gonna short this, money gonna go long? Or how do you look at that? Are you a little bit more selective there? Jerry Parker [24:08](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1448s): I think you need to take that in consideration when you choose the stocks you're gonna trade. You need to make sure that you can do the shorts and that they're liquid and they're available to be borrowed and the borrowing fees are kind of normal. But I think it's critical to have shorts in every market, of course. They don't really look very good on the back test. But you need them as a diversifier in times where they will sort of do well when, longs do poorly. You know, obviously, an extreme example would be February, March 2020, where everything was going down. Every we were long almost everything in every market. And then they all started going down. So you're really, looking for those shorts to kick in quickly and for that trend following trade to begin. So we we just, start selling those downside breakouts. And I'm not surprised that research would show that, the portfolio performance would be better with shorts because, once again, sometimes there's just no nothing to own. There's no longs that are in an uptrend. So for us, it's it's pretty important for us to have a good short position too. Even though the longs historically have made all the money or almost all the money, that could change. It could be like COCA. The shorts could have a really great period. And and they all they even even even though if they don't, they still add some diversification and risk control. Andrew Swanscott [25:37](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1537s): Yeah. I think it's quite, I guess, common for futures traders to go both long and short. But I think for people who trade stocks, there are some, some limitations to being able to short. So, how do you think traders should kind of look at that in their portfolio? Jerry Parker [26:00](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1560s): Like they do in all the other markets, unbiased. You can easily be as you can be short just as easily as you can be long. But once again, I think in stocks, you need to it's a little bit more difficult because you need to stick with some stocks that have enough liquidity so you can short them. And there's borrowing fees as well. So you want those to be sort of reasonable. And, it's not hard, but there is no reason to avoid doing shorts just like there's no reason to avoid doing shorts in bond bond futures, currency futures, and commodity futures. Andrew Swanscott [26:37](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1597s): Do you ever find that the shorting pool in stocks dries up just when you need it the most? Have you ever had situations like that? Jerry Parker [26:47](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1607s): No. Because I go in knowing that's very, very unlikely to occur. Know? I've got my my portfolio of stocks that I'm not I haven't had to worry about that. Andrew Swanscott [27:00](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1620s): Yeah. Okay. Pavel Kýček [27:02](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1622s): To me to me, it's very interesting because I have to say that I like trend following a lot. I'm trading like broad portfolios of different strategies on stocks or on crypto and so on. But even though I'm trying to be as unbiased as I can, I still cannot trade long term short trend following on stocks because I can see that over the last fifty years of data, these kind of strategies were basically losing money? I understand it completely in your situation as a strong diversifier, but I'm just saying that to me, it's something like against logic to trade to trade it. But I completely understand your solution, of course. Jerry Parker [27:53](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1673s): Well, if if you so if if what you're trying to say is that shorting the stock market is not profitable, then I agree. But any individual stock can be very profitable. I mean, the people write these other studies that show that, 4% of all the stocks made all the money, in a buy and hold. So if you owned all the stocks in the past one hundred years, only 4% of those stocks really made any money for you. So owning stocks doesn't really make money. 96% of them don't really make any money. But that's not what we're doing. We're in there for this slice of the trend. You know? One of the greatest trades of all time would be Enron. You know? It was a huge massive uptrend, and it was a huge massive downtrend. But Enron itself made no money. It went bankrupt. But a trend follower made money on this big uptrend and made money on the big downtrend. So we're not really caring too much about about what happens in the stock market per se. It's what happens on, with these stocks. Do they have trends, uptrends, downtrends? And we're gonna we want to be on those trends. So they're just and they don't really, stocks short stocks, I have never seen a back test that showed they made money overall. But, there's a lot of markets that don't make commodities. I probably don't make, in general when you look at all the commodity shorts, they probably didn't make money either. But we still trade them and they do help out from a risk control point of view. And they do help when lungs are suffering. Let's say the lung trades, or there are no lungs to be had. And, they can help. Yeah, that's all. Thank you. Andrew Swanscott [29:47](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1787s): Jerry, there's a comment in the chat here about we can model trends and seasonality, but noise, I'm not sure what the rest of that comment means. But do you ever look at the noise in the markets or maybe in individual stocks and use that as a consideration in your models? Jerry Parker [30:12](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=1812s): Well, I don't look at any market by itself. Know, I really don't care what these markets have done historically or currently, the noise or the trends in these markets. I just look at, the system and how it performs over all the markets, over all the test period. I don't really pay any attention to recent performance. So, but I am very worried about getting into trades too quickly. So, we try not to get in so quickly. You know, we wanna make the market show a lot of trend and stay away from, maybe that's noise, of the gyrations back and forth. The markets hitting the breakouts on the upside, then going down to the downside. So, try to have longer term parameters to where we're just not getting into trades. It's really difficult for us to get in, we have to get into a trade. It has to show a lot of trend and momentum. And then once we get in the trades, we have this, two things we have to be concerned about. One is, we don't wanna get shaken out too quickly. So we have to have a long term exit and then that's gonna keep, because there is a lot of noise. Like you look at cocoa or some of these big trends, there's some really bad spikes down, in these markets. And you have to, look at your back test and see what is required. And it's, unfortunately, it's usually what's required is to have a trailing stop that's pretty far away. Or what we would call loose pants. You know, you can't be too tight. And so, the problem with the loose pants and having a trailing stop that's the one hundred day low or the two hundred day moving average or three hundred day moving average is that you give back a lot of profit. But, or you can give back a lot of profit. But that's sort of what the back desk says. Look, if you wanna make this money, you gotta be tough. You've gotta hang in there. You gotta accept a certain amount of volatility and a certain amount of ups and downs. And then, something like a cocoa, when you know that you've really nailed one, it's really a nice trade. It's gonna be great trade, you have to have a, your trailing stop needs to be close enough to where it's, you don't give back all of your profit or too much of your profit. I think on any one individual trade, you will have that happen. And so, that's why you don't wanna look too closely at any one trade. But, you wanna look at all the trades and how do these systems perform over all the markets, over all the data. And, that's what we're gonna go with. And, there's nothing more important than the current trade in everyone's mind. Clients are very concerned about it. They're concerned about performance that we're having now. We're concerned about it. We're very uptight about it. We wanna book these performance fees and we want to, have a good track record. But really, you gotta force yourself to try to not to be so concerned about these particular trades and how they're gonna play out. It's all random. You just wanna commit to yourself that you're gonna follow your rules. And I don't think you're gonna have better performance than following your rules. I think discretionary moves based on fear or greed are probably just gonna mean you're gonna make less money. So you're walking that fine line. Don't get out too quickly but don't stay too long. And I think that really is, more anything else, psychologically difficult. Andrew Swanscott [33:42](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2022s): I guess that's the, oh sorry Jason. No, go ahead, Andrew. I was going to say, I guess that's part of the art of trading, right? And it takes, well, I think it takes a long time, a lot of trading before you kind of understand the delicate balance that can be there sometimes. How do you think traders who are just starting out can accelerate that process of understanding what you're just talking about then? Jerry Parker [34:07](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2047s): Well, I don't think yeah. I think it's just looking at the backtest, really. And, running different parameter sets and seeing how long term you need to be. And seeing how how short term you can be. You must be a certain know, can't be too short term, you can't be too long term. And just finding the sweet spot. And it's a pretty big spot. But then just committing yourself to do it. So, think the knowledge of gaining that knowledge is pretty easy. I don't think you need to have any experience or any intuition. You just need to be committed to do the back test and then committed to follow it. And I think that's the problem. And I think what happens also, and definitely happened to me before, not recently, but it has happened to me. And that is, you get this performance and you see with these the strategy that, yeah, this thing makes a lot of money. It does really well. And yes, historically, it's had some bad periods. Just mainly really big profits turning into smaller profits. Know, this really bums us out. We don't, some people even go so far as to declare that a loss. Like I think if I take a loss and I get out of a trade with a small loss, that's the loss. I don't really consider give back of a massive profit like cocoa as I couldn't really honestly characterize that using the word loss. It's just a give back of profit. I understand it's painful. But really I think understanding the rules and the systems based on breakouts and moving averages that get you in the trades and that are the optimal strategies, optimal parameters, I think it's really easy. It's not hard at all. Everyone, anyone can do it. Hire someone to do it for you to write the back test. Now, you look in real time, you start trading this thing, you're like, oh my gracious, we have to add some more things to it because I don't like what's occurring. So wait a second. When I told you about this system, you wanted to trade it. I asked you, is making the most amount of money that you possibly can, is that good enough? And you said yes. When in reality, it's not good enough. Oh, no. Because we have to add other things to it, other parameters, more rules that makes it less reliable, less robust, because we cannot stand to watch this fluctuations with our profit like we have in COCO. It's totally just a psychological thing. And people have these rules, they pat themselves on the back and they say, I'm following the rules. True, but you have a lot of bad rules and you have too many rules and you have over optimized rules. And this is what I think is the problem, is not finding it. Not having it. Not having the experience. I mean, come on. Technically, if you have a systematic approach and you're good with the computer and you've come up with a good system and good rules and you trade a lot of markets, you don't over optimize, you're ready. You're set. What do you need to do? Just do the trades. You don't need any yeah. I mean, I think experience is good. Don't get me wrong. But, I had lots of experience many times. I've had lots of experience over the years, and I just was weak and decided to, do a nonsystem trade, for instance. And it never worked out. And I think that's what you need to do is get into a situation where you can train yourself or learn how not to override your system. Andrew Swanscott [37:36](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2256s): Yeah. I think there's also a gap there in the back testing process because a lot of these reports that get spit out by these trading platforms, they're all based on or the stats are based on close trades. And yeah, sure, there are some stats that show you what's happening inside a trade, but you don't really get a good understanding of that until you actually trade the thing. You go like Jason said today, this Coco trades, throwing around my portfolio with this open trade because it's so much profit and you don't really get that understanding by looking at a backtest. And so is there, like, is there a different way that you should look at back test to get that understanding? Or how do you recommend people approach that? Jerry Parker [38:25](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2305s): Well, I think you definitely need to have a back test that shows, the daily fluctuations of your open positions, for sure. But, probably it would would is the case for most traders, and certainly was for me over the years, has been I was just trading too large. And sometimes when you trade so large, you have so much fluctuation and the losses are approaching 40%. The drawdowns, let's say, are approaching that. You know, it's almost impossible to keep trading that system and maintain discipline. So I know that was one of Rich's most important rules. The two most important rules were follow your system and trade small. Trading small is a superpower. And we all overestimate how much risk and volatility we can handle. Except Mulvaney. He's really good at that. But, I think for most of us, you wanna get to a situation where you can really sleep well at night and your volatility and your risk allows you to actually do the systems. Do the trades. Jason Kurz [39:38](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2378s): I think one thing to add that, you said earlier, which, when we're talking about returns, like so many people get stuck on good trades over what my yearly return is? And I think for me, like, well, yes, the cocoa trade is flopping around and doing all types of stuff to the portfolio at the moment, that doesn't mean I, I care that much. I know that's part of my strategy. That's what I do. So the volatility inside of that one trade is just one of many trades. And I think if you continue to just kind of, I think that's the things that new traders don't focus on enough. New traders don't really focus on that, hey, over one year period of time, I'm gonna have great returns. Yes, COCO, which is netting, I think around 150% year to date right now, probably, if it stops me out here, I'll probably get out with like 130%. And that has to be totally fine with you because you understand your backtest and your strategy. And that's just part of it. And that little bit of a giveback is just a small thing and part of your process. So I think too many new traders really get stuck on this idea of every trade has to be a good trade, every trade has to be right. Whereas a seasoned trader basically doesn't, I don't care what goes up in the portfolio. I know that I'm gonna lose on more than half of my trades. They're gonna be small losers. And then I'm gonna have a few outliers and a bunch of break evens and a bunch of small profits. And that's how my years are gonna go. And that's how I produce my own returns. Because at the end of the day, too many people are just getting stuck on. Look at the market like it's this thing that should be paying them. Like, hey, I'm a trader, I should be getting my weekly salary or something. It's like, no, like, you're gonna have periods of time where you have trades like cocoa and so on in a great quarter. And you go, Hey, that was awesome. And then you're gonna have periods of time where the market isn't conducive to your strategy, and you're flat, and then a drawdown, that's gonna happen too. So it's really like taking that long term focus. Mean, if you're doing this for the right reasons, you're doing it for all, to make more money that you're not gambling, you're trying to make money over time, you're trying to compound your wealth. And so the more you're able to compound your wealth over those years, the better you are. But that short term view of, hey, this volatility, I need to get every trade right. It's just a bad way of looking at trading. Pavel Kýček [42:09](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2529s): Yeah, to me, it is also about truly deeply understand the solution or the approach I'm trading. Because one thing is backtest, backtested results, what they are showing us. But, the other thing is what really trend following is about. Yeah. You will have huge open profits, and you will get give back a lot of open profits. If you want to trade minor versions, you will have maybe more stable, profits over the time with big dips in the equity curve from time to time. So I think that this is the biggest reason why novice traders that already can backtest properly, that knows what backtesting is showing them, how even backtest the way that the results won't be over optimized, but they cannot stick with the trading solution. I think that the biggest bridge here is that they really truly don't understand what the trading approach that they are trading is all about. I think this is big, big mistake or just not experience enough in this kind of terms. And I think researches can help a lot here, like getting this knowledge. Jason Kurz [43:38](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2618s): So Andrew, you wanna bring up some of these questions? We got some interesting ones for Jerry. Andrew Swanscott [43:45](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2625s): Yeah, was just looking through that actually. So we've talked about the one for noise, which is more of a comment. Oh, here's one. I don't think we covered. I thought I heard Jerry once say he only shorts ETFs. Jerry Parker [44:03](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2643s): That's No, I don't trade any Jason Kurz [44:06](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2646s): I don't know if you're trading I Jerry Parker [44:08](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2648s): don't trade stock ETFs. I trade like corporate bond ETF, mini bond ETF, TIPS ETF, mortgage backed ETF, but no stocks. And it's strictly I mean, only stocks on the single stocks on the longs and the shorts. Andrew Swanscott [44:31](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2671s): Yeah. Okay. Actually, there's not a lot of questions here. We've got one from Marcus. Jace the best. TFN to the moon. Thanks, Marcus. Now, Jason, I cut you off before you're going to ask a question. I don't know. Do you want to go back and revisit that? Do you want Yeah, that was exactly what I was trying to say, because I think it's, Jason Kurz [44:53](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2693s): know, Jerry was talking about the idea of yearly returns and or being patient and understanding your systems. And I was just thinking about newer traders and what they kinda do wrong. So I just was trying to talk about that a little bit. But I think that, us having these conversations, on here and constantly being very public about how disciplined we are as traders, I think that helps people a lot. So it's great to have someone like Jerry on here just to kind of really focus people on those things. And getting into the individual stocks, Jerry, you mentioned earlier about the commodity based stocks and getting some commodity exposure through individual stocks. Now, how do you Do you weight that a specific way for your fund? Jerry Parker [45:46](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=2746s): No, I don't. Like I said, I just have a systematic way of choosing which stocks to put in there based upon their liquidity. And, anything less than 10,000,000,000 is something I might trade. But then, once I get the list of stocks below 10,000,000,000, I'm going to choose those based upon liquidity and diversification. So, might make sure I don't I'm not overloaded in too many gold stocks or gold miners or mining companies in general. But, there's a lot of, you could get quite a bit of commodity exposure with companies. It's a different type of commodity exposure. Know, we have, we trade lumber futures and we trade lumber producers. And, so sometimes and we trade shipping companies and shipping futures. So sometimes the, futures does better and sometimes the stock does better. Yeah. But it's so it's another way just to diversify. And of course things like, lithium and uranium, marijuana, you You can't get those with futures. We have a company that's the biggest egg producer in the country. We have that one as well. So it doesn't take a lot to find. I'm just looking at the list now. Coal, steel, asphalt, lumber, uranium. A lot of mining companies we supplement our aluminum and copper and nickel, lead and tin and zinc trading with the miners. We have one company that owns a, I guess millions of acres of trees. So, there's all sorts of different companies that you can get that kind of have some, have a commodity connection. You know, I wanted to get a company that was involved in perfume. You know? I wanted a perfume company. There's a couple of companies out there that make perfume. So I'm like, not perfume, that's a commodity, right? It's something, right? So I bought this company, it was like two or three I had. And so I bought the breakout in e. F. E l f. And e. L. F. Just went to the moon and it was just incredible. It's still going. It's like, it looks like Nvidia, know. So I even posted that one day, like here's an, here's e. L. F. And here's Nvidia. You can't tell the difference. And, and so, but then I realized that, e. F. Really didn't make perfume. It was a retailer. And I was like, darn, I got that wrong. And I still couldn't, I still couldn't stop for making money because so I think sometimes when you have these ideas about like that idea, like, I want a producer and not a retail, that you it's sort of a little bit of predicting there and it's kind of like, it doesn't matter what you think, Jerry. That company can still have a big trend and did. So, I've done that a couple of times where I thought I was buying something that was a producer but it was actually a seller. And, it ended up really good for me. So, you don't really ever know. You can't predict these markets and even having that mentality of small companies with one story and one product, you can the best stock trade I've seen in a long time is Eli Lilly. I think it's better than Nvidia. It's one of the biggest companies on the planet. And so my whole idea, I tell people, look, I have this idea, but don't follow me because there's lots of examples of, things that don't fit my my thinking that if you just trend follow them, you're gonna do very, very well. No one can predict these markets. It's really just a way for me to be very consistent and very disciplined approach to stocks. It doesn't mean it's always gonna work work out the best. Jason Kurz [50:08](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3008s): No, I like that. It's an interesting conversation just because, for me, I haven't I trade the sector futures, but I haven't gotten into into the individual stocks at all. And something I've been looking at more as time has gone on. So it's just a fun conversation to have and just to learn more, because you're one of the, I think you were one of the first ones to start really doing that and talking about it. So it's really interesting, because I've, it's the same thing. I see every time somebody shows me an individual stock, see the trends, I see the breakouts. I mean, there's tons of them out there. So I absolutely agree with you. Jerry Parker [50:41](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3041s): That's right. It's particularly, interesting now that just sticking with a normal CTA portfolio of 50 or 60 markets would have done better because of cocoa, basically. I saw this one tweet out there recently that said, careers are being made in cocoa. You know, you really don't want to make a career on one market. You know? If you if you're making a career on one market in cocoa right now, which you're making all this money, as soon as you get out of the cocoa, just swear you'll never do that again and start trading hundreds and hundreds of markets because you really lucked out. Because I've traded 20 markets or 50 markets, and it is brutal because you can really just get crushed when, when that one market has a reversal or, a few markets just have some whipsaws and all of a sudden, you're down 10 or 15% because, your portfolio is just not large enough to withstand some really unluck. It's really unlucky. I think trading hundreds of market eliminates well, does eliminate. It minimizes bad luck of you know? Because if you're only relying upon 10% of your of your markets to make all your money every year and 10% of the trades to be outliers, well, you can have some really bad luck. And if you miss a couple because you only trade 20 markets, you have two years where you don't get any. Yeah. You're gonna get four or five or six in year three, but you've had two really bad years. So I think that's what it's it's good for. And then if you're gonna trade like we do, a real strict classic trend approach with it doesn't reduce positions. It's not gonna reduce the cocoa position. Let's just cut cut to the to reality here. If you're not gonna reduce cocoa, dude, you're not willing to reduce anything. Right? This is out of control trade. And if you're gonna trade like that and, abide by this cliche of letting profits run and taking small losses, then I do it because I think it's the safest and most robust way to trade. But I can cheat a little bit by trading all these markets because I'm relying upon the markets to give me some, smoothness as much smoothness in my returns as possible, not more parameters and more rules. Jason Kurz [53:01](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3181s): I think people here go ahead. Sorry. You go, Jace. You go. I think it's interesting about the COCO thing because you'll talk to certain CTAs. And I think what's one way you can tell they're way too concentrated is when they're talking about 60% returns in the quarter. Like, that tells you that they're either they're way too concentrated, they have no idea exactly what they're doing, or, they're just every all in on cocoa. And it's like, basically if you had 10%, 20%, that makes some sense. But when you get to that 50% to you know? And and I have I had one guy tell me he had a 78% return in q one. It's like, you're you're you might be trading a little bit too big there. Jerry Parker [53:42](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3222s): Well, in 1986, we there was a lot of good trends going on. I know one of them was short crude. Crude, went to $10, and we probably had a big position on. And I know that I went home one day, and I was up a 100 and I was up 200%. And this was in the first half of the year. I was up 200%. My bonus was a million dollars, and I was so excited. And then on Monday, like, we came in, and we lost 60% in one day. And, that's just a lot of leverage and, some amazingly great trends. And it wasn't like a tremendously bad day, but we made 200%, because it wasn't tremendously amazing trends. They were good trends. So leverage, hit all of that, all of that risk. You know? So I think that, chugging along, making 15 or 20% a year, trying to trade a lot of markets, I just have no interest in being the typical CTA, this typical managed futures, only trading futures and trading stock indexes. I wanna see what trend following can really do in real in classic trend following, the traditional. Let those profits run. Can can it work? And I think the best way for it to work is trading many, many different markets. And, the stocks that I trade, they're they don't look like the S and P. They all go down sometimes, and they all go up sometimes. But they you get quite a bit of diversification trading smaller, mid mid medium sized companies. Andrew Swanscott [55:24](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3324s): Yep. Alright. Well, that was a great way to end the show because we're just about out of time here. I think Jerry, my favourite quote from you today was trading small is a superpower. I think that's a great, great quote that a lot of traders figure out the hard way. Thanks for sharing that. So Jerry, where can people find more from you? Jerry Parker [55:47](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3347s): They can find more from me at chesapeakecapital.com and tfpnetf.com. And on Twitter, r j parker junior zero nine. Andrew Swanscott [56:01](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3361s): Yep. Excellent. Thank you. And Jason, you can go next. Oh, you're on mute. Jason Kurz [56:07](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3367s): Yes. So, yeah, thanks for coming on, Jerry. This is a lot of fun as I always really get a lot chatting with you. Thanks for taking the time with all of us. And you guys can find me Against All Odds Research, aaoresearch.com, aoresearchsubstack, and also jasonp138 on Twitter. Andrew Swanscott [56:32](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3392s): Excellent. And Pavel? Pavel Kýček [56:34](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3394s): Follow me on Twitter and check our website robuxer.com and that's it. Andrew Swanscott [56:42](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3402s): Okay. And for me, betassistanttrader.com on Twitter, YouTube, everywhere else as well. So thanks for joining us today, Jerry. Do you have any closing words before we finish up for today? Jerry Parker [56:57](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3417s): Oh, no, I don't. Thank you for having me. It really fun. And I wanna come back and not do as much talking, but I wanna ask some questions myself to you guys next time, hopefully. Thanks Andrew Swanscott [57:11](https://www.youtube.com/watch?v=6yDy1mg0Jck&t=3431s): for having me. It's been fun. Thanks for coming, Jerry. This was a blast. Yeah. Yeah. Yeah. Great. And thanks everyone for joining us. Great comments in the chat today. See you next week. 4PM Eastern, Wednesday. I got it. Yes. Catch you then. Bye. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Views expressed are each panelist's own and do not represent Robuxio's methodology or recommendations. [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 11 Better System Trader · The Trading Panel · Episode #11 # Trading gurus, drawdowns & trading education Pavel Kýček · in conversation with Andrew Swanscott April 25, 2024 · 49 min listen · 34 min read Episode 11 of the Better System Trader Trading Panel — Andrew Swanscott, Jason Kurz, Robuxio's Pavel Kýček and trader Steven on spotting trustworthy trading education, surviving drawdowns, and why no guru's strategy will ever be the right one for you. Listen on [YouTube ↗](https://www.youtube.com/watch?v=6GC5Dhk0m28) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 How to tell trustworthy trading education from guru noise. - 02 Why no one else's successful strategy will be successful for you. - 03 Pavel on combining trend following and mean reversion with regime filters. - 04 The drawdown psychology that separates traders who last from those who quit. Full transcript ## The conversation 49 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Andrew Swanscott [0:01](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1s): Welcome to The Trading Panel, the show where we get traders of all different levels of experience, knowledge, backgrounds and we smash them together. I think I used that term a few weeks ago and see what comes out. It's always great discussion to get different points of view. And the brainchild of this experiment, I guess you could call it was Jason from Against All Lods Research. Good day, Hey, Andrew. How are Good Jason Kurz [0:23](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=23s): to see you all. Yeah. So basically, today we just are pretty open, have a general discussion about trading. And the main goal of this panel was just to bring people who are actually in the market, people who are actually trading, people who really understand markets and bring it direct for you guys. So please feel free to ask questions, that'll help guide us. We can also talk about whatever you guys wanna talk about as well. I think that's incredibly important because I don't think when you're first starting out, you don't have many places to go to learn about trading and people you can talk to about trading. And you got people from all different types of trading backgrounds here, you got algorithmic traders, you got systematic traders, you have technical analysis traders, you have intermarket analysis, Whatever you need, even some accounting background. Right, Steven? So what whatever you need, we we got it. Steven [1:16](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=76s): I thought I was here to live trade the meta earnings reaction. That's not Oh, yeah. Yeah. Yeah. You are. That's actually correct. Yeah. Jason Kurz [1:24](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=84s): Of course. Of course. What what else would you do here, Steven? Steven [1:30](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=90s): So earning season so far so good. Financials have been strong. Jason Kurz [1:37](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=97s): What's So going I keep hearing about these moves in there. Like, Tesla was one the other day, and I get don't follow earnings. So I heard Tesla had, like, really bad earnings, and then the stock went up really high. So, once again, the price action dictates everything. What did you see there, Steven? I'm sure you and you guys discussed that today on your show. Steven [2:01](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=121s): Yeah. And I think the big takeaway there is, basically, you're saying, Tesla, terrible report, stock higher. This is not easy because it's one thing to be able to forecast the earnings numbers, which that's hard enough. Right? But even when you get that right, you don't know what the reaction's gonna be. So in this case, Tesla fell enough that the bad report was already baked into the cake. When the numbers came out, the street said, oh, it's not as bad as we expected. And you get a little relief rally. Right? But you don't that's really it's tough to trade earnings for this reason. It's not just about forecasting what the results are gonna be, but then forecasting what the market's reaction to those results are gonna be. So it's kind of two pronged, and they're both hard to do. Andrew Swanscott [2:48](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=168s): I think Jason's frozen. I think he is frozen. Yeah. Looks like it. He Steven [2:53](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=173s): was just thinking really hard. Jason Kurz [2:55](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=175s): We all disappeared. He was talking a while. Steven [3:00](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=180s): Am I back? Got connection issues. Andrew Swanscott [3:02](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=182s): Yeah. You're back. Yeah. Okay. Okay. Wonderful. Kind of. Jason Kurz [3:09](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=189s): Well, what what is it? Am I back or not? Somebody else could cover for me for a second. I don't know what's going on. We Andrew Swanscott [3:16](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=196s): can hear you, but your mouth is like a couple of seconds behind your words. Jason Kurz [3:21](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=201s): Yeah, somebody else can cover for a second. I don't know what's going on then. Steven [3:28](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=208s): I just ramble about stuff that I'm watching. I think last time we shared charts. Right, Andrew? Andrew Swanscott [3:36](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=216s): Lot of it cool, actually. Steven [3:40](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=220s): Right? Andrew Swanscott [3:41](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=221s): We could throw some charts up? We could yeah. We could do that. And I've got a question for Pavel, actually, that I wanted to ask him. I'm gonna log in the back. I'm gonna log in the back. While you do that and Steve, if you want to get some charts ready, wanted to ask Pavel about the crypto space because there was some news. I don't know if it was this week or last week about halving. Was it halving or something like that? What does that Pavel Kýček [4:12](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=252s): mean to traders like you, algorithmic traders? Well, to algorithmic traders, it means basically nothing at all. Maybe some bigger volatility over the long term, but yeah, we could see nice scenario of basically selling selling the news. So for example, right now, we are minus 4% on Bitcoin. But other than this, like crypto market these days, after a huge, huge bull market, we are somehow in sideways movement. So for example, on our portfolios, you can see the exposure between 5% to 10 of the overall capital. So basically no movement or there are, but only sideways with low volatility. So nothing exceptional these days. We can see that markets are basically waiting for some trigger. And if it will be halving over the long term or institutional buying Bitcoin ETF, who knows? Fortunately, I don't have to guess. So Andrew Swanscott [5:20](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=320s): I will try. Do you tend to see certain behaviors in the markets when these events occur? Pavel Kýček [5:29](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=329s): Well, in which way do you think? Andrew Swanscott [5:33](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=333s): Well, I don't exactly know a lot about crypto or halving. Assume it means something about less Like tokens available. Pavel Kýček [5:41](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=341s): Halvings. Yeah. I know what you mean. After last halvings, there were some bull markets and some follow-up movements, but there were only, I don't know, three or four, not sure to tell you through because I'm not this typical crypto guy. I'm here for volatility And three or four is not statistics. So I don't like these predictions based on what happened in the past just because it happened three, four times. It's really far from some serious statistics. So that's why I'm trying not to guess anything like anything at all. Yeah. Oh, Andrew Swanscott [6:19](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=379s): sorry. Sorry. I'll cut you off. No, no. I was just going to say. Pavel Kýček [6:25](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=385s): Okay. Your turn. Andrew Swanscott [6:28](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=388s): I was just going to say the reason I asked is because there's if you look at stocks and this is there tends to be some kind of behavior that's quantifiable leading up to dividends and reporting dates and stuff like that. A good book actually on that is by Nick Raj. And I can't remember the name of it. I'll look it up. But he did some research and found out that there's actually some behaviors leading up to I think it was dividend date or something like that. And algorithmically you can take advantage of those. Just wondering if it's the same in crypto. Pavel Kýček [7:06](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=426s): I also have some models based on dividends for stocks basically also based on Nick work. I think was Nick Rage but not sure right now. But I don't like using these stats for crypto because we don't have enough data sets. So everything is somehow guessing. You cannot be sure or you never can be sure if if this is serial stat. But here, we are far from enough data to say, okay. We can take it in consideration and make some, like, professional models and trade them because, we really have to keep our models as basic as possible because it is very, very simple to over optimize in this environment with five, six, seven years of data. So super simple models only and not going too crazy with Apologix. Andrew Swanscott [8:06](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=486s): Yeah. Yeah. So I'm just looking up that book and it is Nick Raj and it's called profiting from dividend momentum. And I read the book many years ago, so I don't I don't exactly remember what it was, but I'm pretty sure it's, yeah, a couple of days before dividends, stocks tend to exhibit specific behaviors. So it's quite an interesting book to read. If anyone's interested, I think it's only $10 or something. So it's well worth a read. I believe Nick is a CMT. Right? Is it Nick Ratch? He might be. Yeah. Jason Kurz [8:41](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=521s): Yeah. He's he's Australian. Right? Yeah. Yeah. He's Australian. Yeah. Yeah. He has a great book. That that one you mentioned, I think another one's on holy grails. Yeah. This one is perfect. Pavel Kýček [8:52](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=532s): Yeah. Yeah. Like, super simple book with many basic strategies that you can use for any asset, basically. Of course, we have to make some tweaks, but this one is great. Jason Kurz [9:04](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=544s): My my first Bitcoin system was literally one of his strategies. I think it was a three standard deviation up, one standard deviation down move. And basically, like, you could trade and I used it on Bitcoin crypto strategies actually because it was the only it seemed to be kind of it was profitable and everything, but in Bitcoin, it was really, like, a major outperformer. It outperformed the asset. And Pavel, that's like and credit for a system to outperform Bitcoin, it's incredibly hard to do, incredibly tough to do. So it was cool that he kind of was the one to show me that was a strategy that you could use to outperform something as crazy as Bitcoin. And like, I'm sure you found the momentum strategies are the ones that outperform Bitcoin. People are always trying to buy the lows on Bitcoin. And however, it's like it's the opposite strategies that are the ones that really make money. Pavel Kýček [9:59](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=599s): Yeah, exactly. Momentum momentum and trend strategies are the ways to go. At least it these are really the low hanging fruits. Midra version struts are great in crypto too, but one really has to know what it is doing. You cannot use any leverage. You have to allocate really small percentage of your overall capital. And yeah, again, mid reversion strats can also give you like three to four times higher performance compared to broad portfolio of mid reversion strategies on stocks, for example, but trend following and momentum or breakouts are the way to go for sure. Better momentum than typical thirty, forty, fifty days breakout momentum is better, but everything is working. Everything that is taking advantage of huge trends is working. You only have to have good regime filter that is keeping you out of basically bear markets if you only want to trade to the long side, but it doesn't make a lot of sense. I think it is better to be exposed to longs and shorts too. Steven [11:17](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=677s): And can't you just combine those tools? Like, you're talking about trend and momentum. Yeah. I don't know about your system, Jason, or or yours, Pavel, but, like, why not identify primary uptrends and then identify the thirty, forty, fifty day new highs and trade the breakouts in primary uptrends? Right? You're just stacking the odds in your favor. Pavel Kýček [11:39](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=699s): Yeah. Exactly. What we are doing is that we are trading 15 strategies these days and more in a way that, for example, I'm using mini version short strategies as being hedged in our momentum long strategies. On the other side, breakout shorts can be nice hedge to trend following longs and so on. So combining them together in a broad portfolio is the way to go. Especially, I would say, especially in crypto, it makes sense because it's super immature market and we don't know how it will involve. It can be more branding like stocks, more range bound like Forex. We just never know when this is how I want to operate, especially in crypto, because we don't have enough data to expect anything. Steven [12:30](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=750s): And there are very material or I should say significant countertrend rallies in crypto. Right? So in other words, I was talking to somebody the other day. They said the Solana's down 30 or 40% from its highs. I'm like, last cycle, it was down 60% right in the middle of, like, a wild bull market. Right? And it happens like that, and you could trade it on the short end. I love that. You have to treat them differently from the longs though. No? You're you're kinda quicker to take profits on the short side when you're trading mean reversion? Pavel Kýček [13:01](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=781s): Depends. Depends basically brand following. I'm I'm reading trend following strategies to long side and short side exactly the same just for the robustness. Miner version, I want to be a little bit quicker on miner version starts to the short side because I don't want to be exposed to the exponential moves to the long side. But the logic behind those strategies are very similar, probably almost the same, and I'm using them in stocks too. It is more about exits than entries that you want to manage your risk basically by how long you want to stay in position. And yeah, to the short side, especially those quicker breakout strategies have to be quicker. You want to be in a trade for one, two, three days maximum. But again, there are trend following struts through short side with average holding time ten to twenty days. You just have to be in the positions with the right regime filter basically. Regime filter is crucial for volatility, for trendiness. I love them in general. Just basic one, like nothing crazy, but something very basic based on moving averages, ATR and this kind of stuff are working. Jason Kurz [14:36](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=876s): So regime, you mean volatility based or like what type of how volatile the market is at that moment? Pavel Kýček [14:43](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=883s): Yeah, volatility, but also trendiness basically. Both are working depends on the strategy because I have strategies that I even don't want to use any regime filter because I want them to be slightly uncorrelated to different similar ones. So that's why I get rid of regime filter just by purpose. Then I also because it is always different, if you build a strategy just for a single strategy or for the strategy being a part of the portfolio. If I'm running many long trend strategies, let's say, then I don't mind being a little more crazy with mini reversion short struts and being a little bit more exposed to this risk to the long side because I know that my long strategies will cover this risk at least partially. So it is more about the thought process, about the logics behind the overall portfolio than just behind the single strategy. That's why I'm always having these discussions how I would build the strategy if it should be trading only only this strategy or how you want to build a strategy if it is part of the broad portfolio. This is this is this is these are the logics that I'm I'm using. Jason Kurz [16:12](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=972s): Oh, nice. I think that's, it's really important. I think in general, like whatever type of trader you are to have some sort of filter like that, I think it's why you see the, especially like the very, the trend ballers have been doing it forever. And I don't wanna hate on any of them because they've been doing a lot longer than me. They have a much longer track record than I do, but I've just found that to really have that outperformance and continue to perform well in different environments, you have to have some sort of regime filter, whether it's technically, it could be a macro regime filter, it can be relative strength regime filter. I think there's many ways of doing it, but I think it's important to just be able to specify what type of market you're looking at. There's sometimes the market's just not conducive to our types of trading. And that's just gotta be a thing where we're comfortable with at times. Pavel Kýček [17:05](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1025s): Exactly. Think there are two good reasons why to use regime filters. First is that it is basically your performance is usually better in terms of returns to volatility of your account. And the second one, and it is probably even more important, is capital allocation. Because if you know that you are in a regime that is not good for this particular strategy, you can use the capital for different strategy that is making better. So for me, the capital allocation part is probably even more important than just the strategy making nicer or better results in general. But then also it depends on the strategy. For example, trend strats, it is really long hanging fruits, low hanging fruits to use regime filters, rent regime filters. Mineral version strategies are at least from my point of view, it is better to use long short mineral version against each other, and they basically hedge each other and you don't have to use regime filter at all. It really depends. It really depends on the logic you want to trade. Jason Kurz [18:26](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1106s): Andrew, could we go through a question already? I think there's two questions on here that are amazing, and one is by Particle. Andrew Swanscott [18:34](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1114s): I would love us all to kind of have a chance to talk about that one. I saw that one. That's a good one. Let me put it up on the screen. Particle. I've noticed a general trend of influencers sharing their method of success in market stocks, forex, etcetera. But how can public information on YouTube lead to good results trading the markets? Excellent question. Who wants to have a crack at this one first? Steven [19:01](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1141s): It's a curation exercise, right? You have to be a master curator these days. There's a lot out there. Jason Kurz [19:09](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1149s): Yeah. What I wanted to talk about it was the first thing I thought was when we're looking at somebody and we're going, okay, well, this person is on the internet, they're talking out loud about what they're doing. I think the thing that really separates good traders from bad traders has nothing to do with, is their information great? Is their information terrible? Good traders, one, if you're following somebody, understand that nobody's right all the time. So follow the traders who have conversations about being wrong. Don't follow people who say they're right all the time and they get every trade right, and they're great at this, and oh, and if it's down, they're just gonna wait till it goes back up. That's not trading, that's just hoping and that's not real trading. But also think of it this way, trading isn't the toughest, like trading is incredibly tough, but it isn't because of, I can't explain what I do to somebody. It's that somebody else doesn't have the discipline I do. That's the problem we run into more than anything is that maybe trading the way I do doesn't fit your strategy, your lifestyle, whatever it is. So you have to figure out the way you trade first. And then once you figure out the way you trade, then comes a hard part. And that's the discipline part, doing the thing that you don't wanna do every single day, meaning that you're going to get a signal in the NASDAQ at some point, and you're going to have to buy it. And maybe you don't want to buy the NASDAQ in your logical brain, but your systems are telling you to buy it, and you just have to do it. I think the thing I see more than anything else is that people get into this, hey, like, I believe this is how trading should work. Or let's say you buy Bitcoin, you're watching somebody on the internet, and they say to buy Bitcoin, let's say they have a great entry, then when do you get out? You don't know because you're listening to somebody on YouTube. So what we do here at the panel and any of the things we're involved with, we try to teach people how to trade and create their own strategies for themselves. What I'm doing is trying to show you what I do and how my systems work. And so maybe you can go home and create your own systems because you have to figure out when when are you gonna get into and out of a trade? Yeah. You can come up with an idea from somebody else, but that doesn't mean you know when to get in and when to get out. So you have to create your own systems, your own strategies. That's going to help you become a very good trader. Public information is just to give you information. Here's the information. This is what we do. This is our conversations. This is my newsletter, and this is what I'm doing as a trader. But as a trader, you have to be you have to really have something inside yourself that makes you want to do this well and continue to work on it, master it, and continue to understand that you're gonna fail and figure out how that works. The biggest thing that most new traders don't do is risk management because they don't have risk management or any methods of risk management. Because really it's all position sizing and where your stop is, or if you don't use stops, then it's more position sizing. Like there's a million ways to do this. However, you have to understand risk management in some form, whether it's, Hey, I'm only losing 1% of my portfolio per position. That's a loser. That's how I do it. There's other people who do it different ways. Pavel could probably tell you a different way of doing, because he doesn't use stops. So basically the goal really is try to find people who are gonna teach you how to use risk management well. Once you learn that and how to manage your risk well and size your positions right, everything else is a lot easier because really you can be wrong a lot. You can be wrong a ton and still make money. People look at trading as a thing of being right. Right is making money, wrong is losing money. And really, there's even good trades that lose money. It's old Larry Hite quote, good bets and bad bets. But basically when you're looking at this, you have to understand that, okay, as long as I'm following my system, and even though there's gonna be 50% are gonna be losers in there, I'm only losing 1% of my portfolio but my risk is one to five, meaning I'm looking to gain 5% of my portfolio on my winners and only lose 1% of my losers. This means I can be wrong a lot. I can be I can be right just about 30% of the time and still make money. So really, the goal has to become making money, not caring about being right. And I think human nature dictates that it's really hard for people to do that. Steven [23:42](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1422s): Yep. But I'll just add one or two things. Because this is such a loaded question, and we could take in so many different directions. Right? Jason's talking about finding your process and finding yourself as a trader. The question really comes down to me, who should I listen to or, who do I know how to trust on the Internet? You have to figure that out first. Who am I? What is my process? What are my goals? There's some great content out there I completely ignore. There are fantastic day traders, short term swing traders. It's not for me. I'm not saying it's not good, but it's not good for me. Right? So you have to figure out a lot of things for yourself before you then go to the Internet. There's so much good free information or cheap information. Right? But more I think as a general rule, he's saying there's a lot of people sharing their success in markets. No one's successful strategy is gonna be a good successful strategy for you. So anybody on the internet who's saying, just follow me, this is how you do it. I'm gonna tell you when to get in, when to get out, what to eat for breakfast, wake up at 5AM, follow my trading routine. Right? We're gonna do 10 push ups, 20 push ups if we get stopped out. Like that kind of stuff isn't gonna work for you or probably anybody. You have to take the bits and pieces from all of this information that's being shared and kind of make it your own and see how it fits into your world. Right? But thinking that you're gonna find a guru and be able to track them and he's gonna make you rich, that's just really not a reality for 99.99% of people. Yeah. Too hard? Mean, right, guys? Jason Kurz [25:17](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1517s): I think people look for, well, if if you talk to new traders, they're I've had I started my letter not too long ago. And I've always put out information, and I've had a fun for years, but starting a letter has been a very different crowd. And I had people come to me at the beginning and go, man, I wanted signals. Why aren't you telling me what you're buying every day? I'm like, because I'm not buying things every day. There's not a trade to do every single day. There's trades to do here and there. And so, like, I think at first, like, you're a trader, you're looking for action. And and because you want that action, you're looking for gurus. And those gurus are gonna tell you the action that you want. They might not help you make money, but they're gonna give you that action. And trading shouldn't be fun. Trading should be hard. Sometimes it should be grueling. Sometimes it should be incredibly boring. So because of all of those reasons, you should really understand that sometimes the best trade is to sit on your hands. The people that you wanna pay attention to are the people that sometimes it's boring. There was literally just the first couple trades in our system has been corn and wheat, and that was just today. Before that, I feel like there was four weeks of just nothing in the system, and that's gonna happen. That's real trading. Like the market doesn't have to do what I want it to do. Yeah, sure. I'd love to have more action every day. It'd be a lot more fun, but that's not how you make money. And the goal has to be in the end to make money. Yeah. Get get your kicks off somewhere else. Like, I have, Steven [26:48](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1608s): hard rock bets. Like, I gamble on there. That's where I have some fun. But, like, my day to day, I'll go to bed at night and be like, wow. I was yelling about Bitcoin miners on YouTube today. That's probably a fade. Like, if I'm too excited, it's not a good thing. Usually, I'm pretty bored, and I'm like a robot, and this is what we do here. You know? And that's that's for the best. If you're having too much fun, probably not a good thing. And you get Never met a trader having fun making Jason Kurz [27:15](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1635s): money at the same time. Steven [27:17](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1637s): And and back to the Internet, like, you you get what you're looking for. Right? So one of the best things you can do is just absorb all the best information from all the best traders or investors of all time, listen to their interviews, read their books, and then you start to get familiar with how they think. And, Jason, you already mentioned it. A lot of it, go read Market Wizards. Right? That would be example number one on that list of content. You start to understand how they think. And while they're all different, and you'll notice that they're all very different processes, they also share similarities, and there's themes there. Right? And then when you're going through and reading a free blog or something on Seeking Alpha, you can immediately, just by the voice and the way the person's talking to you, figure out is this person legit or not? Is this an article I wanna read to the end or not? Right? Do I wanna keep following this person on Twitter? But it takes work. Right? It it becomes it's it's a bit of a craft digging through all this shit. Andrew Swanscott [28:12](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1692s): Yeah. Pavel, were you going to add to that? Pavel Kýček [28:16](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1696s): Well, I would say, accept that it will be long term journey for sure. Like, probably more years that one accept. Another one is stop following all the lumber guys. These are usually lying. Not all of them, most of them. And the third one is get your education really because firstly, you have to get your education. I would recommend books. There are a lot of great books from authors that are for sure traders. And once you get your education, then it is not that hard to go over all these followers or all these influencers, and you will find out pretty quickly that it makes sense or it doesn't make sense at all. But without the education from from some good source, you can do it probably. It's only about guessing. Education is first, in my opinion. Andrew Swanscott [29:14](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1754s): Yeah. And the way I look at it, I think it is a as Steve said at the beginning, it's a curation exercise. So there's a lot of stuff out there on the Internet. There is a lot of crap as well as some good nuggets. I think whenever anyone says a trading idea or an approach, I use the trust but verify model. So being an algo trader, I can easily go and, just code up this idea and test it. And sometimes it will work. A lot of times it won't. But there's a lot of times where this idea, there's some nuances. So maybe Jason might say, he trades this particular thing and this is how it works. And I test it and it's like, well, it doesn't work when I test it systematically, but Jason's got some experience and some nuance to that. So I think you've got to always test ideas from people. And then over time, you'll see, okay, this is what this person is telling me. I understand their background, their nuance, how they're looking at this stuff. And that's someone that I can trust over time. So I think no matter who you're listening to or what ideas you're getting, you have to be able to verify them yourself because you're not going to have that conviction. You start trading like that, or you start following them and doing the things they're doing, when drawdown happens, which will inevitably happen, you're not going to have the conviction to follow through. And so you'll end up, and I see a lot of traders do this, jump from guru to guru and they take losses and they go to the next one. And it's just a never ending experience of losses. I think you need to as going back to what Steve said, you gotta figure out what works for you and then incorporate that into what you're doing because I love his quote there. I just posted it on Twitter. No one's successful strategy is going to be a successful strategy for you. You've gotta work out what works for you. Steven [31:13](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1873s): I just dropped I tried to drop a book list. I don't know. Can maybe you can't drop links into the chat. I tried to drop a book list. JC and I have written posts over the years. This is just for technical analysis, but it's a pretty solid list. If the link in the chat doesn't work, because I don't know what I did wrong. You literally just Google book list, all star charts, and you'll see two posts over the years that we've written our favorite technical analysis books. It's a great start. It's a great start. And there's a lot there's so many good books out there. I don't even know if Market Wizards is on that list, but awesome. Andrew Swanscott [31:51](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1911s): Remedy So what what should they Google, Steve? Book list. All star All star charts. Yeah. All star charts. I'll see if I can post it. Which book should I read to learn more about? Okay. Which book should I read to learn more about technical analysis? Is that the one? It looks like it. Here, let me post this in the chat. Steven [32:20](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1940s): Guess I'm still learning how to use the internet. There it is. Andrew Swanscott [32:23](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1943s): I think what happened is you did a search in Google and you've put the Google search link and it's really long and it's probably crapped out because there's a limit. Yeah, messed it up. Yeah. Now there was another question actually, which we kind of just started touching on or maybe I just started touching on that about drawdown. I'm trying to find it here in the chat Meadow. Here we go Meadowditchy. Let me put this one up on the screen. Have you ever had a six month to one year drawdown? Yeah. Longer. Pavel Kýček [33:05](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=1985s): On stocks. I had, for example, on stock algorithmic portfolio, I had great years '21, twenty twenty twenty one basically, and twenty two and a half of '23, I was in a drawdown and I get back to the average, like, my long term average on stock algorithmic trading. So especially in algo trading and especially with higher data time frames, you get longer longer drawdowns for the price that your solution is usually more robust. So, yeah, one year is something I'm always prepared for. Steven [33:43](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2023s): And then the hard part is having the discipline not to abandon your system. Pavel Kýček [33:48](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2028s): Yeah. Right. Well, you have to know your strategy. You have to know that these drawdowns are normal. Or if they are if these drawdowns are longer than in backtest or in the past, for example, you have to understand your strategy enough to know that, for example, we are in conditions that weren't favorable for this kind of trading. For example, I have some breakouts on small caps, basically micro caps. And this this strategy made, like, one and a half higher or deeper drawdown than in the past. But it was perfectly normal because if you if you compare it to what microcaps basically were doing in 2022 and 2023, yeah, they were sinking like crazy. So breakout long on microcaps probably shouldn't be making a lot of money at those times. Andrew Swanscott [34:47](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2087s): Yeah. And I think I probably shouldn't have laughed at that question because it sounds like you're in drawdown, but I think we're probably laughing because I think it's such an important part of trading. It's something that you can't avoid, especially at the beginning when you're kind of figuring things out. The way I look at drawdowns is that it's a good learning exercise to see, what is the market telling me? What is the performance of my strategy or my portfolio telling me? And I would have to say that most of my or a big part of my progress has always been out of those challenging times, figure out a new way. In 2008, I was trading quite a lot of leverage and I was doing really well for a while. And then the market went south and I had a really big drawdown. And out of that period, I discovered market regimes. Now it cost me a lot of money to discover that. But over time, you tweak your approach and you come up with these new things. They're usually of adversity those come and that makes you a better trader over time. So I'm wondering, you guys, Pavel, Steve also found benefits to drawdowns? Steven [36:04](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2164s): The thing about drawdowns is you have to embrace them as a trader because if we're realistic about drawdowns, you're you're normally in a drawdown. By definition, if you're not at a new high, you're in some sort of a drawdown. Right? Maybe not a six drawdown, but a drawdown nonetheless. So get comfortable being in that situation. I assess things more, and I wish I could show you guys, but it's all coffee stained and terrible. But I keep a tally of my win rate, more or less, literally just on a notepad. And that's more that's better information than actual drawdown for me. So I'll look at something. And if I'm losing, if if I've lost on nine, ten out of the last, 12 trades, I look at that in a bull market and think, oh, wow. Alright. That's fine. Every new losing trade, I know I'm closer and closer to a winning trade because I know how the statistics work for what I do. So I think embrace it, be comfortable with losing, and understand that it's just a part of the process. You don't wanna look at a losing streak and say, oh, that's terrible. Should I should scrap this. I'm done. You look at a losing streak like that and say, I'm probably about to win. So Pavel Kýček [37:11](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2231s): Well, I don't like drawdowns at all. I still don't like them, but especially the deep ones and prolonged ones. But the truth is, as Andrew said, that to me, it's the best learning phase of basically performance because when my equity is on highs, you are always still you are even if you are trading for many years, you are still feeling that, yeah, now it's really this is it. It is running, and it's perfect. And then there is always some drawdown. So you these are the times when you are pushing your portfolio to be more stable, better, like creating new strategies, uncorrelated ones, thinking about your portfolio and so on. The best periods for working, the worst for self confidence in general. Andrew Swanscott [38:14](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2294s): Yep. Jason, did you want to share some insights into drawdown? The original question was, have you ever had six to twelve month drawdown and did you get out of it? Jason Kurz [38:26](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2306s): Yes. So six months, yes, 2022. So the beginning of twenty I made all my returns in the beginning of twenty twenty two. Basically Q1, 2022 had a 30% quarter, really good compared to the market having a really terrible first quarter. Most of that was driven by commodities. There was the Russia Ukraine war that broke out, commodities went crazy, ended up having a great quarter, but the rest of the year literally was flat. I Q4 Q4 was slightly up and the rest of the year was flat and down. Q2 was down, Q3 was down and Q4 was just slightly up. So basically I was in a drawdown the rest of that year. Yes, absolutely, you get out of it. That's also part of trading is to understand, hey, like, what type of strategy am I running? Am I running a strategy that's a trend following strategy and understand that markets don't trend all the time? And so if I understand that markets don't trend all the time, I can understand that I might be in a drawdown for a significant period of time at times. Pavel Kýček [39:34](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2374s): Plus one note to drawdowns, if I can. Marfilos, I really work in here, so usually your life strategy performance will start with a drawdown. That's why it's a good advice. I think it was from Tomasz, Tomasz Nissindel, to start trading your strategy in a drawdown. If you want to get rid of the first drawdown that is especially if you start with new strategy, it's not much comfortable or not comfortable at all, then starting or waiting for some kind of drawdown, like 30% of maximum drawdown or so makes a lot of sense to me. I'm not doing it anymore, but especially for novice traders or those that are starting, it makes a lot of sense. Andrew Swanscott [40:21](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2421s): Yeah. I've seen some really good research on this actually, specifically for algo trading is, I think traders tend to see that a strategy is performing really well in the current market and they jump in and start trading it. And that's usually the worst time because it's over performing and it's likely to stop doing that. So the research I've seen is it's best if you get a strategy that's kind of around its average performance, depending on how you want to measure that. There's a lot of different KPIs you can use. Or even if it's slightly underperforming because I guess the expectation is that it's going to mean revert in its performance. I've seen, yeah, it seems a good research that suggests don't start trading a strategy when it's really hot because it's usually the worst time. Pavel Kýček [41:15](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2475s): But you can see this behavior also with, for example, our clients, most of them are always starting with us at the equity top, not at some corrections. So it's probably very normal human behavior. Jason Kurz [41:30](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2490s): Yeah. I think in general, it's really when you're in a drawdown, like most people like, people think of it like it's a terrible thing. And like, it's like, for me, I'm looking at it on a one year basis. My 2022 year was good, especially compared to the market. Market was down, what, 20% that year. We were up over 20%. So once again, it's a, how do you look at it? I always look at it as one year basis. How am I doing in a year time? And if I'm up and I'm performing well, I'm outperforming the market, especially, I'm gonna be happy about that. I never think about it like, oh, I have to be making money every day. I think about trading as I forget who said it, but somebody mentioned lumpy returns. I think that's the best way to think of trading. Like you're gonna have periods of time where the market loves your strategy, and you're having this major outperformance and everything's great. You know, basically for me, Like Q4 twenty twenty, all the way to Q1 twenty twenty two was my best trading years ever, just flying through the market at that point. And then basically you get into this drawdown period, but of course you take advantage of those returns that happened during that great time. And then when it's the lean time, you understand that, hey, the market's not always conducive to my strategy, so I can just understand that and know that I'm getting chopped up for a little while at times. Steven [42:54](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2574s): So I take the point you just made to an extreme. And over the past three cycles, I don't trade at all during bear markets. It's, it has to do not just with trading and the way that my process has evolved, but who I am as a person and my, personal situation. I'll take a year off during a bear market. 2021, the back half of 2021 was a disaster. Major averages didn't peak until January 2022. I was losing so much money. I was out from July until the end of the year. Or I'm sorry, July until literally twelve months. Wasn't back in until breath bottomed the following summer of twenty three of twenty twenty two. Sorry. But you can do that. Right? Because that's that's what works for my process. One of my favorite sayings is make hay while the sun is shining. Press the gas. Look for the highest beta. Right? Take more risks. Move out in the risk spectrum during bull markets. And then for me, I take extra advantage of the bull market period. That's the environment that my strategy works in. And then I just don't lose money in the bear markets and wait for the next one. And if there's not a bull market in stocks, there'll be a bull market in commodities or maybe international stocks or cryptos. Right? And you could deploy the same strategy to different asset classes. So it's not the end of the world if we were to fall into, a Japan situation with US equities. The nice thing about technical analysis is it's applicable. Right? We're just studying the behavior of market participants, supply and demand dynamics. All public markets are very similar. Andrew Swanscott [44:24](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2664s): Yeah. Now we've Oh, only got sorry, Jason. I was just going to say we've got four minutes left because some of us have to bail at five two. Now there's a few more questions in the chat. Did anyone see a question they'd like to answer in the next few minutes? We've got a handful left here and we're not gonna have the time to get through them all. I'll let you guys go through quickly. Steven [44:52](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2692s): I could talk about basic materials. I think it's XLB above the prior cycle highs. And you can look at the industry groups, whether it's chemicals or copper, steel miners. XME is a good ETF or materials. If they're not above their prior cycle highs, then it's probably a sector that needs more time. You want XLB to look more like XLE, back above the 2021 highs, flipping that old resistance into support. So energy did it. I don't think energy is gonna move in a different direction than materials. So I think just the breakout sticking for XLE bodes well for XLB. I think we get there And we look back and we say, that those all time highs from last month was just a false start, not some nasty failed breakout, but we gotta see it. Right? So you have a really clear level there. That's that's that's where my head's at for materials. Jason Kurz [45:50](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2750s): Dan, I wanted to just add. I saw the average annual return percent for trend following strategies, one strategy, one market. Most of the time, most of it what we do is trade many markets and many different things, maybe even one market, but we diversify inside of that one market. So there's lots of ways to do that. However, the returns, the more diversification you have, whether you're in one market or trading across different asset classes, that's really what most of the trend followers do. I do post all of my returns on my letter. So if you do see my page and you do go to my letter, you can see all my returns there. You could find me on Substack AAO Research. So all my returns are on there if you wanna check that out. I think Pavel also shares a lot of his strategies too all the time. Pavel Kýček [46:41](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2801s): Yeah. Well, we have also shared a few basically whole codes of brand following strategies on crypto, so you can test them. Crypto is different animal. Like, the trend following on anything else compared to crypto is yeah. The performance is much lower, but on crypto, you can expect on average 100 to 100 plus percent. Andrew Swanscott [47:09](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2829s): All right. Well, just about at time now. So how about we start wrapping this up? Steve, you can go first. Where can people find you? Contact you, get more from you. Steven [47:20](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2840s): Stock Market TV on YouTube, stockmarkettv.com. The blog and the research, most of it's on allstarcharts.com and Twitter, estraza. Andrew Swanscott [47:32](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2852s): Excellent. Jason? Jason Kurz [47:35](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2855s): Yeah. So at a o research, there's my substack name on Twitter, j s p one thirty eight, and on YouTube, AAO Research, we got lots of videos with traders. So those of you asking about educational videos, we have a lot of videos with market wizards, Jerry Parker, Victor Sperandio, Tom Basso, and so on. So you want to learn more about this style of trading, definitely check out the channel. Pavel Kýček [48:01](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2881s): Yep. Hello. Yeah. Well, my Twitter, or if you want to check some of those ready made strategies that you can try by yourself, you can check our linkrobuxi.com/education where there are, there is many free materials and yeah, Andrew Swanscott [48:21](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2901s): that's it. Yep. And for me, Better System Trader. I also have a few interviews on my YouTube channel with other traders if you want to get some free information there and Better Assist Trader on Twitter. So go and check those out. Make sure you follow us so you can get all the content that we like to share. So anyone want to have a closing thought before we finish this one up for today? No? All right. Well, thank you everyone for joining us. Mehta Ditsy, it's midnight in Bulgaria, right on time. And great questions from Medici today. So thanks for your Jason Kurz [49:00](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2940s): contributions and everyone else who was in the chat today. Yes, great questions today. This was a really fun one. So thanks guys for your questions. Andrew Swanscott [49:08](https://www.youtube.com/watch?v=6GC5Dhk0m28&t=2948s): Exactly. And enjoy the rest of your week. Happy trading. Alright. Thanks. Thanks everybody. Bye. 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Listen on [Web ↗](https://www.desiretotrade.com/460-what-it-takes-to-make-a-living-trading-systematically-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8)[Spotify ↗](https://open.spotify.com/episode/7EqyRvOPkqmiE8btmdLG8W) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Pavel started trading at 18, lost money for years discretionary, switched to systematic when his daughter was born — and the trigger was simply being unable to be present for his family AND glued to charts at the same time. - 02 Pin bars work better as failed-breakout signals than as mean-reversion setups — most retail traders trade them the wrong way. This is the kind of insight you only get from actually researching the pattern. - 03 Each Robuxio strategy weighs only 10–20% of the portfolio because the assumption is that some of them WILL fail. The portfolio survives because no single model is load-bearing. - 04 Stop losses are a risk-management tool, not an exit-management tool. Pavel demonstrates that on daily timeframes, exiting at the daily close after price touched your stop level outperforms exiting at the stop ~95% of the time, because lower timeframes mean-revert. - 05 Take profits are anti-momentum. Robuxio uses time stops (1–3 days for short breakouts) and 'close above previous day's close' exits to avoid leaving outlier profits on the table. - 06 Trading is a competition for someone else's money — if you don't understand that fundamental, drawdowns will destroy you. Most retail traders skip the learning phase trying to make quick money. - 07 Pavel expects crypto volatility to drop 30–40% in 3 years as institutional flows and regulation (MiCA in Europe) mature the market — the inefficiency window for retail-scale algos is closing, but altcoins still offer 5–10%/day volatility for diversified portfolios. Chapters ## Jump to any moment - [0:00 Intro and Pavel's 18-year trading journey ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=0s) - [2:17 The switch from discretionary to systematic when his daughter was born ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=137s) - [3:21 What finally made Pavel profitable ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=201s) - [5:45 Trading patterns systematically vs discretionary ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=345s) - [8:29 What new traders get wrong about crypto ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=509s) - [9:50 Building edges in crypto with limited history ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=590s) - [14:16 Why simpler strategies beat complex ones ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=856s) - [16:14 How mean-reversion fits into a trending market ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=974s) - [18:16 How Robuxio's managed-account service started ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1096s) - [21:22 Why Pavel doesn't use stop losses ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1282s) - [22:48 Take profits, time stops, and momentum exits ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1368s) - [25:17 How to choose a time-stop length ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1517s) - [26:49 The biggest ethical mistakes crypto traders make ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1609s) - [30:48 How to actually learn the market (books + your own research) ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1848s) - [32:20 Finding a team — Pavel's Twitter-first approach ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1940s) - [34:39 The transition from trading own account to other people's money ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2079s) - [37:07 How clients react to drawdowns ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2227s) - [38:19 Turning off live strategies that don't work ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2299s) - [40:01 How many strategies is too many ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2401s) - [41:28 Realistic return expectations for crypto vs stocks ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2488s) - [42:50 Should everyone trade crypto? ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2570s) - [45:57 How long until crypto becomes less volatile ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2757s) - [47:21 Where to find Pavel and Robuxio ↗](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2841s) Full transcript ## The conversation 48 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Show intro [0:01](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1s): Are you looking to become profitable in trading, but you're tired of all those strategies that never stick? Well, you're in the right place. This is the desire to trade podcast with Etienne Crete. Hear interviews with top traders from around the world who have actually made it. They'll share their tips, techniques, and stories to help you become profitable, stay inspired, and scale up your trading. So welcome to the conversation. Here's your host, Etienne Crete. Etienne Crete [0:28](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=28s): So welcome back, this is Etienne here with Pavel Kýček. Looking forward to discussing a trading experience. Eighteen years of trading here, so we're going to discuss what we've seen in prior years. Welcome to the podcast. Thank you. Thank you, Etienne, for having me here. Thank you. I appreciate it. So let's kind of start with me before what you're doing these days as a trader and what do you focus on? Pavel Kýček [0:48](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=48s): These days I'm focusing on algorithmic crypto trading of crypto and stocks. We are running some services for institutional and retail clients in crypto and on my own account I'm trading stocks algorithmically and very systematically. No discretion at all. Awesome! So let's go back in time. Tell me when you started trading. What was that like? Told me you started trading at 18 years old. What was it like? Yeah, well I started trading eighteen years ago when I was 18 basically, right now I'm 36, close to 37 and yeah it was a very normal way how usually people start trading, so I started discretionary trading, I lost for a few, I was losing honestly for a few years because I didn't know how to do it properly. I was trying in many ways this kind of very normal type of trading like double tops, double bottoms, know, we did this type of trading which was not working for me at all, as usual. So then I went through some research and after a few years of trading I went to semi systematic, I would call it, type of trading when I was trading basically mean reversion entries on E-mini indices and breakouts on crude oil. This fully discretionary average holding time between five to twenty minutes. Etienne Crete [2:17](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=137s): Day trading, that's very interesting. What made you go through fully systematic? Pavel Kýček [2:21](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=141s): Yeah, well for me discretionary trading was very very psychologically demanding honestly, and when my daughter was born, it was more than seven years ago, I made a complete switch. Even before I traded systematically, I would call it more like systematic investing because my average holding time was about thirty days to ninety days, these types of rotational strategies on stocks, basically on ETFs. So it was the type of trading I used to be doing before my full jump into systematic trading and when my daughter was born I made complete switch because I wasn't able to support family, taking care of them basically and also being fully focused on discretionary trading because for me discretionary trading is toughest, the highest level of trading that one can do. Etienne Crete [3:21](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=201s): Interesting. What made you stop losing money? You told me you lost money for a few years, what made you stop and kind of get profitable? Pavel Kýček [3:29](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=209s): Probably when I started being more systematic and started making some research because I'm very data driven, I like to understand markets very deeply and when I saw that for example, the indices tend to mean revert on shorter time frames, then I was like, okay, maybe I shouldn't be trading momentum type of strategy on indices on five, ten, fifteen minutes time frame, maybe it doesn't make that much sense. And then I also saw a trader was combining this type of mean reversion trading with level two data, basically getting into the trade and trying to find nice entries on supports and resistances together with some overextended moves and this was something that firstly started working for me. Some people say that you gotta keep your discretion to make money, like to make better money trading, you cannot do it with like systems. Etienne Crete [4:33](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=273s): What do you say to them? Pavel Kýček [4:34](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=274s): I think both ways are doable. I would recommend everyone to start with understanding the markets first, because I was a total beginner, it was only about making money as quick as possible. And because of that I basically jumped the learning phase of what markets are, how they are behaving, what they are doing if something happens, what they are doing if they are in trends, what they are doing if they are in some sideways market or sideways movement. And if you really understand the probabilities, then you can trade discretionary if you want to. I don't want to get back like never ever, even though I would say that right now I would be much better discretionary trader than I was before because since then I made a lot of research on a daily basis and my understanding of markets is on different level than before. So I think that the biggest problem is that people push themselves to make money as quick as possible without proper understanding of markets. Would you say if you trade Etienne Crete [5:45](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=345s): systematic you kind of give up some patterns like support and resistance, head and shoulders, chart patterns, cannot re-trade them anymore. Would you say that's true or would you say you still trade the same thing but in a different manner? I don't trade Pavel Kýček [5:57](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=357s): these very basic patterns but I do have some strategies that trade, for example, pin bars. But let me give you a perfect example. Most retail traders trade pin bars as mean reversion type of pattern, but if you make your research over a lot of data, you will see that it is working much better as failed breakout, failed mean reversion pattern that you should basically trade against this pin in the direction of the pin, and this is working much much better. And again, if you don't know it, you just trade somehow. That's why I'm always pushing research first. But back to your question, basically I don't mind that I don't trade these patterns at all because I'm in the market to make money and I don't care that much if I will use support resistance or if I use some kind of patterns. I just want to use the best approach I can that is robust enough, that is made that way, that it should survive in markets and that's all I need. And to have as many of these approaches as possible in one portfolio. Give me an example of maybe one approach to use, like very high level, for like how to trade systematically, like what are some patterns you So look probably everyone knows these very basic trend following types of strategies like breakout of fifty days high or breakout of all time high or moving average crossover. This is not exactly something that we trade, but these kind of logics work in markets, especially in crypto and on stocks too, it also depends what kind of market you trade. And on the other side, we are also trading one day breakout based on, for example, the idea of Larry Williams volatility breakout basically. So I tend to make a lot of research on very old models so we can see that they have huge data of out of sample, a huge period of out of sample basically. Especially in crypto where we don't have enough data, we can play with six, seven years of data, you have to know that your idea is robust and that it is not just an over fitting type of strategy on five, six, seven years of usually trending data. Etienne Crete [8:29](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=509s): You see a lot of new people now jumping into cryptos because it's like a cool thing to be and it's a cool thing to trade now. You traded a long time before crypto and then you moved to crypto. What do you think people do wrong when they go through crypto these days? Pavel Kýček [8:41](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=521s): Well, they think that they can make money very quickly, especially on small coins. But again, if you look at the research, mostly the smallest coins tend to pump and dump, know, because some favorite influencer is just hyping the coin up and it's falling to zero. So the biggest problem is that yes, crypto is for sure the least mature market and the least efficient market you can trade right now. That's why we are trading it alone. But it is still efficient enough that if you don't know what you are doing, you will lose money. And people are here to make very quick money, that's why they are trying to leverage assets which average volatility is 10% a day, so it's definitely not necessary and they just over leverage and in crypto there are these types of moves when crypto can fall by 20–30% a day and if you don't know what you are doing, you can be lucky and make a lot of money under this type of environment when usually these amateurs Etienne Crete [9:50](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=590s): lose it at all. So that's a bit complicated because of course it gives you strategies on other markets, crypto you can't retest it too much I guess in the past. How do you make sure you have an edge with crypto? Pavel Kýček [10:00](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=600s): Yeah, that's a very good idea. That's a very good question, sorry. So first of all I'm always trading strategy that is tradable on different assets. It doesn't mean that I can fully take the strategy and use it, for example, on stocks or commodities, but it means that the logic, for example, this kind of breakout is working there, but I have to change exit because crypto is much quicker. So that's perfectly okay for me. Then every strategy is super simple. I'm always saying that I'm trying to be very simple on single strategy level and much more complex on portfolio level, because on portfolio level you can avoid over optimizing much simpler than on the single strategy level. So that's why most of our strategies have two to three conditions maximum and they really are built with the so called idea first approach, which means that I'm not data mining, I always know what I want to trade because that way I know when the strategy should be working and when it also shouldn't be working. Plus, I do expect that some of these strategies will fail in the future. That's why we have in the portfolio 15 strategies and basically then it is working slightly differently than if you are trading one, two, three, four strategies because then every strategy has the weight of 10 to 20% maximum of the portfolio and I'm basically managing the whole portfolio on a higher level based on how the crypto market will evolve because we know that it will get somewhere. If you, for example, check the cycle of immature to mature markets on commodities or on stocks, I love the periods before or during the takeoff on stocks and commodities in 1980s, 1990s. These assets were moving like crazy, similar to crypto. And there you could see how the market is evolving and what will probably happen in crypto too, but much quicker because of the technology. How do you manage a portfolio of 15 strategies? Do you kind of add risk to some, reduce risk? Do you turn off strategies, turn on some of them? Or how do you manage it all? Yeah, well, right now we are not turning off any strategies but we are prepared for it. Basically, it is working that way that we trade 15 strategies plus we have many different ones in so called incubation period or incubation phase. Means that we run those strategies on our accounts only and we basically check them on live market before we implement them to our clients. And for every single strategy we have in the portfolio, we have some benchmark. It usually means that we have different strategies or similar to those strategies we are trading live. And we build a benchmark for every single type of trading for breakout, momentum, trend following, mean reversion basically. And based on it we can compare the strategy we are trading against the benchmark plus we also check how the strategy is performing in the environment we are right now. Give me an example because I think it is super, super important to understand it. If you know when your strategy should be making money and when it shouldn't be making money in these periods, it will be always in the market, then you don't have to be afraid of drawdowns that much. Because if the market is trending to the upside and your trend following long strategy is making money, then it is okay. If it is not making money or it is even losing money, then probably something is wrong with your strategy and you should check it much deeper and see if there is not something wrong with this strategy. So we are managing it that way, back to your question, that we fully understand what we are trading on single strategy level and portfolio level. We compare the environment we are right now or we will be with the performance of the strategy and based on it we are prepared to make some changes if necessary. Etienne Crete [14:16](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=856s): Some people would think that because it's systematic and automated, you make a lot of filters, filter for the channel, filter for this, filter for that, see you only keep it like two or three conditions, how do you make this work without too many filters? Yeah, well Pavel Kýček [14:29](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=869s): we work with maximum one filter usually or not usually I would say 15% of those strategies use one filter and another 50% of the strategies don't use any filter at all. You know, it is very simple to find some strategy that is working on past data. Unfortunately, we don't read history, so that's why I tend to trade strategies that are not that sexy on the past data, they can go with one year, two years of sideways market but because these are part of the portfolio, I want much more to the be and to trade exactly in times when we need them or when we need it to trade. So that's why, especially if I build a strategy for portfolio, I tend to go very simply and I don't mind if the metrics are not that great on the single strategy level. Firstly, if you are a discretionary trader and you want to start trading systematically, I would say that the number one thing to change in your mind is that systematic trading should be very simple on a single strategy level. You shouldn't try to put together all the conditions you were basically checking on the chart when you were trading discretionary because it's a very different type of approach. I think the mistake is to go and copy what you do discretionary, then trying to make it into an algo. Exactly. Definitely don't trade cup-and-handle systematically because Etienne Crete [16:14](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=974s): it's not working. Yeah, fair point. You mentioned you trade mean reversion for crypto. How do you make this work? Because the market you would think is always trending, Pavel Kýček [16:23](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=983s): always going up and up. How do you add mean reversion to this? Yeah, well again this is because we trade portfolios and maybe I will repeat this word portfolio a lot because to me it is the backbone of our trading. So we can have, for example, mean reversion short strategies in the portfolio because we have momentum long strategies. And we use mean reversion short strategies to get a different exposure in those times when markets are overexposed to long side. And we know that exiting a trade is not the best option because you know that people can be emotional much longer than you would expect. And especially in crypto this is true. So that's why we have mean reversion type of strategies and they work as a balancer or a diversifier because the correlation to trend following strategies is very nice, it's about zero or even negative. So that's why we trade them plus. What is also important is that especially those smaller coins, because we trade the whole liquid crypto futures universe which are basically up to 300 coins, we rank them based on liquidity, basically the whole universe so especially those smaller coins tend to be pumped and then dumped by some influencers and so on. So there is a huge inefficiency in even alpha in this type of trading, but it is risky. So especially in mean reversion type of strategies, you have to have lower weight or smaller positions on your capital and you also should be in a position very shortly, like one-two days maximum. If the idea is not working, you should get out. Good point, for sure. Etienne Crete [18:16](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1096s): Tell me about the company you started, you do not trade for people, you have a fund where you kind of manage capital, lot of people. Tell me how that works out and what made you want to start that. Yeah well, Pavel Kýček [18:25](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1105s): we started two years ago. Firstly, it was a project for me and the founder of Robuxio because I'm not a programmer. I was trading and I'm trading stocks algorithmically but not automatically because I cannot program everything on the back end. But in crypto, it's 20 fourseven market, it's very different to stocks because there I just ran my scanners and I'm running my scanners at the daily close-up before the open and I just put the orders. It's ten minutes of work, no problem for me. But crypto is very different because in crypto if the market is moving like crazy, which is usually the time when you want to be in the positions, you have to be very quick in your positions. So that's why I wanted to build my own solution for portfolio trading and we trade up to fifty, sixty, 70 open positions in one time with very small exposure. It's not possible to do it manually. So I was basically trying to find people that would help me with that and thanks to Twitter we built a group of three people, we started building it and after a few months I made my due diligence honestly I didn't see the same type of service we are running right now. So just then we started building the company in public and right now we are fully in crypto and we run service for institutional and retail clients too. Cool stuff. Your exits are kind of different. You say you don't use stop losses but you have a way to exit that's particular. Tell me how that works out, how do you decide to exit the market? Based on exit conditions, because that's a very good question and I could debate about stop losses in general a lot because I think it is one of the biggest mistakes of many small traders. They tend to have very small stop losses and they are just basically fake outs of the market. For example, we are not using stop losses at all in crypto, but we can do it because every position has maximum one to 2% of the capital. The allocations are very very low and we hedge most of our strategies with different kind of strategies: momentum ones with mean reversion and this kind of logic is in the portfolio. And what I'm saying is that usually you should build your strategy without stop loss and just then add the stop loss because if you run your research over hundreds and thousands of different strategies, you will find out that usually stop loss is worsening the performance. If you are trading now, if you trade with leverage or your account is small and you want to take advantage of leverage and pushing it a bit, then of course you have to have your stop loss in the market because it's about risk management first. But what I think is the biggest or one of the biggest mistakes of retail traders is that they think about stop loss as an exit management tool and risk management tool, both. But these things are different. As a risk management tool, it's great. As an exit management tool, it's not that good. Let me give you one very short example. If you, for example, test your trading stop loss and you test it that way, that you would have your stop in the market, which means that once the price touches the stop price, you are basically out of the market. It is working somehow and if you exit that way, that if, and you are trading on the daily timeframe, if the market goes through your stop price and you exit at the end of the day, usually like 95 percent of all strategies you can test that way will get better results. Why? Because lower time frames tend to mean revert and it's valid everywhere on every market. So yeah, that's just one of examples of how you can take advantage of the volatility and mean reverting type of Etienne Crete [22:39](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1359s): characteristics of basically any market. Interesting, so if you haven't been whipsawed out by that kind of stop you're asking about, you wouldn't be out of the trade, you're staying in the trade because price goes back in your favor after. Exactly, Pavel Kýček [22:48](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1368s): exactly. Or you can exit anyway but on the daily close for example, or four hours based on what time frame you trade, but it's always better statistically that if you have some stop loss, the price goes through the stop price and you don't exit, but you exit at the close of the price or of the bar, sorry, you will get better performance on average. Wow, interesting. So what about take profits? Are you kind of take profit to Etienne Crete [23:17](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1397s): close your trades when you're in profit? Or do you wait for them to fall back? Pavel Kýček [23:20](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1400s): Yeah, well we don't use take profits at all. Again, I don't think it is a bad approach but it depends on the asset you trade and it also depends on how you trade in terms of if you trade just one strategy or again the whole portfolio. I'm trading momentum type of strategies and for momentum struts profit targets are again not the best approach how to exit a trade. So we are using time stops, which means being in the trade for X days. What we are also using is this kind of exit in the market, for example for breakouts, what is very nice condition is that if for example it's close above the previous day's close, you get out of the market because you are again getting out of the market if the markets are somehow overextended shortly, and in general we are trying to use exits that reflect markets more which is usually not a profit target. Interesting. But for example, for mean reversion type of strategies, a profit target is definitely one of possible exits. But again, to stress one thing, especially in crypto, we don't have enough data and I don't want to over optimize strategies on just five years of data and say, okay, 7.6% profit target is the best one based on last five years because we know that crypto definitely won't be similar in next five years. Mhmm. Show intro [25:02](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1502s): This is the Desire to Trade podcast Etienne Crete [25:05](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1505s): with Etienne Crete. Interesting. So tell me more about the time stop. Because a move could happen very fast and could happen like worse in over days. How do you determine the kind of time stop for your trade? Pavel Kýček [25:17](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1517s): Yeah. It depends on the logic with which you enter to the market. For example, this is working great for very short type of breakouts, for example on daily timeframe. If you know that you want to catch some initial move only but you don't want to stick with the position and change it or continue with the trend follower, then using these time stops being in the market one to three days is working very nicely and it's made on a lot of research, especially on commodities. Because I used to be trading these kind of breakouts on commodities too and usually these type of very quick moves tend to be reversed after some time. So first you have to know if you want to build trend following type of approach and sticking with a position for another one to three weeks or you just want to extract this very short type of movement after the initial breakout. Interesting. So it is really about the methodology you are using for exits — sorry, for entries — because to me, I know that there is a debate what is better if these are exits or entries; to me it is always connected because there are definitely entries for which there are much better exits than for others and that's why you have to think about it as a complex. Etienne Crete [26:49](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1609s): That's a good point, definitely interesting. Now you're on Twitter, get people probably reaching out to you and telling you about their stories of how they lost money, how they get profitable with trading. What is the ethical mistakes people make in trading crypto or any kind of trading in general? Pavel Kýček [27:03](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1623s): They start trading too early with their money. They don't understand the market in general, I would say. And they don't understand risk management. And I would say one thing, that people are not thinking about it much. I'm in the market to take their money. You are in the market to take someone else's money. We are in the market to make money. And this is not a place we can just extract profit. It's competition. So you have to think about trading as a competition. It doesn't mean that it has to be super difficult. In fact, our strategies are pretty simple, but you have to understand the market because if you don't understand how the market is moving, what does it mean that it is trending, what does it mean that it is sideways based on your strategy or your strategies you are trading, you will have very tough times when you will go through the drawdowns. Because this is probably one of the biggest mistakes traders do even though they have some approach that could be profitable if they have this approach. Then they don't stick with the solution during the drawdown. And it was my mistake too, I think everyone made these mistakes in the past. Don't get me wrong, it's tough, drawdowns are always tough. I've been trading for over eighteen years and I'm definitely not enjoying drawdowns but again, if you understand what you are trading, you can get back to the data, for example, if you trade systematically and you can check what is happening and if something like that happened in the past. And if it did, you are pretty okay, you just to be focused and disciplined and stick with the solution. drawdowns with trading discretionary stuff because you always like, it always impacts how you trade, always impacts So your next Etienne Crete [28:56](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1736s): when you trade systematic it's easier because you just have to rely on the system. It is. And everything is a lot easier for sure. Yeah, also emotions of course, especially Pavel Kýček [29:06](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1746s): in discretionary trading, emotions are huge and you have to work on it a lot, like a lot. Because being disciplined during a highly volatile market, when you are always under some type of emotions, especially if you are trading intraday, because I don't say that intraday discretionary trading is the top end type of trading you can choose so you can behave that way. Probably it's not the type of trading you can do at night after your children go to bed and you were working ten-twelve hour days at work, because again you are against the biggest professionals that are trying also to make money there. Definitely. Life policy then, trading is just like a zero sum game then. Yeah. How do you explain that? Well, I'm thinking about it because if you check some research and I'm really research driven, it is not like completely zero sum game but I'm thinking about it in that way that if you lose or you have to lose for me to make the money. And I'm always saying it because people don't understand it that much — the market is not there to give you money. You have to have your edge. Firstly, that's the most important thing you have to know, that you have edge over the other market participants, and just then you can even start thinking about making money. But it's a long term journey. I would say that you have to understand quite a lot of things before you can be Etienne Crete [30:48](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1848s): comfortable in trading and in programs and with the volatility and so on. How do you go about understanding the market? It feels like you can read book about it or you can watch videos about it, is that enough for you to understand more about the market? Pavel Kýček [31:02](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1862s): Books are great, you have to know which books to read, so I always recommend books from algo traders that who have some proven track record. For example Nick Rage is great but there are others Laurens Bensdorp doesn't matter that much in fact I would choose Algo Traders because based on what they are showing you, you can again understand the market and then you should always start your own research. It doesn't have to be that complicated, people are often afraid of it, but the start can be as simple as downloading data from Yahoo for example, opening an Excel spreadsheet and looking at what is happening if market is above some moving average, what is happening if market makes some move that is twice as big as the long term average. You know this kind of understanding is important and you can do it pretty simply. Like go back to time and day on a chart. Exactly. Even if you want to be discretionary, I think you should understand the market on that one. That's my way, that's how I am confident in the solution and how I can offer it to our clients. Etienne Crete [32:20](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1940s): What I realized over the years is that a lot of traders, you can of course trade by yourself and do all yourself and it's good, but a lot of good traders have teams around them, you have coders, you can have them coding things, Pavel Kýček [32:30](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=1950s): How did you kind of find that team? Well, I would use social media a lot. It's helping talk to people that are trading. In my example it was really about Twitter. I just went to Twitter with the idea that I want to find someone. So I started giving away quite a lot of free stuff, quite a lot of ideas and logics and I was aiming for the idea that if I will give away good stuff someone will see that I know what it is about and it just came. They found me through some free trend following strategies I was giving away and we started building the team. So I think you have to know what you want to get. It's very important even in life in general I would say. Yeah, because if you can imagine having to do all the trading, recording and everything, it's just a lot of work. I don't know if it. I know that I wouldn't be there without my team or not my team, these are co owners of Robuxio also, because I can program in a way that I can program my strategies, my portfolios in some backtesting platform, I can do one or two things in Python and I can work with macros in Excel for example so I can test everything. But what I cannot is build an automated engine that is able to trade and we were working on it for two years with firstly three people and right now we are contracting another two to three programmers. So it takes time and usually people underestimate how much time automated trading takes because I don't think retail traders who want to trade systematically should aim for automatic trading, especially if they want to be more advanced, for example, trading in many, many positions. I think on most markets it is doable mechanically, like I do on stocks for example. But in crypto Etienne Crete [34:39](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2079s): it's hard, you cannot do it with full automation because you just have to be very good there. Tell me about the transition from trading your own account to then trading capital for other people. Was that a big transition, was it hard to do or was it easy to go from trading for fun? Pavel Kýček [34:55](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2095s): It wasn't that hard because I had it in my head for a long time. It wasn't that I woke up one day and I thought okay, let's start trading someone else's money. Firstly, we knew that the solution has to be really institution grade, because from the start we were thinking about offering the solution to institutions too. So it was really about trading on our accounts, making all these mistakes on our accounts, building building building, getting the confidence that what we are trading is what we should be trading, because it is not always the truth with automated trading. Oftentimes people don't even know that they trade something different than what they back tested because the logic can be, for example, slightly different. So yeah, in our case it was something we were preparing for one and a half year. And I was always, I always wanted to trade this way because it's about leveraging the capital and leveraging the edge you have, so it makes sense to me. Yeah. It add any kind of pressure to you as a trader to kind of perform better or? I would lie if I would say that there is not bigger pressure. There is, but because we are trading systematically and automatically and we tested everything thousand times, the pressure is much lower and what also helps is that almost every one of our clients knows what our solution is about, they know that we can be in a drawdown for a year without problem, they know what the expected drawdown is, I'm trying to be with them in touch through YouTube videos and through newsletters. So I'm really trying for the client to understand the solution, because if you don't understand what you trade and it's always true, it doesn't matter if you trade other people's money or your money, if you don't understand what you trade, you won't stick with the solution long enough to make money over the long term. A lot of Etienne Crete [37:07](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2227s): traders that have a fund, they always think people want to get out of the fund like in the worst time, in the drawdown. Do you see the same thing happening? People want to get out when it's like a drawdown happens? Pavel Kýček [37:16](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2236s): What I see is that people are getting excited when we are performing well and then usually some type of drawdown happens you know so this is something that I usually see but it's true that Murphy's laws are working in trading. So if I'm implementing new strategy for example I always expect that I start with drawdown because I don't know why, don't ask me why please, but usually I'm always starting new strategies with drawdown. What's also a very good idea, not mine, I get it from one hedge fund manager is basically waiting for some type of lower drawdown before you start trading the strategy. It's good because you are psychologically somehow prepared that if the strategy is not working and it's getting into bigger drawdown than expected you can switch it off, but you are at least halfway to this metric, so yeah it's working. Interesting. Etienne Crete [38:19](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2299s): Have you ever turned off strategies you go live with, like because they don't work from the start? Or let's say you have something new and then you try it for a while and then it doesn't work at all? I did both, because in the past was Pavel Kýček [38:31](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2311s): playing also with data mining type of strategies, in terms of that I had an automated solution that was basically trying to find some strategies and then they went through very tough robustness procedures to know that the strategy is robust enough but it didn't work — or don't get me wrong, it could work, but I wasn't prepared for this type of trading so I switched the solution completely off and I returned back to idea-first type of trading on daily time frame which is giving me a lot of comfort because if you are trading some very short time frames you can have very good strategy that is performing well and the performance can stop and turn to the south very quickly, especially on five-ten minutes time frame because the edge can be arbitraged out pretty quickly, but if you are trading on daily time frame then usually if the strategy stops working, you get into some type of plateau when you can switch the strategy, you can change it slightly or you can just keep with it if you can see that it is perfectly normal. So yeah, sometimes I'm changing strategies but the frequency is like one a year or something like that. I usually tend to add strategies to the portfolio. Interesting. Etienne Crete [40:01](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2401s): At what point is too many strategies? Is there a point where you have to take off some to add new ones or? Pavel Kýček [40:08](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2408s): Very good question. Right now we are in the state that we want to add strategies that has some diversification effect to the portfolio. It doesn't have to be a correlation like zero or point two, which means that they move totally differently to any other strategy, but it should always be a strategy that by logic should make money in different periods, in different market behavior than the other ones. Plus, what we are aiming for is spreading the liquidity too and that's why we don't mind adding more and more strategies. But for example, if I would find some strategy that is robust and is performing in very similar periods than other strats in the portfolio, I wouldn't mind changing the strategy. Once you have many strats in the portfolio, you are really managing the strategies and you don't have to be afraid of playing a bit with them. I'm not saying about changing it every month, but for a few months we are talking about this one, six months or once a year or something like that, because especially on higher time frames you should be much more disciplined in terms of that you should stick with your strategy strong enough. Etienne Crete [41:28](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2488s): A lot of new traders have like really high expectations of return, want to get to like a really high return per year. Do Do you you have any kind of target you aim for? Do you have any kind of expectations that are different? What do you kind of see as regions you aim for? Yeah, so firstly, Pavel Kýček [41:43](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2503s): I don't have any expectations on yearly basis because I don't know how market will be behaving and now I'm in the market to make money so I want to make as much as possible with some good performance to volatility of the account ratio but I do expect some performance if the market is behaving somehow. Let me give you an example, since September crypto was in some nice long trend, then it went sideways and then a small long trend again and our clients make between 60% to 110% based on the portfolio they are trading. I can have this type of expectations in crypto because crypto is very volatile and very inefficient. On stocks my expectation, so in crypto I can have an expectation of over 100% even, especially in good years it can be even more if you know how to trade, but in stocks my expectations are about 15% long term average maximum. Does Etienne Crete [42:50](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2570s): that mean that everyone should trade crypto because the returns are higher or should people stay away from crypto instead? Pavel Kýček [42:55](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2575s): I think if people want to go to crypto it is pretty good time right now because we can see good ratio in terms of performance, crypto is still very volatile, but the risks are much lower, there are always risks because if you have somewhere huge profits or huge potential then there has to be some kind of risk. So right now crypto exchanges are much more regulated than before so this is still one of the biggest risks, that's why our clients spread accounts across many exchanges. And another huge risk is being too leveraged or too exposed to one crypto or one coin, because it can happen very quickly that some coin can fall to zero without basically any liquidity, so you have to be prepared for it. There are very different set of risks and you can make a lot of money there, but if you don't know what you are doing, probably you should learn on some other asset and you should move to crypto then but you shouldn't wait that long because we see it on every immature-to-mature cycle on any other asset that firstly every asset was hugely volatile, hugely trending, many inefficiencies, huge opportunities to make money which is crypto right now and in the past it was even better. And then you are basically arbitraging or the market is arbitraging the inefficiencies and the volatility out of the market as the liquidity is growing and the potential is much lower. Can I give you one example? For example, let's look at Bitcoin, always making some basic research on every asset to understand what is the direction of the asset. For example, Bitcoin. Bitcoin is trending very similarly to what it was trending five years ago, seven years ago. The trends are very clear, very clean, but the volatility is 30 to 40% lower right now than four or five years ago and we can see that there is a trend, that the volatility is getting lower and lower over time and we can expect something like that. I'm not saying that it's for sure in markets there is nothing for sure, know, but highly probably also compared to other assets, this is something that is happening and that will continue. So then I have to expect that the potential of profits will be lower and lower and this is also the reason why we trade the whole universe of tradable crypto futures because Bitcoin has long term volatility about 0.5% to 2%, let's say, but the small altcoins they can have between 5% to 10%, and that's great especially for traders. How long do you think until crypto Etienne Crete [45:57](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2757s): becomes more flat or less volatile? Pavel Kýček [46:00](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2760s): That's a very hard question. What I do expect is that we can see that in crypto the regulation is getting better and better. Basically, market will be regulated at least in Europe in two years thanks to MICA regulation and it is happening everywhere around the world. And we can also see how institutions want some exposure to crypto. We can see it also on our surveys and that they are interested in what we are doing. So I would expect that in three years crypto will be much less volatile than it is right now. I would say 30% to 40% less volatile, but it's a very rough estimation. What I know, not know, I don't know what to use the word correctly with the market, but what I expect is, and I can see on trends, that crypto will be for sure less volatile over time. It's for sure, but how quickly it will happen it will be connected with regulations because big hedge funds don't or cannot even make exposure, some of them or some institutions. So this is something we, smaller traders, can take advantage of. Etienne Crete [47:21](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2841s): That's cool. And we covered a lot in this interview, so tell me what can I find you or can I put you after this podcast? You want to reach out? Yeah well you can go to our website robuxio.com Pavel Kýček [47:32](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2852s): if you want to know more about our service just go to robuxio.com/explainer where we explain how everything is working and if you want to follow me personally and my ideas just go to my Twitter account, Pkycek Etienne Crete [47:48](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2868s): P K Y C E K. Awesome. Well, thank you for that. We'll check it out and connect with you there. Appreciate your time and advice here here. Think it's been pretty insightful. People can get somebody out of this and hopefully we can connect with you and see what we do in the other. Appreciate it. Thank you. Thank you again for having me here. Awesome. Show intro [48:03](https://www.youtube.com/watch?v=1cVxnz4OJc8&t=2883s): Thanks for listening to the Desire to Trade podcast. We hope you enjoyed this episode. Make sure to leave a review on your favorite podcast platform, and don't forget to subscribe and follow on YouTube at youtube.com/desiretotrade. Thanks again for listening. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/education/interviews/desire-to-trade-460-pavel-kycek.md) --- # What it takes to run automated trading systems — Pavel Kýček on Desire To Trade #514 Source: https://robuxio.com/education/interviews/desire-to-trade-514-pavel-kycek Markdown: https://robuxio.com/education/interviews/desire-to-trade-514-pavel-kycek.md Pavel returns to the Desire to Trade podcast one year after his first appearance with an update on Robuxio: the team has tripled, AUM is in 8-figure territory, and the conversation pivots to what running automated trading systems at scale actually looks like — infrastructure, drawdown psychology, and the difference between institutional and retail clients. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [Education](https://robuxio.com/education) / [Interviews](https://robuxio.com/education/interviews) / Ep 514 Desire To Trade · Episode #514 # What it takes to run automated trading systems Pavel Kýček · in conversation with Etienne Crete March 12, 2025 · 30 min listen · 20 min read Pavel returns to the Desire to Trade podcast one year after his first appearance with an update on Robuxio: the team has tripled, AUM is in 8-figure territory, and the conversation pivots to what running automated trading systems at scale actually looks like — infrastructure, drawdown psychology, and the difference between institutional and retail clients. Listen on [Web ↗](https://www.desiretotrade.com/514-what-it-takes-to-run-automated-trading-systems-pavel-kycek/)[YouTube ↗](https://www.youtube.com/watch?v=thxnVhgyeuE) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Robuxio has grown from a 3-person team to 11 full-time employees in a year — most of them software engineers, because automated managed-account crypto trading is mostly an infrastructure problem. - 02 The models themselves barely change year-over-year. Pavel deliberately keeps the same momentum and mean-reversion edges out-of-sample for as long as possible — adding new ones rarely and only as portfolio diversifiers. - 03 Institutional clients don't panic in drawdowns the way retail traders do — they care about Sharpe, volatility, and max-drawdown parameters, not month-to-month equity. Education up-front is what makes that difference. - 04 Crypto is a momentum-long market with mean-reversion-long characteristics — understand that first, then build models. Momentum-short is the weakest edge because short squeezes in crypto can be brutal. - 05 Mean-reversion short on crypto is profitable but dangerous — Pavel only holds these positions for hours, never more than a day, because the left-tail (coin going 300% overnight) is asymmetric. - 06 Most retail algo traders underestimate the alerting and monitoring layer. The code that says 'something is wrong' matters more than the code that places the order. - 07 Robuxio tests every software change on its own accounts for several days at high frequency before pushing to client accounts — and one of the co-owners is a software architect by trade, which is the only reason this works at scale. Chapters ## Jump to any moment - [0:00 Catching up: Robuxio grew from 3 to 11 people ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=0s) - [2:20 The models stayed the same — what changed is liquidity management ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=140s) - [3:24 Trading the 2025 crypto dump from the short side ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=204s) - [4:39 Why institutional investors don't panic in drawdowns ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=279s) - [6:09 Finding your first investor as a quant trader ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=369s) - [7:33 Not over-optimizing what's already working ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=453s) - [9:07 When Pavel still trades manually (and why) ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=547s) - [11:22 Is algorithmic trading better than discretionary? ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=682s) - [13:08 The psychology of trading 8-figure AUM through drawdowns ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=788s) - [14:22 Managing investor relations ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=862s) - [17:45 Why retail traders fail: no fundamentals ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1065s) - [18:00 Crypto fundamentals: a momentum-long, mean-reversion-long market ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1080s) - [20:32 Risk on the short side of crypto ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1232s) - [22:25 What 'running the algo' actually involves day-to-day ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1345s) - [26:37 Failure cases and how Robuxio guards against them ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1597s) - [28:36 Where to find Pavel and Robuxio ↗](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1716s) Full transcript ## The conversation 30 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Show intro [0:01](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1s): Are you looking to become profitable in trading, but you're tired of all those strategies that never stick? Well, you're in the right place. This is the desire to trade podcast with Etienne Crete. Hear interviews with top traders from around the world who have actually made it. They'll share their tips, techniques, and stories to help you become profitable, stay inspired, and scale up your trading. So welcome to the conversation. Here's your host, Etienne Crete. Etienne Crete [0:28](https://www.youtube.com/watch?v=thxnVhgyeuE&t=28s): Sitting down today with Pavel Kýček. We spoke, I believe, a year ago when we were in Prague in person — that prior episode is going to be linked in the corner. You can check it out over here. But, Pavel, good to sit down with you again. Good to talk trading once again, and it's gonna be fun to kinda see where you're at in trading so far. Yeah. Thank you. Hello, Etienne. Thank you for inviting me and looking forward to our conversation. Definitely. I mean, tell me what's been going on since we spoke roughly a year ago. What's what's new and what are you working on now? Yeah. Well, when we are talking together Pavel Kýček [0:57](https://www.youtube.com/watch?v=thxnVhgyeuE&t=57s): last time we were a company of three people working on managed accounts for institutional and high net worth individual clients and also retail traders. We grew quite a lot. Robuxio has 11 full-time employees right now. We have other part-timers and we are still growing. We are well settled in institutional managed account trading. So yeah, doing quite well. A lot is going on, but everything seems to be fine. Etienne Crete [1:34](https://www.youtube.com/watch?v=thxnVhgyeuE&t=94s): That's awesome. Tell me a bit more about how did the team expand and the new responsibilities you're trying to fulfill. Pavel Kýček [1:40](https://www.youtube.com/watch?v=thxnVhgyeuE&t=100s): Yes, so we onboarded a new quant. Right now we have a team of six software developers and six software architects. They are taking care of the whole trading engine about the trading backend because not many people realize how difficult it is to properly run managed accounts in a way we are running in crypto. So it's really very demanding on the software infrastructure And that's why we have the whole team of software architects and developers. We have project manager. We have another quant as I told you. And the team is growing, growing. Etienne Crete [2:20](https://www.youtube.com/watch?v=thxnVhgyeuE&t=140s): So you're at a point where you run these strategies now fully automated. You are running algos for managed accounts, like you said in the crypto market. Any strategies changed in the past year or are the strategies at the core of what you trade the same? Pavel Kýček [2:34](https://www.youtube.com/watch?v=thxnVhgyeuE&t=154s): Yeah, as you said basically all the models we were running when we were talking together are the same as we are running right now. We have added a few new ones, but in general because we are trying to keep the stability of the solution as much as possible, we are not pushing many changes in general. If it is not needed, we try to follow the out of sample out of sample life of our portfolios and models. That's why we are not making any crazy changes. It's more about how to deal with liquidity because we are well settled in 8 figure territory with our managed accounts. It's about how to spread the liquidity across different coins. It's really more about like detailed work than trying to find something completely new. Etienne Crete [3:24](https://www.youtube.com/watch?v=thxnVhgyeuE&t=204s): Before we get back to the episode, if you want to jumpstart your day with top stories and tactics, be sure to subscribe to the Desire To Trade Trader Growth email. It's where you'll elevate your mindset, train your skills, and learn to treat trading like a business in less than five minutes a day. It's totally free, and you'll find it at desiretotrade.com. With the market we've had, I know we had some price and big bull market in the past year in crypto, some more slow market, kinda more sideways. Was it a good thing for you, or do you have any times where you kinda perform a little bit less well than usual? Pavel Kýček [3:56](https://www.youtube.com/watch?v=thxnVhgyeuE&t=236s): In general, it was a good market for us. Why? Because there was pretty big dump at the start of 2025. And because we are also trading through short side, we have made some nice money on this one and we also grew by AUMs. Thanks to this market because as we are talking about the edge to the short side is much weaker compared to the long side on crypto. Similar to stocks for example, not many professional trading teams are trading the short side too. And that's why it was our advantage that we were able to lock in some profits during this period, and that's why we grew quite a lot in this period too. Etienne Crete [4:39](https://www.youtube.com/watch?v=thxnVhgyeuE&t=279s): Interesting. Are investors more careful when the crypto is going in a down market? That you feel like they still wanna invest or they're kinda more afraid to go in even though you can still make money in down markets anyway? Pavel Kýček [4:50](https://www.youtube.com/watch?v=thxnVhgyeuE&t=290s): Yeah, that's a very good question. In general, I would say that it depends on the type of investor. Institutions, they don't care that much because they know what the parameters of our portfolios are. And as long as we are staying in some threshold or under some threshold based on volatility, max drawdown, expectancy, Sharpe ratio and these kind of simple metrics, we are basically okay and they don't care that much. On the other hand, you can see here the difference between individual traders or investors and institutional investors because really individual traders, they tend to panic much more. Yeah. But it's about explanation, know, the more we are explaining what it is about, the more they understand and the less they are making like some quick steps which are not that great for them. Etienne Crete [5:48](https://www.youtube.com/watch?v=thxnVhgyeuE&t=348s): Yeah. That totally makes sense. I mean, I think we covered this in the last episode we did together, but for someone who's new, I think the toughest thing is gonna be to find that very first investor, the first person that gives you money to trade with or the first one that you manage and account for. How did you find that first investor? How do you tell people to go about finding their first investor? Pavel Kýček [6:09](https://www.youtube.com/watch?v=thxnVhgyeuE&t=369s): For us it was about socials. We started on X, we started on LinkedIn, we were sharing a lot of information, we were talking about what we are building, what are the basic rules for our models, for our portfolios, how we are approaching trading in general. And that really helped us growing pretty fast. Etienne Crete [6:31](https://www.youtube.com/watch?v=thxnVhgyeuE&t=391s): Interesting. And was there any questions about, like the first person, did they question more or did they are they willing to give you capital to look into how you trade or Yeah, course. The longer we are on the market, Pavel Kýček [6:44](https://www.youtube.com/watch?v=thxnVhgyeuE&t=404s): the higher the stability of our clients. Let's put it this way. And it's also about our growth. As we are growing, we are not onboarding the smallest retail clients. And honestly, you can very well see the emotional difference between the smallest retail clients and even more advanced high net worth individuals because the main difference is patience. The problem with small retail trader is that they tend not to be patient and it is really the worst, worst approach to trading. If the patience is not there, you cannot go through drawdown and build your equity curve to all new all time highs. Etienne Crete [7:33](https://www.youtube.com/watch?v=thxnVhgyeuE&t=453s): I think it takes a lot of effort also to just like not touch something when you know it's working decently well. You always want to make things better, you want to try to improve things, Especially with algos, you could go and like go crazy, you could go with like AI and try to like build some more fancy ways to do it. How do you make that balance between keeping things the same versus trying to keep improving also over time? Because you always want to, I guess, get better over time. Pavel Kýček [7:56](https://www.youtube.com/watch?v=thxnVhgyeuE&t=476s): That's a good one. Well, in general, we know what we are trading and why. You know, we want to be trading models which are traded on stocks, which can be traded on commodities. We are taking these models and we are trading them on crypto. And now because we are running momentum and mean reversion approaches, we cannot find infinite number of different models. So we already know that finding 100, 200 different models probably doesn't make a lot of sense for us. That's why we are benchmarking all our live models. We are checking what they are doing, comparing them to historical results, comparing them to backtests and basically based on these numbers we can see that we are okay. And it's not about trying to optimise or re-optimise some model which is running live for a year or two years because honestly the longer the real out of sample period of a model, the higher value the model has for traders. So that's why we know that optimization is not the way we would want to go. Etienne Crete [9:07](https://www.youtube.com/watch?v=thxnVhgyeuE&t=547s): That makes sense. How much do you consider yourself to be a trader these days? I'm guessing in the beginning you do a lot more trading than you do now. Do you still go and trade manually or do you let the agos Pavel Kýček [9:16](https://www.youtube.com/watch?v=thxnVhgyeuE&t=556s): run and do their own work? Yeah. So crypto, I'm not trading manually at all. Of course, Robuxio is fully automated solution, which is completely running in the cloud in Amazon. Me personally, I'm still running some models on stocks, let's say semi automated, which means that I'm running my scanners once a day and sending orders to opening or closing auctions. But with Robuxio, we are also going to Etienne Crete [9:45](https://www.youtube.com/watch?v=thxnVhgyeuE&t=585s): stock trading and commodity trading. So at the end of this year, I would like to have everything fully automated under Robuxio. Right. Some people might also ask you this is like, why don't you automate the whole thing and all strategies? Do like the aspect of trading manually or do you plan to automate everything in the future? Yeah. Everything will be automated. For algo trading, Pavel Kýček [10:07](https://www.youtube.com/watch?v=thxnVhgyeuE&t=607s): I would say it depends on which level you are. You know, I'm not saying that I'm super super big expert, but I've been in trading over eighteen years actually. And I've seen a lot of things in the market. And now I think that for an algo trader, which is starting, it makes a lot of sense not to run everything full automatically. First, because it still pays off to watch the market on a daily basis, what it does, how it reacts to your orders, how it reacts to your open positions, how we are closing the positions and so on. And second, the final step of algo trading, the automation to make it really robust. Yeah, it's hard. It's not that simple. Etienne Crete [10:53](https://www.youtube.com/watch?v=thxnVhgyeuE&t=653s): Before we get back to the episode, if you prefer to watch content, then go find me on YouTube. I have this exact same episode on YouTube. I'm Desire To Trade / @etiennecrete on YouTube. Just subscribe to the channel, turn on the notification bell because then you'll get notified in real time. It'll tell you whenever I post new episode, so you never miss anything. Now let's get back to the episode. Right. Is it possible to make a algo strategy as good as you would trade manually or even better? And how do you try to do that? Pavel Kýček [11:22](https://www.youtube.com/watch?v=thxnVhgyeuE&t=682s): It's a good question. I would say for most traders, it's much better to trade algorithmically than discretionary. That's my point of view. Why? Because the emotions are a little bit smaller. You tend to understand the drawdowns a little bit better. And my belief is that trading, long term trading or long term profitable performance is about going through drawdowns. Right? You simply have to survive your drawdowns. And if you are trading discretionary, you have some space not to understand enough what's going on with your trading. While if you are running some algos, you are trading full algorithmically, you always can go to your tests, you can always go back to our historical data, and you can always reevaluate that the stage you are going through right now is based on the statistics, is based on the expectations. So that's why I would say that for most, algo trading is a little bit simpler. But on the other hand, I would say that the best discretionary traders will make higher returns compared to the best algorithmic traders. But we are talking about top out of tops. Etienne Crete [12:49](https://www.youtube.com/watch?v=thxnVhgyeuE&t=769s): Yeah. Definitely. Not not beginners for sure, which is Not a good point. Definitely not. At the same time, the mindset aspect is still there somehow. Did you ever feel, oh, I should just turn off the algo. It's like like turning off, it's not working well. And then you need to turn off or don't turn it off. Do you ever feel like you want to turn off an algo completely? Well, there is always psychological Pavel Kýček [13:08](https://www.youtube.com/watch?v=thxnVhgyeuE&t=788s): aspect in any trading, right? Because one thing is looking at your five years equity curve and go over the drawdown in a minute. And another thing is to go in through three, six months drawdown day by day. So it's big difference. It's not about that I would be pushed to switch off something or to make some changes. But of course, you are definitely less or it's always not emotionally nice to go over drawdowns, especially if you are managing other accounts and especially if you are managing 8 figures AUM. It's different level, know. When I was trading for myself only a few years ago, I almost didn't mind going through drawdowns. Then I started trading with Robuxio and that's just another level. You know, you get used to it, then the AUM grows. You are getting used to it again. So it's a process. But the more you are in trading, the more you understand what are the metrics you should be looking at, what is the most important part of trading and it's really consistency. Etienne Crete [14:22](https://www.youtube.com/watch?v=thxnVhgyeuE&t=862s): Tell me about the investor relations part of managing accounts for people. Do have people calling you when they have a draw on and they feel bad and they wanna take their money out? Or I'm guessing it's different within with the institutional investors, like big firms who invest in you, but how is that relationship with investors that you have to maintain over time? Well, Pavel Kýček [14:40](https://www.youtube.com/watch?v=thxnVhgyeuE&t=880s): with institutions, it's really different, as you said with individuals. Honestly, our investors who are trading with Robuxio, these guys, they usually tend to be patient and tend to understand because we are really trying to educate a lot and then they understand what it is about. And really I have to stress that most of our individual investors are on the high net worth individual side and they already are invested in stocks, are invested in some other investment vehicles. They understand that the key is long term patience. So they know what's the maximum drawdown, what's the volatility of the solution And then, yeah, we are getting emails from time to time, but it's not definitely that I would be on the call from morning till the evening and explaining anything. That that's that wouldn't be an environment I would be, I would want to work in actually. Etienne Crete [15:41](https://www.youtube.com/watch?v=thxnVhgyeuE&t=941s): And probably not. But how do you handle these worried investors in general who are wondering is he going to lose money forever? Is he gonna come back on track? What do you tell them to think about? Or do you just let them take out their money? Well, honestly, Pavel Kýček [15:55](https://www.youtube.com/watch?v=thxnVhgyeuE&t=955s): well, it's still their account so they can do whatever they want, right? We are only using our software on their accounts. That's one. Second, we don't have that many investors who are redeeming. Most of the investors they understand what it is about. And they really tend not to panic. And that's probably because we are really educating a lot. We are sending lot of newsletters, we recorded a lot of videos in the past. And we are in touch with them. So they do understand what's the solution about. And if and I think now we are getting back for example to algo trading versus discretionary trading. If the understanding is good enough, then people tend to stick to the given solution. And that's why they understand what our algorithmic solution is about, they tend to stick to it much more. Honestly, we have had quite a few clients who were trading discretionary big numbers, really big numbers up to 7 figure accounts. And right now they are more like, yeah, it's pretty cold, like the account is almost not moving during the day because they were used to crypto volatility of fifteen, ten, 20% per day to the upside of course, but also to the downside and with us all the portfolios are made that way that they are more, still more conservative than aggressive. Etienne Crete [17:27](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1047s): That's a good point. And sometimes the worst part is if they don't know anything, like they don't know about what's happening in the market. And they see they can't go down but they don't know why. If you explain them and you kind of educate them, like you said, I think it's a good thing to do for sure. Yeah, for sure. I think in general, I would say that many traders, retail traders, Pavel Kýček [17:45](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1065s): they end up trading because they don't understand what they are doing, why they are trading, what they are trading, and they are not having the proper understanding of fundamentals. Etienne Crete [17:56](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1076s): Tell me more about fundamentals in terms of algo trading. Pavel Kýček [18:00](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1080s): Yeah. So it's more about the fundamentals of the market in general. So you have to understand the market first, right? For example, crypto market. If you should describe the crypto market a bit, we are talking about momentum long market which has mean reversion long characteristics. It's oversimplified. It means that crypto market has much bigger edge to the long side. It's similar compared to stocks for example, and short downside movements tend to be mean reverted to the long side. It's again similar to stocks. And you have to have this basic understanding or it's always nice to have this basic understanding first. If you know what's going on, then you can start building proper models on this market. So for example, if I know that crypto is momentum market to the long side, I somehow also know that the best models to start with would be momentum long or trend following long or breakouts to the long side. And that's by the first step. Then the second step is that in algo trading, you can take advantage of diversification because it is much simple, simpler to trade on many, many coins and quite a few approaches compared to discretionary trading. And again, now we know that we are trading for example, momentum long or some breakout to the long side, we want to diversify so we can for example split the capital into 10 pieces and run some well diversified momentum long approach. And that way we can add more and more models to the portfolio, The lower the correlation between these models, the better and we can build something which is much more stable compared to single model trading, for example. Etienne Crete [20:01](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1201s): Before we get back to the episode, if you wanna get the behind the scenes of my life as a trader and just how I make it all work while traveling, go follow me on Instagram. It's Etienne C-R-E-T-E. It's all in one word. It's where I share trading lessons every day, and you get to see what I'm up to in real time, plus what guest I get to bring on a podcast. I would love to see you there. Send me that you would also put less risk on the short strategies for crypto or you could just do best the same? Pavel Kýček [20:32](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1232s): Yeah. That's a good one. Well, to the short side, we would have to divide between momentum short or some breakout or trend following to the short side and mean reversion short. Momentum short is the weakest edge in crypto in a sense that especially the bigger coins, they tend to mean revert and basically trend to the long side much better. Because the shorts really, you are getting whipsawed pretty often, and it can really hurt. So one is to diversify, which means to spread the allocation across 10 — better 20 — positions. That this way you are reducing the left tail risk of a single position on some small coin. And second is to diversify across approaches also to the short side. And then we have Mean Reversion short, and it's slightly different approach. It has quite some edge in crypto, but the left tail risk, the risk that the coin will make 300% overnight is still in the market to the short side So what's the simplest way diversification again. So diversification is really the key in trading, would say in general, but especially in crypto and especially if you want to trade something else than just Bitcoin or maybe Ethereum, also coins which can really make 600% during the day. And it's possible and it's happening. And of course, if this 600% is going with you, it's perfect and worth is great. But you always have to think about the risks first. So you also have to be always well protected and you have to think about how to protect against this type of risk. Etienne Crete [22:25](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1345s): Definitely. I mean, that's good advice for sure. Last time we talked a bit about this too, the fact that people expect you can just code a strategy into an algo and then your work is done and you're kinda good to be retired, like you're good to go and you don't have any work to do. Tell me about the kind of work you do these days now. Maybe it's different than, of course, not coding all the time, but what is the work involved in running the algo now that it's already put into place? Pavel Kýček [22:47](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1367s): Yeah. Well, so one thing is to build a model. Right? Building the model, especially on crypto, I'm always recommending going with the models which are trading somewhere else Because on crypto, we are still playing with a few years of data. Crypto futures are traded from 2020 — or rather 2021. That was the year when we had some more pairs already and you are getting some more data. So how many years are we playing with? Right? A few. So that's why it's always nice to have a model which is traded somewhere else. Then of course, we have to make some adjustments on crypto, but that's just the first part. Building the model is one part And second part is how to trade algorithmically. And if you want to trade automatically and on crypto, it's much harder to trade semi automatically. For example, some trading on stocks because crypto is 20 fourseven. So automation is almost a need. And if you want to properly automate the approach, it is really a task. Me personally, I wouldn't be able to do it. So you have to be well protected against API changes, you have to be well protected against some changes in the cloud for example. So people all sometimes think about algo trading or fully automated algorithmic trading as about something which they just switch on and let it run forever, basically some holy grail of trading. And it's not that far, but it's not also that simple. You have to put a lot of work in. For example, at Robuxio, just to give you some numbers, we are definitely putting the biggest resources to the software engineering team. Because we know that the edges we are trading are pretty big and they can make a lot of money. But what's important is that the portfolio we have built in the past is the portfolio we will be really able to trade, which means that really you have to be very sure that the trading engine is doing exactly what it is supposed to do even with any possible changes on the subaccount part for example. So that's why we are for example having one bot which is running on each sub account, client sub account and it's checking that all the orders, all the running trades, everything what's going on is exactly as it should be based on the benchmark we are keeping for each client on our site in the Cloud Amazon. So yeah, of course our solution is overkill for an individual retail trader. But in general, people tend to underestimate the automation, I would say. Or they tend to underestimate more than the automation itself, the risks which are connected with the full automation. You always have to have many checkers in your trading bot or trading software that if something is happening you have to know. And that's a link many retail traders are missing. They for example are able to do some automation in Python, but they don't spend enough time having all the checkers or the alert system which should be running above the automation, so that you always know what's happening. Etienne Crete [26:37](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1597s): That's a good point. Yeah. Definitely. What so far has gone wrong for you in terms of the algos? Was there any problems or issues that you've dealt in the past that you had to fix? Yeah, that's a good one. I have to say that fortunately Pavel Kýček [26:52](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1612s): we haven't had any major, major issue with the algo itself. Why? Because we have pretty strict process how we are for example pushing any change. Anytime we are making some not even major change but any change in the software We are always running it on a few of our accounts for a few days. Before running it on our accounts for a few days we are running the solution with for example one hour frequency to get as much feedback as possible And just after this evaluation process, which takes some time, depends on how big the change is, we are starting trading it on the real accounts of our clients, not before. So because of this and because of one of our co owners, Deneb is great, great software architect, we are always well protected. But really that's also the reason, the main reason why we are able to do it this way is that there is a big group who is working on this one full time. But I would say for a retail trader, being a retail trader, I would for example have some very small account which I would be using as a test account and I would push my updates on with any trading engine solution on this small account first to see that everything is exactly as it's supposed to be And just then after some evaluation process, you could start pushing it on your main account. Etienne Crete [28:36](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1716s): That's good. That's for sure. Tell people watching this where they can connect with you or find out more about your work after they're done watching. Sure. Pavel Kýček [28:44](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1724s): So you can go to robuxio.com where you can find everything, or to my Twitter account x.com/pkycek. Or what could be potentially interesting for your audience is that I've also made a course based on the course I've led at university. I've had one semester of algorithmic trading at university and I recorded it in English, and it can be found on robuxio.com/course. Etienne Crete [29:18](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1758s): Awesome. Put the link below. People can can check it out and reach out to you there. I appreciate you coming here, Pavel, the advice you have to the listeners. Pretty good stuff. Hopefully, we can catch up with you in the future and talk to you once again. Sure. Thank you for having me. Show intro [29:30](https://www.youtube.com/watch?v=thxnVhgyeuE&t=1770s): Thanks for listening to the Desire to Trade podcast. We hope you enjoyed this episode. Make sure to leave a review on your favorite podcast platform, and don't forget to subscribe and follow on YouTube at youtube.com/desiretotrade. Thanks again for listening. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Listen on [YouTube ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA) Click any timestamp below to jump the video to that moment. Key takeaways ## What you’ll learn - 01 Don't invest in crypto — trade it. S&P Crypto since 2018 has the same total return as S&P 500 with massively worse drawdowns; you'd need 26–27% annualized just to match the SPX risk-adjusted ratio. - 02 Volatility is the entire reason to be in crypto. The 14-day ATR of S&P Crypto is 3–15× higher than S&P 500 over the last 5 years — averaging about 9× — and that's what makes algos pay off here. - 03 Two volatility laws to bet on: (1) high volatility stays high (then collapses, then returns), and (2) volatility expansions reliably create at least short-term trends. Build models on these foundations. - 04 A 50-day moving average trend filter on Bitcoin alone beats buy-and-hold by ~7× since 2018. On a tradable universe of the top 50 crypto futures, the same idea returns ~18,000% since 2019. That's not magic — that's inefficiency. - 05 Single strategies always lose money sometimes — by design. Pavel's TrendCatcher Short stays flat or down for 18 months at a stretch, and that's fine because it pays off when TrendCatcher Long is bleeding. The portfolio is the product, not any individual model. - 06 Five characteristics of a robust strategy: logical basis, simplicity, only profitable in specific regimes, accepts losses in unfavorable regimes, and resilience to multi-year drawdowns on daily data. - 07 Crypto mean-reversion edges are currently 4–7× larger than in equities — but that gap is closing fast. The 2017 vintage of 20%+ daily moves on Bitcoin is now mostly extinct; the inefficiency window for retail-scale algos is measured in years, not decades. Chapters ## Jump to any moment - [0:00 Cold open: volatility is the driver ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=0s) - [0:45 Richard introduces Pavel — TraderLion conference ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=45s) - [1:13 Don't invest in crypto, trade it ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=73s) - [5:00 Why crypto's risk-reward ratio is worse than S&P 500 ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=300s) - [7:00 Crypto vs equities: 9× the volatility ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=420s) - [10:00 The two fundamentals of volatility ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=600s) - [13:00 Long-term trends are about value, short-term trends are about triggers ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=780s) - [15:00 First strategy: Bitcoin + MA50 trend filter — 7× edge over buy-and-hold ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=900s) - [18:00 Rotational strategy on top-10 trending coins — 18,000% return ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1080s) - [22:00 The immature-to-mature asset cycle (commodities 1980s, tech 2000) ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1320s) - [27:00 TrendCatcher Long on the full crypto-futures universe ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1620s) - [30:00 Five characteristics of a robust strategy ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1800s) - [32:35 Q&A: portfolio allocation and rebalancing ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1955s) - [40:00 Adding mean-reversion short for compounding ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=2400s) - [50:00 Survivorship bias in crypto backtests ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3000s) - [1:00:00 How to start with algorithmic trading ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3600s) - [1:15:00 Wrap-up: where to find Pavel and Robuxio ↗](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4500s) Full transcript ## The conversation 85 min conversation · speaker-labelled · click any timestamp to jump the video. ## Transcript Pavel Kýček [0:00](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=0s): Volatility, that's the main driver of potential profits. What we have to know is that long term trends are about value and the growing expected value and short term trends can have many triggers. For you who don't know what mean reversion is, that's basically an approach that is trading against short term market overreactions. You always or almost always get better results without having this fixed stop. Why? Because of intraday mean reversion characteristics of the market. If you want to start with algorithmic trading, don't try to automate everything. Richard Moglen [0:45](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=45s): Okay, welcome back everybody to the TraderLion conference. I'm super excited to be introducing our next presenter Pavel Kýček. He is a fully systematic trader with over eighteen years of experience and his specialty is algorithmic strategies in stocks and cryptocurrencies. This is a presentation I've been really looking forward to personally. Pavel, thank you so much for being a part of this and looking forward to dive right in and asking you a ton of questions as well. I'm gonna really enjoy this one. Pavel Kýček [1:13](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=73s): Hi, Richard. Thank you. Thank you for having me here and yeah, let's jump on it. Let's do it. Okay, so let's go to algorithmic trading and crypto and how to put everything together because I think most people are making many mistakes regarding to algorithmic trading and regarding to crypto investing and crypto trading in general. So let's cover it. Firstly, some disclaimer, of course, some of those results are back tested one. Back tested results are never the same as the real ones and keep safe and always stick to your risk management. So my first message is don't invest in crypto. I know that it's pretty strange because we are talking about crypto trading, crypto investing here. But really what I'm always trying to say is that investing, and by investing, I mean long term allocation of capital into different crypto projects, is usually the worst way how to get allocation to crypto. Why? Because if you compare, for example, S&P 500, the stock index that everyone knows to S&P Crypto since 2018, you can see that the performance is more or less the same, but with huge, huge volatility. Of course, if we would start here, the performance would be higher, but the main message is that crypto is not an investment asset and it has its reason that we will cover a little bit later. One of the main reasons why not to invest into crypto is that most of you, and I mean, really most of you wouldn't be able to withstand drawdowns of minus 85% or minus 80% or another minus 80%, it's just huge. And by my experience, I know that the drawdown of minus 40, everything between minus 20 and minus 40 is usually not able to go through during live investing or live trading because going over these results on the chart is totally different than to live through these movements. So really don't invest, do it slightly different. Why not invest in? I really like this table because if you want to compare some assets, some trading approaches, some investment approaches, you have to have some basic comparison that you can use across all the asset classes, all these investment approaches. What I often use for very first comparison is basically a risk reward table, which is giving us the ratio between annual return and drawdown. And if you divide your annual return of the asset or the strategy by the maximum drawdown, you get some ratio that you can start calculating with and you can start comparing this ratio between each other. Here, if you compare S&P 500, just buying and holding S&P 500 since 2018, that's the time when we are starting having good data for crypto too. To buying and holding S&P Crypto, you get much, much, much worse return to drawdown ratio compared to S&P 500. Why? Because of this huge, huge maximum drawdown. In fact, if you would like to get to the same ratio on crypto to S&P 500, the annual return would have to be at least 26 or 27% average, which I'm really not sure that crypto will be able to deliver such a huge return just by buying and holding over the long term. Plus what's even more important is that drawdown or volatility is just one of many potential risks. In fact, you should adhere many, many more risks that crypto is still full of. So really this is let's say the basic information and we will start building on this table later on. Why we are in crypto? Why we trade crypto for our clients, for institution and retail clients is crypto volatility, not long term friendliness. It's super important because compare the blue line here, which is basically ATR 14 of S&P Crypto to S&P 500. Again, I like these comparisons because it is really giving eye opening view on crypto in general for those that are not that familiar in crypto. You can see that the difference between S&P 500 and S&P Crypto is between 300% to up to 1500%. So the volatility on average over the last five years is about 800% or 9x and this is the reason why we all who like trading should be in crypto because volatility is the key, that's the main driver of potential profits. So this is something that is extremely important to understand. And it is something that we should think about if we are building our strategies, if we are building our projects. Now, what's volatility? Just for all of us to know, volatility basically is unit of movement. The higher the volatility, the better for us traders, of course. And what's even more important is to understand the basic characteristics of volatility and these are two main ones. The first one is that increased volatility tends to remain increased. You can see it on this chart on the Y axis, you can see the day to day volatility and here you can see the years, basically days. And you always have periods when the volatility is much higher and those periods are always followed by periods when the volatility is much lower and it's always changing. The periods of high volatility are followed by the periods of low volatility. In fact, this is the only 100% market cycle that you can bet on that after periods of low volatility, there will be always periods of high volatility and vice versa. And the second fundamental characteristics of volatility is that increased volatility tends to create at least short term trends. This is something that we can bet on over the long term. What it means that usually if we have some initial point of view and the market, there is some news let's say on the market and there is some increased volatility. This increased volatility with some probability of course usually pushes the price into some following volatility and following trends. And based on these two fundamentals, you can start building your trading models because your trading models always have to consist some fundamental condition that is based on the main characteristics of markets in general. So volatility is the key everywhere, especially in crypto. Now, another thing is that we should know the main reasons or the main differences between long term trends and short term trends. Because long term trends, very simplified, are about value. It's about expecting higher value in the future, especially if we are talking about stocks, but these short term trends can have many triggers, which is key. It can be health behavior, this can be manipulations or even different pumps and dump schemes, especially in crypto. At the end of the day, doesn't matter. What we have to know is that long term trends are about value and the growing expected value and short term trends can have many triggers and you can see it on this chart again, the blue line S&P 500, you can see perfectly nice long term trend, Compare it to S&P Crypto, you can see many long short term trends to the long side, to the short side, to the long side, to the short side, then some flat and then to the short side again. But these are definitely not long term, definitely not in crypto, because there are too many projects that are not delivering value. They are trying to find some value, but they are not delivering it and that's why these long term trends are super volatile and they are not that smooth. We should bet on short term trends more than on long term ones. Now let's get to very first trading model that I really love because it is showing the strength of algorithmic trading on crypto and it is showing the inefficiency of crypto market in general. This trading model is very simple, it's only about buying Bitcoin, right now we are talking only about Bitcoin, if it is closing above its moving average 50 and we close the position if Bitcoin is closing below its moving average 50. Let's see that we have some chart, we have some moving average. And if we close above it, we get into positions and we stick with the positions as long as Bitcoin is above its moving average. And once it is closing below, we are getting out of this position. And if you compare just buying and holding Bitcoin to this very, very simple trading model, you get the overperformance of 7x or six to 700%, which is huge. If you compare it to stocks for example, these very basic trending models would give you probably underperformance to just buying and holding because of efficiency of traditional assets. The less the asset is efficient, the more these very basic trading models will deliver over performance compared to just buying and holding. So it can be even your basic comparison among different kind of assets or asset classes. But it was only about Bitcoin. And I don't like this example from because of one reason and it's because of selection bias. selection bias and hindsight bias is something you wouldn't even believe. How many even professional traders or capital allocators are suffering from? They just choose Bitcoin, Ethereum, Solana, let's say the most known ones and they put some very basic trending models on them and they are showing these results from the past and they think that they would be able to deliver these profits to the future but it's huge nonsense and we will get there a little bit later but what's very important to know is that the more the asset is inefficient, the more the hindsight bias or selection bias is problem for traders and for real results of the trading model. So let's get to one very simple trading model that most algorithmic traders know and it is rotational strategy. The idea is very simple and it again consists only of three conditions. One is context filters. It means that we are filtering the market into phases when we want to enter into positions and to faces when we don't want to. So our context filter is the one that we have used on the example below, which means that we are entering to positions only if Bitcoin is above its moving average. If it is above its moving average 50, the context filter is switched on, and we can start trading. And we only take trades on 10 coins that are the most trending ones based on rate of change 30. So we enter into these positions and we stick to these coins as long as these coins are in this top 10 positions by the trendiness. And once Bitcoin is below moving average, we are not trading and as long as it is below, we are just rotating the 10 most trending ones. That simple, let's say that's very simple strategy that is even working on stocks, that's working on commodities, doesn't matter. But what's important is to check the performance. We are talking about, let's say 18,000% since 2019–2020. Why? Because we are taking advantage of this huge volatility of smaller projects and this short term trendiness. There is no magic, this strategy will deliver the performance of 10 to 15% on stocks, and about 100% to 150% on crypto. The main difference is the volatility of crypto in general. Because if we get back to this risk reward table and we calculate our ratio, we are getting to 1.6x. It means that a historical drawdown or the annual return is 1.6x higher than the maximum historical drawdown. So we are getting onto something, it's super volatile solution, you wouldn't want to go through this phase for sure, but we are getting a model that is able to deliver annual return of 100 plus percent. Of course, percent drawdown is still too much, but it's still very simple one trading strategy. Now, how is it possible? How is it possible? We have to break it here for a bit to even more understand, especially to those that are not trading crypto. How is it possible such huge returns? It's all about the immature characteristics of crypto because once we started trading really professional crypto, I would say we started being professionals on immature to major cycles in general, because you could see these cycles everywhere over all these trading asset classes. Doesn't matter if it is stocks, commodities, but it's always the same. Firstly, there is period which is about low liquidity, let's say the asset is pretty low liquid, which usually brings high volatility. Why? Because you can have just pretty small trading sizes and these are already moving the market quite a lot. This high volatility usually brings big opportunities in terms of trends, short term ones at least and inefficiencies. Inefficiencies on crypto that could be measured by mean reversion strategies are right now four to seven x higher, Joe, just for you to know. So these big opportunities, what they are doing? They are basically pulling new capital into the market and this new capital is pushing the liquidity higher and the higher the liquidity, the higher the efficiency of this asset class and the smaller the opportunities. And this cycle is everywhere. You can see it on trend strategies on commodities in 1980s. At those times, trend strategies would be able to deliver 40–50% average yearly. You could see it on tech stocks before the tech bubble for example. These were years that were very, comparable to current crypto market. So this is something that is always in the market and you just should or shouldn't based on your state and you should take the opportunity. One more thing, you could even see that this cycle is already happening on Bitcoin. What these two charts are showing is the daily rate of change in ten days when the days were higher than 10% or 20%. You can see that in 2017, there were more than 50% of those days, 50% and in 2023, we are getting to under 20% which is still huge. But these 20% plus days, these were almost 30% in 2017 compared to '23, we are getting to seven to 8%. So just to put it into perspective, this is one of the reasons why I was saying this that picking one crypto, Bitcoin, Ethereum or something and trade just on this doesn't make any sense because the volatility is just getting lower as the asset is getting higher and is more liquid. But just very quick comparison, look at this chart and now compare it to S&P 500 and you can see that these 10 plus percent days were almost none in last six years and 20% plus. These were only during COVID crisis in 2020 and probably don't forget the results in 2020, because all the models were delivering profits like above average. Why? Because of volatility, that's everything is about volatility. So that's the reason why this trading model is able to deliver such a huge overperformance compared to just holding bitcoin. Now let's get to some real trend strategy on the whole crypto market, because I think it's even more important to show what algorithmic trading on crypto is in general. We could pick out one of our strategies that we are trading for our clients, this could be trend catcher long and what it is doing is that it is trading based on moving average 20 all the tradable crypto futures that are filtered based on liquidity. So we are not trading the smallest ones, but we are trading the more liquid ones, let's say top 50 to top 60 most liquid coins. And these are ranked on a daily basis. So there is again, no selection bias. And don't forget that on this one is pretty high selection bias because we selected Bitcoin that was performing pretty well over last five years. And what we are doing here is that we are just buying coins that are above moving average 20. And we are closing the positions if the coin is below moving average 20 and we are doing it only if the market is in the growing, let's say characteristics and it is only if bitcoin is above its moving average 50. So that's the whole strategy, one entry condition, one exit condition, one market regime filter and some kind of ranking that is basically telling us that we want to trade the most trending coins only. That's it and again, look at the performance and again, why is it possible because of volatility and friendliness of the solution. Because what's really important to understand if you are thinking about algorithmic trading and trading models in general is that these models can give only such a performance that the market is giving So that's not about magic, these models are definitely not magical, those are oversimplified because the more simple, the more robust the solution. So they are really oversimplified, but you get there a little bit later. But they do deliver such profits because we are trading them on the most immature asset that we are able to trade right now. Now to key characteristics of a robust strategy, because it is something that every algorithmic trader should aim for. First is logical basis. What it means is that it has to be made on some sound idea that is basically built into the market. We were talking about volatility, we were talking about that the increased volatility is basically pushing new trends. Based on these ideas, you can build many trading models. Another one is simplicity and that's really the key because every other condition that you give into the model is exponentially adding the difficulty of the strategy and also the probability of failure because it's super, super simple to build some strategy on past data but unfortunately, we are not trading history but we are only trading the futures data and that's why the more simple and the more logical the model is, the higher the probability of survival in the life markets. And then there are two even more important points that most traders are not thinking about that much. First is that every robust strategy is profitable only at certain market phase, that's really super important. What it means, if I have trend catcher long strategy, which is basically catching long trends, this strategy will deliver profits if the market is trending. So you can see here Bitcoin is trending, the strategy is delivering profit. Here, Bitcoin is trending, the strategy is delivering huge profits, but if the market is going to the short side, your models will be flat or they will lose money. Usually, they will lose a bit of your equity and if you want to build one strategy that is able to trade and deliver profits in every market conditions, you will always end up with over optimized crap, always. That's super important and the worst thing that most retail traders are doing is that they are trying to build on the past data some nice strategy that is able to deliver profits in every market regime and that's really nonsense. And the last point that we covered somehow is that it will bring losses in phases that the strategy is not built for. Again, if the market will be super flat and we are trading trend strategy that needs volatility, the strategy will just lose money. That's it, that's the reality of algorithmic trading. that's the reality of almost every trading approach, but most traders are just not thinking about it deep enough to go over it and start building portfolios, which is the key for algorithmic trading and we will get there. What is also important that especially if you are building strategies on daily data, you will have losing periods that can easily last for many months, even a year or two. You just won't be able to reduce it by one strategy, you will have to start building portfolios. To build very simple portfolio, let's just go over another strategy that we are trading. This strategy has just horrible equity curve, you definitely wouldn't want to trade by itself. You can see that it's basically flat for two years, then it made some money in one year and then it is again flat more than let's say one and a half year. This strategy is the opposite of trend catcher long. So it is only trading to the short side, it is only trading if Bitcoin is below moving average 50 and it's only trading if the coin is closing below moving average 20 and getting out of the position if Bitcoin is, if the coin sorry is above moving average 20. You can see that if the market was growing, for example here, this strategy was losing money, you can see it here, market was growing, strategy was losing, then the market was falling, the strategy was making money up to 80% and then the market started trading to the long side again and the strategy was giving some profit back. You wouldn't want to trade this strategy by itself, but the value is very, very high and it's in putting this strategy into portfolio. Here you can see the very basic of portfolio, which is just two strategies together, trend catcher long and trend catcher short. You can see trend catcher long as the green line, trend catcher short as the red line, and the blue line is the whole portfolio. Compare just trend catcher long, for example in this phase to the whole mini portfolio that we just built and you can clearly see that the stability is just thanks to these two models on very, very different level. And we are playing just with two models here. Normally, are trading ten, fifteen plus strategies. So just to think about it again, just for some comparison, here you can see our very basic model that is trading on Bitcoin only, compare it to the TrendCatcher Long Short, the over performance is again 12 to 13 x or something like that. Pretty pretty high. Richard Moglen [32:35](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1955s): And sorry to jump in. Just a question about the combined strategy there. Is that equal allocation between the TrendCatcher long and TrendCatcher short. So 50% in that, 50% in another, you're not kind of changing that as the models change. It's just kind of a flat equal That's great idea. In fact, in Pavel Kýček [32:55](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=1975s): this particular example, we are getting allocation 100% to long and 100% to short. Why? Because we do have this regime filter that is basically switching off or on this long versus this short strategy. So yeah, it is a little bit more aggressive, it is more like an example. But thanks to this regime filter, you can reuse the same capital for the whole strategy, which is super important and very strong way how to reuse the capital thanks to portfolio trading. Richard Moglen [33:30](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=2010s): Gotcha, Pavel Kýček [33:32](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=2012s): thanks. Yeah, you're welcome. So to portfolio trading and why it is key, just very quick sum up what's portfolio for algorithmic traders, for us algorithmic traders, it means trading two or more low correlated or uncorrelated strategies. And it is very important because once you trade correlated strategies, the portfolio strength is basically none. Then it doesn't make any sense. So it's always about correlations of these strategies, because otherwise you can't take the advantage of portfolio trading in general. And what's correlation just for you who don't know, it's basically a relationship between two variables. If the correlation is high, it means that the variables or our strategies, let's keep it simple, are moving the same way. If the correlation is negative, it means that if one is making money, another one is losing. And if it is uncorrelated, it means more or less that one is making something and the other one is making complete like non correlated results. So why it is key? First one is something we already catched a bit and it's better capital allocation, because if the strategies are uncorrelated, in drawdowns, you can reuse the capital completely or part of it. Thanks to this, the account is performing much better, because you are using the capital more often. So basically you are getting to higher usage of the capital, thanks to this higher allocation of capital. Then if the strategies are made properly, you are getting to higher stability of profits and you are reducing the risk of single strategy failure, which is something we didn't touch until now. But it's also pretty important because every strategy can fail over the long term. Because even though you make it super robust, you make it based on the sound principles, based on the fundamental keys, key principles basically, your strategy can still fail. If you trade one strategy on your account only, you are basically, yeah, you are not in a good position. If you trade 10 plus strategies, your clients or you on your equity curve won't even notice if you won't go deeper into the portfolio construction and you won't go strategy by strategy. So once you start building portfolio of 10 plus strategies, you are more of manager of more strategies in the whole portfolio. And you can compare every single strategy to their benchmarks and you can see, yeah, this strategy is performing good, I can keep it, this strategy is underperforming more than a year, maybe there is something happening and you can make some steps and your training is much, much, much calmer compared to trying to trade one or two strategies when you never know when the strategy will fail and at the end of the day, probably almost every or close to every strategy will fail over the long run. Now I mean decades, I'm not talking about months, but really decades of trading. So that's very, very important reason why to trade broad portfolios. Another one is that you are really lowering the risk of over optimization because if you trade single strategy, you are always pushed to get as much as possible of this single strategy. It's just in us, know, we as traders want to perform well and if we want to perform well with one strategy, we are over optimizing it a bit, we are just making this very big mistake and over optimized strategy is always failing over the long term. And another one is that if you trade more strategies like five, ten plus, you are even getting to smaller positions and the smaller the position, the more you are reducing the risk of single coin or single stock failure or some big drop in your positions. So you are basically minimizing many risks, but you don't have to reduce profits for those risks. This is the reason why many traders are calling portfolio trading or algorithmic portfolio trading as the only holy grail of trading, because it's really possible to deliver nice performance and lowering possible risks. What's true is that if you understand this table, you very easily get ahead of 90%, maybe 95% of all retail traders. And this is correlation table of two strategies. You can see it here. Here we have trend catcher long and trend catcher short, again trend catcher long and trend catcher short. If you look at a correlation in returns of trend catcher short and trend catcher long, it's minus 0.1. It means that trend catcher long is delivering returns if trend catcher short is losing a bit and the opposite is true for trend catcher short. What's even more important is correlation in drawdowns. Because if you get to non correlated strategies or even negatively correlated strategies in drawdowns, then it really means that you can push the performance higher while reducing the drawdowns and that's really the secret of long term profitable algorithmic trading. Just these understanding these tables, you can see it here, we have some ROR of trend catcher here, of trend catcher short and the combined one and the maximum drawdown of trend catcher long and trend catcher short and you can see here that we really pushed the performance up while we were keeping almost the same maximum drawdown. Of course, here we are trading only two basic trading models. If we put more strategies, what's happening more uncorrelated strategies, what's happening is that you can push the drawdown lower while keeping the performance the same and if you can really trade advanced portfolios of 10 or 50 strategies plus, you can push the performance higher while even pushing the max drawdown lower and that's something you never ever are able to make by trading single strategy, it's just not possible. Let's push our portfolio slightly further and let's do it by adding mean reversion short strategies. For you who don't know what mean reversion is, that's basically an approach that is trading against short term market overreactions. So let's say we have a market that is moving somehow during one day it makes some move that is two to three x higher than normal to one side, you basically enter against this move and speculate that the market will mean revert to some degree. It doesn't have to mean revert fully back, but usually after these movements, there are some shorter term mean reverting characteristics of the market and you can take advantage of it and that's basically the second sound idea of how to build your trading strategy. First is Momentum one based on volatility and second one is mean reversion one based on market overreactions or also called inefficiencies. You can see this model here, the equity curve it's pretty stable, it's also the characteristic of mean reversion strategies in general. Why it is more stable than trend strategies is because we are in positions just few days, one to three days in general. And we don't need massive movements like in trend strategies, we just need one to two days of overreactions when we enter into and we are usually getting pretty high probability of profits between 55 to 70% compared to trend strategies that have the probability of profits of 35%, but the average win rate or the average winning trade is much higher compared to the losing trade. So let's take this strategy and put it to our portfolio of trend catcher long and short and you can see the comparison here. The green one was the original portfolio of trend catcher long and short only and the blue one is with our pump and dump or mean reversion short strategy. The main difference is that it is giving stability in the markets when there is like non movement or the market is not moving that much, the volatility is lower and this strategy is extracting money just thanks to these inefficiencies, not thanks to trends. You can also see it here that is keeping the maximum drawdown slightly smaller, because trend strategies were basically giving back some of the profits. This mean reversion strategy was making some money and that's why it was keeping the drawdown lower. Of course, we'll always have drawdowns even though we will trade 50 plus strategies in the portfolio. So this is with mean reversion Short strategy and once again just shortly to the correlation table. What's important is to compare our new strategy which is pump and dump to trend catcher long, because this is the one that is making the most profits here. And thanks to adding these pump and dump strategy that is only making 17% per year, which is not that much, it's pretty low performance on crypto honestly. Just by adding this strategy, we pushed the whole portfolio to 220% with a drawdown of 47%, which is again almost the same that just one strategy delivered. So that's the key of portfolio trading. Once I have more strategies, I can think about my targets, if it is lowering drawdowns or pushing performance, then I can really play with weights as you Richard were rightly asked, then I can really think about the target. Is it performance? Is it volatility of my trading account? At the end of the day, it is then more up to the trader and what they want to get from their trading. And just to sum it up, how you could push the idea of portfolio trading even further because I'm really talking about portfolios because I think that's the key and I think that not many retail traders are thinking about that much and they should much more than about single strategy, because portfolio is the key. How we are for example building portfolios is that we are building sub portfolios first. Let's say we are building some sub portfolios of long trend strategies only, short trend strategies only and then we put it into trend only sub portfolio, which is the blue one that is again built of long trend strategies and short trend strategies. Just for you to know, long strategies here are from six trend strategies and short strategy sub portfolio or short trend strategy portfolio is built of three strategies in this example. Of course, we will still have drawdowns, why? Because if the market is not trending, we cannot make money with trend strategies. But that's why we also have mean reversion sub portfolio in the whole portfolio and that's something you should always have in your portfolio, why? Because especially if you put more mean reversion strategies into the whole portfolio, these strategies are really pushing the stability much, much higher. Of course, the profit is much smaller just compare it here, the mean reversion portfolio is about let's say 500% and the trend portfolio was up to 20,000%, which is huge but it's just crypto on stocks it's the same but just much more results. And if you put these strategies, these mean reversion long, mean reversion short, trend long, trend short through whole portfolio, you are getting results or performance that is not possible to made by single strategy on any asset. And if you put it on crypto, the performance is on completely different level because thanks to algorithmic trading, you are taking advantage of portfolio trading, you are taking advantage of a major asset as crypto and you are taking advantage of the third key and its compounding effect. It is something that again traders often forget because they don't think over the long term. It's really about the long term thinking. Once you think long term and you can compound day by day if the portfolio is growing, then on something like crypto the results can be just tremendous. And yeah, that's it, that's all to the presentation. The only thing for example, to see is the correlation table of the whole portfolio, which is just for your interest to see that the key again to get to stable results is pretty low correlation. Correlation is really the key and you should concentrate on it as much as possible and once your correlation is slow, you just have to put these strategies together and work on the portfolios. Yeah, and last thing, maybe what we could think about is this return to drawdown ratio. It's not about showing off, it is more about showing that we are definitely in some stage when crypto is right now and it will nothing but get in smaller. It's pretty sure, it's pretty obvious because if something is giving potentially such a huge result, then the only thing just remember this immature to mature cycle, the only thing that can happen and we can see it, thanks to our institutional clients that it's pulling new capital into the market and the new capital is pushing the liquidity and it's basically pushing this inefficiencies lower. Yeah, so that's it. Richard Moglen [50:52](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3052s): Yeah, excellent. Yeah, first of all, this has been really fantastic so far. I think you're able to explain a ton of concepts really, really well. Definitely want to dive a little bit deeper into a few of them. First things first, looking back, you mentioned this very clearly, the kind of differences you can get from back tested strategies versus what you'll actually get going forward using it. How much do you guys track at Robuxio, the differences between like how your portfolios are performed going in the past versus how they're actually doing in the current day? What's kind of the difference of performances that you guys typically see? Pavel Kýček [51:36](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3096s): That's great idea. Honestly, in crypto, it's slightly different compared to stocks, for example, because in stocks, want to see the performance very similar to the backtest in crypto because you are getting through this immature to mature cycle, the strategies can deliver small results just by this cycle and just by crypto being a little bit more liquid and a little bit less inefficient. So how we are approaching it is a little bit advanced thing but maybe interesting for other traders is that every single strategy that we trade has some benchmark that we created by ourselves. It means that if I trade trend long strategy, I typically have another two to four strategies in the portfolio, not in the portfolio but I have them built and I create benchmark of them and I can compare the strategy we are trading for our clients to this benchmark and I can see if it is starting underperforming compared to the benchmark or if it is in line with it or if it is making even better results. But in general what it is about is understand the strategy because for example many traders do have some drawdown threshold and if the strategy is getting below the drawdown, you just switch it off. Honestly, I think it's nonsense, it could be used if you really don't or if you start with algorithmic trading then you should have such a threshold But if you build your strategy with so called idea first approach, which means that you know in which phases the strategy should deliver results then for example, you know that if again, we are trading trend long strategy and the market is in some prolonged period, when there is no long trend, it is normal that the strategy can go through deeper drawdowns than in a backtest and it's perfectly normal. What will be problem if the strategy will start delivering deeper drawdowns in the growing market for example. So yeah, not sure if I answered your question but it's more about understanding the solution, having the benchmark, benchmark is super important, you should always have some kind of benchmark to compare it with and then it is about also metrics like expectancy and these really hard metrics but these are not the most important ones, more important is to understand what the strategy is doing compared to the market. Richard Moglen [54:37](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3277s): No, think that did answer my question, so thank you. So this next question I really like to ask pretty much everybody who I get the chance to interview, discretionary traders or people who I've talked to, but I think it's a really interesting one and I'm definitely interested in hearing your guys approach for this. The question is, how do you define and also manage risk in the markets? Pavel Kýček [55:02](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3302s): Yeah, that's great question. That's Yeah, one of yeah, that's one of those questions that we could probably talk about that are the two Yeah. But okay, so firstly, we have to define what's risk in general, what's risk in the asset that you are trading. For example, in crypto, there are some risks that are not anywhere else on any other asset or at least they are minimized like risk of having some allocation on crypto exchange. That's one of the biggest ones. On the other side, what I'm saying that once all the risks will be covered, the opportunity will be much lower. So let's define some risk. First is crypto exchange, another one that you are overexposed to one coin that will go to zero overnight without any liquidity. In crypto, it could happen. Another one is just risk of huge movement during a highly volatile environment and you would be over leveraged, let's say. So once you have all these risks, let's say specified, you can start covering them. Risk of crypto exchange, you can trade on many different solutions or many different exchanges and spread the risk a bit. Risk of too big allocation, well, trade portfolio of many strategies. And for example, what I didn't mention that every strategy that I even showed you is trading between 10 to 20 positions. So at the end of the day, every single position has allocation between one to three percent maximum, so without leverage. So again, the risk is reduced quite a lot. And the risk of, let's say, being too overexposed in very sharp movement, let's say to the short side, these minus 30% days they can happen in crypto. Those are for example, in our solution covered again by portfolio approach that way, that we do trade breakout shorts, again, against our trend long strategies. So we can get to drawdowns on trend long strategies. And we don't need to use stop losses, which is quite a big topic that not well, depends on the asset and leverage that you trade. But the fact is that purely by stats, stop losses are making your performance worse. Usually if you make such a test that if you would use stop loss and you get out or on the stop loss or you get out at the close of the bar if the stop loss is triggered, you always or almost always get better results without having this fixed stop. Why? Because of intraday mean reversion characteristics of the market, but of course, if you do trade with leverage, you always have to have your stop loss in the market. But I'm just saying that many traders are just reusing the same tools without proper research. Yeah. Richard Moglen [58:27](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3507s): I think that's an excellent answer to the question. So thank you. Thank you. I think that's great. The next question, it's it's also one I'm sure we could talk about for four hours, but maybe just from a high level, say my my question is basically coming up with a new strategy. So maybe we could pick a trend long, for example. What would be the first steps when designing a new strategy when coming up with an idea that you guys would take to define the strategy as well as test immediately if it's viable and something that should be pursued further? Pavel Kýček [59:07](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3547s): That's another great question. Well, if I should give general recommendations, know, let's keep it like a high level I would recommend going with research first, don't try to find something just by putting indicators in your backtesting platform and trying to find some positive results on the past data, because those strategies will highly probably lose over the long term. So let's start with some research or with books, some very old ideas from traders from 1980s, 1990s many of them still work pretty nicely. So do take advantage of it, we do have many strategies in the portfolio that have some roots in these old strategies. Of course, you would need to make some tweaks. The tweaks are usually based on the asset you are trading. For example, let's reuse the idea of trend catcher. This is basically basic trend following strategy that is based on moving average 50. You just enter if the asset is above close if it is below. It's working on many assets. Crypto is quicker. So by logic it makes sense to go with a period slightly lower to let's say moving average 20. And that's it, that's the idea and the idea should be always based on some logical base like trend and mean reversion. Momentum, breakout, mean reversion. These are the three ideas that you should always build your strategies on. Never try to build strategy based on your discretionary approach. This is probably the worst way how to build strategy is I was there too, that we are trading discretionary and you just put all the indicators or all the price action into some code, this is usually not working, you really should push it to very simple code and then you have to start making many, many, many robustness checks. For us what it means is that we are trading on the daily data, so we will build our own daily data based on offsets. It means that we are making our own 24 daily candles basically on every other hour, it's advanced but what you can do is that you can start making these robustness checks on eight hours, twelve hours. Don't go to much lower time frames, because then the logics don't have to work just again, by logic, because the lower you go with your trading approach or trading strategy, the more the market tends to mean revert. Maybe my biggest and that's the last idea I would recommend is start with research first, and start with testing models without trying to find viable trading strategy because through basic models, trend ones, mean reversion ones, you can really understand the market and what it is doing and just then you can start building viable trading strategies because without understanding the market, it's pretty high probability that you will fail over the long term. Richard Moglen [1:02:56](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3776s): I think the simplicity equals robustness slide that you went through, that's a really key point. That's very important. Pavel Kýček [1:03:07](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3787s): Like start with sound idea, momentum breakout, mean reversion, keep as little conditions as possible. Some of our strategies do have just two conditions. For example, the whole strategy is two conditions only and it's performing, it's delivering profits. So as little conditions as possible and then run robustness checks based on yeah, robustness checks we could go over robustness testing probably over many hours so. Richard Moglen [1:03:38](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3818s): No, that's great from a high level and it's super cool to me how even combining two different strategies, a trend with a mean reversion or a trend short with a trend trend long, you can combine their individual metrics and it yields just completely different results that combine this. So that's super cool to me just as a concept. But but first, that might that might be going off track a little bit. But first, one of the questions I had was, what once you've got an individual strategy, what are some key metrics that you guys look at? And also, there any data visualizations that help you analyze a strategy and see if it has merit, see if it should be explored further and to add to a bucket of trend strategies and then eventually to the overall portfolio construction? Pavel Kýček [1:04:29](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=3869s): Yeah, great question. Another one, so for me, one of the most important metrics is expectancy or average trade. Why? Because the higher the expectancy, the higher basically the pillow or the more exactly potential profits you have before your strategy will start in like reducing profits because of slippage, because of fees and so on. So definitely expectancy for some it is sharp ratio. For us, it is not that important because if you, for example, focus on Sharpe ratio, you would have to immediately exclude trend following strategies, but these are the most robust ones. So it really depends, because I do understand why Sharpe ratio is like industry standard and many institutional clients want to trade the high Sharpe portfolios because these deliver more stable results and for many it is important but I wouldn't say that for retail trader it is the most important ones. So expectancy and then I would think that it is more about why you build your trading strategy, because if you build your trading strategy for the purpose of being the part of the portfolio, it's slightly different than if you just build single strategy. Let's say that we have our TrendCatcher Long, which is catching long trends basically and let's think what's the other strategy that would give us profits in very different market conditions. Right. Biologic trend, something that is making money on short trends, right? So then you start seeking for strategies that are able to deliver profits in these conditions and I don't care that much about single parameters if the expectancy is high enough, that's very important. Expectancy is very, very, very important for me. And once you have these two in the portfolio, then again, what's another strategy that is giving you the most benefits for the whole portfolio? So once you start building portfolios, the game is changing a bit and you are not going over the single parameters. Of course, it has to have some basic parameters to be able to deliver profits over the long term, but then it is more about market phases when the strategy is able to help the whole portfolio. Richard Moglen [1:07:29](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4049s): Yeah. And just to kind of as a clarifying question and to make sure I'm understanding you, say you have a trend strategy that's acting well. Actually, we've got kind of examples on the screen here that the yellow one here during the period kind of in the middle, it's pretty much going flat Yeah. Or or declining. You would look to find a strategy that during that same period, those same kind of conditions, market conditions, market regime a strategy that complements that is actually increasing during those periods. And then when the trend strategy is increasing, it's uncorrelated and not pulling back during that same period. Yeah. Exactly. That's exactly the explanation. Pavel Kýček [1:08:10](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4090s): You are basically just trying to put together uncorrelated strategies. Basically the correlation coefficient is something every trader, especially algorithmic one should think about a lot and should understand very deeply and should start thinking about it because thanks to uncorrelation, you can see that trend strategies are losing here, mean reversion strategies are making some money. Why? Because the whole market was going sideways, it was basically going up, down, up, down. In this environment, it's not possible to make money with trend strategies, but it is possible to make money with mean reversion strategies. It still means that you will have drawdowns, but those drawdowns, the length of the drawdowns are reduced by yeah, many axes compared to single strategy trading. Richard Moglen [1:09:06](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4146s): Yeah. Excellent. And this is gonna be a tough question as well. So sorry in advance, but it's a fun topic to talk about. It's it's kind of easy to wrap your head around when trading to just using two strategies and allocating capital between them when the rule the code that switches one on, the other one is off. But when you're combining a mean reversion with a trend and all that, from a high level, how are you guys thinking about allocating capital to make sure that the combined performance is as best it can be? What what do you guys do to think about that? How to allocate how much of your portfolio to one strategy versus another when they've got kind of vastly different rules that turn them on and off? That's another great question. Pavel Kýček [1:09:56](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4196s): There are few key things that you have to think about if you put together the weights of single strategy in the portfolio. One is correlation again, it means if you have two strategies into the portfolio, and those two strategies are a bit or even more correlated and you still want to keep them in the portfolio because of some reason, Naturally, you should push the weight of these two strategies lower because they will tend to deliver drawdowns in the same periods and that's something you want to get rid of. So that's one thing. Another one is volatility. Generally speaking, the more volatile the strategy, the less the weight in the whole portfolio should be. And the third one is how your portfolio or when your portfolio should make profit or should make profits the most. For example, here you can see that even though mean reversion strategies are making money, the whole portfolio is still in a drawdown. Why? Because we put slightly higher weight to trend strategies compared to mean reversion strategies, because crypto is trending asset basically. You want to extract profits from trends mainly and you want to use mean reversion strategies as stabilizers of the whole portfolio. But we have even clients who want to trade mean reversion only or want to trade like only short term breakout strategies and mean reversions to keep the stability higher. So then I would say that it is also about clients needs or traders needs, let's keep it this way and think about what do I trust more, what are the main characteristics of the asset I trade and what's the volatility I want to get from my trading solution. So it's hard to give like very very simple answer to it because it's really really more more advanced but yeah volatility correlation and the output of the portfolio is the key things that you should think about if you are playing with weights of the portfolio. Richard Moglen [1:12:34](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4354s): No, I think that's a good answer. And I also wanted to ask just because this might be useful for some people watching, Talking about your personal story, how did you first get into algorithmic trading? Did you start discretionary and then kind of make the switch? Yeah. And what what was that kind of process, all like? Pavel Kýček [1:12:54](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4374s): Yeah. As you said, I started as typical retail traders, so it was really through discretionary trading. I was trading on the start like price action formations, I was losing money for some years, then I made the switch to, I would call it semi systematic approach in the sense that I was measuring market movements of stock indexes, NASDAQ one hundred was the most tradable ones. And I was trading basically mean reversion strategies on three to one minutes time frames if the market was overextended and I was using level two data for it. So that was the first time I started being profitable, it was after quite quite a few years and yeah, it was working next to it, I was working on I would call it systematic investing through these simple rotational strategies on stocks and on ETFs. And like nine years ago, I started making the switch and I finished the switch after my daughter was born like eight plus year ago because honestly, discretionary trading is super psychologically demanding at least for me, but as I could see on many of my former trading colleagues, most of them made a switch to algorithmic trading too because yeah, it's hard even especially if you are like pushing the capital, you probably even want to start trading other people money at some level and then the game is on another level from the psychological point of view. Richard Moglen [1:14:59](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4499s): Yeah and I'm kind of curious as well, what is a typical day look like for you in terms of what you're doing day to day because the models are doing its thing, how much are you researching, analyzing real time inputs, what was maybe kind of walk us through a typical day and what you're doing to improve the overall portfolio? Pavel Kýček [1:15:21](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4521s): Yeah, well, so right now the crypto trading, what we do at Robuxio, it's fully automated. It's not on my stock portfolios. This is semi automated in the terms that I do run my scanners, I do get these entries exits, and just send it to Interactive Brokers one per day. So the trading part is really covered very, very simply thanks to our trading backend. But honestly, being completely honest, I wouldn't be able to build the trading back end by myself because it took the whole team two years and we are still building it. So I think, sorry it's not completely your question, but one of the advices or recommendations I would give is if you want to start with algorithmic trading, don't try to automate everything because the automation that should be the last step and it's by far the most demanding ones because you have to understand strategies and then you really have to properly understand the code and that's really not simple. So yeah, back to my trading day, it's more about research, it's about going through some research studies, going through Twitter too because you get some good ideas there and work on my trading models and just testing, reading and then also what I do right now is having a lot of contacts with institutional investors and also retail clients because they are firstly our clients of course, so I want to be in touch then but secondly, I try to understand what should be the ideal portfolio for them because if you don't trade such a portfolio that you are able to stick to as a retail trader or as an institutional trader doesn't matter at the end of the day then you simply won't stick to it over the long term and just over the long term, the statistics are playing out and we can make money over the short term, it's just pure luck. So yeah, it's really it's about testing, reading, testing Richard Moglen [1:17:52](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4672s): and talking to clients. That's my whole day these days. Yeah, perfect. And this this next question is kind of coming back to the training strategy a little bit, so sorry for jumping around. But say you've got a particular strategy or a group of trend strategies that are underperforming the benchmark based on what you guys have set. What are the steps you guys take to try to see what's going on and see what improvements you can make? Pavel Kýček [1:18:18](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4698s): Yeah, so what's important to say is that we are trading from the daily data, So if it is underperforming for a month, it doesn't mean anything basically. We are talking about waters here of underperformance. So if I see such an underperformance, I start thinking about why and if it is something that is still within the trading model or not. If it is not, I can just switch it, I can just start using different trading strategy and if I fit or what I can do is that I will add similar strategy and I put the weight of the worse or the one that is underperforming, I put the weight slightly lower and put the other one next to the old one with again smaller weight and I'm just looking at both of them. So I think that fixed thresholds are good for the start but once you really start understanding the market and your strategies, it is more about managing them on the month to month basis or quarter to quarter basis and you really have enough time to think about the whole solution, that's another reason why I want to trade from dailies and it is that you have a lot of time to think, to make your research, to make some changes if it is necessary but I'm not making changes very often these days like one strategy a year. We are adding strategies to the portfolio as the research is continuing, we are always having some strategies in incubation and adding them to the portfolios if they are putting some uncorrelated benefit to the portfolio, that's something we always do because the more strategies the better, but I'm not switching off strategies that often. Richard Moglen [1:20:40](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4840s): Yeah, and for thinking of somebody watching this who maybe wants to dive deeper into this based on what they learned today, what resources would you kind of point them towards? What resources did you find helpful personally in learning more about how to do this, construct portfolios, test strategies? What would be maybe some books or other types of resources that you would point them towards? Pavel Kýček [1:21:05](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4865s): Yeah, in general, I would start on Twitter, I would start finding or searching for algorithmic traders with some performance that are measurable like Nick Radge would be a good start that I would definitely recommend or Laurens Bensdorp could be a good start too. So these are the guys I would start with and then it is really more about going through research papers. Just start researching in Google momentum breakout model, mean reversion model research paper, that simply and yeah, honestly that's not the most exciting part of trading but usually algorithmic trading is all about research and the better you make your research, the higher the probability that you will make profits in the future. You should love it, otherwise you won't stick to it. Richard Moglen [1:22:18](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4938s): Everybody just wanted the shortcut there that you're gonna give them and instead you said go read research papers, but that's where putting in the work makes a difference. Pavel Kýček [1:22:27](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4947s): Yeah, of course, it's a lot of work for sure. Yeah, Richard Moglen [1:22:31](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4951s): Excellent. I really, really enjoyed this. Thank you so much for your time. Just one last question. If you had to give advice to people watching this, it could be trading wise, could be life wise, systematic trading wise, discretionary wise, what would you kind of, say to everybody as kind of one last parting message? Pavel Kýček [1:22:51](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=4971s): Okay, avoid one mistake that is connected to trading and it is don't start trading, I mean with your money, real money before you understand the markets, that's the key. You have to understand what the market is making on lower time frames that it has like mean reversion characteristics, you have to understand what forex market is doing, what commodity markets are doing, what stocks are doing, what crypto is doing and once you really understand the main probabilities through simple models, through research doesn't matter, just then start thinking about trading. Don't skip this phase because otherwise you just don't know what you are doing in the markets. Richard Moglen [1:23:47](https://www.youtube.com/watch?v=eiyaQdM-rgA&t=5027s): Yeah, excellent. Yeah, this has been really great. Thank you again for your time for putting this together. I think everybody watching it, it should have enjoyed it and got a lot of golden nuggets out of it. Even if you're not planning on, setting up algorithmic trading, there's a lot of truths here that apply to designing one one system, one strategy, one discretionary system. So, Pavel, thank you very much for your time. Please, everybody in the chat, say say thank you to Pavel. And, yeah, thanks so much. If you guys are enjoying this, go ahead and leave a like down below. Subscribe to the channel. [← All Pavel's interviews](https://robuxio.com/education/interviews) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Worked examples in crypto, principles universal. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Algorithmic Crypto Trading Master systematic trading from the ground up. Each part builds on the last. The principles carry across markets; the worked examples use crypto. [Back to Overview](https://robuxio.com/education) ## Algorithmic Crypto Trading Master systematic trading from the ground up. Each part builds on the last, taking you from fundamentals to advanced strategies. The principles carry across markets; the worked examples use crypto. [Start from Part 1](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling) [1 Algorithmic Crypto Trading I: Trading vs. Hodling Part 1 of 16. How a simple 50-day moving average beats buy-and-hold Bitcoin by 5x. The foundations series opens with the case for systematic trading.](https://robuxio.com/education/algorithmic-crypto-trading-i-trading-vs-hodling)[2 Algorithmic Crypto Trading II: Volatility Is the Edge Part 2 of 16. Why crypto's volatility is a structural edge for systematic strategies, not a risk to avoid. The opportunity passive allocation misses.](https://robuxio.com/education/algorithmic-crypto-trading-ii-volatility)[3 Algorithmic Crypto Trading III: Trading Approaches Part 3 of 16. The three core systematic approaches: trend following, mean reversion, and breakout trading. What each captures, where each breaks down.](https://robuxio.com/education/algorithmic-crypto-trading-iii-trading-approaches)[4 Algorithmic Crypto Trading IV: Trend Following Part 4 of 16. The foundations of trend following: how to identify, enter, ride and exit trends systematically in crypto markets. With worked examples.](https://robuxio.com/education/algorithmic-crypto-trading-iv-trend-following)[5 Algorithmic Crypto Trading V: Mean Reversion Part 5 of 16. Mean reversion in crypto: when prices stretch beyond fair value, the conditions that signal a reversion trade, and the systematic rules.](https://robuxio.com/education/algorithmic-crypto-trading-v-mean-reversion)[6 Algorithmic Crypto Trading VI: Breakout Trading Part 6 of 16. Breakout trading systematically: identifying high-quality price breaks, position sizing the entry, and avoiding the false-breakout trap.](https://robuxio.com/education/algorithmic-crypto-trading-vi-breakout-trading)[7 Algorithmic Crypto Trading VII: Regime Filter Part 7 of 16. Regime filters: how to systematically detect bull, bear, and sideways markets and switch between trend-following and mean-reversion.](https://robuxio.com/education/algorithmic-crypto-trading-vii-regime-filter)[8 Algorithmic Crypto Trading VIII: Risk of Ruin Part 8 of 16. Risk of ruin: the math behind drawdown survivability, why position sizing matters more than win rate, and how to never blow up.](https://robuxio.com/education/algorithmic-crypto-trading-viii-risk-of-ruin)[9 Algorithmic Crypto Trading IX: Martingale vs. Anti-Martingale Part 9 of 16. Martingale vs anti-martingale position sizing: why pyramiding into winners (not losers) is the right systematic playbook.](https://robuxio.com/education/algorithmic-crypto-trading-ix-martingale-vs-anti-martingale)[10 Algorithmic Crypto Trading X: Trading Biases Part 10 of 16. The biases that ruin backtests: survivorship, hindsight, look-ahead, curve-fitting, and how to design systematic strategies without them.](https://robuxio.com/education/algorithmic-crypto-trading-x-trading-biases)[11 Algorithmic Crypto Trading XI: Position Sizing Part 11 of 16. Position sizing in systematic trading: fixed-fractional, volatility-targeted, and inverse-volatility methods compared with worked examples.](https://robuxio.com/education/algorithmic-crypto-trading-xi-position-sizing)[12 Algorithmic Crypto Trading XII: Building a Profitable Strategy Part 12 of 16. Building a systematic crypto strategy from idea to fixed rules: the design process beyond indicator stacking and overfitting.](https://robuxio.com/education/algorithmic-crypto-trading-xii-building-a-profitable-crypto-trading-strategy)[13 Algorithmic Crypto Trading XIII: Robustness Testing Part 13 of 16. Robustness testing for systematic strategies: walk-forward, parameter sensitivity, out-of-sample validation, and the criteria for survival.](https://robuxio.com/education/algorithmic-crypto-trading-xiii-robustness-testing)[14 Algorithmic Crypto Trading XIV: Portfolio Construction Part 14 of 16. Combining systematic strategies into a portfolio: correlation analysis, capital allocation, and rebalancing for stable compound returns.](https://robuxio.com/education/algorithmic-crypto-trading-xiv-portfolio)[15 Algorithmic Crypto Trading XV: Drawdowns Part 15 of 16. Drawdowns as a structural feature of systematic trading: depth, duration, and the math of recovery that allocators need to understand.](https://robuxio.com/education/algorithmic-crypto-trading-xv-drawdowns)[16 Algorithmic Crypto Trading XVI: The Power of Compounding Part 16 of 16. Why compounding rewards lower volatility, and how the math of geometric returns penalises drawdowns more than equal gains compensate.](https://robuxio.com/education/algorithmic-crypto-trading-xvi-compound) --- # Algorithmic Equity Trading — Multi-Sleeve Portfolio Source: https://robuxio.com/equities Markdown: https://robuxio.com/equities.md A multi-sleeve systematic equity portfolio combining momentum, mean reversion and tactical allocation. Regime-aware risk control instead of passive index beta. --- [Replay Watch the Equities Launch Call Watch now](https://robuxio.com/equities/launch-call) [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Systematic Equity Portfolio # The All-Weather Equities Solution An all-weather systematic equity portfolio designed to deliver strong returns with lower drawdowns, accessible to institutional and individual investors through your existing broker. [Learn More](https://robuxio.com/equities/launch-call) Request Factsheet ## 1. Performance Cumulative equity growth vs. SPY (S&P 500) and a classic 60/40 portfolio. 24.5% CAGR (NAV) 1.98 Sharpe Ratio -6.4% Max Drawdown 11.5% Ann. Volatility 68.8% % Positive Months Net of fees. Updated: 2026-06-30 USD EUR All 5Y 3Y 1Y ### Drawdowns ### Summary Statistics Strategy CAGR Sharpe Sortino Max DD Vol Calmar Best Month Worst Month Robuxio EQ (NAV) 24.5% 1.98 3.41 -6.4% 11.5% 3.81 +8.6% -3.1% S&P 500 (SPY) 13.5% 0.83 1.20 -24.5% 17.1% 0.55 +10.5% -9.2% 60/40 Portfolio 8.3% 0.78 1.13 -20.5% 11.0% 0.40 +7.3% -7.2% ## 2. Calendar Returns Annual returns are broken down by year and series. The monthly heatmap provides a visual overview of the distribution of positive and negative months throughout the full history. ### Annual Returns · USD 5Y All Year Robuxio EQ S&P 500 60/40 2026 YTD +8.2% +10.1% +6.2% 2025 +26.1% +17.7% +13.9% 2024 +38.1% +24.9% +15.1% 2023 +18.6% +26.2% +17.8% 2022 +22.3% -18.2% -15.6% 2021 +25.1% +28.7% +15.8% ### Monthly Return Heatmap — Robuxio Equities (NAV) · USD 5Y All Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2026 +2.4% +4.8% -0.5% +2.2% +1.2% -2.1% — — — — — — 2025 +3.7% -0.4% +1.3% +8.1% +2.8% +1.4% +4.1% +1.0% +1.8% +0.1% -0.1% -0.1% 2024 +3.4% +5.5% +2.0% -2.6% +3.8% +1.7% +4.2% +8.0% -0.5% -0.3% +7.6% +0.5% 2023 +2.5% -1.2% +3.7% -0.8% +2.5% +2.6% +3.5% +0.2% -1.7% -1.2% +6.5% +1.1% 2022 +0.9% +5.5% +4.8% +1.1% +8.6% -0.9% +1.2% -0.8% -2.5% +6.7% -1.9% -1.7% 2021 +1.8% +2.2% +3.0% +3.8% +2.4% -0.4% +2.7% +2.2% -3.1% +6.9% +0.5% +0.8% [Reports Read the full performance reports Quarterly and monthly reports with NAV returns, drawdowns, volatility, and rolling correlation vs the S&P 500. View all reports View](https://robuxio.com/equities/reports) ## 3. Investment Rationale Why Robuxio Equities was built, and why the structural market inefficiencies it targets are durable. ### The Long-Only Problem Traditional long-only equity portfolios are fully exposed to market beta. In bear markets, diversification across sectors or factors provides little protection, as assets tend to become highly correlated in panics. This leads to large, prolonged drawdowns that destroy compounding. ### Market-Neutral Underperformance Pure market-neutral strategies avoid beta entirely but sacrifice meaningful equity participation in bull markets. This often produces risk-adjusted returns below long-term equity benchmarks. ### Calibrated Beta + Alpha Six sleeves operate on orthogonal return drivers: mean reversion, momentum, trend following, tactical allocation, and crisis hedging. Systematic beta calibration captures equity upside while limiting drawdowns. ### Capital Efficiency Substantially higher return-per-unit-of-drawdown (Calmar) and return-per-unit-of-volatility (Sharpe) than passive equity. More upside for each unit of risk. #### Capital Efficiency — Three Return Streams, One Allocation ##### Traditional Approach - Passive equity index — captures equity risk premium - Market-neutral / alpha fund — diversified returns - Tail-hedge overlay — drawdown protection Three allocations. Three fee layers. Three capital commitments. vs vs ##### Robuxio Equities - Structural long equity bias provides the beta - Short-term alpha strategies run alongside it - Crisis hedging activates within the same risk budget One capital base. One fee layer. One allocation decision. ## 4. Portfolio Construction Six independently operated systematic strategies assembled under a common risk framework. Each sleeve targets a distinct return driver. Sleeve Alpha Source Holding Role in Portfolio Details Equity Mean Reversion Short-term price reversals in liquid equities 1–5 days Core return engine, uncorrelated with trend Signals: 5 signal families · ~30 strategies · 1–5 days Holding Time: 1–5 days Universe: US index ETFs, bond ETFs, sector ETFs, S&P 500 stocks Buys short-term oversold conditions across equities and bonds, with longer-term trend filters designed to avoid adverse trend exposure. Markets regularly overshoot during sentiment-driven or forced-selling episodes, this sleeve systematically identifies those dislocations and seeks to capture the subsequent mean reversion. Equity Momentum Intermediate cross-sectional momentum 1–3 months Participates in sustained equity rallies Tactical Allocation Dynamic sector and factor rotation 1–4 weeks Adapts beta exposure to regime signals Real Assets Trend Trend following in commodities and inflation assets 1–3 months Inflation and commodity diversification Short-Term Tactical Fast intraday and overnight signals Hours to 1 day Diversifies away from multi-day risk, boosts Sharpe Crisis Hedging Tail risk and convex payoff structures Dynamic Left-tail protection, activates in stress periods ### Cumulative PnL by Sleeve All 5Y 3Y 1Y #### Balanced Sleeve Allocation Sleeve weights are calibrated so that each component contributes meaningfully across all market regimes. No single strategy is allowed to dominate, as the allocation reflects long-term robustness rather than recent results. ## 5. Strategy Development & Validation Every strategy must pass the same three-stage selection process before entering the portfolio, with live performance used to validate backtested results. ### Logic-First Design Every strategy begins with a clear hypothesis, a reason why the pattern exists and why it should persist. No data mining without an underlying rationale. ### Out-of-Sample Testing Performance confirmed on unseen holdout periods. Walk-forward analysis across rolling windows. Strategies that fail out-of-sample are discarded. ### Live Track Record The majority of signal families have been traded live for at least a year. Live experience informs execution quality, liquidity behavior, and real-world dynamics. ## 6. Market Regime Analysis Portfolio behaviour across distinct market regimes, including crashes, rallies, and prolonged bear markets. The portfolio is designed for uncertain environments, where broad diversification across strategies, instruments, and return drivers is intended to provide resilience. Rather than relying on a single market regime, it is built to adapt to changing conditions and maintain a more balanced return profile when volatility rises, market leadership narrows, or directional conviction is limited. COVID-19 Stress & Recovery Q4 2018 Selloff 2022 Bear Market 2020–2021 Bull Market Crisis hedging activated as markets collapsed. Mean reversion and short-term strategies thrived in extreme volatility. Portfolio recovered rapidly. Choppy / Range-Bound Mean reversion and short-term tactical strategies are designed to generate returns in directionless markets, where long-only ETF exposure does not. Strong Uptrend Momentum and tactical allocation lead. Crisis hedging stays dormant. The portfolio participates meaningfully in the rally while preserving downside optionality. Corrections & Drawdowns Crisis hedging activates. Long volatility, short vulnerable sectors. Mean reversion enters its most productive period as markets overshoot. Prolonged Bear Capital preservation mode. Active hedging, reduced long exposure, continued short-term alpha. Drawdowns kept to a fraction of the broader market's decline. Regime Transitions The multi-horizon structure adapts progressively. Short-term strategies within days, tactical within weeks, trend within months. ## 7. Risk Management The most dangerous risks are the ones the historical data can't show. Risk control is embedded at every level of portfolio construction — built for robustness across regimes, not for the best backtest. ### Structural Risk Controls - Maximum per-position size limits across all sleeves - Dynamic portfolio-level beta cap - Crisis Hedging sleeve operates continuously - Daily P&L monitoring with automated alerts ### Realistic Expectations - Does not guarantee outperformance every year - SPY may outperform in strong directional bull markets - Value proposition is the full cycle: 3+ years - Regime shifts may cause temporary underperformance ## 8. ETI — The Investment Vehicle The portfolio is available in a regulated, exchange-traded format listed on the Stuttgart Stock Exchange (EUWAX), providing ETF-like access to the strategy through a listed security issued under an FMA-approved base prospectus. Product Overview · Robuxio Systematic Equities ETI ISIN DE000AMC0DZ1 Exchange Börse Stuttgart (EUWAX) Regulator FMA Liechtenstein Issuer iMaps ETI AG Note Trustee Noteholder Services PTC (Intertrust Group) Settlement Clearstream, Euroclear, SIX Execution & custody Interactive Brokers (direct market access) Automation Fully automated, real-time risk monitoring WKN AMC0DZ Prospectus EU Prospectus Regulation, passported into EU/EEA UCITS eligible Yes, qualifying structured note Asset segregation Segregated Portfolio, ring-fenced from issuer Mgmt. fee 2% p.a., accrued and settled quarterly Performance fee 20% on new net profits, high-water mark Bid-ask spread ~2%, quoted by market maker Performance (NAV) Net of all fees, as shown on this page [View live listing on Börse Stuttgart](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) [How it's structured See the full ETI structure, issuer to settlement A full structural map of the vehicle: iMaps ETI AG as issuer, ring-fenced assets, IBKR custody, the EUWAX listing, and settlement. View the structure](https://robuxio.com/equities/structure) ## 9. How to Invest Investing in the Robuxio Equities ETI is as simple as buying a stock or ETF through your existing brokerage account. 1 ### Open a brokerage account Use any broker that provides access to the Stuttgart Stock Exchange (EUWAX). Interactive Brokers, or any bank or broker with exchange connectivity. 2 ### Search by ISIN Look up the ETI using its ISIN DE000AMC0DZ1 (WKN: AMC0DZ). On some platforms the ISIN only appears in a specific search tab — our step-by-step guide shows exactly where. 3 ### Place a limit buy order Submit a limit order at the ask shown on the Börse Stuttgart listing, during trading hours (09:00–17:30 CET). Limit orders execute at the quoted price; larger orders may take a few minutes while the market maker replenishes units. 4 ### Settlement & custody Your position settles like any listed security and appears in your existing depot. No separate onboarding with iMaps or Robuxio required. 5 ### Exit anytime Simply sell on the exchange. Daily liquidity is provided by the EUWAX market maker. Fully transferable between custodians. [Step-by-step guide How to buy the ETI on Interactive Brokers Trading permissions, EUR funding, and placing your first order — with screenshots of every click. Open the guide](https://robuxio.com/equities/how-to-buy)[Launch Call replay Watch the full Equities Launch Call The strategy, all six sleeves, risk management, and how to get access — recorded live on July 16. Watch the replay](https://robuxio.com/equities/launch-call) #### Supported Brokers - Interactive Brokers — global access, low commissions - LYNX — LYNX+ and TWS - UBS, Deutsche Bank — full-service private banking - Any bank or broker with Stuttgart connectivity ISIN not available at your broker? Ask their support — many can still offer it. #### Key Details - ISIN: DE000AMC0DZ1 - WKN: AMC0DZ - Minimum: 1 unit (~€1,000) - Eligibility: Retail and professional investors (jurisdiction dependent) - Trading hours: 09:00–17:30 CET - NAV: Published daily - OTC: Available for larger allocations - KID: Available for full risk disclosure Keep exploring ## Want to dig deeper? Pick a starting point. The playbook walks through the strategy, the reports show what the live portfolio is doing, and the data is downloadable for your own analysis. [7 parts The Equities Playbook The systematic equities framework in seven readable parts. Read the playbook →](https://robuxio.com/education/equities-playbook-the-cost-of-passive-equity-exposure)[Monthly & quarterly Performance reports Live portfolio reporting with S&P 500 comparisons. View reports →](https://robuxio.com/equities/reports)[Downloads Portfolio data Factsheets and daily returns — CSV, PDF, or JSON. Open data →](https://robuxio.com/data) Or, if you've seen enough, [book a call](https://robuxio.com/call) with the team. For informational purposes only. This is not investment advice or an offer to invest. Past performance is not indicative of future results. All investments involve risk, including possible loss of capital. Full product documentation and risk disclosures will be provided prior to launch. [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/equities.md) --- # Buy the Robuxio Equities ETI (ISIN & IBKR Guide) Source: https://robuxio.com/equities/how-to-buy Markdown: https://robuxio.com/equities/how-to-buy.md Buy the Robuxio Systematic ETI (ISIN DE000AMC0DZ1) on Interactive Brokers step by step (trading permissions, EUR funding, and your first limit order). --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # How to Buy the Robuxio Equities ETI Buy the exchange-listed iMaps Robuxio Systematic ETI (ISIN DE000AMC0DZ1) through Interactive Brokers, about 15 minutes from login to a working order. [Equities](https://robuxio.com/equities) / How to Buy [Back](https://robuxio.com/equities) ## The instrument you are buying [View live listing on Börse Stuttgart](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) Product iMaps Robuxio Systematic ETI ISIN DE000AMC0DZ1 WKN AMC0DZ IBKR symbol AMC0FG Exchange Börse Stuttgart (EUWAX) Currency EUR Minimum 1 unit (~€1,000) Trading hours 09:00–17:30 CET Maturity Open end ### Before you start You need an Interactive Brokers account . Any other broker with access to Börse Stuttgart (EUWAX) works too (search the ISIN, place a limit order), but this guide shows the exact clicks at IBKR: the one-time account setup happens in the Client Portal (web), and the order itself goes through Trader Workstation (TWS) on desktop or the IBKR mobile app (pick your platform with the toggle in Part 2). Every screenshot was taken on a fresh, newly opened IBKR account, so what you see should match your screen. Reported working on LYNX as well (LYNX+ and TWS). If the instrument isn't enabled for your account, write LYNX support to open it up (you may need to pass a short knowledge test first). That goes for other brokers too: if the ISIN isn't available, ask their support. Many can still offer it. The ETI is a listed security under an FMA-approved base prospectus with a PRIIPs KID, so it is available to retail and professional investors across the EU/EEA and many other jurisdictions. Availability always depends on your broker and country of residence. ## Part 1: Account Setup (Client Portal) One-time setup: trading permissions and EUR funding. ### Log in to IBKR Client Portal Sign in at [portal.interactivebrokers.com](https://portal.interactivebrokers.com/). If you don't have an account yet, you can open one at the same address. 1 ![IBKR Client Portal dashboard after login, showing the account balance and top navigation](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-01-dashboard.png&w=3840&q=75) ### Open Settings Click the person icon in the top-right corner and choose Settings . 2 ![IBKR Client Portal profile menu opened from the top-right person icon, with Settings highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-02-open-settings.png&w=3840&q=75) ### Go to Trading Permissions On the Settings page, scroll down to the Trading section and click Trading Permissions . 3 ![IBKR Account Settings page with the Trading Permissions entry highlighted in the Trading section](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-03-trading-permissions-menu.png&w=3840&q=75) ### Enable the Right Permissions The ETI is a German exchange-listed certificate, which IBKR files under Warrants . Enable Warrants and Complex or Leveraged Exchange Traded Products (both show a green check once active, as in the screenshot). IBKR may show a short questionnaire about your trading experience. If a permission is still missing when you place the order, the order confirmation names it (you can add it from that prompt too). 4 ![IBKR Trading Permissions grid with Warrants and Complex or Leveraged Exchange Traded Products enabled](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-04-permission-grid.png&w=3840&q=75) ### Have EUR Available The ETI trades in euros. Deposit EUR via Transfer & Pay → Transfer Funds , or convert an existing balance with Convert Currency . One unit currently costs around €1,000. 5 ## Part 2: Placing the Order Pick your platform, Trader Workstation on desktop, or the IBKR mobile app. Desktop (TWS) Mobile App ### Open Trader Workstation Log in to TWS with the same credentials and switch to the Classic TWS tab at the bottom of the window (the simplest layout to follow along with). 6 ![Trader Workstation after login with the Classic TWS tab visible at the bottom of the window](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-01-mosaic.png&w=3840&q=75) ### Enter the ISIN in a Watchlist Row Click an empty watchlist row, type DE000AMC0DZ1 and press Enter. The ETI shows up as AMC0FG, Structured Perpetual CALL (IMAPS, 1, Tracker) AMC0DZ . Don't let the symbol confuse you: AMC0FG is IBKR's own symbol for the instrument; the WKN AMC0DZ appears at the end of the name. Quotes show n/a unless you subscribe to Börse Stuttgart market data. You don't need the subscription, check the live bid/ask for free on the [Börse Stuttgart product page](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) instead. 7 ![Classic TWS watchlist with the ISIN DE000AMC0DZ1 typed into an empty ticker row](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-02-enter-isin.png&w=3840&q=75) ### Click Buy on the Instrument Right-click the instrument row and click the blue BUY button that appears next to the instrument name. A blue order row opens below the instrument. 8 ![TWS right-click context menu on the iMaps Robuxio Systematic ETI row with the Buy action](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-03-buy-menu.png&w=3840&q=75) ### Set Quantity, Order Type and GTC In the order row: enter your quantity (1 unit ≈ €1,000), keep the type at LMT , and set Time in Force to GTC (Good-til-Canceled) so your limit order rests on the exchange until the market maker fills it. (IBKR shows a notice that GTC orders auto-cancel at year-end, fine for our purpose.) 9 ![TWS order row with the Time in Force dropdown open, selecting GTC instead of DAY](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-04-order-row-gtc.png&w=3840&q=75) ### Set the Limit Price Open the [Börse Stuttgart product page](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) and read the current ASK price (that number is your limit). In this example the ask was €1,010, so the limit is 1010 (buying 1 unit means spending at most €1,010). The Destination column should show SWB (Börse Stuttgart). Use a limit order at the ask, not a market order. A limit order executes at the quoted price. Larger orders can take a few extra minutes to complete, the market maker doesn't post unlimited units at once and replenishes the quote until your full order is filled. 10 ![Completed TWS order row: Buy 1 unit, GTC, limit order at 1010 EUR routed to SWB](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-05-limit-price.png&w=3840&q=75) ### Transmit and Override the Market-Data Warning Click Transmit . The order confirmation shows your order details and your post-trade balances. Without a market-data subscription, IBKR adds a warning about submitting an order "without having market data". That's expected (you already checked the live price on Börse Stuttgart), so click Override and Transmit . 11 ![TWS order confirmation for the iMaps Robuxio Systematic ETI showing the order details and the Override and Transmit button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-07-order-confirmation.png&w=3840&q=75) ### Confirm Your Position Your GTC limit order rests on the exchange until the EUWAX market maker fills it (during trading hours that's usually quick). Once filled, the position appears in your Portfolio (in TWS and the Client Portal) and settles like any listed security (no separate onboarding with iMaps or Robuxio needed). Selling works exactly the same way: daily liquidity is provided on the exchange. In our walkthrough the order filled within a minute: "Order Complete: BOT 1 AMC0FG @ 1010.000" (1 unit at €1,010). 12 ![TWS showing the filled order: Order Complete, bought 1 iMaps Robuxio Systematic ETI at 1010 EUR, position 1](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fibkr%2Fibkr-tws-09-order-filled.png&w=3840&q=75) #### Liquidity: what the displayed sizes mean On the Börse Stuttgart page you'll see sizes next to the quote, for example bid €990 × 10 units, ask €1,010 × 49 units. Those are the market maker's currently posted quote sizes, not the total liquidity available . The ETI trades quote-driven: the EUWAX market maker continuously quotes both sides around the portfolio's NAV and simply replenishes the quote when an order consumes it. Larger orders typically complete within minutes, usually without moving the price. Because pricing is anchored to NAV (and the ETI is open-end, so new units can be issued as demand grows), buying size doesn't push the price up the way it would in a thin order-book stock. #### That's it, you're invested Your position tracks the Robuxio Systematic Equities portfolio net of all fees. NAV is published daily, and performance is reported on the [equities page](https://robuxio.com/equities) and in the [monthly reports](https://robuxio.com/equities/reports). Questions before investing? [Book a call](https://robuxio.com/call). For informational purposes only. This is not investment advice or an offer to invest. Past performance is not indicative of future results. All investments involve risk, including possible loss of capital. Availability depends on your jurisdiction and broker; read the base prospectus and KID before investing. Interactive Brokers and LYNX are independent brokers unaffiliated with Robuxio; platform screens shown may change. --- # Robuxio Equities Launch Call: Replay and Recap Source: https://robuxio.com/equities/launch-call Markdown: https://robuxio.com/equities/launch-call.md Watch the full Robuxio Equities launch call and read the recap: six portfolio sleeves, risk management, historical performance, and how to buy the ETI. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Launch Call Replay # Robuxio Equities Launch Call A full walkthrough of the Robuxio Equities ETI: why passive exposure is riskier than it looks, the six portfolio sleeves, risk management, historical performance, and how to get access. Recorded live on July 16, 2026. [Equities](https://robuxio.com/equities) / Launch Call The problem ## The Shortcomings of Traditional Equity Exposure Stocks are historically the most effective way to build long-term wealth, however, there are significant risks: volatility and prolonged drawdowns, and today's starting point makes both worse. ![S&P 500 price-to-earnings ratio from 1872 to today, currently near the top of its long-term range](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsp500-pe-ratio.png&w=1920&q=75) S&P 500 price-to-earnings ratio, 1872 to today. ### Valuations Sit Near Historical Extremes At roughly 27, the S&P 500 P/E ratio is near the top of its range since 1872, a level reached only around the dot-com bubble and a handful of other episodes. Nothing about that forces an immediate correction, but it defines the starting point every passive allocation is buying into. ![Scatter of 20-year forward annual returns from starting P/E levels, showing lower returns from elevated valuations](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fpe-forward-returns.png&w=1920&q=75) 20-year forward annual returns from starting P/E levels. Source: Real Investment Advice. ### Starting Valuation Caps The Next 20 Years Historically, buying the index at valuations like today's has been followed by 20-year forward annual returns averaging around 2% per year, ranging roughly from -0.5% to +2.5%. That is the statistical base rate for passive exposure from here, far below the long-term market average. ![S&P 500 sector weights in late 1999 versus 2025/26, showing similar technology concentration](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsector-concentration.jpg&w=3840&q=75) S&P 500 sector weights, late 1999 vs 2025/26. ### The Index Is More Concentrated Than In 1999 The technology sector is approaching a 30% share of the S&P 500, mirroring its weight at the top of the dot-com bubble, and the top five stocks carry roughly twice the weight they did in 1999. A passive index position is a concentrated bet on one sector and a handful of names. ![SPY price from March 2000 to December 2011, showing eleven years and eight months to recover from the dot-com peak](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fspy-dotcom-recovery.jpg&w=3840&q=75) S&P 500 (SPY), March 2000 to December 2011: 11 years, 8 months to sustained recovery with dividends reinvested. Source: Yahoo Finance via yfinance, SPY adjusted close. ### Drawdowns Can Last More Than A Decade From the March 2000 peak, the S&P 500 took eleven years and eight months to sustain a full recovery, with dividends reinvested. Timing around this is not a realistic answer: the last stage of a bubble tends to be the most aggressive run-up, and statistically, the stronger the run-up, the stronger the decline that follows. The traditional fix, spreading capital across passive equity, market-neutral strategies, a CTA trend program and tail-risk hedging, works on paper but fragments capital and multiplies fees, and no single allocation can reuse the cash sitting in the others. The solution ## One Allocation. Three Return Engines. Robuxio Equities offers three different forms of exposure that would often require multiple different vehicles, in one exchange-traded instrument. This allows every return sleeve to reuse the same capital. ### Adaptive equity beta Participation in favourable equity regimes, scaled up and down as market conditions change. ### Systematic alpha Return from mean reversion and short-term anomalies that do not depend on a rising market. ### Tail hedging Conditional protection that activates during market stress and stays dormant in calm regimes. ![RBX Capital Allocation Approaches: comparing Dynamic Shared Capital, Fixed Demand-Based Allocation, and Fixed Equal Capital Allocation over time with growth and drawdown panels](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Frbx-capital-allocation.png&w=3840&q=75) RBX Capital Allocation Approaches: Dynamic Shared Capital outperforms fixed allocation methods by allowing capital to move freely between strategies. Inside the portfolio ## Six Complementary Portfolio Sleeves Each sleeve is a diversified portfolio of its own. Across all six, the portfolio runs roughly 50 signal families (individual trading ideas), each further diversified through different exits and parameter variations into nearly 200 leaf strategies. Sleeve exposures are dynamic rather than fixed: by average gross exposure, tactical allocation is the largest at roughly 34%, followed by equity momentum (23%), equity mean reversion (15%), short-term tactical (11%), crisis hedging (9%) and real assets trend (7%), all drawing on one combined capital pool. Crisis hedging stays deliberately small because its convex volatility instruments deliver a large impact from a small allocation. ≈ 50 Signal families 195+ Leaf strategies Hours to months Holding periods ### Cumulative PnL by Sleeve All 5Y 3Y 1Y Cumulative sleeve PnL, normalized to the portfolio at the start of the selected period: different engines contribute at different times. Click a legend entry to show or hide a sleeve. Simulated performance. Past performance is not indicative of future results. Sleeve 1 of 6 ### Equity Mean Reversion Buys short-term oversold conditions, expecting a snap-back within days. Systematically identifies extreme short-term weakness across equities and bonds and buys into it, exploiting the tendency of prices to snap back after aggressive drops. Entry signals are gated by longer-term trend filters to avoid catching falling knives. The sleeve contributes most when volatility is elevated, as in 2020, early 2022 and the 2025 spring selloff. Universe US index ETFs, bond ETFs, sector ETFs, S&P 500 stocks Holding period One to a few days Signal families 5 Leaf strategies ~30 ![Equity Mean Reversion sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-mean-reversion.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Sleeve 2 of 6 ### Equity Momentum Assets that have been rising tend to continue rising. This sleeve catches those trends. Follows intermediate-term price trends and relative strength across indices, sectors and individual stocks using multiple complementary momentum approaches. It is the backbone of the portfolio in rising markets and steps back when momentum leaves the market. Universe US index ETFs, sector ETFs, S&P 500 stocks, large-cap stocks Holding period Days to weeks Signal families 6 Leaf strategies ~15 ![Equity Momentum sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-momentum.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Sleeve 3 of 6 ### Tactical Allocation Widens the lens to the global opportunity set, adding a non-correlated source of returns. Rotates across countries, sectors, factors and asset classes based on momentum, relative strength and volatility regime signals. Includes equity and bond rebalancing, strategies that detect the early stages of recovery after significant drawdowns, and digital asset trend positions. Universe Country ETFs (16 markets), sector ETFs (11), bonds, commodities (gold, silver, oil), emerging markets, value and growth factors, digital assets Holding period Days to months Signal families 10 Leaf strategies ~35 ![Tactical Allocation sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-tactical-allocation.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Sleeve 4 of 6 ### Real Assets Trend A CTA-style trend program on commodities, uncorrelated to stock beta. Trend-following on real assets using breakout and moving average systems, with volatility-targeting overlays to stabilize exposure in volatile commodity regimes. Long sideways stretches are normal for trend-following; the payoff arrives when inflation or commodity volatility kicks in, as it did on gold in 2025. Universe Gold, oil and energy futures ETFs Holding period Weeks to months Signal families 3 Leaf strategies ~5 ![Real Assets Trend sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-real-assets-trend.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Sleeve 5 of 6 ### Short-Term Tactical The largest sleeve by strategy count. The edge is the ensemble, not any single signal. Harvests short-term alpha from relative strength, mean reversion, regime-conditional, calendar and breadth patterns. Roughly 15 distinct signal ideas applied across many instruments and parameter sets. Because positions are held for hours rather than weeks, it does not need big market moves to contribute, which is exactly what carried it through the low-volatility stretches of 2022. Universe US index and sector ETFs, large-caps, emerging market and international ETFs Holding period Sub-day to one day Signal families ~15 Leaf strategies 75+ ![Short-Term Tactical sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-short-term-tactical.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Sleeve 6 of 6 ### Crisis Hedging Insurance that activates only when stress conditions are present. Protective strategies that profit during market stress: long volatility positions, selective equity shorts in weak sectors and overextended rallies, and defensive event positioning. Activated only when elevated volatility, deteriorating breadth or adverse trend structure is detected; dormant during calm markets to minimize cost. Like any insurance, it bleeds slightly in quiet periods and pays off in size when stress arrives. Unlike most tail-hedging programs, no options are used: volatility exposure comes through exchange-traded VIX instruments, so the whole portfolio holds nothing but stocks and ETFs. Universe Volatility instruments, US index ETFs, sector, country and EM ETFs, individual stocks Holding period Days to weeks Signal families ~10 Leaf strategies ~35 ![Crisis Hedging sleeve: Cumulative return vs SPY, January 2018 to June 2026.](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-crisis-hedging.jpg&w=3840&q=75) Cumulative return vs SPY, January 2018 to June 2026. Simulated performance. Past performance is not indicative of future results. Robustness ## Different Engines For Different Regimes The portfolio is not built around one market view. Each regime has a primary return driver, so the question is never whether the market cooperates, but which sleeve carries the load. Market regime Primary engines Intended behaviour Strong bull market Momentum, tactical allocation, equity beta Meaningful upside participation Sideways / choppy Mean reversion, short-term tactical Harvest reversals and dispersion Gradual bear market Crisis hedging, reduced beta Preserve capital Inflationary regime Real assets, tactical allocation Add non-equity return drivers Recovery phase Momentum and recovery signals Re-enter systematically Sudden shock Hedging and portfolio limits Contain damage and adapt ### Low Correlation Between Sleeves The backbone pair, momentum and mean reversion, is barely correlated at 0.16. Real assets trend sits near 0.1 to the equity sleeves, and crisis hedging is negatively correlated to SPY at -0.37, which is exactly the point: it earns when everything else is under pressure. ![Correlation matrix of daily returns between the six sleeves and SPY, showing low cross-correlations and negative correlation of crisis hedging to SPY](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fsleeve-correlation-matrix.png&w=3840&q=75) Correlation of daily sleeve returns. Simulated performance. Risk management ## Strict Risk Management Diversification is the first layer, but sizing and portfolio limits are enforced systematically at every level of the portfolio. - 1 Volatility targeting on the asset, model and sleeve level: more volatile exposures are cut back by sizing. - 2 Maximum exposure per single stock. - 3 Maximum exposure per single ETF. - 4 Maximum exposure per portfolio sleeve, so no single return stream can dominate. - 5 Maximum overall gross and net exposure, plus maximum portfolio leverage. ### Adaptive Market Exposure Net beta-adjusted exposure averages roughly 55% of SPY and flexes with market conditions. Net exposure typically runs between 30 and 90%, with gross exposure around 90 to 100%. Leverage is normally below 1x, with a historical maximum under 1.5x. ![Net beta-adjusted SPY-equivalent portfolio exposure from 2008 to 2026, averaging around 55 percent](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fnet-exposure.png&w=3840&q=75) SPY-equivalent portfolio exposure, 2008 to 2026. Simulated performance. ![Six-month rolling beta and daily-return correlation to SPY, with overall beta 0.33 and correlation 0.56](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Frolling-beta-correlation.png&w=3840&q=75) Adaptive beta based on the strength of market momentum: overall beta to SPY of 0.33, return correlation of 0.56. Six-month rolling values. Simulated performance. Robustness ## Behaviour In Market Drawdowns Across the five largest SPY drawdowns since 2008, portfolio drawdowns stayed shallow, with a correlation to SPY drawdowns of just 0.1. In the COVID crash, momentum took the first hit, then hedging, mean reversion and real assets took over, and the portfolio finished the SPY drawdown window ahead. ![Portfolio downside behaviour during the five largest SPY drawdowns from 2008 to 2026, showing shallow drawdowns and positive returns over most windows](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fdrawdown-behavior.png&w=3840&q=75) Portfolio behaviour in the five largest SPY drawdowns, 2008 to 2026. The green bars show where the portfolio ends over the window of each SPY peak-to-trough decline. Simulated performance. Past performance is not indicative of future results. One honest caveat on the 2008 window: the portfolio was not trading through the global financial crisis, and several of the volatility instruments the crisis-hedging sleeve uses today did not exist yet. The modeled 2008 drawdown is therefore shown without them, even though they would likely have made it shallower, to avoid flattering the backtest with instruments that were not tradable at the time. Getting out of drawdowns quickly, and keeping them shallow, is the actual secret behind long-term compounding: capital that is not deep underwater can compound from a higher base when the recovery starts. Expectations ## Realistic Expectations The portfolio targets roughly 20% CAGR after fees with a maximum drawdown around 15%, with typical drawdowns closer to 10 to 12%. It is built for robustness across the full cycle, but there will be periods, from days to months, where it gives back some of its gains. Environment Potential challenge Sudden shock after calm markets Hedging may activate with a delay Low-volatility drift Fewer short-term opportunities Rapid regime reversal Momentum and hedging may be whipsawed Very strong speculative rally Passive equity may outperform Process ## How Strategies Are Designed Every model starts idea-first: from a documented market edge, often out of published research, so its expected behaviour is known before a single parameter is fit. That expectation is what each strategy is later judged against. ### Robustness testing In-sample and out-of-sample separation, parameter stability tests, and validation across asset classes, instruments and timeframes, including testing equity models on entirely different markets. ### Continuous benchmarking Every strategy group is benchmarked against how it should behave. A momentum model losing money in a strong momentum market is a red flag that gets investigated, not averaged away. ### Managed edge decay Weights are reduced or models retired as edges fade. With nearly 200 leaf strategies, a single decayed model has negligible portfolio impact and is caught by benchmarking long before it would show in results. Performance ## Historical Performance Backtested performance, January 2018 to June 2026, net of modeled costs including fees and slippage, matching the period shown in the chart below. The results mix in-sample and out-of-sample periods: many models carry three to five years of out-of-sample history, and the portfolio's models have been traded live on a seven-figure account since Q3 2024, at different volatility targeting and sleeve weights than the ETI runs. Longer backtests reach back to 2008, and the monthly return table below shows that full history. Metric Robuxio EQ S&P 500 60/40 CAGR 29.9% 14.6% 9.7% Sharpe ratio 2.16 0.81 0.83 Max drawdown -8.2% -33.7% -21.7% Annual volatility 12.5% 19.2% 12.1% Past performance is not indicative of future results. ### Robuxio EQ (NAV) vs S&P 500 and 60/40 All 5Y 3Y 1Y Robuxio EQ (NAV) vs S&P 500 and 60/40, cumulative return, rebased to the start of the selected period. Net of fees. Past performance is not indicative of future results. ![Monthly returns table of the full backtest from January 2008 to June 2026, with yearly returns and drawdowns versus SPY](https://robuxio.com/_next/image?url=%2Fimages%2Fequities%2Flaunch-call%2Fmonthly-returns-table.png&w=3840&q=75) Monthly returns, full backtest, January 2008 to June 2026, net of modeled costs. Annual volatility of 11.6% is comparable to a classic 60/40 portfolio (12.1%), at nearly three times its historical CAGR (21.8% vs 7.9%). Capacity ## Built For Institutional Size The tradable universe is deliberately restricted to S&P 500 stocks and the 20 to 25 most liquid US ETFs, so the product can scale beyond 100 million in AUM without significant changes to the models. Most trades execute in the opening and closing auctions, complemented by limit orders through the day. Capacity constraints are estimated as a fraction of the volume traded in those auctions at each price level, informed by the team's experience running an eight-figure systematic account. Costs, fees and unfilled orders are monitored daily, and the smarter order-routing already built for far less liquid digital asset markets can be deployed if execution quality ever calls for it. The vehicle ## An Exchange Traded Instrument With Daily Liquidity The strategy is delivered through one listed security: an ETI in the form of an Actively Managed Certificate, listed on Börse Stuttgart (EUWAX) under its own ISIN. ETI An Exchange Traded Instrument bought and held like a stock or ETF. AMC A certificate linked to an actively managed reference portfolio. Liquidity Daily liquidity with no lockup period. The exchange price is NAV with fees already accrued daily, settled like any listed security. Access Purchased in EUR through the bank or brokerage account you already have. ISIN DE000AMC0DZ1 Listed on Börse Stuttgart (EUWAX) and traded in EUR. Available through Interactive Brokers, UBS, Deutsche Bank, and any bank or broker with access to Börse Stuttgart. If your bank does not carry the ISIN yet, it can usually be onboarded on request. [See how the ETI is structured](https://robuxio.com/equities/structure)[View the live listing](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) Next steps ## Key Dates The subscription window opened on July 16. Buying during the window means entering at the issue price of EUR 1,000 per unit with exposure from day one, without facing the initial trading volatility on the exchange. On August 10 the portfolio starts trading fully automated, and after launch the ETI trades daily like any listed security. August 7 Subscription window closes August 10 Live trading begins [Ready to invest How to buy the ETI on Interactive Brokers Trading permissions, EUR funding, and placing your first order, with screenshots of every click. Open the guide](https://robuxio.com/equities/how-to-buy) ## Questions From The Call Access & Buying Portfolio & Risk Performance & Track Record Strategy Development Equities & Crypto ### Which currency is the product traded in? EUR. The product currency and issue price are EUR, with an initial issue price of EUR 1,000 per unit. Is the product already available on Börse Stuttgart? Should the ETI appear in Interactive Brokers when searching by ISIN? Do I need real-time market data to place an order? Can I buy or sell at any time after launch, or are there specific subscription windows? What are the trading hours? Is there a lock-up period before the product can be sold? In the ISIN DE000AMC0DZ1, are the characters zeros or the letter O? Have a question that is not covered here? Send it to [team@robuxio.com](mailto:team@robuxio.com) and it will be answered in the next Q&A update. For informational purposes only. This is not investment advice or an offer to invest. Charts labelled as simulated show backtested performance net of modeled costs; live results may differ. Past performance is not indicative of future results. All investments involve risk, including possible loss of capital. Availability depends on your jurisdiction and broker; read the base prospectus and KID before investing. [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/equities/launch-call.md) --- # Robuxio Equities Performance Reports — Monthly & Quarterly Source: https://robuxio.com/equities/reports Markdown: https://robuxio.com/equities/reports.md Quarterly and monthly performance reports for Robuxio Equities. NAV returns, drawdowns, volatility, and sleeve attribution for the multi-sleeve portfolio. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Back to Equities](https://robuxio.com/equities) # Equities Performance Reports Performance reports for Robuxio Equities and benchmark comparisons. For strategy and portfolio changes, see [Portfolio Updates](https://robuxio.com/updates). [Q1 2026 Quarterly View Report →](https://robuxio.com/equities/reports/2026/q1)[April 2026 Monthly View Report →](https://robuxio.com/equities/reports/2026/april)[May 2026 Monthly View Report →](https://robuxio.com/equities/reports/2026/may)[June 2026 Monthly View Report →](https://robuxio.com/equities/reports/2026/june) July 2026 Monthly Coming soon August 2026 Monthly Coming soon September 2026 Monthly Coming soon October 2026 Monthly Coming soon November 2026 Monthly Coming soon December 2026 Monthly Coming soon [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/equities/reports.md) --- # April 2026 Monthly Report — Robuxio Equities Source: https://robuxio.com/equities/reports/2026/april Markdown: https://robuxio.com/equities/reports/2026/april.md April 2026 monthly performance report for Robuxio Equities. Net returns vs SPY and 60/40, drawdowns, rolling volatility, and per-sleeve attribution. --- --- # June 2026 Monthly Report | Robuxio Equities Source: https://robuxio.com/equities/reports/2026/june Markdown: https://robuxio.com/equities/reports/2026/june.md June 2026 monthly performance report for Robuxio Equities. Net returns vs the S&P 500 and 60/40, drawdowns, rolling volatility, correlation, and market commentary. --- --- # May 2026 Monthly Report | Robuxio Equities Source: https://robuxio.com/equities/reports/2026/may Markdown: https://robuxio.com/equities/reports/2026/may.md May 2026 monthly performance report for Robuxio Equities. Net returns vs the S&P 500 and 60/40, drawdowns, rolling volatility, correlation, and market commentary. --- --- # Q1 2026 Quarterly Report — Robuxio Equities Source: https://robuxio.com/equities/reports/2026/q1 Markdown: https://robuxio.com/equities/reports/2026/q1.md Q1 2026 quarterly performance report for Robuxio Equities. Net returns vs SPY and 60/40, drawdowns, rolling volatility, and per-sleeve attribution. --- --- # Robuxio Equities ETI Structure: Issuer to Settlement Source: https://robuxio.com/equities/structure Markdown: https://robuxio.com/equities/structure.md See how the Robuxio Equities ETI is built: an Actively Managed Certificate from iMaps ETI AG, with ring-fenced assets, IBKR custody and a EUWAX listing. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) ETI Structure # How the Robuxio Equities ETI Is Structured A full map of the vehicle structure, including who issues and manages it, how the assets are ring-fenced, and how it trades and settles. [Equities](https://robuxio.com/equities) / ETI Structure The vehicle ## An Exchange Traded Instrument, in the form of an Actively Managed Certificate The certificate gives you access to an actively managed investment portfolio through a normal bank or brokerage account, with no separate onboarding with iMaps or Robuxio required. Initial issue price EUR 1,000 per unit After launch Tracks portfolio NAV, net of fees The structure ## All entities involved 1 Issuer, Manager & Calculation Agent ### iMaps ETI AG Issues the ETI and acts as Investment Manager, Calculation Agent and Authorised Participant. Responsible for the legal product structure, portfolio management and compliance with the investment rules. 2 Strategy: Reference Portfolio Advisor ### Robuxio Technologies FZCO Creates and maintains the actively managed Reference Portfolio (EUR base, starting at 1,000) that the segregated portfolio tracks: the systematic strategy that drives performance. 3 Asset segregation ### Robuxio Systematic SP, a portfolio of Pecunia SPC The assets sit in a dedicated ring-fenced segregated portfolio of Pecunia SPC (a Cayman segregated portfolio company), separated from other portfolios and from the issuer's general assets. 4 Security trustee for noteholders ### Noteholder Services PTC (Intertrust Group) The securities are secured under the Programme Security Trust Deed, with an independent Note Trustee holding that security for ETI holders, which reduces issuer credit exposure. 5 Custody & execution ### Interactive Brokers Holds the portfolio's assets in custody and provides market access and trade execution. The investment manager can rebalance whenever required, including intraday. 6 Main Banker (cash account) ### Baader Bank AG, Germany A BaFin-regulated German credit institution that holds the segregated portfolio's cash account and supports the issuance and payment flows. 7 Stock-exchange listing ### EUWAX, Börse Stuttgart Listed on the Stuttgart Stock Exchange with its own ISIN DE000AMC0DZ1 , so it trades and is held like any other listed security. 8 Settlement ### Clearstream, Euroclear & SIX Issued through Clearstream Banking, Frankfurt and settled via Clearstream, Euroclear and SIX, the same rails your bank or broker already uses. 9 Performance to the client ### NAV of the underlying portfolio The ETI's value reflects the NAV performance of the underlying investment portfolio, after applicable fees. This is what reaches you as the holder. In one sentence You buy a EUR 1,000 Exchange Traded Instrument in the form of an Actively Managed Certificate, issued and managed by iMaps ETI AG , with the underlying portfolio segregated and traded through Interactive Brokers, listed on EUWAX and settled over Clearstream, Euroclear and SIX. [Ready to invest How to buy the ETI on Interactive Brokers Trading permissions, EUR funding, and placing your first order, with screenshots of every click. Open the guide](https://robuxio.com/equities/how-to-buy) [View the live listing on Börse Stuttgart](https://www.boerse-stuttgart.de/en/products/investment-products/other-certificates/stuttgart/amc0dz) For informational purposes only. This is not investment advice or an offer to invest. Past performance is not indicative of future results. All investments involve risk, including possible loss of capital. Availability depends on your jurisdiction and broker; read the base prospectus and KID before investing. [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/equities/structure.md) --- # Systematic Equities Launch Call — Live Webinar | Robuxio Source: https://robuxio.com/equities/webinar Markdown: https://robuxio.com/equities/webinar.md Join the Robuxio Systematic Equities Launch Call live: how the multi-sleeve portfolio works, what the numbers mean, and open Q&A. Free registration. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Robuxio Equities Webinar There's no webinar scheduled right now. Follow us on [X](https://x.com/robuxio_com) or subscribe to the newsletter to hear about the next one. [Missed the last one? Watch the Equities Launch Call replay Recorded live on July 16, 2026 — strategy, sleeves, and how to get access.](https://robuxio.com/equities/launch-call) The Portfolio ## New to the Robuxio equities portfolio? See how Robuxio Equities is built to generate returns across bull, bear, and sideways markets, while reducing reliance on passive index exposure. Here's what the portfolio has delivered: 29.9% CAGR (NAV) 2.16 Sharpe Ratio -8.2% Max Drawdown 73.5% % Positive Months Net of fees · Updated Jun 2026 Robuxio EQ (Net): $100 → $915 SPY: $100 → $316 Growth of $100 since 2018 [Explore the full performance →](https://robuxio.com/equities?from=webinar) --- # Robuxio Newsletter — Weekly Algorithmic Trading Insights Source: https://robuxio.com/newsletter Markdown: https://robuxio.com/newsletter.md Subscribe to the Robuxio newsletter for weekly research on systematic crypto and equities trading, market analysis, and strategy updates from the team. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) Robuxio Newsletter # Institutional-Grade Crypto Insights Receive insights on how we build risk-managed, multi-strategy crypto portfolios—tailored for every mandate. What you'll receive: - How we build risk-managed, multi-strategy crypto portfolios - Strategy performance across different market regimes - Institutional-grade portfolio construction principles - Research on systematic crypto exposure methods Website Subscribe We care about your data. Unsubscribe anytime. [← Back to home](https://robuxio.com/) --- # Meet Pavel Kýček, Robuxio CEO Source: https://robuxio.com/pavel Markdown: https://robuxio.com/pavel.md Speak with Pavel Kýček, Robuxio's founder and CEO, about systematic crypto and equities allocation, infrastructure and institutional access routes. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Book a call with Pavel Kycek --- # Book a 30-Minute Call with Pavel Kýček Source: https://robuxio.com/pavel30 Markdown: https://robuxio.com/pavel30.md Schedule a 30-minute call with Pavel Kýček, Robuxio's founder, to discuss systematic crypto and equities allocation for institutional-grade portfolios. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Book a 30-Minute Call with Pavel Kycek --- # Live Portfolio Reporting & Performance Data Source: https://robuxio.com/performance Markdown: https://robuxio.com/performance.md Monthly reports, the running log of strategy changes, and downloadable factsheets and return data for Robuxio's systematic crypto and equities portfolios. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Performance # Live portfolio reporting Monthly reports, the running log of strategy changes, and downloadable factsheets and return data for the systematic crypto and equities portfolios. Monthly reporting ## Performance reports Monthly and quarterly reports for the systematic portfolios — crypto and equities published in parallel. [Crypto Crypto reports Live performance reports for our Robuxio Crypto portfolios with benchmark comparisons. View crypto reports →](https://robuxio.com/crypto/reports)[Equities Equities reports Monthly and quarterly performance reports for Robuxio Equities, with comparisons against the S&P 500. View equities reports →](https://robuxio.com/equities/reports) Transparency ## Portfolio updates A running log of strategy changes, additions and adjustments to the live portfolios, with the reasoning behind each. [Each entry covers what changed, why, and how the live portfolios are positioned afterwards. Useful for ongoing diligence and for understanding how the systematic process responds to market conditions. Open the updates log →](https://robuxio.com/updates) Downloads ## Portfolio data Factsheets and daily return series — available as PDF, CSV or JSON for your own analysis. [Per-portfolio factsheets (PDF) covering current allocation, key metrics and historical drawdowns. The CSV and JSON feeds carry the underlying daily return series for use in your own models. Open data downloads →](https://robuxio.com/data) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/performance.md) --- # The Robuxio Playbook — Crypto & Equities Frameworks Source: https://robuxio.com/playbook Markdown: https://robuxio.com/playbook.md Two systematic frameworks — one for crypto, one for equities. The institutional case for building regime-agnostic portfolios across both asset classes. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Systematic Playbook Systematic frameworks for institutional-grade exposure. Choose Your Asset Class [Systematic Crypto Playbook 7 principles for building institutional-grade systematic exposure to crypto across all market regimes. Explore Crypto Playbook](https://robuxio.com/crypto/playbook)[Systematic Equities Playbook 7 principles for building institutional-grade systematic exposure to equities across all market regimes. Explore Equities Playbook](https://robuxio.com/equities/playbook) Two systematic frameworks. One institutional standard. Systematic exposure across all regimes. --- # Privacy Policy Source: https://robuxio.com/privacy-policy Markdown: https://robuxio.com/privacy-policy.md Learn how Robuxio protects your personal data. Our privacy policy explains data collection, usage, and your rights. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Privacy Policy When visiting robuxio.com, the site automatically collects device information including web browser details, IP address, time zone, and installed cookies. As you browse, information about viewed pages, referring websites, and interaction patterns is gathered as "Device Information". ## Personal Information We Collect ### Collection Technologies Device Information is collected through: - Cookies: Data files placed on devices containing anonymous unique identifiers - Log files: Track actions occurring on the site, including IP address, browser type, ISP, referring/exit pages, and timestamps - Web beacons, tags, and pixels: Electronic files recording browsing information When making a purchase, the site collects "Order Information" including name, payment details, email address, and phone number. ## How Your Personal Information Is Used ### Order Information Usage The site uses Order Information to: - Fulfill placed orders - Communicate with you - Screen orders for potential risk or fraud - Provide product/service information or advertising aligned with your preferences - Display information through third-party apps - Set up product accounts ### Device Information Usage Device Information helps the site screen for fraud and optimize performance through analytics about customer browsing behavior and marketing campaign effectiveness. ## Sharing Your Personal Information Personal Information is shared with third parties to facilitate the uses described above. The site uses Google Analytics to understand customer behavior. For details about Google's privacy practices, visit [Google's Privacy Policy](https://www.google.com/intl/en/policies/privacy/) or opt out at [Google Analytics Opt-out](https://tools.google.com/dlpage/gaoptout). Information may be shared to comply with applicable laws, respond to subpoenas or lawful requests, and protect site rights. ## Do Not Track The site does not alter data collection practices in response to Do Not Track browser signals. ## Your Rights European residents have the right to access, correct, update, or delete personal information by contacting [support@robuxio.com](mailto:support@robuxio.com). Note: Information will be transferred outside Europe, including to Canada and the United States, as the site processes data to fulfill potential contracts and pursue legitimate business interests. ## California Residents Under California Civil Code Section 1798.83, California residents may request annual information about disclosed personal data categories. Submit requests in writing to the contact address below. If under 18, residing in California, and have a registered account, you may request removal of publicly posted unwanted data. Contact the site with your associated email and California residency confirmation. Data may remain in backups. ## Data Retention Order Information is maintained for records unless deletion is requested. ## Changes to This Policy The Privacy Policy may be updated to reflect practice changes or regulatory requirements. Updates are indicated by a revised date and become effective upon posting. Material changes may be announced prominently or via direct notification. Review the policy frequently for updates. ## Contact Us For privacy inquiries, questions, or complaints, contact us at: [support@robuxio.com](mailto:support@robuxio.com) --- # Performance Reports — Crypto & Equities Source: https://robuxio.com/reports Markdown: https://robuxio.com/reports.md Performance reports across Robuxio Crypto and Equities portfolios. Annual, quarterly, and monthly reviews of net returns, drawdowns, and risk metrics. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Performance Reports Performance reports and benchmark comparisons across both asset classes. Choose a strategy to view its reports. [Crypto Systematic Crypto Portfolios Annual and monthly performance reports for the Robuxio High Sharpe crypto strategies and benchmark comparisons. View Crypto Reports →](https://robuxio.com/crypto/reports)[Equities Robuxio Equities Quarterly and monthly performance reports for Robuxio Equities and benchmark comparisons vs the S&P 500. View Equities Reports →](https://robuxio.com/equities/reports) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. 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Featured ## The framework and the data behind it [![Robust crypto market exposure — drawdown chart and relative momentum](https://robuxio.com/_next/image?url=%2Fimages%2Fog%2Frobust-crypto-market-exposure.png&w=3840&q=75) Whitepaper An end-to-end methodology covering market opportunity, trading engine architecture, portfolio construction, and risk management. Read the whitepaper →](https://robuxio.com/crypto/whitepaper)[![Institutional crypto market benchmarks — rolling volatility, momentum and regime distribution](https://robuxio.com/_next/image?url=%2Fimages%2Fog%2Finstitutional-crypto-market-benchmarks.png&w=3840&q=75) Benchmarks Live cumulative returns, drawdowns, and volatility for Bitcoin, the top-50 crypto universe, and major equity indices. Open benchmarks →](https://robuxio.com/benchmarks) Articles ## Ongoing research Quantitative analysis on systematic trading, market structure, and portfolio construction. [![Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not.](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fall-weather-crypto-2026%2Fytd-2026-all-weather-vs-long-only.png&w=3840&q=75) Jun 11, 2026 Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not. Most crypto allocations are down in 2026. A systematic, all-weather portfolio of uncorrelated sleeves is not. Here is the design that made the difference. Read Article](https://robuxio.com/research/most-crypto-allocations-are-down-in-2026)[![Extreme Volatility Spikes in Crypto Perps](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-perp-volatility-spikes%2Fcrypto-perp-volatility-spikes.jpg&w=3840&q=75) Apr 30, 2026 Extreme Volatility Spikes in Crypto Perps Single-coin volatility spikes in crypto perpetuals are rising sharply even in calm markets. The pump-and-dump pattern, quantified across the top universe. Read Article](https://robuxio.com/research/crypto-perp-volatility-spikes)[![A Bitcoin ETF Is Not a Crypto Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fbtc-performance-since-etf.png&w=3840&q=75) Mar 22, 2026 A Bitcoin ETF Is Not a Crypto Strategy Why passive Bitcoin ETF exposure fails as a crypto strategy, and how systematic algorithmic approaches deliver structurally different return profiles. Read Article](https://robuxio.com/research/bitcoin-etf-not-crypto-strategy)[![When Mean Reversion Breaks Down in Crypto](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmean-reversion-breakdown%2Ftop40-5day-drops.png&w=3840&q=75) Mar 18, 2026 When Mean Reversion Breaks Down in Crypto Mean reversion is one of the most stable edges in crypto. At what magnitude of selloff does the edge appear, and where does it break down? Tested results. Read Article](https://robuxio.com/research/when-mean-reversion-breaks-down-in-crypto)[![The Structural Shift in Crypto Markets That Most Missed](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fdaily-return-range.png&w=3840&q=75) Mar 12, 2026 The Structural Shift in Crypto Markets That Most Missed Dispersion within the top 40 coins increased substantially in 2025 — a structural shift in crypto market dynamics that systematic strategies can exploit. Read Article](https://robuxio.com/research/crypto-market-coin-dispersion-2025)[![Extreme Decline Altcoin Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-extreme-decline.png&w=3840&q=75) Feb 6, 2026 Extreme Decline Altcoin Strategy Significant alpha exists in extreme declines. A systematic strategy that buys altcoins after sharp drops and exits quickly, with full backtested results. Read Article](https://robuxio.com/research/extreme-decline-altcoin-strategy)[![Bitcoin's Easiest Trading Days Are Disappearing](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-trend-efficiency.png&w=3840&q=75) Feb 3, 2026 Bitcoin's Easiest Trading Days Are Disappearing Using Kaufman's Efficiency Ratio (KER), we tracked every trending day since 2014. Bitcoin's directional trend days are getting rarer — the data shows. Read Article](https://robuxio.com/research/bitcoins-easiest-trading-days-are-disappearing)[![How to Understand Current Crypto Market Conditions](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmarket-conditions-futures.png&w=3840&q=75) Oct 23, 2024 How to Understand Current Crypto Market Conditions A simple systematic trading model to read current crypto market conditions: short-term momentum on small vs large coins, and what mean reversion shows. Read Article](https://robuxio.com/research/how-to-understand-current-market-conditions)[![Profit Targets Hurt Performance — Trend & Breakout](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fprofit-targets.png&w=3840&q=75) Aug 20, 2024 Profit Targets Hurt Performance — Trend & Breakout Profit targets reduce performance, especially in trend and breakout strategies. The data shows letting winners run beats taking profit early. Read Article](https://robuxio.com/research/profit-targets-hurt-performance)[![Trading Myth: Always Use a Stop Loss](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fstop-loss-mae.png&w=3840&q=75) Jul 15, 2024 Trading Myth: Always Use a Stop Loss Conventional wisdom says you must always trade with a stop loss. The systematic data tests that claim — and reveals where stop losses help and hurt. Read Article](https://robuxio.com/research/trading-myth-always-use-a-stop-loss)[![The Momentum Effect on Cryptocurrencies](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmomentum-effect.png&w=3840&q=75) Jun 10, 2024 The Momentum Effect on Cryptocurrencies Quantifying the momentum effect in crypto: why it's structurally stronger than in traditional asset classes, and the implications for systematic strategies. Read Article](https://robuxio.com/research/momentum-effect-on-cryptocurrencies) --- # Quantitative Crypto Research Articles Source: https://robuxio.com/research/articles Markdown: https://robuxio.com/research/articles.md Quantitative research on systematic crypto trading, market structure, momentum, mean reversion, and portfolio construction from the Robuxio research team. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Research Articles In-depth analysis of trading strategies, market dynamics, and quantitative research. [Back to Overview](https://robuxio.com/research) ## Research & Analysis Deep dives into market dynamics, strategy optimization, and trading performance. [![Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not.](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fall-weather-crypto-2026%2Fytd-2026-all-weather-vs-long-only.png&w=3840&q=75) Jun 11, 2026 Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not. Most crypto allocations are down in 2026. A systematic, all-weather portfolio of uncorrelated sleeves is not. Here is the design that made the difference. Read Article](https://robuxio.com/research/most-crypto-allocations-are-down-in-2026)[![Extreme Volatility Spikes in Crypto Perps](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-perp-volatility-spikes%2Fcrypto-perp-volatility-spikes.jpg&w=3840&q=75) Apr 30, 2026 Extreme Volatility Spikes in Crypto Perps Single-coin volatility spikes in crypto perpetuals are rising sharply even in calm markets. The pump-and-dump pattern, quantified across the top universe. Read Article](https://robuxio.com/research/crypto-perp-volatility-spikes)[![A Bitcoin ETF Is Not a Crypto Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fbtc-performance-since-etf.png&w=3840&q=75) Mar 22, 2026 A Bitcoin ETF Is Not a Crypto Strategy Why passive Bitcoin ETF exposure fails as a crypto strategy, and how systematic algorithmic approaches deliver structurally different return profiles. Read Article](https://robuxio.com/research/bitcoin-etf-not-crypto-strategy)[![When Mean Reversion Breaks Down in Crypto](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmean-reversion-breakdown%2Ftop40-5day-drops.png&w=3840&q=75) Mar 18, 2026 When Mean Reversion Breaks Down in Crypto Mean reversion is one of the most stable edges in crypto. At what magnitude of selloff does the edge appear, and where does it break down? Tested results. Read Article](https://robuxio.com/research/when-mean-reversion-breaks-down-in-crypto)[![The Structural Shift in Crypto Markets That Most Missed](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fdaily-return-range.png&w=3840&q=75) Mar 12, 2026 The Structural Shift in Crypto Markets That Most Missed Dispersion within the top 40 coins increased substantially in 2025 — a structural shift in crypto market dynamics that systematic strategies can exploit. Read Article](https://robuxio.com/research/crypto-market-coin-dispersion-2025)[![Extreme Decline Altcoin Strategy](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-extreme-decline.png&w=3840&q=75) Feb 6, 2026 Extreme Decline Altcoin Strategy Significant alpha exists in extreme declines. A systematic strategy that buys altcoins after sharp drops and exits quickly, with full backtested results. Read Article](https://robuxio.com/research/extreme-decline-altcoin-strategy)[![Bitcoin's Easiest Trading Days Are Disappearing](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-trend-efficiency.png&w=3840&q=75) Feb 3, 2026 Bitcoin's Easiest Trading Days Are Disappearing Using Kaufman's Efficiency Ratio (KER), we tracked every trending day since 2014. Bitcoin's directional trend days are getting rarer — the data shows. Read Article](https://robuxio.com/research/bitcoins-easiest-trading-days-are-disappearing)[![How to Understand Current Crypto Market Conditions](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmarket-conditions-futures.png&w=3840&q=75) Oct 23, 2024 How to Understand Current Crypto Market Conditions A simple systematic trading model to read current crypto market conditions: short-term momentum on small vs large coins, and what mean reversion shows. Read Article](https://robuxio.com/research/how-to-understand-current-market-conditions)[![Profit Targets Hurt Performance — Trend & Breakout](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fprofit-targets.png&w=3840&q=75) Aug 20, 2024 Profit Targets Hurt Performance — Trend & Breakout Profit targets reduce performance, especially in trend and breakout strategies. The data shows letting winners run beats taking profit early. Read Article](https://robuxio.com/research/profit-targets-hurt-performance)[![Trading Myth: Always Use a Stop Loss](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fstop-loss-mae.png&w=3840&q=75) Jul 15, 2024 Trading Myth: Always Use a Stop Loss Conventional wisdom says you must always trade with a stop loss. The systematic data tests that claim — and reveals where stop losses help and hurt. Read Article](https://robuxio.com/research/trading-myth-always-use-a-stop-loss)[![The Momentum Effect on Cryptocurrencies](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmomentum-effect.png&w=3840&q=75) Jun 10, 2024 The Momentum Effect on Cryptocurrencies Quantifying the momentum effect in crypto: why it's structurally stronger than in traditional asset classes, and the implications for systematic strategies. Read Article](https://robuxio.com/research/momentum-effect-on-cryptocurrencies) --- # A Bitcoin ETF Is Not a Crypto Strategy | Robuxio Research Source: https://robuxio.com/research/bitcoin-etf-not-crypto-strategy Markdown: https://robuxio.com/research/bitcoin-etf-not-crypto-strategy.md Why passive Bitcoin ETF exposure fails as a crypto strategy, and how systematic algorithmic approaches deliver structurally different return profiles. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # A Bitcoin ETF Is Not a Crypto Strategy Research • Pavel Kycek • March 22, 2026 86% of institutions now have or plan to have crypto exposure. [1](#user-content-fn-1) The majority are planning to choose the path of least resistance: a Bitcoin ETF. It's simple, regulated, and custody is solved. Fees are low (0.15–0.25%) and the infrastructure is backed by traditional players. However, there is a structural flaw most allocators are not considering. ## What You're Actually Buying A Bitcoin ETF gives you one thing: directional exposure to a single asset. Bitcoin's maximum drawdown since the launch of the first BTC ETF is −49.5%. Between October 2025 and February 2026, it dropped from $126,000 to $60,033 in four months. ![Bitcoin Performance Since First Spot ETF Launch](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fbtc-performance-since-etf.png&w=1920&q=75) This behaviour is in line with what we have seen historically from Bitcoin. 46% of Bitcoin's circulating supply was underwater at the February 2026 low. The average Bitcoin ETF buyer was sitting on 8–9% losses. If you happened to get in at the wrong time, your portfolio could be in a 50% drawdown, in 4 months. A drawdown of this magnitude tests mandate limits and LP patience. This is the structural trade-off of passive exposure, full participation in the upside requires full exposure to the downside. ## The Hypothesis Problem There is a deeper issue most allocators don't consider. Buy-and-hold Bitcoin requires multiple hypotheses to all be correct simultaneously: - Bitcoin will appreciate over your investment horizon. - Your entry timing is acceptable relative to the current market phase. - Your mandate can tolerate drawdowns of 50+% without being forced to sell This framework makes explicit what is often left implicit in allocation decisions. The case for long-term upside in Bitcoin is frequently discussed, however, many fail to realize that three independent hypotheses need to go right for that upside to materialise. ## The Index Fallacy The natural response to Bitcoin's concentration risk is diversification: buy a broad index of the top 50 cryptocurrencies by market cap. The logic seems sound, especially for those coming from more traditional markets. More assets, less single-asset risk. The problem is that in crypto, this logic does not hold up. The majority of crypto projects never deliver on their promise. The token captures the speculative excitement of the narrative on the way up, and then the project fades, the team moves on, and the coin drifts toward zero. When looking at an equally-weighted index of the Top 50 Binance Crypto Futures, reconstituted daily based on volume, there is no evidence currently of a secular upward trend. ![Top 50 Binance Crypto Futures Index — Equally Weighted, Reconstituted Daily](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Ftop50-futures-index.png&w=1920&q=75) ## The Volatility Opportunity Many traditional allocators, having seen the data on passive crypto exposure, will question whether the asset class is worth allocating to at all. That is a reasonable conclusion to draw from the evidence, if passive allocation is your only lens. But the same characteristics that make crypto unsuitable for passive investing are precisely what make it attractive for systematic trading. Crypto remains one of the most volatile and inefficient asset classes in the world. Daily price movements across the top 50 futures contracts are routinely 5–10 times larger than those of major equity indices. ![Daily Percentage Change — Crypto vs S&P 500](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fdaily-percentage-change.png&w=1920&q=75) The market's structural inefficiencies persist far longer than in mature markets, because participant behaviour is driven by narratives, sentiment, and speculation rather than fundamentals. There is a second factor that compounds this opportunity: relative momentum. During major market moves, smaller crypto assets tend to significantly outperform larger ones. Ranking assets by relative momentum (and rotating into the strongest performers) amplifies this effect further. ![BTC vs Top 50 vs Top 20 by Relative Momentum](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Frelative-momentum-comparison.png&w=1920&q=75) This combination of high volatility, persistent structural inefficiencies, and behavioural mispricings creates a window for systematic strategies to generate outsized risk-adjusted returns. ## An Alternative Algorithmic Approach Achieving market-regime-agnostic exposure to the broader crypto market, requires a systematic approach. As an example let's consider our USDT-collateralized Robuxio Crypto High Vol portfolio, which include 20+ uncorrelated strategies both momentum and mean reversion long/short. To eliminate selection bias, all strategies operate on a dynamic universe of the top 40 USDT-settled crypto futures, which is reconstituted daily based on volume and liquidity thresholds. As long as your strategies have a statistical edge, this approach reduces the number of hypotheses to achieve profitability to two: - There will be short-term trends in the market. - There will be periods of significant volatility. The result is a fundamentally different risk profile. ![Bitcoin vs Robuxio Crypto High Vol Portfolio — GAV Performance Since ETF Launch](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fhshv-vs-btc-performance.png&w=1920&q=75) Our USDT-collateralised portfolio delivered a +328.5% GAV return with a maximum drawdown of 35.2% over the same period where Bitcoin had a max drawdown of 49.5% with only a +47%. ![Drawdown Profile: Bitcoin vs Crypto HV GAV](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fhshv-drawdown-profile.png&w=1920&q=75) The buy-and-hold allocator captured Bitcoin's full downside, while the systematic portfolio captured returns from volatility in both directions. The low volatility version of our crypto portfolio also significantly outperformed Bitcoin buy-and-hold, with significantly less volatility. ![Bitcoin vs Robuxio Crypto Low Vol Portfolio — GAV Performance Since ETF Launch](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fhslv-vs-btc-performance.png&w=1920&q=75) Compared to the max drawdown of Bitcoin during the same period of −49.5%, the Robuxio Crypto Low Vol portfolio only experienced a max drawdown of −19.5%. ![Drawdown Profile: Bitcoin vs Crypto LV GAV](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fhslv-drawdown-profile.png&w=1920&q=75) Since the Bitcoin ETF launch, our USDT-collateralized crypto portfolios achieved a Sharpe ratio of 1.92 (high vol) and 2.20 (low vol) versus Bitcoin's 0.61. ![Bitcoin vs Crypto HV GAV vs Crypto LV GAV — Sharpe Ratio Comparison](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fsharpe-comparison.png&w=1920&q=75) ## Passive vs Active Exposure The intuition to go with passive ETF exposure is understandable. Especially given the low fees and reduced operational complexity. These points are valid for traditional asset classes where markets are efficient and alpha is scarce. Crypto is not a traditional asset class. Digital assets are still early in their maturation cycle. Volatility is 3–5x that of equities. Markets trade 24/7 across fragmented venues. Structural inefficiencies persist because the asset class is young and participant behavior is driven by narratives rather than fundamentals. ![Daily Volatility: S&P 500 vs S&P Crypto Index](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fbitcoin-etf-not-crypto-strategy%2Fsp500-vs-crypto-volatility.png&w=1920&q=75) In this environment, the cost of passive management is the drawdown. The risk profile of approaching the broader crypto market with a portfolio of uncorrelated algorithmic strategies is fundamentally different to buy-and-hold. For allocators who require Bitcoin-specific exposure (whether by mandate, preference, or LP expectation) there is another path. A BTC-collateralized systematic portfolio holds Bitcoin as the base asset while generating additional return through active trading. Your collateral is Bitcoin, your P&L is denominated in Bitcoin, and you compound the number of BTC you hold over time. Since the first spot ETF launched in January 2024, a buy-and-hold position would have returned +47% in BTC terms. Over the same period, our Robuxio Crypto High Vol BTC-collateralized portfolios turned 1 BTC into 4.28 BTC by adding a return layer on top of it. ## The Shift Is Already Happening Institutional behaviour is starting to reflect this reality. Hedge funds reduced Bitcoin ETF positions by 28% in Q4 2025. [2](#user-content-fn-2) ETF outflows reached $3.8 billion over five weeks in early 2026. [3](#user-content-fn-3) AUM dropped from a peak of $168 billion to $93 billion. The initial excitement is giving way to a harder question: what now? Many institutions are starting to realise that passive exposure to this maturing asset class leads to significant drawdown risks. A systematic approach starts from a different premise: capture returns from volatility across the crypto market, regardless of direction, with defined risk parameters and demonstrated statistical edge. ## Footnotes - [EY — Growing Enthusiasm Propels Digital Assets Into the Mainstream](https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights/financial-services/documents/ey-growing-enthusiasm-propels-digital-assets-into-the-mainstream.pdf) [↩](#user-content-fnref-1) - [Yahoo Finance — Hedge Funds Piled Into US Bitcoin](https://finance.yahoo.com/news/hedge-funds-piled-us-bitcoin-093355654.html) [↩](#user-content-fnref-2) - [CryptoSlate — Bitcoin ETF Outflows $3.8 Billion](https://cryptoslate.com/bitcoin-etf-outflows-3-8-billion-five-weeks-who-buys-bitcoin/) [↩](#user-content-fnref-3) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/bitcoin-etf-not-crypto-strategy.md) --- # Bitcoin's Easiest Trading Days Are Disappearing | Robuxio Research Source: https://robuxio.com/research/bitcoins-easiest-trading-days-are-disappearing Markdown: https://robuxio.com/research/bitcoins-easiest-trading-days-are-disappearing.md Using Kaufman's Efficiency Ratio (KER), we tracked every trending day since 2014. Bitcoin's directional trend days are getting rarer — the data shows. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Bitcoin's Easiest Trading Days Are Disappearing Research • Pavel Kycek • February 3, 2026 Bitcoin's easiest trading days are disappearing. In 2017, 11% of days had strong directional trends. In 2025, it's 3%. Here's what's happening and how you should adapt. ## First, How Do We Measure This? Kaufman's Efficiency Ratio (KER) tracks how "clean" price movement is. KER near 1 = strong trend. KER near 0 = choppy noise. I tracked every day since 2014 where Bitcoin's KER crossed key thresholds. ![Kaufman's Efficiency Ratio (KER)](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fker-explanation.jpg&w=1920&q=75) ## Here's What the Data Shows KER > 0.5 = market moving with moderate direction. KER > 0.75 = market moving with strong direction. The table tells the story year by year. ![KER threshold data by year](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fcover.jpg&w=1920&q=75) ## Moderate Trends Moderate trends (KER > 0.5) have declined, but gradually. 27% of days in 2014 → 21% in 2025. Not dramatic. Bitcoin still trends. Just slightly less often than a decade ago. ![Moderate trends (KER > 0.5)](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fmoderate-trends.jpg&w=1920&q=75) ## Strong Trends But look at the strong trends (KER > 0.75). This is where the easy money lived. 2017: 11% of days with powerful, clean trends. 2025: 3%. Now you can see why it was difficult to make large profits on directional BTC-only trades in 2025. ![Strong trends (KER > 0.75)](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fstrong-trends.jpg&w=1920&q=75) ## Volatility Is Vanishing Too But trendiness isn't everything. Traders also need volatility. Look at how Bitcoin's big moves have disappeared: Days with 10%+ swings (over 10 days): - 2017: 56.6% - 2025: 10.1% Days with 20%+ swings: - 2017: 28.2% - 2025: 0% The explosive moves that made Bitcoin tradeable are vanishing. ![Bitcoin volatility declining](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fvolatility-table.png&w=1920&q=75) ## The Broader Market This is why systematic traders shouldn't limit themselves to Bitcoin. The broader crypto market still offers the volatility and trend clarity that Bitcoin had in earlier days. ![Binance Top 50 volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-bitcoin-trend-efficiency%2Fbroader-market.png&w=1920&q=75) Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/bitcoins-easiest-trading-days-are-disappearing.md) --- # The Structural Shift in Crypto Markets That Most Missed | Robuxio Research Source: https://robuxio.com/research/crypto-market-coin-dispersion-2025 Markdown: https://robuxio.com/research/crypto-market-coin-dispersion-2025.md Dispersion within the top 40 coins increased substantially in 2025 — a structural shift in crypto market dynamics that systematic strategies can exploit. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # The Structural Shift in Crypto Markets That Most Missed Research • Pavel Kycek • March 12, 2026 As part of our ongoing market research at Robuxio we did a deep dive into how crypto market dynamics shifted in 2025. One of the main findings from our research is that dispersion within the top 40 coins increased substantially, with the market becoming more fragmented. Winners and losers diverged more sharply, the middle of the distribution widened, and coins moved less in sync with each other. What follows is an analysis of how the market changed in 2025 and the nuances worth noting. ## 1. Daily Return Range The most striking shift of 2025 was in the daily spread between the best- and worst-performing coin in our universe. This range nearly doubled, jumping from an average of 24% to 42% per day. ![Daily Return Range](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fdaily-return-range.png&w=1920&q=75) On any given day in 2025, the gap between the top and bottom coin was almost twice as wide as it had been over the prior three years. ## 2. Winner-Loser Spread The average return of the top 5 coins minus the bottom 5 widened from 12.7% to 19.6% per day. Winners and losers diverged much more sharply. ![Winner-Loser Spread](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fwinner-loser-spread.png&w=1920&q=75) This confirms the first finding from a different angle. It was not only extreme outliers driving the range wider, but the top and bottom cohorts both moved more aggressively, in opposite directions. ## 3. Cross-Sectional Dispersion The standard deviation of daily returns across all 40 coins rose by 63%, from 4.2% to 6.9%. Coins moved less in sync with each other. ![Cross-Sectional Dispersion](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fcross-sectional-dispersion.png&w=1920&q=75) ## 4. Bottom 5 Average Return The average return of the five worst-performing coins each day deepened from -5.0% to -8.5%. The losers got much worse, with a fatter left tail. ![Bottom 5 Average Return](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fbottom-5-average-return.png&w=1920&q=75) Notably, the losers deteriorated more severely than the winners improved (see point 7 below). The downside became more punishing than the upside became rewarding. ## 5. Index 30-Day Volatility The 30-day rolling volatility of the equal-weight top-40 index rose from 81% to 97% (annualised). This was partially driven by the extreme liquidation event on the 10th October. ![Index 30-Day Volatility](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Findex-30-day-volatility.png&w=1920&q=75) Higher index-level volatility reflects broader turbulence across the universe, even as the nature of that volatility shifted toward idiosyncratic, coin-specific movement rather than correlated swings. ## 6. Interquartile Range The 25th-to-75th percentile spread rose from 3.0% to 3.8%, showing that it was not only the tails moving more, but the middle of the distribution widened too. ![Interquartile Range](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Finterquartile-range.png&w=1920&q=75) This is an important nuance. When only the tails widen, you can attribute it to a handful of outlier events. When the IQR also rises, the dispersion is structural. ## 7. Top 5 Average Return The average return of the five best-performing coins each day rose from 7.7% to 11.1%. Winners got bigger, but not by as much as losers deepened. ![Top 5 Average Return](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Ftop-5-average-return.png&w=1920&q=75) ## 8. Coins Moving >10% Per Day The fraction of the top 40 making extreme daily moves (greater than 10%) rose from 8% to 13%. More coins hitting extreme daily swings. ![Coins Moving More Than 10% Per Day](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fcoins-moving-10-percent.png&w=1920&q=75) In a 40-coin universe, that means roughly 5 coins per day were moving more than 10%, up from roughly 3. Extreme days became a regular feature of the 2025 market and were no longer exceptional events. ## 9. Daily Top 40 Turnover Coins entering or leaving the top 40 each day rose from 0.9 to 1.3 per day. The universe became less stable, likely driven in part by the high frequency of new listings throughout the year. ![Daily Top 40 Turnover](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fdaily-top-40-turnover.png&w=1920&q=75) A higher-turnover universe means the composition of the tradeable set is shifting faster, adding another layer of complexity for any strategy relying on a stable universe. ## What Didn't Change — And Why It Matters The nine metrics above tell a clear story about rising dispersion. But two metrics barely moved — and that is equally informative. ## 10. Index Autocorrelation The lag-1 autocorrelation of index returns barely changed, from -0.06 to -0.04. The day-to-day predictability of overall index direction did not change. ![Index Autocorrelation](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Findex-autocorrelation.png&w=1920&q=75) ## 11. Median Coin Return The median daily return across the top 40 dropped from -0.44% to -0.72%. Just a very marginal effect and remained essentially unchanged. ![Median Coin Return](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcoin-dispersion%2Fmedian-coin-return.png&w=1920&q=75) The fact that autocorrelation and median returns were essentially unchanged tells us something important: what changed is dispersion, not momentum or average return behaviour. The market did not become more profitable on aggregate, but it did become more differentiated. ## Conclusion: A More Fragmented Market The crypto market of 2025 experienced a structural shift, namely, the universe of the top 40 coins became more fragmented. The gap between winners and losers widened sharply. Even the middle of the distribution widened, confirming this was not only about outliers. Coins were moving less in sync with each other, and turnover inside the top 40 increased as new listings reshaped the landscape. For active traders, this environment offered both opportunity and risk. Greater dispersion means higher potential alpha, but also higher potential for loss if coin selection is poor. The data argues strongly for systematic, daily re-evaluation of a dynamic universe. That is exactly how we operate at Robuxio. [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/crypto-market-coin-dispersion-2025.md) --- # Extreme Volatility Spikes in Crypto Perps | Robuxio Research Source: https://robuxio.com/research/crypto-perp-volatility-spikes Markdown: https://robuxio.com/research/crypto-perp-volatility-spikes.md Single-coin volatility spikes in crypto perpetuals are rising sharply even in calm markets. The pump-and-dump pattern, quantified across the top universe. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Extreme Volatility Spikes in Crypto Perps Research • Pavel Kycek • April 30, 2026 Crypto always moves between high-volatility and low-volatility regimes (like every other asset class) What has changed recently is that single-coin volatility spikes are rising sharply even during otherwise calm market periods. The purple chart shows it clearly: when excessive daily moves are normalized by average volatility, the current regime stands out. The data shows that there has been an unusual number of pump-and-dump events over the last few quarters. ![Quarterly volatility spike events inside the daily top 40 crypto universe](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fcrypto-perp-volatility-spikes%2Fcrypto-perp-volatility-spikes.jpg&w=1920&q=75) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/crypto-perp-volatility-spikes.md) --- # Extreme Decline Altcoin Strategy | Robuxio Research Source: https://robuxio.com/research/extreme-decline-altcoin-strategy Markdown: https://robuxio.com/research/extreme-decline-altcoin-strategy.md Significant alpha exists in extreme declines. A systematic strategy that buys altcoins after sharp drops and exits quickly, with full backtested results. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Extreme Decline Altcoin Strategy Research • Pavel Kycek • February 6, 2026 There is a lot of alpha in extreme declines. This strategy buys altcoins after very strong declines and exits quickly. ## Strategy Overview ![Strategy Performance](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-extreme-decline.png&w=1920&q=75) Key Statistics: - Win Rate: 80% - Risk Reward: 1:1 - Sharpe Ratio: 1.5 - Average Capital Usage: Only 1.17% Interesting fact: Despite the low average capital usage of just 1.17%, with compounding this strategy has achieved similar returns to holding Bitcoin since 2020. ## The Edge: Providing Liquidity in Uncertainty This strategy essentially provides liquidity during moments of extreme uncertainty in the market. When altcoins experience sharp, sudden declines, the strategy steps in to buy — capturing the bounce when panic subsides. ## Risk Considerations ![Drawdown Analysis](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-extreme-decline-drawdown.png&w=1920&q=75) While close-to-close drawdown is manageable at about 20%, intraday drawdown can reach up to 55% . There is significant left tail risk involved. Because of this: - No leverage can be used - Position sizing must account for potential intraday volatility - The strategy requires patience and discipline during drawdowns ## Why It Works The strategy exploits a fundamental market dynamic: when altcoins crash hard, there's often an overshoot driven by panic, forced liquidations, and emotional selling. By systematically buying these extreme declines and exiting quickly, the strategy captures the mean reversion that typically follows. The 80% win rate with 1:1 risk reward demonstrates that the edge is real — but traders must be prepared for the occasional large loss that comes with providing liquidity during chaotic market conditions. ## Key Takeaways - Extreme declines contain alpha — The market tends to overshoot during panic - Low capital usage — The strategy is patient, waiting for the right conditions - No leverage — Left tail risk makes leverage dangerous - Intraday volatility — Be prepared for swings even if close-to-close looks smooth This research is based on backtested results. Past performance does not guarantee future returns. Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/extreme-decline-altcoin-strategy.md) --- # How to Understand Current Crypto Market Conditions | Robuxio Research Source: https://robuxio.com/research/how-to-understand-current-market-conditions Markdown: https://robuxio.com/research/how-to-understand-current-market-conditions.md A simple systematic trading model to read current crypto market conditions: short-term momentum on small vs large coins, and what mean reversion shows. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # How to Understand Current Crypto Market Conditions Research • Pavel Kycek • October 23, 2024 Short-term momentum struggled on small coins, while mean reversion performed well across both small and large coins. Momentum is stable on bigger coins. Learn more in this analysis. ## Understanding Market Conditions ![Futures Universe](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-market-conditions%2Ffutures-universe.png&w=1920&q=75) ![Entire Futures Universe](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-market-conditions%2FEntire-Futures-Universe.png&w=1920&q=75) Different market conditions favor different trading strategies. By analyzing how various approaches perform across market caps and timeframes, we can better understand the current market regime. ![Top 20 Coins Analysis](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-market-conditions%2Ftop20.png&w=1920&q=75) ## Our Analysis Framework We tested two fundamental trading strategies applied to different market segments: ### Short-Term Momentum Long This approach purchases coins showing recent price appreciation, betting on trend continuation. ### Mean Reversion Long This strategy buys coins that have deviated from their average price, anticipating a return to baseline levels. ## Key Findings ### Top 20 Coins by Volume Short-term momentum had a hard time on small coins this year. The strategy struggled to generate consistent returns in the smaller cap segment. Mean reversion demonstrated strong results across both asset sizes, proving to be a more reliable approach regardless of market cap. ### Entire Crypto Futures Market Mean reversion continued performing well on both large and small coins. The strategy's edge persisted across the entire tradable universe. Momentum showed greater stability specifically in higher-capitalization coins. Larger caps provide more liquidity and more reliable trend signals. ## What This Means for Traders ### In Current Conditions: - Focus momentum strategies on large caps - More reliable signals, better liquidity - Use mean reversion on oversold opportunities - Works across the board - Be cautious with small-cap momentum - Higher noise, more whipsaws - Diversify approaches - No single strategy dominates in all conditions ### Regime Indicators Signs the market may be shifting: - Momentum performance divergence between large and small caps - Mean reversion becoming less effective (strong trending market) - Increased correlation across all assets ## Practical Application ### For Large-Cap Trading: - Continue using momentum strategies - Look for established trends on 7-30 day timeframes - Add mean reversion for oversold bounces ### For Small-Cap Trading: - Prioritize mean reversion over momentum - Avoid short-term momentum signals - Wait for strong trend confirmation before following ## Important Note These models exclude fees and slippage. Robuxio trades a broader universe for enhanced volatility opportunities but requires patience. ## Conclusion Market conditions constantly change, and successful traders adapt their approach accordingly. By monitoring how different strategies perform across market segments, you can better position your portfolio for current conditions. The key insight: what works on large caps doesn't always work on small caps, and vice versa. Tailor your approach to the specific market segment you're trading. Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/how-to-understand-current-market-conditions.md) --- # The Momentum Effect on Cryptocurrencies | Robuxio Research Source: https://robuxio.com/research/momentum-effect-on-cryptocurrencies Markdown: https://robuxio.com/research/momentum-effect-on-cryptocurrencies.md Quantifying the momentum effect in crypto: why it's structurally stronger than in traditional asset classes, and the implications for systematic strategies. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # The Momentum Effect on Cryptocurrencies Research • Pavel Kycek • June 10, 2024 Understanding the Momentum Effect in Crypto Markets: This research explores the momentum effect in crypto and develops a trading strategy based on it. ## What is the Momentum Effect? The momentum effect describes how rising asset prices tend to continue rising and falling prices continue falling. This creates opportunities for directional trading strategies. ![Momentum Effect](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Fmomentum-effect.png&w=1920&q=75) ![Momentum Analysis 1](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Funnamed-4.png&w=1920&q=75) ## Historical Research Studies in equities have verified the momentum effect over monthly-to-yearly periods. The effect was first documented by Jegadeesh and Titman (1993) in equity markets. They found that buying past winners and selling past losers generated significant excess returns. However, as markets become more liquid and efficient, short-term momentum increasingly triggers mean reversion instead. Our research extends this analysis to cryptocurrency markets. ## Three Momentum Timeframes Tested Using Binance futures data, we tested multiple lookback periods: ![Momentum Analysis 2](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Funnamed-5.png&w=1920&q=75) ![Momentum Analysis 3](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Funnamed-6.png&w=1920&q=75) ### 1-Day Momentum Strong momentum in 2021's bull market. However, the long-short net position showed steady loss from late 2021 onward, suggesting market maturation. Short-term momentum is becoming less reliable as the crypto market evolves. ### 7-Day Momentum By far the most stable in this period. 7-day momentum demonstrated consistent profitability throughout the research window. This timeframe captures meaningful trends while filtering out daily noise. ### 30-Day Momentum Exhibited mean-reversion characteristics starting September 2023, suggesting weaker signal strength in faster crypto markets. Longer-term momentum signals may be arriving too late in the rapidly evolving crypto space. ![Momentum Analysis 4](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Funnamed-7.png&w=1920&q=75) ![Momentum Analysis 5](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-momentum%2Funnamed-8.png&w=1920&q=75) ## Building a Momentum Strategy Based on our research, here's a practical momentum strategy as a benchmark: ### Basic Strategy Rules - Calculate momentum for all coins - Buy the 10 fastest-growing cryptocurrencies - Close positions after 3 days - Add a trend filter to improve results ### Entry Rules - Calculate 7-day return for all coins - Select top 10 by momentum - Wait for pullback to 2-day low - Enter position ### Exit Rules - Exit if coin drops out of top 30 by momentum - Exit if 20-day moving average is crossed - Maximum hold time: 14 days ### Position Sizing - Equal weight across 10 positions - Maximum 3% risk per position - Reduce size when market regime is bearish ## Key Findings Summary Lookback Annualized Return Sharpe Ratio 1-day +32% 0.82 7-day +67% 1.24 14-day +58% 1.15 30-day +41% 0.95 90-day +28% 0.78 The sweet spot is 7-14 days. Shorter periods have too much noise; longer periods capture trends too late. ## Momentum Crashes Momentum strategies are vulnerable to sudden reversals, typically after market stress events: - March 2020: -42% momentum drawdown - May 2021: -38% momentum drawdown - November 2022: -35% momentum drawdown These crashes can be partially mitigated with regime filters. ## Momentum Enhancement Techniques ### 1. Volume Confirmation Only trade momentum when accompanied by above-average volume. ### 2. Regime Filter Reduce exposure when Bitcoin is in a downtrend. ### 3. Risk-Off Trigger Pause momentum trading during high-volatility events. ### 4. Sector Rotation Momentum within sectors (DeFi, L1, Gaming) rather than entire market. ## Conclusion Crypto markets show clear momentum characteristics suitable for trend-following strategies. The market is shifting toward longer-term trend models combined with short-term mean-reversion approaches. The momentum effect is alive and well in cryptocurrency markets. Mid-term momentum (7-14 days) offers the best risk-adjusted returns. However, momentum strategies require: - Active risk management - Regime awareness - Preparation for momentum crashes When implemented correctly, momentum can be a powerful component of a systematic crypto trading portfolio. Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/momentum-effect-on-cryptocurrencies.md) --- # Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not. | Robuxio Research Source: https://robuxio.com/research/most-crypto-allocations-are-down-in-2026 Markdown: https://robuxio.com/research/most-crypto-allocations-are-down-in-2026.md Most crypto allocations are down in 2026. A systematic, all-weather portfolio of uncorrelated sleeves is not. Here is the design that made the difference. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Most Crypto Allocations Are Down in 2026. A Systematic Approach Is Not. Research • Pavel Kycek • June 11, 2026 If you had passive exposure to crypto this year, 2026 has been painful. Bitcoin is down over 30% as of today (11th June). The broader market has performed even worse, and most actively managed crypto products have also faced significant drawdowns this year. Meanwhile, the systematic crypto portfolio discussed is up double digits over the same period, continuing to deliver returns across regimes while having much shallower drawdowns than passive crypto exposure. Crypto HV Robuxio Crypto HV +17.77% YTD return Crypto LV Robuxio Crypto LV +10.47% YTD return Bitcoin Bitcoin -30.76% YTD return Top 50 Binance Top 50 -41.93% YTD return The gap between this portfolio and the broader market does not come from picking the right coins or from predicting this year's bear market. It comes from the all-weather algorithmic approach that underpins every portfolio design: multiple uncorrelated return sleeves, each built to perform in a different market condition, so that the portfolio as a whole expresses a far broader set of bets than long-only beta. ## The Mistake Many Made Crypto's first decade produced returns that broke people's intuition. Bitcoin compounded through multiple 10x moves, and the lesson most market participants internalised was to be long and early on coins. This was the thesis that the majority of the industry built their products around: long momentum. Buy strength, ride the trend, endure the drawdowns, wait for the next leg up. It worked for years, which made it look like skill rather than what it largely was: a single bet on a market regime persisting. This is hindsight bias doing what it always does. The exponential returns of the past became the design assumption for future products, precisely as the conditions that produced those returns were fading. Bitcoin's risk and return profile has changed as the asset has matured. In 2017, 57% of trading days saw a 10-day move exceeding ±10%. By 2025, that had fallen to 10%. Rolling 4-year volatility has followed the same path, which makes a repeat of Bitcoin's early return profile harder to underwrite. Bitcoin (BTC): Days with |ROC(10)| > 10% Percentage of trading days per year where Bitcoin's 10-day rate of change exceeded ±10% in either direction. Snapshot through 2026-06-10. Investors looking beyond Bitcoin often assume the broader crypto market offers the same upside with more diversification. The data says otherwise. Of the 20 largest cryptoassets bought at the November 2021 peak, none have shown positive returns by June 2026. Buy & Hold Returns: Top 20 Altcoins Coin Return Coin Return BTC -7.48% BNB -9.02% XRP -12.72% XLM -53.76% ETH -65.72% DOGE -69.95% BCH -72.13% SOL -73.97% LINK -77.57% LTC -83.74% UNI -90.60% SHIB -91.75% ADA -92.72% AVAX -93.27% MATIC -95.59% ALGO -95.86% VET -97.27% DOT -98.24% AXS -99.43% LUNA -100.00% Returns for the top 20 cryptocurrencies by market cap, held passively from 11 Nov 2021 to 10 Jun 2026. The equal-weighted Top 50 Binance Futures universe tells the same story: high volatility, no secular upward trend, and passive exposure compounding losses rather than returns. Yet the broader crypto market still offers unparalleled opportunity in a different form: elevated volatility. That volatility is damaging for passive investors, but it creates a wide opportunity set for systematic strategies designed to trade both directions instead of simply betting on long momentum. ## The Two Return Sources That Were Neglected Whilst long momentum was the consensus trade, two other return sources were left almost untouched. ### Short Exposure Most allocators do not run a systematic short sleeve and if they do, it is often not weighted proportionally to the long sleeve. The edge is smaller than the long side, the long-biased culture of the asset class works against it, and shorting without rigorous risk management is genuinely dangerous: squeezes are violent, funding costs bite, and a single unmanaged position can do real damage. Shorting crypto safely is mainly a risk management and infrastructure problem. It requires 24/7 automated monitoring, hard per-coin position caps, liquidity-aware execution that can exit a position during a squeeze without moving the market, and black-swan stop-loss mechanisms that act promptly. Infrastructure includes execution colocated with the major exchanges, pre-trade risk checks on every order, and order slicing that keeps even fast exits from leaving a significant footprint on the book. But those are arguments for doing it carefully, not for not doing it. Short systematic strategies do two jobs no long allocation can do: - They generate returns in bear markets, exactly when everything else in a crypto portfolio is bleeding. - They reduce portfolio volatility, smoothing the equity curve rather than amplifying it. In research, the correlation between long and short momentum strategies is -0.06, offering an additional uncorrelated return sleeve. Short Sleeve Contribution — 2026 YTD Cumulative contribution to Crypto HV portfolio return, scaled by live capital usage. 31 Dec 2025 – 4 Jun 2026. Source: Robuxio internal attribution. ### Mean Reversion The second neglected source is the most stable edge in crypto: mean reversion. Crypto markets are still dominated by retail flow, liquidity is fragmented across venues, and institutional arbitrage capital is often thin. The result is that prices routinely overshoot in both directions, and those dislocations are frequent, short-lived, and statistically exploitable. Mean reversion has been flat so far in 2026 due to the low volatility regime. However, as its correlation to long momentum is -0.16 and it performs well in volatile sideways regimes it is a must for every all-weather crypto portfolio. Mean Reversion Sleeve Contribution — 2026 YTD Cumulative contribution to Crypto HV portfolio return, scaled by live capital usage. 31 Dec 2025 – 4 Jun 2026. Source: Robuxio internal attribution. ## A Structural Error Many Allocators Make There is a quieter structural error that compounds the first two: most crypto products trade a predefined basket. Bitcoin, Ethereum, and a hand-picked list of large caps chosen at some point in the past, usually based on what had already gone up. The problem is that crypto's leaderboard changes frequently. Of the 20 largest cryptocurrencies held from the late 2021 market peak, none have shown positive returns by May 2026. LUNA went to zero. DOT lost 97.7%. ADA lost 89%. A static basket does not just miss the new winners. It systematically accumulates the old ones on their way down. Buy & Hold Returns Since the Nov-2021 Peak, Ranked Top 20 cryptocurrencies by market cap, held passively from 11 Nov 2021 to 10 Jun 2026 — ranked best to worst. Snapshot through 2026-06-10. The portfolio instead trades a dynamic universe: the top 40 crypto futures by volume and liquidity, reconstituted daily. This keeps the strategies pointed at where the volatility and liquidity actually are, eliminates selection bias, and means the portfolio never has to be right about which coins "matter" over the next period. ## How the Portfolio Is Actually Built The Robuxio portfolio consists of more than 20 uncorrelated systematic strategies, organised into independently operated sleeves and assembled under one risk framework. Each sleeve owns a different source of return: Mean Reversion (Long) Reversal of short-term overreactions to the downside Holding: Hours to several days Role: Buys oversold dislocations in BTC, ETH, and high-cap alts Crypto markets routinely overshoot on sentiment-driven or forced-selling episodes — leverage cascades, liquidations, and panic selling. This sleeve systematically identifies short-term oversold conditions in liquid majors and the broader top-40 universe, and captures the subsequent mean reversion. Holding periods stay short because edges decay quickly in 24/7 markets. Mean Reversion (Short) Mean-reverting overshoots to the upside Holding: Hours to several days Momentum (Long) Trend persistence in directional markets Holding: Days to weeks Momentum (Short) Trend persistence to the downside Holding: Days to weeks Crisis Overlay Tail protection Holding: Always on Sleeve Alpha Source Holding Role in Portfolio Details Mean Reversion (Long) Reversal of short-term overreactions to the downside Hours to several days Buys oversold dislocations in BTC, ETH, and high-cap alts Holding Time: Hours to several days Crypto markets routinely overshoot on sentiment-driven or forced-selling episodes — leverage cascades, liquidations, and panic selling. This sleeve systematically identifies short-term oversold conditions in liquid majors and the broader top-40 universe, and captures the subsequent mean reversion. Holding periods stay short because edges decay quickly in 24/7 markets. Mean Reversion (Short) Mean-reverting overshoots to the upside Hours to several days Fades parabolic blow-offs after sentiment-driven exhaustion thrusts Momentum (Long) Trend persistence in directional markets Days to weeks Captures sustained uptrends across the top-40 universe Momentum (Short) Trend persistence to the downside Days to weeks Profits from persistent downtrends in alts and majors Crisis Overlay Tail protection Always on Protects against extreme adverse moves, exploits, and flash events The design principle is simple: the regime where one strategy type underperforms is typically the regime where another generates returns. - In volatile, range-bound markets, the mean reversion sleeves do the work while momentum is scaled back. - In strong uptrends, long momentum dominates. - In corrections, mean reversion long buys the dislocations while momentum short protects. - In a prolonged bear market, the year we are living through now, the short sleeves carry the portfolio while long exposure scales down automatically. On top of the sleeves sits a portfolio-level risk layer: per-coin position caps based on liquidity and realized volatility, a dynamic volatility target that adapts gross exposure to the market regime, black-swan stop-loss mechanisms for events no model predicts, and 24/7 automated monitoring. ## Why 2026 Has Rewarded This Design So Far Nothing about this year surprised the portfolio, because the portfolio was never built on an opinion about this year. As the market rolled over, the long momentum sleeve scaled itself down and the short momentum sleeve found persistent downtrends across falling coins. Meanwhile the dynamic universe kept rotating the book toward where the liquidity and movement actually were, rather than holding coins that face massive drawdowns and may never recover. The result, across regimes rather than within one: ### Annual Returns Year Robuxio Crypto HV Robuxio Crypto LV Bitcoin 2026 YTD +16.5% +9.8% -29.8% 2025 +6.4% +7.1% -6.4% 2024 +255.9% +106.1% +121.1% 2023 +256.0% +92.5% +155.9% 2022 +182.9% +80.3% -64.2% Calendar-year returns, Robuxio GAV (gross of fees). Snapshot through 2026-06-10. ## Nobody Knows Where We Are Going It would be easy to read our portfolio performance this year as a story about being positioned for a bear market. But this is not the case. Our portfolio was not positioned for a bear market. It was positioned for not knowing. Nobody knows where the crypto market ends up from here. The market could rally back to its highs by December, grind sideways for two years, or fall another 50%. Anyone trying to predict exactly where the market will end up has the odds stacked against them. All buy-and-hold crypto portfolios are structurally committed to a single outcome: long momentum on a fixed list of coins. An unbiased portfolio makes the opposite commitment. By holding uncorrelated sleeves that each earn in a different regime, it never needs to forecast which regime comes next. If the market rallies, the long momentum sleeve scales up. If it keeps falling, the short sleeve performs. If it chops, mean reversion does the work. COVID-19 Crash & V-Recovery 2020–2021 Bull Market Luna / 3AC Collapse FTX Collapse & Contagion Spot-ETF Approval Rally ATH Through 10th Oct Crash BTC lost ~50% in two weeks of forced deleveraging, then began the parabolic 2020–21 bull run. A stress test for crypto strategies during cross-asset liquidations. Portfolio behaviour across distinct historical market regimes — crashes, rallies, and prolonged bear markets. Rebased to 0% at each window's start. Same data as robuxio.com/crypto. To be direct about the trade-off: the well-known weakness of any directional algorithmic approach is a prolonged, low volatility sideways market. When prices neither trend nor overshoot, momentum has nothing to ride and mean reversion has few dislocations to harvest. In these environments returns tend to be muted and drawdowns are likely. However, volatility is cyclical: periods of compression have historically resolved into expansion, in crypto more violently than anywhere else, and quiet regimes have never persisted. The portfolio is built for a full cycle, three years and beyond, not for any single month or quarter. Over that horizon, shallower drawdowns and uncorrelated return sources compound into substantially higher return per unit of risk. The most expensive position in 2026 was certainty. The best protection against the next 2026 is a directionally unbiased all-weather portfolio. Keep exploring ## Want to dig deeper? Pick a starting point. The strategy page shows how the portfolios are built, the reports show what they are doing live, and the data is downloadable for your own analysis. [The strategy The Crypto Portfolios Full methodology, risk framework, and live performance of the HV and LV portfolios. Explore the strategy →](https://robuxio.com/crypto)[Monthly Performance reports Live portfolio reporting with attribution and commentary. View reports →](https://robuxio.com/crypto/reports)[Downloads Portfolio data Factsheets and daily returns — CSV, PDF, or JSON. Open data →](https://robuxio.com/data) Or, if you've seen enough, [book a call](https://robuxio.com/call) with the team. [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/most-crypto-allocations-are-down-in-2026.md) --- # Profit Targets Hurt Performance — Trend & Breakout | Robuxio Research Source: https://robuxio.com/research/profit-targets-hurt-performance Markdown: https://robuxio.com/research/profit-targets-hurt-performance.md Profit targets reduce performance, especially in trend and breakout strategies. The data shows letting winners run beats taking profit early. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Profit Targets Hurt Performance — Trend & Breakout Research • Pavel Kycek • August 20, 2024 Profit Targets Hurt Performance: Especially in Trend and Breakout Strategies. ## Maximum Favorable Excursion (MFE) To understand why profit targets hurt performance, we need to look at Maximum Favorable Excursion (MFE) – the maximum amount of profit that was available while a trade was open. ![Profit Targets Analysis](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-profit-targets%2Fprofit-targets.png&w=1920&q=75) ![Percentage MFE](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-profit-targets%2FPctMFE.png&w=1920&q=75) This analysis helps us understand strategy characteristics and identify outliers – the big winning trades that make directional strategies profitable. ## The Profit Target Paradox Here's the paradox: while profit targets increase win rate stability, they damage overall returns. In our Momentum Catcher strategy example: - A 10% profit target boosted win percentage by 20% - But it reduced overall performance by 65% ![Win Distribution](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-profit-targets%2Fwin.png&w=1920&q=75) ![Profit Targets Comparison](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-profit-targets%2FProfit-Targets-1.png&w=1920&q=75) Why? Because directional strategies succeed by capturing major outlier moves. These are the trades that turn a losing month into a winning year. Artificial profit targets cap these opportunities. ## Diminishing Impact of Larger Targets ![Target Hits](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-profit-targets%2Ftarget-hits.png&w=1920&q=75) Larger profit targets have less influence on strategy performance because they're hit less frequently. A target that's only hit 6% of the time provides minimal value – you're barely affecting the strategy at all, but you're still capping your best trades. ## Why Profit Targets Contradict Directional Strategies The core philosophy of trend following and breakout trading is simple: cut losers quickly, let winners run. Profit targets directly contradict "let winners run." You're artificially constraining your profitable opportunities when the market is doing exactly what you predicted. Think about it: - BTC 2020-2021: 10x+ move - ETH 2020-2021: 15x+ move - SOL 2020-2021: 100x+ move A 2x profit target captures 2x. Letting it run captures 10x-100x. The math is clear. ## Better Exit Alternatives Instead of rigid profit targets, consider these approaches: ### For Trend and Longer-Term Strategies Trailing exits – Let the market tell you when the trend is over. A trailing stop follows the price up and exits when momentum reverses. ### For Shorter Timeframe Strategies Winning trade exits – Exit based on specific price action or indicator signals rather than arbitrary percentage targets. ### For Momentum Strategies Time stops – Exit after a certain period. This works well for short-term momentum because the strategy is designed to capture quick moves. ## When Profit Targets Make Sense ### Mean Reversion Mean reversion trades expect prices to return to normal, not continue trending. Small profit targets (1.5x-2x) align with this expectation and can improve performance. ### Scalping High-frequency strategies need quick exits. Profit targets help manage rapid position turnover. ### Psychological Comfort If you psychologically cannot handle giving back open profits, a wide profit target (5x+) may help you stay in trades longer than you otherwise would. ## Conclusion Exit logic should align with entry logic. Since markets remain unpredictable, rigid profit targets undermine directional strategy potential by artificially constraining profitable opportunities. Profit targets feel good psychologically – you're "locking in" gains. But for trend and breakout strategies, they systematically hurt performance by cutting your best trades short. The hardest part of trading isn't finding good entries. It's staying in winning trades long enough to let them become big winners. Let your winners run. Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/profit-targets-hurt-performance.md) --- # Trading Myth: Always Use a Stop Loss | Robuxio Research Source: https://robuxio.com/research/trading-myth-always-use-a-stop-loss Markdown: https://robuxio.com/research/trading-myth-always-use-a-stop-loss.md Conventional wisdom says you must always trade with a stop loss. The systematic data tests that claim — and reveals where stop losses help and hurt. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # Trading Myth: Always Use a Stop Loss Research • Pavel Kycek • July 15, 2024 It is repeated over and over again that stop loss is necessary. And those who trade without one are doomed. But is it really essential? ## The Conventional Wisdom "Always use a stop loss" is perhaps the most repeated advice in trading. The logic seems unassailable: - Limits your losses - Prevents emotional decisions - Protects your capital But like many things in trading, the truth is more nuanced. ## Maximum Adverse Excursion (MAE) Analysis To understand how stop losses affect strategy performance, we use Maximum Adverse Excursion (MAE) – the largest loss suffered by a trade while it is open. ![MAE Analysis](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2Fmae-analysis.png&w=1920&q=75) ![Trades with 20% MAE or Worse](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2FTrades-with-20-MAE-or-worse.png&w=1920&q=75) ## The Surprising Finding Looking at our momentum breakout strategy, we found something counterintuitive: trades experiencing severe temporary losses (exceeding -20%) frequently recovered and ended profitably or with minimal losses. ![Mean Reverting Characteristics](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2FMean-reverting-characteristics-of-above-average-MAE.png&w=1920&q=75) This demonstrates that markets tend to revert during extreme moves, making premature exit strategies counterproductive. ## Performance Comparison We tested the same strategy with and without stops: ![Performance Comparison 1](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2FPerformance-comparison-1.png&w=1920&q=75) ![Trades with 10% MAE or Worse](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2FTrades-with-10-MAE-or-worse.png&w=1920&q=75) The results were striking: - 20% Stop Loss : Would have resulted in 46% more losses than no stop loss - 10% Stop Loss : Would have resulted in 27% more losses than no stop loss ![Performance Comparison 2](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch-stop-loss%2FPerformance-comparison-2.png&w=1920&q=75) Even stopping out on trades that eventually declined to -20%, -30%, or lower, the stop loss strategy underperformed. ## Why Stops Hurt Mean Reversion Mean reversion works by buying "oversold" assets. But how do you know when oversold becomes "more oversold"? You don't. A mean reversion trade that goes against you may simply be offering a better entry. A stop loss forces you to exit when you should be holding (or adding). ## When Stop Losses Help ### Trend Following Trend following REQUIRES stops. The strategy is based on cutting losers quickly. With stops: Many small losses, occasional big wins = Profitable Without stops: Few big losses wipe out all gains = Disaster ### Breakout Trading Similar to trend following – you need to exit failed breakouts quickly. ### High Leverage If you're using significant leverage, stops prevent catastrophic losses. ### Shorting When shorting, using stop losses as protective measures against "black swans" makes sense. ## Better Risk Management Approaches If not stop losses, then what? ### 1. Portfolio-Level Risk Management Instead of individual trade stops, manage risk at the portfolio level. Diversify across uncorrelated strategies. ### 2. Position Sizing Risk less per trade. If a 20% adverse move is acceptable, size your position so that 20% move = 1-2% of account. ### 3. Proper Exit Strategies Develop exit strategies based on research, not arbitrary price levels. Time stops, trailing stops, or indicator-based exits. ### 4. Reconsider Leverage If you need tight stops to manage risk, you may be using too much leverage. ## The Middle Ground Some traders use a "catastrophe stop" – a very wide stop that only triggers if something is fundamentally wrong: - Normal trade: No stop - Catastrophe stop: 25-30% below entry This protects against true disasters while avoiding whipsaws. ## Conclusion "Always use a stop loss" is not universal truth. Stop loss functions as risk management rather than exit strategy. The right approach depends on: - Your strategy – Trend following needs stops; mean reversion may not - Your timeframe – Shorter timeframes = tighter stops make sense - Your position sizing – Smaller positions can survive without stops - Your leverage – Higher leverage requires tighter risk controls Proper research and risk management are essential for sustainable trading success. Question everything – including the most repeated advice. Pavel – [Robuxio](https://www.robuxio.com/) [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/trading-myth-always-use-a-stop-loss.md) --- # When Mean Reversion Breaks Down in Crypto | Robuxio Research Source: https://robuxio.com/research/when-mean-reversion-breaks-down-in-crypto Markdown: https://robuxio.com/research/when-mean-reversion-breaks-down-in-crypto.md Mean reversion is one of the most stable edges in crypto. At what magnitude of selloff does the edge appear, and where does it break down? Tested results. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) [← Research](https://robuxio.com/research/articles) # When Mean Reversion Breaks Down in Crypto Research • Pavel Kycek • March 18, 2026 Mean reversion has historically been one of the most stable edges in crypto. When a coin has a large selloff, the statistical expectation is that it reverts toward its prior mean. The question is, at what magnitude of selloff does this edge exist, and where does it break down? We tested MR long setups across two universes on Binance perpetual futures, 2020-2026. ## Dataset 1: Top 40 Coins by Volume For 5-day drops, the MR long edge is concentrated in the -30% to -50% zone. Beyond -50%, these setups are no longer attractive MR longs. ![Top 40 coins — forward returns after 5-day drops](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmean-reversion-breakdown%2Ftop40-5day-drops.png&w=1920&q=75) For 3-day drops, the same pattern holds but the breakdown occurs earlier. The effective zone narrows to -30% to -40%. ![Full Binance futures universe — forward returns after 5-day drops](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmean-reversion-breakdown%2Ffull-universe-5day-drops.png&w=1920&q=75) ## Dataset 2: Full Binance Futures Universe (704 Coins) Expanding to the full universe, the MR bounce still exists but is clearly weaker. Once the drop exceeds -50%, the setup breaks down fast. ![Top 40 coins — forward returns after 3-day drops](https://robuxio.com/_next/image?url=%2Fimages%2Fblog%2Fresearch%2Fmean-reversion-breakdown%2Ftop40-3day-drops.png&w=1920&q=75) This is expected. The Top 40 coins have deeper liquidity, tighter spreads, and more institutional participation. These structural factors support mean reversion. In lower-liquidity coins, a -60% drop is more likely to reflect a coin that is broken. ## Key Takeaways - For Top 40 coins: MR longs work in the -30% to -50% zone on 5-day drops, -30% to -40% on 3-day drops - Beyond -50%, the setup usually stops behaving like a dip and starts behaving like a broken coin - In the full crypto futures universe, the same bounce exists but is weaker and breaks earlier - Tradable universe selection matters. Liquidity and market cap are built-in filters that improve MR performance Even though mean reversion has historically been a relatively stable edge in crypto, it requires a deeper understanding of the nuanced behaviour in your tradable universe. [All articles](https://robuxio.com/research/articles) Disclaimer: All information provided by Robuxio.com is intended solely for the purpose of studying topics related to crypto trading and is in no way intended as a specific investment or trading recommendation. We are not a registered broker or investment advisor. Trading and investing in financial instruments (and cryptocurrencies in particular) is high risk. The decision to trade cryptocurrencies is the responsibility of each individual and only they are fully responsible for their decisions. Share this article: [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/research/when-mean-reversion-breaks-down-in-crypto.md) --- # Robuxio Resources — Performance, Research, Education Source: https://robuxio.com/resources Markdown: https://robuxio.com/resources.md Live portfolio reporting, in-depth market research, and a full library of systematic trading education — everything Robuxio publishes, in one place. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) Resources # Everything in one place Access live portfolio reporting, in-depth market research, and a full library of systematic trading education. [Performance Live portfolio reporting Monthly reports, the running log of strategy changes, and downloadable factsheets and return data for the systematic crypto and equities portfolios. What's inside Monthly reports · Portfolio updates · Portfolio data Open the hub →](https://robuxio.com/performance)[Research Research and benchmarks The institutional framework behind our portfolios, live benchmarks against major indices, and ongoing research on systematic trading and market dynamics. What's inside Crypto whitepaper · Benchmarks · Research articles Open the hub →](https://robuxio.com/research)[Education Learn systematic trading A complete curriculum from foundations to running strategies live. The 16-part series, the masterclass, the book, asset-specific playbooks, and podcast interviews. What's inside Trading series · Playbooks · Interviews · Book · Course Open the hub →](https://robuxio.com/education) [Setup Crypto exchange setup guides (Binance, Bybit, BIT) Open →](https://robuxio.com/setup) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/resources.md) --- # Crypto Exchange Setup Guides — Binance, Bybit, BIT Source: https://robuxio.com/setup Markdown: https://robuxio.com/setup.md Step-by-step setup guides for connecting Binance, Bybit or BIT to Robuxio's systematic trading engine. Screenshots and API permissions for each exchange. --- [![Robuxio – Back to homepage](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Exchange Setup Guide Connect your preferred exchange to our trading engine and start trading our institutional-grade portfolios. ## Trading Setup Selection Choose your preferred exchange depending on regional availability. [![Binance logo](https://robuxio.com/images/setup/binance-logo.svg) Binance Robuxio's primary crypto derivatives platform with the largest tradable universe. Access Onboarding Guide](https://robuxio.com/setup/binance)[![Bybit logo](https://robuxio.com/images/setup/bybit-logo.svg) Bybit Leading crypto derivatives platform with streamlined API and collateral management. Access Onboarding Guide](https://robuxio.com/setup/bybit)[![BIT logo](https://robuxio.com/images/setup/bit-logo.svg) BIT Formerly Matrixport Subscribe to our portfolios without needing to connect to our trading engine directly. Access Onboarding Guide](https://robuxio.com/setup/bit)[![Equities ETI logo](https://robuxio.com/images/setup/equities-eti-logo.svg) Equities ETI Via Interactive Brokers Buy the exchange-listed Robuxio Systematic Equities ETI (ISIN DE000AMC0DZ1) — no API connection needed. How to Buy Guide](https://robuxio.com/equities/how-to-buy) --- # Binance Setup Guide — Connect API to Robuxio Source: https://robuxio.com/setup/binance Markdown: https://robuxio.com/setup/binance.md Connect your Binance account to Robuxio's systematic trading engine. Choose between USD, BTC-ETH, or BNFCR portfolios with full step-by-step API setup. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance Setup Guide Choose your portfolio type and follow the step-by-step guide to connect your Binance account to Robuxio. [Exchanges](https://robuxio.com/setup) / Binance - Collateral Type [Back](https://robuxio.com/setup) ## Choose Your Portfolio Collateral Choose your preferred collateral depending on whether you would like to accumulate USD, BTC or ETH. [USD Stablecoin Choose this collateral if you would like to accumulate returns in USD.](https://robuxio.com/setup/binance/usd)[BTC or ETH Choose this if you would like to accumulate your returns in BTC or ETH.](https://robuxio.com/setup/binance/btc-eth) EU trader using Binance Futures Credits? [Read our BNFCR guide](https://robuxio.com/setup/binance/bnfcr) --- # What Is BNFCR on Binance? Futures Credits Explained Source: https://robuxio.com/setup/binance/bnfcr Markdown: https://robuxio.com/setup/binance/bnfcr.md What BNFCR (Binance Futures Credits) is, how it works for EU traders, and how to swap BNFCR to USDT or USD with step-by-step instructions and screenshots. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance Futures Credits (BNFCR) Guide Everything EU traders need to know about BNFCR — transfers, swaps, withdrawals, and margin modes explained step by step. [Exchanges](https://robuxio.com/setup) / [Binance](https://robuxio.com/setup/binance) / BNFCR Guide [Back](https://robuxio.com/setup/binance) ## Binance Futures Credits (BNFCR) — What EU Traders Need to Know #### What is BNFCR? Binance Futures Credits (BNFCR) is Binance's trading mode for USDⓈ-M futures in regulated EU markets . Under this mode, all PNL, margin, and fees are displayed in BNFCR — where 1 BNFCR = 1 USD . When you deposit crypto (BTC, ETH, BNB, or USDC) into your Futures Wallet, everything is converted and tracked in BNFCR based on the USD value at that time. For example, depositing 0.5 BTC at $60,000 gives you 30,000 BNFCR. All your trading, PNL, and fees happen in BNFCR from that point on. To withdraw, you swap your BNFCR balance back to BTC, ETH, or BNB at the current market rate, then transfer to your Spot Wallet. #### Cannot Withdraw BNFCR Directly BNFCR is not a token you can transfer or withdraw. To get funds out, you must swap BNFCR to BTC, ETH, or BNB first, then transfer to your Spot Wallet for withdrawal. #### Permanent Upgrade Once you upgrade to Credits Trading Mode, the change cannot be undone . Your margin mode is locked to Cross Margin with Multi-Asset Mode. #### Key Details Supported Contracts USDⓈ-M futures contracts only Collateral Assets BTC, ETH, BNB, and USDC Margin Mode Cross Margin + Multi-Asset Mode (locked) API Trading Fully supported — API keys are not affected #### How Your BNFCR Balance Works Everything in your Futures Wallet is valued at its current USD price and shown as BNFCR. 1 BNFCR always equals $1 USD. 1,000 USDC × $1 = 1,000 BNFCR 0.3 BTC × $60,000 = 18,000 BNFCR 12 BNB × $600 = 7,200 BNFCR Total Balance = 26,200 BNFCR Website App ## How to Get Funds In Transfer assets from your Spot Wallet to your Futures Wallet on the Binance website. ### Open the Transfer Window On the Futures trading page, scroll down to the Asset widget in the bottom-right corner. Click Transfer . 1 ![Binance Futures trading page showing the Asset widget with Transfer button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Fasset-widget-transfer.png&w=3840&q=75) ### Select Asset and Transfer Choose the token you want to transfer into your Futures Wallet. Only BTC, ETH, BNB, and USDC are supported. Enter the amount and click Confirm . 2 ![Binance transfer dialog showing token selection dropdown with BTC, ETH, BNB, USDC options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Ftransfer-token-selection.png&w=3840&q=75) ### Verify Your Balance Once the transfer is complete, check your available balance under the Assets section. Your balance will be displayed in BNFCR (USD equivalent). 3 ![Binance Futures Asset section showing available balance displayed in BNFCR](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Favailable-balance.png&w=3840&q=75) ## How to Swap & Withdraw Swap BNFCR to crypto, then transfer out to your Spot Wallet. #### Why Swap? BNFCR cannot be withdrawn directly. To get your funds out, you need to swap BNFCR to BTC, ETH, or BNB at market value. Once swapped, transfer the crypto to your Spot Wallet and withdraw as usual. ### Open the Swap Function In the Asset widget at the bottom-right corner, click Swap . 1 ![Binance Futures Asset widget showing the Swap button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Fswap-button.png&w=3840&q=75) ### Choose Assets and Confirm Select the asset you want to swap from and to, then enter the amount. The maximum you can swap equals your available balance. Review the real-time exchange rate and the amount you'll receive. Click Confirm within the time limit, or the system will refresh the quote. 2 ![Binance Futures swap dialog showing asset selection, exchange rate, and confirm button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Fswap-asset-selection.png&w=3840&q=75) ### Transfer to Spot Wallet After swapping, go back to the Transfer function. Click the swap icon to change the direction (Futures → Spot). Enter the amount and click Confirm to move funds to your Spot Wallet for withdrawal. 3 ![Binance Futures transfer dialog configured to send funds from Futures wallet to Spot wallet](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbnfcr%2Fwebsite%2Ftransfer-out.png&w=3840&q=75) ### Available Swap Pairs Credits Trading Mode (EU) Swap From: BTC, ETH, BNB, USDC, FDUSD, BNFCR Swap To: BTC, ETH, BNB, BNFCR Normal Mode (non-Credits Trading Mode) Swap From: BTC, ETH, BNB, USDT, USDC, FDUSD, BNFCR Swap To: BTC, ETH, BNB ⚠️ Note: USDT can only be swapped to BTC, ETH, or BNB. USDT cannot be swapped to BNFCR and vice versa. #### Margin & Asset Modes After upgrading, your margin mode is set to Cross Margin Mode and your asset mode to Multi-Asset Mode . These settings are locked and cannot be changed while in Credits Trading Mode. ## Looking for Systematic Crypto Exposure? Robuxio provides institutional-grade algorithmic trading strategies for Binance — fully compatible with BNFCR mode. Let our trading engine handle the execution while you focus on growing your portfolio. [Book a Call](https://robuxio.com/call)[Read Our White Paper](https://robuxio.com/crypto/whitepaper)[Watch the Masterclass →](https://robuxio.com/course) --- # Binance BTC-ETH Setup: Classic EU or Portfolio Margin Source: https://robuxio.com/setup/binance/btc-eth Markdown: https://robuxio.com/setup/binance/btc-eth.md Set up Binance for Robuxio's BTC-ETH portfolio: Classic EU mode for EU clients or Portfolio Margin for non-EU. Both setups with API permissions detailed. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance BTC-ETH Portfolio Setup Choose between Classic EU mode or Portfolio Margin depending on your region and account type. [Exchanges](https://robuxio.com/setup) / [Binance - Collateral Type](https://robuxio.com/setup/binance) / BTC/ETH - Region Selection [Back](https://robuxio.com/setup/binance) ## Choose Your Region Select your jurisdiction for optimal trading mode configuration [European Union Classic Futures Mode Binance's EU-version of multi-asset futures accounts](https://robuxio.com/setup/binance/btc-eth/classic-eu)[Outside of European Union Portfolio Margin Mode Advanced portfolio margin capabilities with optimized capital efficiency](https://robuxio.com/setup/binance/btc-eth/portfolio-margin-non-eu) --- # Binance Classic EU Setup — BTC-ETH Trading Guide Source: https://robuxio.com/setup/binance/btc-eth/classic-eu Markdown: https://robuxio.com/setup/binance/btc-eth/classic-eu.md Step-by-step setup guide for EU clients on Binance Classic margin. Create API keys, configure your sub-account, and connect to Robuxio's BTC-ETH portfolio. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance Classic EU Setup Step-by-step guide for EU traders to connect Binance with Classic margin for BTC-ETH trading. [Exchanges](https://robuxio.com/setup) / [Binance - Collateral Type](https://robuxio.com/setup/binance) / [BTC/ETH - Region](https://robuxio.com/setup/binance/btc-eth) / EU Classic Mode [Back](https://robuxio.com/setup/binance/btc-eth) ## ETH/BTC Classic Futures Mode (EU) Setup for Bitcoin/Ethereum-based trading infrastructure deployment within the European Union: #### EU Classic Futures Mode ⚠️ Important Note: If you are planning on trading both ETH and BTC denominated portfolios, make sure that you create a separate sub account for each portfolio denomination. You should only have one type of collateral per sub account. Profit Denomination (EU): New trading profits will be made in BNFCR (Binance's USD-margined futures collateral token). Binance Futures Credits are not stablecoins. It can not be transferred or withdrawn to your Spot wallet. To withdraw, you must first convert it into a non-stablecoin crypto asset such as BTC, ETH, BNB, or other available assets. Auto-Exchange Protection: To ensure you don't pay a 2.5% conversion fee on BTC and ETH every time the Binance auto-exchange threshold is hit, we keep a larger buffer of BNFCR based on intra-day volatility. There is nothing you need to do here, it's just a note for you. ## Step-by-Step Configuration ### Navigate To Sub Accounts Management Navigate to Subaccounts Management 1 ![Binance dashboard navigation showing Sub Accounts Management menu option](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-subaccounts-management-menu.png&w=3840&q=75) ### Click Create Sub Account Click Create Subaccount 2 ![Binance Sub Accounts page with Create Sub Account button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-subaccount-button-eu.png&w=3840&q=75) ### Select Create with Email This allows switching later for the same user interface experience as the main account. ⚠️ Important: You must use a real email address (the email+alias@provider.com trick does not work). If needed, set up an email alias with your provider to manage this. Select "Create with Email" option Enter the verification code sent to the email and confirm. 3 ![Binance Create Sub Account form with email input field and verification options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-with-email-form.png&w=3840&q=75) ### Enable Futures & Enable Switch Enable Futures & Enable Switch 4 ![Binance sub account settings showing Enable Futures and Enable Switch toggles](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-enable-futures-switch.png&w=3840&q=75) ### API Management Click API Management or go directly [here](https://www.binance.com/en/my/settings/api-management) Navigate to API Management 5 ![Binance account menu showing API Management navigation option](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-api-management-menu-eu.png&w=3840&q=75) ### Create API Click Create API 6 ![Binance API Management page with Create API button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-api-button.png&w=3840&q=75) ### Configure API Keys Select the correct subaccount and give the key a name (e.g., "ROBUXIO") – this is only for reference, any name works. Configure your API key name 7 ![Binance API key configuration form with sub account selector and key name input](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-configure-api-key-name.png&w=3840&q=75) ### Copy API Credentials ⚠️ Critical: Copy your API Key and Secret Key immediately – they will only be shown once! Paste them into your Robuxio dashboard under "Settings" → "Profile" → "Add a new Profile" Copy your API credentials immediately 8 ![Binance API key creation success showing API Key and Secret Key with copy buttons](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-copy-api-credentials.png&w=3840&q=75) ### Configure IP Restrictions Press "Restrict Access To Trusted IPs Only" and input the 9 IP addresses below: Configure IP restrictions with trusted addresses 52.194.221.72 52.193.123.94 54.64.179.211 54.64.56.162 52.198.114.178 3.113.223.144 18.181.70.125 18.176.34.18 13.230.199.38 Copy IPs 9 ![Binance API IP restriction settings with trusted IP addresses input field](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-ip-restrictions-eu.png&w=3840&q=75) ### Enable Futures & Save Enable "Futures" permission and save your API keys Enable Futures and Save API keys 10 ![Binance API permissions page with Enable Futures checkbox and Save button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-enable-futures-save.png&w=3840&q=75) ### Transfer ETH/BTC Funds Navigate to Subaccounts Management and press on the "…" and press "Transfer In" Click "…" and select "Transfer In" At the top, select your Main Account (where you deposited ETH/BTC). Transfer funds into the Spot account of your new USD-M Futures subaccount. Transfer ETH/BTC from Main Account 11 ![Binance internal transfer form showing BTC/ETH transfer from Main Account to Sub Account](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-transfer-btc-eth-form-eu.png&w=3840&q=75) ### Setup Complete! Once the funds are in your sub account USD-M Futures account and you see them in your Robuxio dashboard you are all set! --- # Binance Portfolio Margin Setup — Non-EU BTC-ETH Guide Source: https://robuxio.com/setup/binance/btc-eth/portfolio-margin-non-eu Markdown: https://robuxio.com/setup/binance/btc-eth/portfolio-margin-non-eu.md Setup guide for non-EU clients on Binance Portfolio Margin. Maximize capital efficiency with cross-collateral for Robuxio's systematic crypto trading. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance Portfolio Margin Setup Setup guide for non-EU traders to maximize capital efficiency with cross-collateral BTC-ETH trading. [Exchanges](https://robuxio.com/setup) / [Binance - Collateral Type](https://robuxio.com/setup/binance) / [BTC/ETH - Region](https://robuxio.com/setup/binance/btc-eth) / Non-EU Portfolio Margin [Back](https://robuxio.com/setup/binance/btc-eth) ## ETH/BTC Portfolio Margin Mode (Non-EU) Advanced setup for Bitcoin/Ethereum-based trading setup outside the European Union #### Portfolio Margin Important Note For All Users: We trade USDT-settled futures offers as they offer the broadest tradable universe. While profits are realized in USDT, positive weekly profits are converted into BTC or ETH to accumulate them over time. This setup enables both the broadest tradable universe while taking advantage of the potential long-term collateral appreciation of BTC and ETH. Portfolio Margin Advantages: Compared to "Classic Futures Mode", activating "Portfolio Margin" will enable you to not be forced to have auto-exchange on your potential negative USD balances. This avoids extra fees from these automatic conversions. ## Step-by-Step Configuration ### Navigate To Sub Accounts Management Navigate to Subaccounts Management 1 ![Binance dashboard navigation showing Sub Accounts Management menu for Non-EU users](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-subaccounts-menu-noneu.png&w=3840&q=75) ### Click Create Sub Account Click Create Subaccount 2 ![Binance Sub Accounts page with Create Sub Account button for Portfolio Margin setup](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-subaccount-button-noneu.png&w=3840&q=75) ### Select Create with Email This allows switching later for the same user interface experience as the main account. ⚠️ Important: You must use a real email address (the email+alias@provider.com trick does not work). If needed, set up an email alias with your provider to manage this. Select "Create with Email" option Enter the verification code sent to the email and confirm. 3 ![Binance Create Sub Account form with email input field and verification options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-with-email-form.png&w=3840&q=75) ### Enable Portfolio Margin Key Advantage: Portfolio Margin mode provides better capital efficiency and avoids forced auto-swap fees. Enable Portfolio Margin 4 ![Binance sub account settings with Enable Portfolio Margin toggle highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-enable-portfolio-margin.png&w=3840&q=75) ### API Management Click API Management or go directly [here](https://www.binance.com/en/my/settings/api-management) Navigate to API Management 5 ![Binance account menu showing API Management navigation option for Non-EU users](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-api-management-noneu.png&w=3840&q=75) ### Create API Click Create API 6 ![Binance API Management page with Create API button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-api-button.png&w=3840&q=75) ### Configure API Keys Select the correct subaccount and give the key a name (e.g., "ROBUXIO") – this is only for reference, any name works. Configure your API key name 7 ![Binance API key configuration form with sub account selector and key name input](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-configure-api-key-name.png&w=3840&q=75) ### Copy API Credentials ⚠️ Critical: Copy your API Key and Secret Key immediately – they will only be shown once! Paste them into your Robuxio dashboard under "Settings" → "Profile" → "Add a new Profile" Copy your API credentials immediately 8 ![Binance API key creation success showing API Key and Secret Key with copy buttons](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-copy-api-credentials.png&w=3840&q=75) ### Configure IP Restrictions Press "Restrict Access To Trusted IPs Only" and input the 9 IP addresses below: Configure IP restrictions with trusted addresses 52.194.221.72 52.193.123.94 54.64.179.211 54.64.56.162 52.198.114.178 3.113.223.144 18.181.70.125 18.176.34.18 13.230.199.38 Copy IPs 9 ![Binance API IP restriction settings with Robuxio trusted IP addresses](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-ip-restrictions-noneu.png&w=3840&q=75) ### Enable Portfolio Margin Trading Enable "Portfolio Margin Trading", "Enable Spot & Margin Trading" and "Save" your API keys Enable Portfolio Margin Trading and Spot & Margin Trading 10 ![Binance API permissions with Portfolio Margin Trading and Spot & Margin Trading enabled](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-ip-restrictions-noneu.png&w=3840&q=75) ### Transfer to Portfolio Margin Navigate to Subaccounts Management and press on the "…" and press "Transfer In" Click "…" and select "Transfer In" At the top, select your Main Account (where you deposited BTC or ETH). Transfer funds into the Spot Account of your new PM subaccount. Transfer funds from Main Account to subaccount 11 ![Binance internal transfer form for moving funds to Portfolio Margin sub account](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-transfer-portfolio-margin.png&w=3840&q=75) ### Switch to Subaccount Click Switch Account and select the subaccount where you will run the portfolio. Switch to your subaccount 12 ![Binance account switcher dropdown showing available sub accounts to select](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-switch-subaccount.png&w=3840&q=75) ### Internal Transfer to Portfolio Margin Inside the subaccount, click Transfer. Click Transfer inside subaccount Transfer your BTC/ETH from Fiat and Spot to Portfolio Margin. Transfer BTC/ETH from Fiat and Spot to Portfolio Margin 13 ![Binance internal transfer showing BTC/ETH transfer from Spot wallet to Portfolio Margin](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-internal-transfer-pm.png&w=3840&q=75) ### Setup Complete! Once the funds are in your sub account USD-M Futures account and you see them in your Robuxio dashboard you are all set! --- # Binance USD Portfolio Setup — USDⓈ-M Futures Guide Source: https://robuxio.com/setup/binance/usd Markdown: https://robuxio.com/setup/binance/usd.md Configure your Binance account for USD-denominated systematic trading. API setup, sub-account creation, and risk limits for Robuxio's USD portfolio. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Binance USD Portfolio Setup Connect your Binance account for USD-denominated systematic trading with USDⓈ-M futures. [Exchanges](https://robuxio.com/setup) / [Binance - Collateral Type](https://robuxio.com/setup/binance) / USD Classic Mode [Back](https://robuxio.com/setup/binance) ## USD Classic Futures Configuration #### Regional Stablecoin Requirements EU Jurisdiction: USDT is not supported in the EU. The easiest alternative is to use USDC. Non-EU Jurisdiction: Both USDT and USDC are supported by our trading engine. Profit Denomination (EU): New trading profits will be made in BNFCR (Binance's USD-margined futures collateral token). Binance Futures Credits are not stablecoins. It can not be transferred or withdrawn to your Spot wallet. To withdraw, you must first convert it into a non-stablecoin crypto asset such as BTC, ETH, BNB, or other available assets. ## Step-by-Step Configuration ### Navigate To Sub Accounts Management Navigate to Subaccounts Management 1 ![Binance dashboard navigation showing Sub Accounts Management menu option](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-subaccounts-management-menu.png&w=3840&q=75) ### Click Create Subaccount Click Create Subaccount 2 ![Binance Sub Accounts page with Create Sub Account button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-subaccount-button-eu.png&w=3840&q=75) ### Select Create with Email This allows switching later for the same user interface experience as the main account. ⚠️ Important: You must use a real email address (the email+alias@provider.com trick does not work). If needed, set up an email alias with your provider to manage this. Select "Create with Email" option Enter the verification code sent to the email and confirm. 3 ![Binance Create Sub Account form with email input field and verification options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-with-email-form.png&w=3840&q=75) ### Enable Futures & Enable Switch Enable Futures & Enable Switch options 4 ![Binance sub account settings showing Enable Futures and Enable Switch toggles](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-enable-futures-switch.png&w=3840&q=75) ### Navigate To Sub Account API Management Navigate to API Management 5 ![Binance account menu showing API Management navigation option](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-api-management-menu-eu.png&w=3840&q=75) ### Create API Click Create API 6 ![Binance API Management page with Create API button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-create-api-button.png&w=3840&q=75) ### Configure API Keys Select the correct subaccount and give the key a name (e.g., "ROBUXIO") – this is only for reference, any name works. Select subaccount and name your API key 7 ![Binance API key configuration form with sub account selector and key name input](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-configure-api-key-name.png&w=3840&q=75) ### Copy API Credentials ⚠️ Critical: Copy your API Key and Secret Key immediately – they will only be shown once! Paste them into your Robuxio dashboard under "Settings" → "Profile" → "Add a new Profile" Copy your API credentials immediately 8 ![Binance API key creation success showing API Key and Secret Key with copy buttons](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-copy-api-credentials.png&w=3840&q=75) ### Configure IP Restrictions Press "Restrict Access To Trusted IPs Only" and input the 9 IP addresses below: Configure IP restrictions with trusted addresses 52.194.221.72 52.193.123.94 54.64.179.211 54.64.56.162 52.198.114.178 3.113.223.144 18.181.70.125 18.176.34.18 13.230.199.38 Copy IPs 9 ![Binance API IP restriction settings with Robuxio trusted IP addresses for USD mode](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-ip-restrictions-usd.png&w=3840&q=75) ### Enable Futures & Save Enable "Futures" permission and save your API keys Enable Futures and Save API keys 10 ![Binance API permissions page with Enable Futures checkbox and Save button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-enable-futures-save.png&w=3840&q=75) ### Transfer Funds Navigate to Subaccounts Management and press on the "…" and press "Transfer In" Click "…" and select "Transfer In" At the top, select your Main Account (where you deposited USDT/USDC). Transfer funds into the Spot account of your new USD-M Futures subaccount. Transfer funds from Main Account to subaccount 11 ![Binance internal transfer form showing USDT/USDC transfer from Main Account to Sub Account](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbinance%2Fbinance-transfer-btc-eth-form-eu.png&w=3840&q=75) ### Setup Complete! Once the funds are in your sub account USD-M Futures account and you see them in your Robuxio dashboard you are all set! --- # BIT Onboarding — Subscribe to Robuxio Strategies Source: https://robuxio.com/setup/bit Markdown: https://robuxio.com/setup/bit.md Step-by-step guide to create your BIT account, complete verification, and subscribe to Robuxio's systematic crypto portfolios via prime brokerage. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # BIT Onboarding Guide Step-by-step guide to create your BIT account, complete verification, and subscribe to Robuxio's systematic portfolios. [Exchanges](https://robuxio.com/setup) / BIT [Back](https://robuxio.com/setup) ## Portfolio Options Clients looking to allocate $50k+ can access our High Sharpe High Vol portfolios directly on BIT, without needing to connect to our trading engine via API or have access to Binance/Bybit Futures accounts. USD High Sharpe High Vol (USD-denominated) Minimum initial allocation: $50,000. PnL measured and settled in USD. Choose this if your goal is to grow your account in USD and want reporting and PnL in USD terms. Access Code: ZB063 BTC High Sharpe High Vol (Bitcoin-denominated) Minimum initial allocation: 0.5 BTC. BTC-settled and designed to accumulate BTC over time. Choose this if your goal is to grow your BTC stack and want reporting and PnL in BTC terms. Access Code: AB000 #### What You'll Need USDT or BTC to invest into our portfolios. If USDC is the only available stablecoin on your current exchange, you can deposit it onto BIT and convert it into USDT. ## Step-by-Step Onboarding Follow these steps to create your account, complete verification, deposit funds, and subscribe to your chosen portfolio. ### Part 1: Account Creation ### Sign Up For A BIT Account 1 ![BIT registration page showing email and password fields](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-signup.jpg&w=3840&q=75) Use the link below to sign up for a BIT account on your desktop. You will need to fill in your email and set a password. [https://invest.bit.com/newRegister/en](https://invest.bit.com/newRegister/en) ### Request Email Verification Code 2 ![BIT registration form with Get Code button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-signup-getcode.jpg&w=3840&q=75) Once you have filled in your email address and set your password, press "Get Code" to receive an email confirmation code. ### Complete Email Verification 3 ![BIT verification email showing the confirmation code](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-verification-email.jpg&w=3840&q=75) You will receive an email from noreply2@bit.com with your verification code. Input the verification code into the box next to the "Get Code" button and press "Sign Up". ### Download The BIT App 4 ![BIT app download page showing Android, Google Play, and App Store options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-download-app.jpg&w=3840&q=75) After signing up, download the BIT app to your phone. Android: [Download from Google Play](https://play.google.com/store/apps/details?id=com.matrixport.mark&pcampaignid=web_share) iPhone: [Download from the App Store](https://apps.apple.com/us/app/bit-fka-matrixport-cryptolab/id1488557973) ⚠️ Some iPhone users may not find the app in their regional App Store. If so, download [TestFlight](https://apps.apple.com/app/testflight/id899247664) first, then follow [this TestFlight guide](https://testflight.apple.com/join/s5rARDvM). ### Login To The BIT App 5 ![BIT app login screen with email and password fields](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-login.jpg&w=3840&q=75) Open the BIT app and login with the same credentials you created on the desktop sign-up page. ### Part 2: Identity Verification & Security ### Navigate To Identity Verification 6 ![BIT app home screen showing profile icon and navigation](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-home.jpg&w=3840&q=75) Tap your profile icon in the top-left corner, then select "Identity Verification" from the settings menu. ### Complete KYC Requirements 7 ![BIT Identity Verification page showing Lv.1 and Lv.2 verification options](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-identity-verification.png&w=3840&q=75) Choose whether you are verifying as an institution or an individual . ⚠️ Important: Make sure to complete verification for both Lv.1 and Lv.2. ### Set Up Account Security 8 ![BIT Account Security settings with Authenticator setup prompt](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-account-security-authenticator.jpeg&w=3840&q=75) Navigate to your profile and select "Account Security". We strongly recommend setting up Two-Factor Authentication (Authenticator app). We also encourage adding further account security features. ### Part 3: Deposit Funds ### Navigate To Your Wallet 9 ![BIT app home screen showing Wallet and Deposit button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-wallet-deposit.jpg&w=3840&q=75) Tap "Wallet" in the bottom navigation bar, then tap "Deposit". ### Select Deposit Crypto 10 ![BIT deposit options showing Deposit Crypto selection](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-deposit-crypto-selection.png&w=3840&q=75) When the deposit pop-up appears, select "Deposit Crypto" under "I already own crypto". ### Select Your Cryptocurrency 11 ![BIT cryptocurrency selection showing USDT highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-select-usdt.png&w=3840&q=75) Select the cryptocurrency you would like to deposit — preferably USDT or BTC as you will be able to use them immediately in your portfolio. For EU residents who do not have access to USDT, you can deposit USDC and trade it to USDT on BIT. ### Choose The Deposit Network 12 ![BIT network selection showing available deposit networks](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-network-selection.png&w=3840&q=75) Select the network you would like to send the crypto with. ⚠️ Your selected network must match the withdrawal network on your current exchange, or the deposit will fail and cannot be returned. ### Copy Deposit Address & Send Funds 13 ![BIT deposit address page with QR code and address to copy](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-deposit-address-qr.png&w=3840&q=75) Copy the deposit address and use it as the destination address when sending from your current exchange. 🚨 VERY IMPORTANT: We recommend sending a small amount first to ensure you have the correct address. Triple-check that you have copy-pasted the address correctly. ### Confirm Deposit Arrival 14 ![BIT showing deposit in transit and confirmation email](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-deposit-in-transit.png&w=3840&q=75) Shortly after initiating your deposit, it will show as in transit. Once successful, you will receive a confirmation email. ### Part 4: Subscribe To Portfolio ### Navigate To The Strategy Page 15 ![BIT home screen showing Strategy icon among center product icons](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-strategy-home.jpg&w=3840&q=75) Once your deposit is confirmed, navigate to the "Strategy" page. It's one of the center icons on the home screen. ### Open The Strategy Search 16 ![BIT Strategy page with Investor tab and search bar](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-strategy-search.jpg&w=3840&q=75) Make sure you have "Investor" selected and open the search bar next to it. ### Find Your Portfolio Using Access Code 17 ![BIT strategy search bar with access code input and Get Strategy button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-strategy-access-code.png&w=3840&q=75) Type the corresponding access code for your chosen portfolio into the search bar: - High Sharpe High Vol (BTC collateral) → AB000 - High Sharpe High Vol (USDT collateral) → ZB063 Then press "Get Strategy". ### Confirm Your Portfolio 18 ![BIT portfolio confirmation pop-up showing High Sharpe High Vol with Invest Now button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-invest-now.jpg&w=3840&q=75) After pressing "Get Strategy", a pop-up will show your desired portfolio. Press "Invest Now". ### Open The Buy-in Page 19 ![BIT portfolio performance page with Buy button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-portfolio-buy-button.png&w=3840&q=75) Press "Buy" to open the allocation window where you can specify how much you would like to invest. ### Specify Your Allocation Amount 20 ![BIT buy page with amount input, access code, and Buy button](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-buy-page-amount.png&w=3840&q=75) Input the amount you would like to invest at the top. You may be asked to re-enter the access code: - BTC collateral → AB000 - USDT collateral → ZB063 Check the box confirming you have read the agreement and risk disclaimer, then press "Buy". ### Subscription Confirmed 21 ![BIT subscription success confirmation pop-up](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbit%2Fbit-subscription-success.png&w=3840&q=75) You will see a confirmation pop-up and receive a confirmation email once your subscription has been processed. ### You're All Set! Your funds are now allocated and trading will begin according to the monthly cycle. #### Important Notes Lock-up Period: Your funds will be locked up for 30 days at a time. Performance Fees: 30% performance fees are automatically deducted above the high watermark. NAV Reporting: The equity curve on BIT shows NAV (Net Asset Value) — performance fees are already deducted. Redemption Fee: BIT charges an additional 0.5% redemption fee when you withdraw from the portfolio. ### Need Help Getting Started? [Book a Call](https://robuxio.com/call) --- # Bybit Setup Guide — Connect API to Robuxio Source: https://robuxio.com/setup/bybit Markdown: https://robuxio.com/setup/bybit.md Step-by-step Bybit setup guide. Create API keys, configure sub-accounts, and connect to Robuxio for systematic crypto trading. Full screenshots included. --- [![Robuxio](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) # Bybit Setup Guide Connect your Bybit account to Robuxio's trading engine with API keys and sub-account configuration. [Exchanges](https://robuxio.com/setup) / Bybit [Back](https://robuxio.com/setup) ## BYBIT Onboarding Guide Step-by-step onboarding guide for all clients using Bybit #### Portfolio Margin Advantages Important Note For All Users: If you are planning on trading multiple denominations of portfolios (USDT, ETH, BTC), make sure that you create a separate sub account for each portfolio denomination. You should only have one type of collateral per sub account. Important Note For All BTC/ETH Collateral Users: We trade USDT-settled futures offers as they offer the broadest tradable universe. While profits are realized in USDT, positive weekly profits are converted into BTC or ETH to accumulate them over time. This setup enables both the broadest tradable universe while taking advantage of the potential long-term collateral appreciation of BTC and ETH. ## Step-by-Step Configuration ### Navigate To "Switch/Create Account" Navigate to the account switching section in your Bybit dashboard 1 ![Bybit dashboard showing the Switch/Create Account menu option in the top navigation bar](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-navigate-switch-create-account.png&w=3840&q=75) ### Create A Sub Account Click to create a new sub account for your portfolio 2 ![Bybit sub account creation dialog with Create button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-create-sub-account-button.png&w=3840&q=75) ### Choose A Nickname For Your Sub Account It doesn't have to be "ROBUXIO", but that's probably easiest to remember. Also make sure the account type is a "Unified Trading Account". Select "Create with Email" option 3 ![Bybit sub account nickname form showing Unified Trading Account type selection](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-nickname-unified-trading-account.png&w=3840&q=75) ### Navigate Into Your Sub Account Switch to the newly created sub account 4 ![Bybit account switcher showing list of sub accounts to select from](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-navigate-into-sub-account.png&w=3840&q=75) ### Navigate To API In Your Sub Account Go to the API management section within your sub account 5 ![Bybit sub account settings menu with API option highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-navigate-api-section.png&w=3840&q=75) ### Create New API Keys In Your Sub Account You might have to setup 2-Factor Authentication on your sub account prior to creating the API keys. 6 ![Bybit API management page with Create New Key button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-create-new-api-keys.png&w=3840&q=75) ### Choose "System-generated API Keys" Select the system-generated API keys option 7 ![Bybit API key type selection showing System-generated API Keys option](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-system-generated-api-keys.png&w=3840&q=75) ### Configure Your API Keys Set up the required permissions for your API keys 8 ![Bybit API key configuration form with trading permissions checkboxes](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-configure-api-permissions.png&w=3840&q=75) ### Your API Keys will be generated Do NOT press "Understood" until you have completed Step 10. 9 ![Bybit API key generation success screen showing API Key and Secret Key fields](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-api-keys-generated.png&w=3840&q=75) ### Copy Your API Key And Secret Key To The Robuxio Dashboard Make sure to copy them before pressing "Understood" as they will only be shown once and paste them into your Robuxio dashboard under "Settings" → "Profile" → "Add a new Profile" 10 ![Bybit API credentials display with copy buttons for API Key and Secret Key](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-copy-api-keys-robuxio.png&w=3840&q=75) ### Navigate Back To Your Asset Overview Enable "Portfolio Margin Trading", "Enable Spot & Margin Trading" and "Save" your API keys 11 ![Bybit asset overview page with Portfolio Margin and Spot & Margin Trading toggles](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-asset-overview-portfolio-margin.png&w=3840&q=75) ### Press "Transfer" Click the transfer button to move funds 12 ![Bybit assets page with Transfer button highlighted](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-transfer-button.png&w=3840&q=75) ### Transfer The Funds From Your Funding Wallet To Your UTA Sub Account Move your funds from the funding wallet to the Unified Trading Account 13 ![Bybit internal transfer form showing Funding Wallet to UTA Sub Account transfer](https://robuxio.com/_next/image?url=%2Fimages%2Fsetup%2Fbybit%2Fbybit-transfer-funds-uta.png&w=3840&q=75) ### Setup Complete! Once the funds are in your sub account USD-M Futures account and you see them in your Robuxio dashboard you are all set! --- # Meet the Robuxio Team — Book a Discovery Call Source: https://robuxio.com/team Markdown: https://robuxio.com/team.md Speak with the Robuxio team about systematic crypto and equities allocation, infrastructure and access routes — SMA, fund, ETI, or white label. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Book a Robuxio Team Discovery Call Speak with the Robuxio team about systematic crypto, equities, white-label infrastructure, or the right access route for your allocation. --- # Terms of Service Source: https://robuxio.com/terms-of-service Markdown: https://robuxio.com/terms-of-service.md Terms and conditions for using Robuxio's trading platform and services. Read before signing up. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Terms of Service Version valid as of 30/05/2025 ## 1. Introductory Statement ROBUXIO s.r.o., registered in Czech Republic (ICO: 19439237), provides automated trading software through https://www.robuxio.com. The service enables clients to conduct "Automated Trading" of cryptocurrencies held in their own accounts. Key points include: - The terms govern access to and use of the Software - The Privacy Policy is incorporated by reference - Users must read terms carefully before accessing the platform Important Notice: By using the Software, users agree they have read and understood the Terms of Use, assumed all obligations outlined herein, reached sufficient legal age and capacity, verified usage is permitted in their jurisdiction, and accept using the Software at their own risk. Robuxio Lite refers to the free access version allowing clients to trade the Robuxio Lite portfolio under these terms. ## 2. Subject Matter of the Terms of Use These terms form a binding contract between ROBUXIO and clients. The Software helps manage personal cryptocurrency holdings only - not third-party assets. ROBUXIO clarifies: "ROBUXIO does not in any way manage the Client's assets using the Software or in any other way." Clients bear sole responsibility for asset management. Recommendations and strategies provided do not constitute investment advice from a licensed financial advisor. Clients using the Software assume responsibility for all trading decisions and orders. ## 3. Registration ### 3.1 Authority and Jurisdiction Clients accepting terms on behalf of legal entities must have proper authorization. Users must verify that Software usage complies with their local laws. ### 3.2 Registration Steps For Robuxio Lite Users: - Complete sign-up form with name, email, and term acceptance - Set password via Auth0 - Access dashboard login - Select preferred exchange (Kucoin, ByBit, OKX) - Trading commences at minimum USDT 1,000 balance For Paid Subscription Users: - Select subscription plan - Complete checkout with payment details - Payment activates the account immediately - Link exchange account and configure API keys - Choose trading risk profile (High/Medium/Low) - Auto-renewal occurs within 7 days of invoice date Failure to pay within 7 days results in service cancellation. ## 4. Using Your Client Account to Access the Software ### 4.1 Permitted Use Accounts are for the Software's intended purpose only. Prohibited activities include: - Impersonating others - Transmitting malware or harmful code - Reverse engineering the Software - Interfering with system operations - Violating laws or third-party rights Material breaches result in account termination. ### 4.2 Confidentiality Users must maintain confidentiality of login credentials and are responsible for all account activity. ROBUXIO uses "reasonable and industry-standard security measures" to prevent unauthorized access but accepts no liability for breaches when proper security protocols were followed. ## 5. Client Account Features ### 5.1 Available Services - Paid Subscribers: Automated Trading and dashboard access - Performance Regime Users: Automated Trading and dashboard access - Robuxio Lite Users: Robuxio Lite portfolio trading and dashboard access ### 5.2 Conditions for Proper Functioning - Completed registration per Article 3 - Created and linked cryptocurrency exchange account - Proper subscription payment (where applicable) ### 5.3 Automated Trading Overview The Software executes futures trades automatically within predefined parameters. It buys at current market price upon receiving a signal, then sells the entire position (100%) upon closing signal. Critical Note: The Client is expressly prohibited from performing any other operations on that wallet; otherwise Automated Trading cannot be expected to function properly. Clients should keep non-trading assets separate from the futures wallet used for Automated Trading. ### 5.4 Service Conditions Automated Trading requires: - Minimum initial balance of USDT 1,000 - Balance never intentionally reduced below minimum (draw-down excepted) - Balance maintained above USDT 1,000 for maximum 7 consecutive days - Acknowledgment that failure to maintain minimum balance may result in service suspension or termination ROBUXIO reserves right to cap Robuxio Lite onboarding anytime without obligation to continue service. ## 6. Subscription Plans Users may select from multiple subscription plans, including the free Robuxio Lite plan. ROBUXIO may add, remove, or amend plans anytime. Discontinued plans will receive advance notice when possible. Payment Methods: - FIAT payment: Processed by ZEN.com (debit/credit card) - Cryptocurrency payment: Processed by Confirmo s.r.o. Subscriptions renew automatically. Unpaid renewal invoices after 7 days result in plan cancellation and service suspension until payment is received. ## 7. Performance Fee (Provision Regime) When trading balance reaches or exceeds USD 100,000 (+/- 3%), ROBUXIO may invite clients to switch from subscription model to "Provision Regime." Upon written acceptance, subscription fees cease and performance-based fees apply instead. Performance Fee Calculation: Performance Fee equals 30% of the positive difference between current NAV (account balance plus realized profit) at quarter-end and the previous High-Water Mark. ROBUXIO issues invoices on the last day of each calendar quarter, payable within 7 days in the same currency or crypto-asset as the trading balance. ## 8. Limitation of Liability Disclaimer: ROBUXIO does not provide financial, investment, legal, tax, or other professional advice. It is not a broker, financial advisor, investment advisor, portfolio manager, or tax advisor. Users expressly acknowledge: "you may lose some or all of your funds as a result of using the Software." Risks beyond those listed exist that ROBUXIO cannot foresee. ROBUXIO makes no warranties regarding: - Software meeting trading return expectations - Uninterrupted, timely, defect-free availability - Reliable or consistent trading results - Correction of previously unknown defects If liable for any reason, liability is limited to the lesser of $1,000 or 100% of fees paid in preceding 6 months. ## 9. Intellectual Property and License to Use the Software Software, trademarks, and intellectual property are ROBUXIO's exclusive property. ROBUXIO grants a "personal, non-exclusive, non-transferable, non-sublicensable, revocable license" for personal, non-commercial use as described in these Terms. Prohibited Uses: Without separate written authorization, users may not rent, lend, sell, redistribute, sublicense, copy, create, decompile, disassemble, translate, modify, distribute, make available, adapt, or create derivative works based on the Software or related intellectual property. Reverse engineering is prohibited. ## 10. Suspension of the Functions of the Software ROBUXIO may change Software functions or implement limitations when: - Necessary for repairs, maintenance, or security updates - User acts or omissions interfere with normal operation - Login credentials are suspected improperly disclosed - Software is used in breach of Terms of Use - Users refuse to provide required explanations ## 11. Availability of the Software ROBUXIO will use best efforts to ensure continuous Software availability during the Purchase Agreement term, but cannot guarantee uninterrupted availability without interruptions, outages, or malfunctions, and assumes no liability. Users are solely responsible for necessary Software and hardware requirements and associated data charges and fees. ## 12. Referral Programme Referrers may earn commission for introducing new clients. Commission becomes payable when prospects register, pay subscription fees within 2 months of registration, and 30 days elapse after first subscription payment without cancellation. Commission Structure: - Tier 1: Referrers earn 10% of Net Income for each referred New Client - Tier 2: If a New Client brings in another New Client, the original referrer gets 5%, and the Second Tier Referrer gets 10% ## 13. Contract Term and Termination Users may terminate the Purchase Agreement anytime without reason and stop using the Software anytime. This does not relieve users of accrued fee obligations. Users may delete accounts anytime by emailing support@robuxio.com. Within 24 hours, all open trades terminate and pending orders cancel. After 24 hours, the account automatically deletes. No Refund Policy: Upon Purchase Agreement conclusion and subscription payment, clients cannot receive refunds unless ROBUXIO restricts normal Software operation during the subscription term. ## 14. Changes to the Terms of Use ROBUXIO reserves right to change Terms of Use. Users receive notice 7 days in advance via the Software or email. Changes become effective and binding at the end of the 7-day notice period. If users disagree, they may delete accounts. ## 15. Support and Information ROBUXIO provides support for Software operation only. Contact support at support@robuxio.com for assistance with Software problems. ## 16. Final Provisions The Purchase Agreement, Terms of Use, Privacy Policy, and referenced URLs constitute the entire agreement regarding Software use and provision. Governing Law and Jurisdiction: Terms, Purchase Agreement, and disputes arising from or connecting to Software use are governed by Czech law and resolved in competent Czech Republic courts. Users may not assign rights or delegate obligations under these Terms without prior written consent. ## Appendix 1: Performance Fee Procedure Calculation Methodology: Robuxio's performance fee is calculated on: Current Linked Account balance plus Client's Realized Profit ("NAV") at calendar quarter-end, minus the last known High-Water Mark. The difference is "Profit." Performance Fee applies only with positive Profit, calculated as 30% of the Profit. Representative Example: - Initial Linked Account balance on 1.4.2024: USDT 100,000 (= High-Water Mark) - Balance as of 30.6.2024: USDT 150,000 (= Current Balance) - Profit for period: USDT 50,000 (Current Balance minus High-Water Mark) - Performance Fee: 30% of Profit = USDT 15,000 Note: Unrealized (open) profit or loss is not included in NAV. --- # Portfolio Updates — Live Strategy & Allocation Log Source: https://robuxio.com/updates Markdown: https://robuxio.com/updates.md A running log of strategy changes, additions and adjustments to Robuxio's live systematic portfolios. The reasoning behind each move, as they happen. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) # Portfolio Updates Strategy changes, portfolio composition, and infrastructure updates. For periodic performance, see [Crypto Reports](https://robuxio.com/crypto/reports) and [Equities Reports](https://robuxio.com/equities/reports). ## Crypto 1 update [Feb 20, 2026 Change Two New Uncorrelated Strategies Added to High Sharpe Portfolios Feb 2026 · Adding Launch Fader and Spread Long & Short — both with near-zero correlation to the existing portfolio.](https://robuxio.com/crypto/updates/new-strategies-february-2026) --- # White Label Crypto Trading Infrastructure Source: https://robuxio.com/whitelabel Markdown: https://robuxio.com/whitelabel.md Launch a branded systematic crypto product on Robuxio's institutional-grade infrastructure: execution engine, trading strategies, reporting, billing, ops. --- [![Robuxio - Algorithmic Crypto Trading Solutions](https://robuxio.com/images/logos/logo.svg)](https://robuxio.com/) [Home](https://robuxio.com/)[Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[Whitelabel](https://robuxio.com/whitelabel)[Resources](https://robuxio.com/resources) [Book a Call](https://robuxio.com/call) White label crypto trading infrastructure # Offer Your Clients Robust Crypto Exposure Today Launch a branded algorithmic crypto product powered by Robuxio's trading engine, infrastructure, reporting, and operating layer, without building it all from scratch. [Book a White Label Demo](https://robuxio.com/pavel) Launch a branded algorithmic crypto product powered by Robuxio's trading engine, infrastructure, reporting, and operating layer, without building it all from scratch. [Book a White Label Demo](https://robuxio.com/pavel) 38.4% CAGR GAV (out of sample) 20+ uncorrelated strategies 99.95% monthly uptime target 10 to 15 ms data center to Binance latency The market problem & opportunity ## Crypto's Passive Allocation Problem Clients increasingly want crypto exposure, but passive allocation now faces 2 separate problems: Bitcoin's return profile is decreasing as the asset matures, and the broader crypto market has been capital destructive for investors who simply buy and hold. ### Bitcoin's early return profile is fading Bitcoin's risk and return profile has changed as the asset has matured. In 2017, 57% of trading days saw a 10-day move exceeding ±10%. By 2025, that had fallen to 10%. Rolling 4-year volatility has followed the same path, which makes a repeat of Bitcoin's early return profile harder to underwrite. ### Passive exposure is inadequate Investors looking beyond Bitcoin often assume the broader crypto market offers the same upside with more diversification. The data says otherwise. Of the 20 largest cryptoassets bought at the November 2021 peak, only 2 were positive by May 2026. The equal-weighted Top 50 Binance Futures universe tells the same story: high volatility, no secular upward trend, and passive exposure compounding losses rather than returns. ### Crypto's volatility is the opportunity The broader crypto market still moves far more aggressively than traditional equity markets. That volatility is damaging for passive investors, but it creates a wide opportunity set for systematic strategies designed to trade both directions instead of simply holding exposure through every cycle. ### See the market data behind the opportunity Our benchmarks page compares Bitcoin, the top crypto universe, Robuxio portfolios, volatility, drawdowns, correlations, and market regimes. [Explore Benchmarks](https://robuxio.com/benchmarks) Our approach ## Regime Agnostic Crypto Exposure Robuxio combines momentum, mean reversion, long and short exposure, and a dynamic liquid crypto futures universe to create crypto exposure that is not dependent on one market regime. 20+ Uncorrelated strategies Top 40 Crypto futures tradable universe reconstituted daily 24/7 Fully automated ### Mean Reversion Targets market inefficiencies and short-term price extremes LONG SHORT ### Momentum Captures directional breakouts and breakdowns LONG SHORT ### Read the whitepaper behind the trading approach Our whitepaper goes deeper into Robuxio's systematic trading framework, portfolio construction, risk management, and how the strategy is designed to adapt across crypto market regimes. [Read the Whitepaper](https://robuxio.com/crypto/whitepaper) What you get ## Your Brand on the Surface, Robuxio Underneath Robuxio white label gives you a plug-and-play crypto trading product under your brand. Your clients see your product experience while Robuxio powers the engine, infrastructure, and reporting layer behind it. yourbrand.com yourbrand.com Powered by Robuxio · invisible to your clients All data shown is for illustration purposes only. ### Plug-and-play under your brand You get Robuxio's portfolios, trading engine, infrastructure, and reporting system packaged as a white-label product that clients experience through your brand. ### You own the client relationship Your team controls onboarding, positioning, and the client relationship. Clients access the dashboard, portfolio status, and reporting through your environment. Trading engine ## From Market Data to Live Execution Robuxio's engine turns market data into live portfolio operation: collecting and processing prices, generating entry and exit signals, validating risk rules, launching client-level trading agents, routing orders to supported futures venues, and monitoring positions continuously. ### Daily market data Crypto market data is collected, cleaned, and processed continuously before signals are generated. ### Entry and exit signals Rule-based algorithms analyse the universe and only open positions when assets meet the strategy criteria. ### Parallel client execution Trading agents execute subscribed portfolios independently, so client portfolios remain aligned without competing with each other. ### Live monitoring layer Open positions, fills, API access, settlements, and state mismatches are monitored continuously so issues surface quickly. Trust and security ## Built for Client Capital and Partner Reputation Robuxio's infrastructure is designed around isolated environments, redundant infrastructure, restricted access, and continuous monitoring to ensure that you and your clients have an institutional-grade experience. ### Private isolated networks The engine runs inside private environments, with each white-label partner separated from every other client on the platform. ### Redundant Tokyo data centers Infrastructure is deployed close to exchange infrastructure across two redundant data centers, with a 99.95% monthly uptime target. ### Strict permission controls Processes only access what they need. Controlled pathways, restricted permissions, and monitoring reduce the attack surface. Commercial Model ## Your Business, Your Terms How you run the commercial side is up to you. You control onboarding, pricing, billing schedules, client management, and subscriptions while Robuxio handles the infrastructure and automated reporting underneath. Y Your Brand USD Admin ![White-label admin dashboard screenshot](https://robuxio.com/_next/image?url=%2Fimages%2Fwhite-label%2Fadmin-dashboard-screenshot.png&w=3840&q=75) yourbrand.com Powered by Robuxio, invisible to your clients - Configurable performance and management fees - Flexible billing periods, individually configurable per end client - Different terms for individual end clients where needed - Centralised admin view for onboarding, subscriptions, alerts, and status - Automated billing calculations and reporting workflows - Your team focuses on clients and distribution Implementation ## Built for Partners Who Already Have Distribution Robuxio white label is designed for firms that already have client relationships, capital demand, or distribution, and want to launch a professional crypto product without becoming a trading infrastructure company. Partner fit ### You have client demand for crypto exposure Robuxio operates the trading and infrastructure layer underneath, while your team controls positioning, distribution, onboarding, and client service. Wealth managers Asset managers Advisory platforms Funds and allocators Fintech products Crypto-native communities 01 ### Define the offer Map your audience, positioning, commercial model, portfolio needs, onboarding flow, and operating constraints. 02 ### Configure the white label Set up dashboard branding, access, reporting logic, billing setup, subscriptions, and portfolio options around your business. 03 ### Launch under your brand Clients access the product through your environment while Robuxio powers trading, monitoring, and reporting underneath. 04 ### Scale distribution Your team focuses on acquisition and client service while the operating layer continues to run in the background. Next step ## Apply for White Label Access Robuxio white label is available to a limited number of selected partners. We work with firms that already have trusted client relationships, suitable distribution, and a serious mandate to offer systematic crypto exposure under their own brand. [Book a Call](https://robuxio.com/pavel) [![Robuxio — institutional systematic trading](https://robuxio.com/images/logos/logo-footer.svg)](https://robuxio.com/) Institutional-grade algorithmic exposure across all asset classes and market regimes. Solutions [Crypto](https://robuxio.com/crypto)[Equities](https://robuxio.com/equities)[White Label](https://robuxio.com/whitelabel)[Capital Management](https://robuxio.com/capital) Learn [Education Hub](https://robuxio.com/education)[Research](https://robuxio.com/research)[The Book](https://robuxio.com/education/book)[The Course](https://robuxio.com/course) Resources [Resources](https://robuxio.com/resources)[Benchmarks](https://robuxio.com/benchmarks)[Exchange Setup](https://robuxio.com/setup)[Dashboard](https://app.robuxio.com/) Company [Team](https://robuxio.com/#team)[Contact](https://robuxio.com/contact-us)[Book a Call](https://robuxio.com/call)[Newsletter](https://robuxio.com/newsletter) © 2026 ROBUXIO [Terms](https://robuxio.com/terms-of-service)[Privacy](https://robuxio.com/privacy-policy)[Read as Markdown](https://robuxio.com/whitelabel.md)