Trade BTC Zignaly

BTC Perpetual Futures Copy Trading

Part 2 — BTCUSDT Perpetual Futures on Binance via Zignaly

CryptoLivermore

Jul 1, 2020·8 min read

“You got to know when to hold ‘em
Know when to fold ‘em
Know when to walk away
And know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealing’s done” — Kenny Rogers

Intro

The first product offered is Managed Futures on the BTCUSDT pair (Perpetual) on the Binance Futures exchange via a dedicated copy trading platform called Zignaly, so you will need to create an account on both of them to follow the trades. I have included instructions below on how to do it.

For those of you not familiar with Managed Futures, they are an Absolute Returns — market neutral — positive expectancy system, that can trade on both sides of the market (long or short) while keeping risk strictly under control.

The specific setup of this strategy is very aggressive and highly speculative, ideal to grow accounts. If there will be demand in the future, I might offer an adaptation of the same with more of a hedging function (lower performances and even lower risk).

Performance and Stats

Cryptocurrencies Copy Trading on Binance via Zignaly
BTCPerp Equity chart from Jan 2016 to Jun 2020

The chart above represents what would have been your performances have you invested $5,000.00 on 01/01/2016 until June 2020, and is based on the Bitfinex exchange (Binance didn’t exist back in 2016) and it does include trading fees as well (0.2% on both entry and exit on Bitfinex)¹. The CAGR as per June 2020 is 213.29%.

Strategy Stats and buy and hold comparison:

Cryptocurrencies Copy Trading on Binance via Zignaly
As per today, the average drawdown duration within one year is 195 days or 53.42% of the time. As mentioned, this is not “get rich quick”.
Cryptocurrencies Copy Trading on Binance via Zignaly
During the period considered the Strategy performances have been about 16x better than a buy and hold, with almost 1/3 of the drawdown.
Cryptocurrencies Copy Trading on Binance via Zignaly
R — Multiples² are a way to measure profits as a function of risk.

The one below is a Monte Carlo simulation³ which helps visualize potential alternative outcomes for the system output by randomizing the historical data, in other words, it is a good test to verify if the original data have been obtained thanks to luck. When using this type of simulation, a nice bundle of upward-pointing curves is what we want to see (like in this case).

Cryptocurrencies Copy Trading on Binance via Zignaly
Monte Carlo simulations of the System performance projected on 500 trades⁴

What you need to understand and keep in mind

To have a chance of making this strategy play out for you, I would say it needs to be followed for at least 1 year, in fact, especially in a bear or sideways market is

not rare that very few trades will make the difference, miss those and your performance for that year is gone, meaning that it is crucial to take every single trade

2019 was a clear example of this principle, with only two months out of twelve being big winners — net profit at the end of the year was 39.59%

Is critical for you to understand this point because, even though you won’t be the one actually trading, you will still go through the ups and downs of your account (which is totally part of the process) and need to be prepared for it (another important reason why you should never allocate sums that you can’t afford to lose, in crypto in general).

Service Fees

The profit-sharing on Zignaly works accordingly to the High Watermark Benchmark, which in layman’s terms simply means that the success fees⁵ are paid to the trader only once a new trade is closed reaching a new profit high, and that the success fee will only be taken from the difference between the last high and the new one. In other words, you will only pay fees on your net profits, and never pay anything if your account is breaking even or losing.
For a more detailed description of how this system works, check the original Zignaly’s release.

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Graphic representation of the High Watermark Benchmark

Personally, I really like the profit-sharing model as it is an effective way to align the trader’s and the copier’s incentives, while eventually encouraging a longer term relationship between the two parties involved, as the copiers are now only paying when their accounts are growing, instead of an arbitrary monthly fee.

Adopting exclusively a profit-sharing kind of model (instead of offering a monthly subscription too) is yet another way of putting my money where my mouth is, in fact with this approach the trader will make more fees only if more profits are made by the copiers, and I think this also proves the level of confidence that I have in my systems.

How to Access the Service

Once on the platform, the next step consists of creating a Zignaly Futures Exchange Account (this is done on Zignaly directly), and you can do it by following these simple instructions. Make sure that when asked for the account Type you select Futures and USDT as base currency.

You now just need to connect this newly created Futures Exchange Account to the BTC Futures — Profit Sharing Provider (direct link)Here you will find an extensive explanation about how to complete this last step.

If you need to find the Provider from a list, just filter them by USDt base quote plus Profit-Sharing type, and find CryptoLivermore — Btc Futures — Profit Sharing.

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CryptoLivermore — Btc Futures — Profit Sharing

If at any step you need help with this process, feel free to contact me or the Zignaly team on their official Discord, plus here is a full platform guide where you will find indications on how everything works on Zignaly in general.

Final Considerations

Congratulations if you have made it this far!
I hope you will enjoy the service and if you have any questions do not hesitate to contact me on Twitteror on the Telegram Group where I will also share all the news related to the service and trading related thoughts.

Disclaimer (Terms and Conditions)

By accessing or using any of the services here described you confirm that you have read, understood, and accepted the Terms and Conditions (Disclaimer) and that you agree to comply with them. If you do not agree to the Terms and Conditions (Disclaimer) described in the link above (https://crypto-livermore.medium.com/disclaimer-terms-and-conditions-3468ac3a5aab), please do not use or access (or continue to use or access) any of the services here described.

Footnotes

[2]: https://www.vantharp.com/trading/wp-content/uploads/2018/06/A_Short_Lesson_on_R_and_R-multiple.pdf

[3]:https://towardsdatascience.com/the-house-always-wins-monte-carlo-simulation-eb82787da2a3#:~:text=Monte%20Carlo%20simulation%20is%20a,the%20risk%20of%20a%20decision.

[4]: Source https://edgewonk.com/. This software can not take into account in the simulation the compounding effect, as it is only possible to input absolute values and not percentages. For this reason, the values in the chart are relatively low, however, what matters here are the curves.

[5] Please note that service fees are not refundable and that the service cannot be paused. You are free to stop accessing the service at any time, by simply disconnecting your account.