Build a Bitcoin Day Trading BOT *NEW STRATEGY* in Python - 1006700
So, we'll start with... and then [Follow the Captions to Learn More] hello everyone I’m Ritvik Dashora and I’m back with a new video and some new learnings in this video we are going to make another amazing trading strategy for our bitcoin day trading bot just to remind you I had already made a video on how to build a bitcoin day trading bot using AROON oscillator technical indicator and that bot actually generated some excess return and had a higher sharp ratio than bitcoin you should watch that video as well it was quite long and it's worth watching that video for sure like you can click on this i button to watch that video and in this video as I already mentioned I will be using another trading strategy now what is this trading strategy I got a lot of comments on YouTube and all other social medias like twitter linkedin instagram facebook etc that I should use engulfing as my next trading bot strategy actually there were many more but engulfing was the one which was mentioned the most of the times so in this video I’m going to use a girlfriend to make this bitcoin day trading bot and I’ll keep on making different strategies for this for this bot and eventually we'll come up with an amazing strategy for the for bitcoin trading this is another step to create a highly profitable bitcoin day trading bot and I bet you you're gonna love this key concept in this video the best part is that you don't need to make an account on binance in order to follow this video as we'll be using paper trading simulator that we will build ourselves so we are not spending any money today and this gives us the liberty to take as much risk as possible and maybe we come up with something great so are you excited I am very much before we start building this million dollar bitcoin day trading bot if you're new around here on this channel I turned you into a successful financial programmer here I upload videos related to trading bots using some highly valuable finance APIs implementation of AI in finance etc etc so if there's something you are interested in then smash on the subscribe button and hit on the bell icon also I offer an amazing gift to all my subscribers I don't know it's a surprise or not because now almost everyone knows about this gift but yeah if you want him my new viewer then you'll get to know about this gift in this video itself so without spending any more time let's start so the topics that I’ll cover today is I will briefly talk about my last bitcoin day trading bot then I will will get to know about the concept of engulfing pattern we'll see what is WebSocket client what is TA-Lib library and then I’ll talk about our trading strategy that we are going to use for this video which is core and satellite investment approach if you are if you have finance background then you would have you would know this strategy if you don't have finance background don't worry I’ll explain it then eventually using everything we will create our bitcoin day trading bot so guys this is the bitcoin day trading bot that we created in our last video I’ll talk about the WebSocket client and TA-Lib very soon and then using this AROON time period of 14 days we had created a bitcoin day trading bot with a paper trading simulator and then eventually we made this trading logic in which the main concept was because the AROON oscillator ranges from minus 100 to plus 100 so we we had given exposure according to the AROON oscillator number so if it's minus hundred we were short by some amount and if it's plus hundred we were long by some amount and this was the basic strategy if you want to know more about this trading bot then you should watch my last video but I will be referring this code in this video although I’ll explain each and everything in this video as well but we will refer all these lines all this trading logic in order to make our new trading bot now I share this code with all my subscribers you'll very soon get to know about this thing how to get a free access of my google drive which is actually the gift to all my subscribers the second point is what is engulfing pattern as for investopedia bullish engulfing pattern is a white candlestick actually green candlestick sometimes we refer to as black and white other time like mostly we do refer it as red and green candlesticks so is a green green candlestick that closes higher than the previous days opening after opening lower than the previous days close now if I go to the image like this is a very good image to explain this concept so you can see that the red candle is being engulfed by the green candle which is the next green candle so it represents a reverse end trend if you know the technical analysis then you would know that there are many indicators that represents different things in the chart analysis and one of them is engulfing like bullish engulfing and bearish engulfing so what it says is that suppose the share price was going down like this and then we got this pattern which is a a red candlestick and then a green candlestick which is engulfing or covering the entire candle I would say red candle then in that case there is a very high possibility as per technical analysis that the the price of the security will start going up from this particular point there's no guarantee for this that's why there's I would say there's a always there is a strategy but there's no guarantee of any strategy so as per records and engulfing patterns have given a very good result as especially in emerging markets like India so that's why I actually have got a lot of comments from India that I should use this engulfing pattern to see if there is some possibility to generate some return or I would say alpha return in bitcoin using engulfing pad so yeah this is the bullish engulfing and the vice versa on the other hand we have bearish engulfing in which we have a smaller green candle and a bigger red candle which engulfs the green candle so yeah if the share price was going up or a price of any security was going up like this and then we have this pattern then there's a high possibility that it will start going down as per the concept of engulfing so our main focus in our trading bot is to recognize this pattern and then create a trading logic a logic such that we are long or short on the basis of the type of engulfing whether it's bullish engulfing or bearish engulfing this is the main concept of our trading bot so next thing is what is WebSocket client basically WebSocket client is a two-way communication system where we don't just receive all the information from the server but we can also send information to that particular server in order to execute some actions we use WebSocket client in order to get a real-time data of any particular security in this case a cryptocurrency we'll be using bitcoin real-time data in this trading bot and we'll be extracting the real-time data through WebSocket client we can use any other cryptocurrencies as well like dogecoin or Litecoin or Ethereum etc. but in this case we are considering bitcoin and similarly this TA-Lib which is technical analysis library it is a it is an amazing python package or I would say the best python package for technical analysis I have made two separate videos on WebSocket client and TA-Lib you can click on this i button to watch these videos because those videos were specifically focused on the usage of WebSocket client and tally in order to install WebSocket client you just need to click on the link which is in the description box and then just click here copy this pip install web socket client and then paste it on our platform I’m using google collab in this video you can use any other platform such as spider or jupyter lab or anything else but you didn't you need to do pip install WebSocket client in order to install it now what is pip stock sorry what is WebSocket client as I already mentioned it is a two-way server two-way communication system and we will be referring to this code in order to extract the real-time data of bitcoin from binance and yeah as I already mentioned we are not required to make any account on binance in order to extract the real-time data it's absolutely free and we don't need to do anything on binance platform so yeah similarly for TA-Lib TA-Lib is a library which is used for technical analysis and it's very very difficult sometimes to install this library in in our system that's why I specifically made this video on TA-Lib in order to explain how to explain in order to explain how to install this library in different platforms such as windows mac or google collab etc but because I’m using google collab in this video I’m just referring to this link which is how which is on stack overflow which is how to install TA-Lib in google collab and I’m just copying this and then pasting it here for more information you should watch my video on TA-Lib so let's dig a bit into this library so we can see that there are different types of function groups which are available and TA-Lib and then in this I’m considering the pattern recognition if you go here there are many types of pattern recognition here like two crows three black cows three line strike etc doji and yeah there's doji dragonfly doji engulfing pattern so this is the function that we are going to use in order to make the trading strategy in this video so yeah I have already installed the WebSocket client and TA-Lib in my google call collab platform so our trading strategy in this video is going to be core and satellite investment approach and we will use this to build our bitcoin day trading bot what is core and satellite approach so basically what we do is we invest some particular amount of money into the benchmark and then we play with the remaining amount of money and we actually we I should say we do 80 like we do some amount of money in passive management and the remaining amount in active management and this is how we try to generate some alpha so this is the main concept is basically an investment strategy where investors invest some amount say 80 percent of their portfolio into indices like S&P500 and the remaining 20 percent into different stocks or different securities just to follow the benchmark as much as possible and then creating some opportunity to make alpha return by saying alpha I’m being excess return over benchmark so the similar strategy is going to be used in this video as well and what I’ll be doing here is I’ll be investing 80% of the entire portfolio into bitcoin as soon as I click on the run button of my trading bot and then remaining 20% will be actively managed so how will I use this 20 percent as I did in my last video on bitcoin day trading bot I’ll do the same thing here that the the core is 80% and then 20 percent can go long or short so if my bot suggests that it predicts an upward trend then I will have 20% investment in the active strategy so it will make 80 plus 20 percent to be 100% exposure of my portfolio into bitcoin and if the outlook is negative if the bot predicts that there is going to be a downward trend then we will short 20 percent in the active part of I would say management and the overall exposure at that time will be eighty percent minus twenty percent which is sixty percent all in all our trading exposure on btc which is bitcoin will range from 60 percent to 100 percent if you are bullish we'll have the entire hundred percent if you are bearish we'll have 60 exposure this is the basic trading strategy for our trading bot I’m gonna have a trade interval of one minute the amount for this will be one thousand dollars it's fantasy money because I’m not putting any money right now I’ll be having a trading simulator that we will talk about very soon and in this video I’m considering no transaction cost although we can update the code very easily if we if you want to incorporate the transaction cost I have actually made a very detailed video on making a paper trading simulator you can watch in the you can click on this i button to watch that video and in that video I actually considered the trade the transaction cost as well so just refer to that video if you want to incorporate transaction cost also in in order to make this trading port so the steps that we are going to follow today is that we will first make a socket URL using WebSocket client and then we'll have we'll we'll make this URL through binance I’ll tell you how to do it and then we will provide all the required parameters then we'll create our own paper trading simulator platform and then after that we will be using WebSocket client and binance platform to extract real-time crypto data in our in this case the real-time bitcoin data and then we'll make and implement the trading strategy that I talked about which is this core and satellite strategy and then eventually we'll run the code and get the final result and lastly we will analyze the gains or losses it has made this is the WebSocket streams documentation for binance and we will be referring to this documentation to extract the real-time bitcoin price the links of all the websites that I have mentioned will be in the description box so you can refer all the links over there so let me start with the the base URL which is this one let me copy it and then paste it here so socket is equal to this if I go here again let me just I should close all these things because all these links will be there on description box let's keep this one so what is this okay this is my video on so yeah you can refer to this video as well let me close this as well yeah so the in order to make this URL we will have to go through the base URL which we have already pasted and then we need ws and then stream name what is stream name we'll see for candlesticks we will have to refer to k line candlestick stream so yeah this is the candlestick stream and then I’ll just copy this and then paste it here like this the symbol is btc usd btc usdt and then interval in this case will be one minute now if you are a beginner in python I don't recommend you to understand this part like I understand how to make the socket URL because it will be same for all the trading parts if you if you remember I did the same thing in order to make the bitcoin day trading bot for my last video as well so we should like rather than putting our efforts to understand this part I think if we focus on how to make this bitcoin rate rating one how to implement the strategy that would be a better choice so I’ll be very very quick here and then in order to make it user friendly I will just convert it into f string which is like this copy and then pasting it here similarly for interval interval is 1 m and then let's convert it into cc and this one as interval so running the cell socket is equal to we have our URL for the socket perfect now the next task would be to provide all the parameters that we will use so amount will be 1000 and I’ll have to import some libraries as well here so import I think web socket is not yet imported yet so import WebSocket json and numpy as np I think these three libraries will be enough amount is equal to 1000 the core trade amount will be 80% which is point eight multiplied by one thousand and similarly the trade amount for our alpha strategy it will be the remaining twenty percent point two multiplied by actually I should write it like this amount and then amount it in the beginning core quantity will be 0 which will become 800 after the first trade because we are investing 800 800 in our core then so the core to trade is equal to true why it's true because in the end sorry we have to have our first trade so this like I’ll be making uh if condition that if the core to trade is if if the core to trade is true then in that case we will buy the entire like eighty percent of our portfolio into bitcoin if it is false then we won't do anything so in that if condition the end would be that go to trade is equal to false so after that we don't buy eighty percent of it so I’ll show you in this code the portfolio value in the beginning is equal to zero which will increase when we start investing in bitcoin investment if you remember from our last video as well investment will be the will be the list which will track all our transactions so in the beginning it will be plus 800 and then according to the different engulfing patterns it will have 600 or 1000 of the trade amount so it will give us the entire I would say order of transaction or how our bitcoin day trading bot has invested money into bitcoin the real time portfolio value will be the this list will be used to get to the actual real-time value of portfolio at that time at that moment of time closes highs and lows I’ll be making different lists of different closes different highs and different lows of this one minute interval money end is the amount of money that is currently in my bank account like right now I’m not using any bank account but yeah at the beginning it is 1 000 and then eventually like in the first trade itself because I will be investing 800 dollars and the first trade because of the core strategy this money and will come down to 200 and then so on so we will have this thousand in the thousand dollars in our bank account at times zero and then eventually this will go up and down according to the trades that we are making the second step is to make our paper trading simulator I’ll be quick in order to explain this in this video because I’ve already mentioned it in my last video so paper trading simulator we'll create two functions for buy and sell in order to simulate our buying and selling of bitcoin so let's start with buying which is def buy and I’ll be inputting allocated money and price as the inputs so whenever I run this function the quantity that will be bought will be equal to allocated money divided by price and of course the money end will go down after that after buying this much amount of bitcoins money and just to confirm you it is the bank account I would say bank balance at that moment of time so it will go down by quantity into price and actually we should make all these parameters global here so global portfolio because we'll be changing it in this function and then another one is money end so as our money end will go down our portfolio should go up it will go up by quantity now lastly we just need to investment dot append and then allocated money now in the first trade actually there will be no I would say the the investment list is empty so in that case the entire money will be appended from the next trades actually I should add all the last I would say transaction value so for example in the first case I have invested 800 so the first value in the in this investment list will be 800 and suppose in the next trade I have made a trade of 200 in order to make the entire exposure to be 1 000 then the investment should be 1000 so we should add 200 plus 800 in order to have the next one such that we track the entire total investments of our portfolio so we'll just need to create a basic if function here if condition here if investment is equal to empty then then just append it and else append it and then after that we'll have to add investment minus 1 plus is equal to investment minus 2. simple similarly for the sell function again it will be the same allocated money and price global portfolio and money end and then quantity will be equal to allocated money divided by price money and will be increased if we sell the portfolio because the money will come to our bank account and then portfolio will decrease by quantity investment append will be minus sorry minus allocated money and then we will eventually add it as I explained it here so this is our basic trading simulator let's refer to the this line which is extract information from WebSocket client as I used this code actually I was facing some issues on the on close thing maybe there's some bug in their library so I’ll I’m not using this on close here and basically I’m referring to this function here which is presented in their documentation so I’m using this ws is equal to WebSocket dot socket app and this is the web the socket we have a different socket here on open on message on error and on close I’m just interested in on message so if I write it like this I’ll have to define a function called on message and if I just go here and then copy it like this and then paste it here if I run this and ws dot run forever then I should have the prices of bitcoin seconds by seconds I’ll quickly go through the explanation of this thing because I i mentioned this thing very in very detail in my last video so basically we will be focusing on the value of x if the value of x is equal to false then the one minute interval is not close if the value of x becomes true then in that case the that particular candle will be close and we will considering that candle only in order to make our strategy so let's wait for the x value to be true so you can see that after some time I got the value of x equal to 2 and this will be the candle this will be the candle that I’ll be referring to in order to make the bitcoin day trading bot all other data is not useful for me so I’m just focused on that particular row so let me stop this cell here and let's start building our trading logic I should name this file as bitcoin trading bot engulfing perfect so let's convert this message into json format so json message is equal to json.loads and
then our message secondly actually we should make all the parameters to be global why because we'll be changing all this parameter so I have made it portfolio investments closes highs lows open money and go to trade core quantity and real time portfolio I think these are all the parameters that I’m I’ll be referring to and because the value of all these parameters will change in this function will have to make it global now in this date in this output I am actually this there is a dictionary and then inside this dictionary there is another dictionary and I am only interested in this k so this is actually going to be the relevant information for me so let me just write it like cs which is the candlestick to be json message and then k similarly for in order to see if the candle is close we'll have to refer to the value of x and then we have close high low and open everything is here so let me just write all this function sorry all these lists here so candle closed is equal to cs and then x close is equal to cs I think c yeah open and low and high will be equal to the open will be o low will be l and high will be h perfect now because I’m only interested in the row in which x value is equal to true and in that case I’ll have to make a condition like if candle closed which is which will be true here and just take all the values of closes open low high etcetera so that's why I have made some empty lists here of for closes highs and lows so I’ll have to append all these values to this empty list so closes dot append close it's better to have it in a float format and similarly for highs highs dot append and then high lows dot append low opens dot open and open perfect the last price which will be considered for our transactions will be closes and then minus ones let's print all this thing and let's see what do we get so closes highs lows opens and then last price actually I should print it in different lines perfect let's see what happens run this cell and then run this cell so I’ll have to wait for the close of that particular candle so let me just pause this video for a moment and let's see what happens because nothing came here and I just figured out that I have made a mistake here so let me just stop this thing because I have not introduced this opens here so I’ll have to do it like this opens and then comma an empty cell running this cell again and then let's see if we get the data now right in this cell and so the first output is here so we have the closed price last close price last high low and open for that particular candle one minute interval and this is the last price let's just wait for one more minute and let's see do we get the second output as well so guys the second output has also come and yeah so it should work now so let me pause it now and let us delete all this thing now and and only keep this thing which is closest so it will keep on providing me the the closes list for all different intervals now let's start without trading logic if what was that parameter I think core to trade if core to trade is true which is like this we don't need to write true if core to trade then buy all this amount which is by all the amount which is 80% and core trade amount by this code trade amount and the price will be the last price of it and let's just print this like that the core investment we bought dollar the code trade amount which will be 800 all the time worth of bitcoin now this will make our core quantity to increase so core quantity should increase by basically the core trade amount divided by the last price all like quantity represents the number of bitcoins we have bought in our core strategy now the very important thing is that we will have to make this as false because we don't want to implement this condition again and again this will be just one time thing which will be when we start our trading bot in the in the beginning we'll buy 800 worth of bitcoin and then after that we're just playing with the alpha perfect so now our king of this video the king or queen I don't know it's that's making king or queen yeah so the the king or queen of our video which is engulfing is equal to TA-Lib dot let me go to this perfect so this is exactly what I’ll have to replicate engulfing and then pasting it here let me check it if we are right yeah perfect it recommends so the open in this case will be our list of opens and highs and lows and close now this works for the np array only so I’ll have to convert into np arryas perfect now the next step would be to see what is our last engulfing value now if I go to this file actually what it does is it provides the value of engulfing to be minus hundred or plus hundred or zero if it captures a bullish engulfing pattern that it gives me plus hundred if it if it predicts bearish engulfing then it will give me minus hundred if none is the case then it will give me zero and let me explain you through yfinance or I would say yahoo finance historical data let me pause this video for a moment and then come back perfect so I have actually used this yfinance library which is which extracts data from yahoo finance from sorry from yahoo finance for any particular ticker it extracts historical data and I just wanted to explain you how talib library works here so I have pasted this here as well and then we have got this the data for apple here and in order to use this engulfing I pasted the same line that we made over there and then we can see that in the end we get this data frame which is like this and it gives me 0 value 100 value or minus 100 so if I do it like this so it will give me all the values which are 0 if I do it like this oh sorry if I if just if I just make it like greater than zero then it gives me dates where the the pattern was a bullish engulfing and if I do it like this less than zero then it gives me up all the values which are actually bearish engulfing so the similar thing will be happening in our bitcoin trading bot as well and so yeah we have to see what is the last engulfing value which will be engulfing and then minus one now as I mentioned in that ppt we will be having 200 dollars for also 20% of the portfolio for our active management so the amount will be equal to last engulfing multiply by the trade amount for this I’ll have to go to here multiply by trade amount divided by 100 so suppose if the value is 100 then in that case the amount to trade will be 100 multiplied by 200 divided by 100 which will be 200 if the value is minus 100 then the amount of trade will be minus 100 divide multiply by 200 divided by 100 which will be minus 200 if the value is zero then the amount to trade will be zero so this is the basic concept that we will use for our trading now we'll have to see what is the value of our portfolio value in the active management so basically this will be a portfolio which is right now 800 dollars actually which is right now which consists of the core investment and then minus core quantity multiplied by last price now if the value of portfolio is more than core quantity for example if we invested the entire one thousand dollars in in bitcoin at a a particular point of time then in that case this portfolio value will be 1 000 minus 800 multiplied by the last price so we actually by saying portfolio port_value actually I mean what is the value of portfolio into the active management now the actual trade amount has to be amount minus port value now why is it because if the amount is say 200 dollars in the case of bullish engulfing we'll have to see whether like how much amount is already invested in the active management if it is if it is already over there then the actual trade amount should be zero so suppose we have the portfolio value to be equal to 200 already like we had already invested 200 in bitcoin which represents that we already have one thousand dollars of investment in bitcoin and then in that case if we get another 100 another plus 100 then this amount will become 200 amt will become 200 so we have to see that whether we have the capability to have another trade or not so this will be 200 if it is already existing is 200 then the trade amount should be zero in that case that is basically the concept here now in case of zero engulfing value if it is zero then the amount will be zero but the port value will it can be something else but we don't need to we don't want the our trading bot to trade when the value is zero we just want it to trade when the value is plus hundred or minus hundred so I’ll have to make a very small condition which is if last engulfing is equal to zero then just keep the trade amount to be zero and else I’m very happy with the trade amount which we are getting over here so trade amount is equal to trade amount now the real time portfolio value will be equal to I would say the money that we have in our bank account plus the portfolio value portfolio multiply by last price so this is the real time value for our portfolio and it's better to print all this thing so print the last engulfing value is last engulfing which is this one and then recommended exposure is trade amount which is this one if the value of engulfing glass engulfing is equal to 0 then in that case the trade amount will be 0 so this will become 0 in that case if it's 100 then it will be 200 if it's and actually if it's 100 then amount will be 200 and then we'll have to see whether we have already invested or not so we'll have to check it if it's minus 100 then accordingly we'll have a different value for trade amount and the real time portfolio value is the rt portfolio value that's it now our final trading logic will be if trade amount is greater than zero then buy now we are buying how much we are buying trade amount at the price of last price and yeah I’ve written this as well so it will write that we bought this much amount of dollars’ worth of bitcoin similarly if the trade amount is less than or even equal to zero it doesn't matter if it's equal to zero or not in that case actually I should write it equal here as only so in in this case if it's less than zero in this case I will trade minus trade amount because we are selling it and then price will be last price and similar to that we are printing this like we sold this much amount of trade amount because the trade amount will be negative by the way because we are doing this calculation here so a minus of trade amount and then worth of bitcoin so we will be selling at this point moment of time and that's it so we have I think I’ve not made any mistake here so we have written our code for the trading bot now the only thing which is remaining is the closing because on close is not working properly in this python package the WebSocket client python package so let me just do one thing I will close it like this manually so I will run both the cells simultaneously such that both the transaction happen at that time so what what what we'll be doing here is at that amount at that moment of time we will be having some exposure to bitcoin from 600 to 800 sorry 600 to 1000 and at that when we stopped the trading bot at that time we should sell all the bitcoin that we have at that moment of time so put sell portfolio multiply by closes minus one so this is the amount that we need to sell and the price will be closes minus one or last price whatever you say so let me run this code from the beginning and let's see what do we get do we do we get some excess return or not I’ll have to go somewhere and then let's see what is the outcome in hour or so so let me pause this video and come back in some time okay so there's some issue in buying because it is not buying the bitcoin so let me just pause it it should buy at this moment of time there would be some error i think is allocated money okay I can see this so the spelling of allocated is wrong here yes now everything is fine now let's run this again from here to this let's see if it if it does the first transaction which is buying 800 worth of bitcoin this is so great so we have done the first investment which is score investment we bought 800 worth of bitcoin the last engulfing value was zero so and the real-time portfolio value is one thousand so definitely our we are currently invested eight hundred dollars in bitcoin as soon as we get this hundred we will be one thousand dollars invested in bitcoin if it is minus hundred then we will be invested six hundred dollars in now in the bitcoin so let me just go go outside for some time and then come back after some time we'll see what happens with the number of trades okay guys so I’ve come back and I i could see there are a lot of transaction that happened in the bot and you can see that okay so there are many transaction that happened at this moment of time so the first one was buying 800 worth of bitcoin and then there will be a value of 100 or minus 100 somewhere which will be the second transaction this is the second transaction transaction so minus 100 it predicted a bearish I would say pattern here so we can see that this this price was 32 829 and then it went down a bit so yeah it was right but at this moment of time we would have sold 200 worth of bitcoin now at this moment of time we will be 600 like exposed to the bitcoin and then after some time let's see what happened zero zero yeah we got hundred here and the price of bitcoin at this moment of time was eight thirty two thousand eight hundred thirty two and the next one is thirty two thousand eight hundred fifty two so yeah definitely and this time also our bot has predicted a right I would say pattern and and at this moment of time it would have bought around 400 dollars of bitcoin because it uh like wanted us to have a hundred percent exposure towards bitcoin so at this point of time we are 100 exposed to the bitcoin and we actually made money here because of the increase similarly after a lot of transactions like like it was for it was run for around three hours I guess so the ending value is fifteen dollars we made fifteen dollars on bitcoin in that much amount of time and then if we see money end at that we have one thousand fifteen point six four dollars in our bank account in the end so let's see what are the transaction that happened which is investment if I run this okay so there we started with 800 and then it went down to 600 and then went up to 1000 and then 600 so there are many many transactions that happened at this moment of time perfect this minus 15 represents our profit because we have taken out 15 more than invested that's why it's negative the portfolio value should be zero yeah it is zero and let's compare it with the benchmark which is bitcoin if we had like bought bitcoin without having any trading strategy there like there's some possibility that bitcoin would have made more money than this trading strategy but let's see let's analyze the result because this was the final point of our video okay so I have I can we can see that if we had invested all the money in bitcoin directly and have held all the money in bitcoin without any trading strategy we would we would have made 2.4675 percent of return in this amount of time and our trading bot had made 1.56 percent so we have a negative excess return here the alpha is negative in this case but actually I’m more focused into the sharp ratio or I would say the risk adjusted return because if our portfolio or our if our trading bot has reduced the risk as well I would say by a significant amount then having a strategy would be a better choice so yeah our alpha is negative close to one percent actually point nine percent so yeah so if we in order to calculate the risk it's basically the the standard deviation of the returns for bitcoin it's like this for bot it should be like this and I actually forgot to create this list while making the bot which is real-time portfolio value actually I had I i forgot it all together like here I actually mentioned it it was an empty list but I should have increased the returns of our trading bot in order to calculate the risk so yeah that's a that's a small mistake from my side I cannot calculate the risk and the sharp ratio in this case but I’ll just uh mention it here in the bitcoin day trading bot which I made in my last video so we can calculate the risk like this and the real time portfolio value has to be like I forgot this line over there so I forgot to append this value if you make this trading bot just append the rt portfolio value and the float of that value into the real-time portfolio value list and then what you need to do here is you just need to calculate the standard deviation of all the risks and then in order to calculate the sharp ratio which is basically the risk adjusted return considering a zero percent risk free rate which is bitcoin return divided by bitcoin risk the sharp ratio will be like this this was the sharp ratio that we got in our last video and in this video there will be some different different sharp ratio and I’m very much confident that the the risk was I would say the standard deviation of our bot would be very very lower than the bitcoin I would say actual return a standard deviation and which should make our portfolios standard sharp ratio to be more than the bitcoin a sharp ratio but there's that's a that's a very small mistake from my side but it's okay if you make this code just just put that line in the trading bot in order to calculate or I would say in order to analyze the portfolio return I’m not running this code I can't for two and a half hours or three hours so you can just put this line for your code now the gift to all my subscribers but before that please mention in the comment box did you like this approach or do did you want me to like use any other technical indicator in future maybe I’ll make another video covering any other technical indicator and then eventually we'll come up with something great after that also don't forget to like this video and share it with your friends and if you like my work you can tip me by buying me just one coffee by going to this link which is mentioned in the description box and in the first comment you can just click on the links if you want me to buy me a coffee in euros or usd and just select one three or five or any number of coffees like 100 if you like my work a lot and then you can tip me which actually keeps me motivated to work on my YouTube channel and keep posting videos like this now the gift to all my lovely subscribers is that I share my google drive access with all my subscribers and this code including many other codes and study materials are saved in my google drive everything is free for use and there is no copyright issue over there in order to get a free access of my google drive you just need to subscribe to my YouTube channel and then click on the access to my google drive button follow some steps over there and then on that 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2021-06-12 16:38
