Volume vs static pairlist (based of marketcap), which one is better?

I have to start the article by stating the obvious thing, that there is no such thing as the univerally best config or strategy or setup. First I will state the pros and cons of using volume and static pairlist.

Volume pairlist

  • You get pairs that are currently actively traded on the market
  • Actively traded pairs tends to have volatility big enough to trigger most indicators used to enter trades
  • High volume pairs can be caused by negative reasons, such as pump-and-dump situations, or panic sell due to announcement of being delisted
  • High volume pairs usually are low marketcap pairs, which usually means the price/indicators/chart patterns of them are easily manipulated. (This might be a good reading).

Static pairlist

  • It’s harder (but not impossible) to manipulate them
  • They have small risk of being pump-and-dump’ed or being delisted.
  • You would get lesser trades because of the small volatility
  • Rarely would you get a big profit trades

Another thing you will need to know is that Freqtrade won’t allow you to backtest on inactive pairs, despite you might have the past price data. That means you won’t be able to backtest on already-delisted pairs. You can’t test whether your strategy can survive delisting events or not, which is bad because delisting is one of the killer of retailers’ strategy.

Personally, I’m currently moving towards using static list after 3 years playing with volume pairlist. Trying to deal with low marketcap pairs is like playing whack-a-mole. There are plenty of things can be done to manipulate your signals, and most of them might haven’t been used in the past.

One comment

Leave a Reply

Your email address will not be published. Required fields are marked *