Thanks Freqtrade!!! I’m quitting my job right now!!!

If you don’t have any doubt in your mind that the title is a clickbait or scam, then this post is written for you. Prepare for a long read.

I will put disclaimer first, that the things written in this post is based of my own experiences as well as others in the Freqtrade server. I have been using this bot since June 2021, so I have been through some bull and bear markets. I have tried several strategies, have been through some crazy profits (100% in less than 1 week) and some crazy losses (-100% in less than 5 days).

First thing that I want you to realize, trading isn’t an exact science. What is an exact science? Just a very simple example, if the temp is below 0 degree celcius, water will freeze. Above 100 degree celcius, water will boil. That is an exact science. You can test it a million times in different part of the earth, the result will be the same. Trading isn’t like that. I hope you have at least learn about trading in general. Most people are using indicators or shapes/patterns in their trading method. Some of the popular methods are

  • Golden and death cross (fast moving average crossing above or below slower moving average)
  • RSI, MFI, or any other indicators trying to categorizing assets into oversold/overbought are
  • Patterns of candles (Double top, double bottom, etc)

You can test them on one asset (Let’s say for example on ETHUSDT pair) on different exchanges on different timeframes on different market conditions, and I would bet that you would never get profitable results on all of them. But why?

That’s because there are (in simple explanation) two types of traders in the market, which are retail traders (which are all of trading bots users, not just Freqtrade) and institutional traders. Institutional traders don’t rely on indicators or patterns. They acts based of real-life global economy analysis. They are playing with a really big money. They can’t afford to place their money on some random non-exact-science indicators. When they think they need to get in or out of the market, they will do so despite whatever the values of indicators. And due to the size of their capital, when they move, the market will move with them.

Why do I explain the big players first? Because that is important to understand our (retail traders) positions in this trading market. Most of the time, we can’t control the market. We can control some numbers of assets for a short time (pump-and-dump for example), but we will never be able to change the global market trend/direction. To trade, we need to know the trend of certain assets we want to trade. For example, if you want to trade BTCUSDT, you will need to know the trend/situation of that asset currently. Is it a good time to buy? Is it a good time to sell? To do so, we must rely on numbers that we can access. That’s where the OHLCV candles comes in. How we use them can differ. There are a lot of indicators you can use. There are numbers of well-known patterns you can use. But remember, as I said above, we don’t dictate the market direction. Even though thousand indicators saying it’s a good time to buy, but if the big players want to sell that asset, then the price of that asset will keep going down even though thousand of retailers are buying the asset.

That’s the hard part of algo trading. We are relying on numbers to do our trading, but the market isn’t only governed by numbers alone. The big part of the market is on which way the big players want to go. You can backtest using 5 years worth of data, that won’t guarantee that your bot will have long-term profitable success. I like this quote a lot

Past is never future

The big players might not react the same way as how they reacted in the past on a similar event. And because of that, the market might also not move the same way as in the past. And that means whatever backtest result you have right now, there is no guarantee that your strategy will have the same result in the future. I have been using freqtrade close to 3 years at the time I’m writing this, and I still have zero long-term profitable strategy. Their backtest always looks amazing. The longest time that my strat can keep the profitable run before it went south is 8 months. And only around two bots can have such long age, out of maybe hundred bots I have run and kill.

So back to the title of this post. Can I make money using freqtrade?

  • Short term profit, yes it’s possible. As I have said above, I once made 100% in less than a week. But to do so, you need to run a suitable strategy for the current market. And it’s hard. In my opinion, you need a very big dose of luck to choose the suitable strategy. And even if it’s profitable for a while, there is no guarantee that it will keep profitable, even if the market hasn’t change.
  • Long term profit, it’s possible depending on your definition of “profit”. If you want to outrace anything your local bank offers, then it’s very hard. If you want the bot to outrace your current job’s salary, then it’s almost impossible. But if you are willing to accept any profit, no matter how small it is, then it’s still doable.

If you are jumping in this algo trading world trying to gain significant money, I would dare to say you are better off just get out. The journey is hard and endless. You will lose money in the process. There are other safer things out there that are safer and give you more money. From my 3 years experience, I gain small amount of money. The one I gained the most is knowledge about trading and python.

There is no shame in admitting that algo trading isn’t for you. Over the years, I have seen smart people got out of this world. I have even seen a professional manual trader that have successful career on manual trading, also quit on algo trade (and even quittingcrypto trading). Getting out doesn’t mean you are dumb or weak. As I have said in the top part of this post, we are nothing in this crypto trading world. We are just small fishes in this huge ocean. Why am I still in freqtrade? I’m still in for the learning. Even until now, there are still new things I can learn. And it’s a good hobby for me.


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