Senti-Bot in April 2024

Senti-Bot results

We want to share with you an analysis of Senti-Bot’s effectiveness in the cryptocurrency market, allowing you to compare it with other tools available on the market. We present the gross results (in red), which do not include the cost of Binance exchange commissions, which allows you to accurately compare the effectiveness of our bot with other solutions. April was the most difficult period for Senti-Bot, but nevertheless the total net profit since the beginning of the project is satisfactory at 165% (blue).

Recent events have shown that we need to change our approach to constructing Senti-Bot strategies, as its effectiveness has dropped significantly. In the chart below, you can see the maximum decrease in the value of the portfolio in April, the so-called “portfolio drop”. drawdown. This decline was comparable to the strategy of holding Bitcoin (hoarding). Accordingly, we have analyzed our strategy and its assumptions, and the results of the new strategy are presented below.

Senti-Bot achieved its effectiveness, mainly by anticipatory exiting positions ahead of anticipated declines in Bitcoin’s price, discernible in emotions analyzed from social media. Evidence of the effectiveness of this approach was provided by the average values of transactions ending in profit and loss:

• The average profit per order is: +1,58%,
• The average loss per order is: -0,33%.

Since Bitcoin’s halving on April 19, the cryptocurrency’s price has fallen continuously, recording an 18% drop from its peaks. Since Senti-Bot didn’t handle the situation very well, ending April with a drop of 15.4%, as of April 27 we implemented a new strategy on all your bots, which we believe solves the problem. You can read more about the new strategy below.

Senti-Bot’s new strategy

The new strategy changes the way artificial intelligence forecasts, significantly narrowing the criteria for entering a position. As a result, Senti-Bot does not react to every emotion signal, but selects more certain signals. As a result, the number of transactions undertaken by the bot more than doubles.

Despite less frequent transactions, which now occur on average once every two days, this one improvement would bring the rate of return to 103%, surpassing the strategy introduced in June 2023, which reached 43%.

The improvement in performance is particularly evident when compared on a monthly basis. The new strategy would perform much better during declines and increased volatility in cryptocurrencies. It would bring a profit of 3% at a time when Bitcoin’s price has fallen by 15%

The change in approach significantly reduces the portfolio’s downside risk, limiting its maximum drawdown to 9.1% compared to the current 17.7%. As a result, key performance indicators are improving significantly:

• The Profit Factorrises from 1.3 to 1.84, meaning that for every trade, the new strategy generates 84% more profits than losses on average, compared to the current 30%.
• The Sharpe ratio increases from 2.2 to 3.55 over the period under review, indicating that the new strategy is almost twice as effective in terms of risk taken.
• Calmar’s index increases almost fivefold to 12.11 compared to the current strategy, mainly due to the high return and twice the drawdown.

Senti-Bot performance indicators

We emphasize that the effectiveness of Senti-Bot should be considered over a period of more than one or two months.
Important elements of evaluating the effectiveness of our tool are measurements of such indicators as:

• Drawndown
• Profit Factor
• Sharpe ratio
• Calmar indicator

Drawdown

Drawdown is the largest percentage reduction in the value of capital from its highest level. It is calculated by comparing the highest previous capital level with its current value. The maximum drawdown (over the entire period) for the CryptoPulse BTCUSDT strategy was -17.6%, while in the Bitocin hodl it was already -21.3%.

Profit Factor

Another measure that deserves attention is the profit factor. The ratio is defined as the sum of all transactions with a profit divided by the sum of all transactions closed with a loss. A profit factor above 1.50 is considered good enough, and above 2.0 for ideal.

The Profit Factor for Senti-Bot was 1.29 at the end of April 2024. We can interpret that for each transaction the bot gained on average 29% more than it lost.

Sharpe ratio

In order to assess the ratio of the return achieved to the risk taken, we track two main indicators. The first is the Sharpe ratio, which measures risk-adjusted return (measured by average deviation). The higher the values of this indicator, the better the investment is considered. Investments for which the Sharpe Ratio is greater than 3.0 are considered among the best.

For Senti-Bot, the Sharpe ratio fell to 4.37% at the end of April, which was still much higher than for most mutual funds. This is significant because a higher Sharpe ratio means more than 4.5 times higher returns relative to risk, which still confirms the attractiveness of the investment strategy.

Calmar indicator

Calmar Ratio is the second main indicator of investment performance, which determines the ratio of the rate of return (calculated on an average annual basis) in relation to the maximum slippage. In general, the higher its value, the better. This is because it means by how many times the average annual cumulative rate of return exceeds the past slide. Values above 1 mean that the rate of return, was higher than the landslide.

At the end of April, Senti-Bot’s Calmar index was 5.76. Thanks to high profits, the bot has provided you with a result of almost 6 times its maximum drop in value.

Table – summary summary

We thank all our users for their trust and words of approval. We encourage you to follow Senti-Bot’s performance in the coming months!

SentiStocks team