HAL Pulse strategies are short-term, long-short strategies.
In this article, you will discover how those strategies are designed, the market typologies in which they can perform best, their advantages and disadvantages.
Pulse: Strategies with a Beat
Our trading strategies are based on algorithms. Picture a strategy as a decision-making mechanism. It contains a set of rules relying on technical indicators, such as the 10-day moving average of the closing price. The strategy continuously monitors the market to gather data on these technical indicators. Depending on how the rules of the algorithm appreciates this input, the strategy can generate buy or sell signals.
Strategies have predefined trading frequencies on which signals are computed. They can therefore operate on a weekly, daily or hourly basis.
Pulse strategies are hourly strategies – they place buy or sell orders every hour. They are long-short strategies: this means they aim at profiting from both price increases & declines of their underlying asset(s). To do so, they can take long, neutral or short positions and are always active on the market (as opposed to Wise strategies, which can only go long and switch to neutral in downtrends).
Their trade horizon is short, standing at just one hour. This high turnover, based on a continuous signal between -1 and 1, leads to higher volatility compared to long-only (Wise) strategies.
There are currently 3 Pulse strategies on HAL (formerly Napbots), trading on either one or two underlying assets: Bitcoin (Pulse: BTC Hourly), Ethereum (Pulse: ETH Hourly), and both Bitcoin & Ethereum (Pulse: ETH-BTC Hourly).
Source: HAL, CoinShares – Past performances are not a reliable indicator for future performance. Capital is at risk.
How Are Pulse Strategies Designed?
Every hour, Pulse strategies check the price movement on their underlying asset(s) and compute indicators used to trigger either long (buy), neutral or short (sell) orders.
They combine several strategies:
- Short-term strategies go either long or short based on hourly moving averages to try to benefit from market volatility.
- Medium & long-term trend-following strategies place orders to try to make the most out of uptrends or downtrends in a wider timeframe.
- Contrarian strategies take positions in opposition to the prevailing sentiment on the market when indicators suggest a potential market reversal.
Filters are applied to avoid emitting as many false signals as possible, especially when the market is ranging – i.e when prices are fluctuating from high to low points – or when there are artificial short-term price hikes brought about by pump-and-dump schemes.
Advantages and Disadvantages of Pulse Strategies
Thanks to their continuous signaling, Pulse strategies are very reactive. Their ability to go long and short can enable them to benefit from both bull (rising) and bear (falling) market tendencies with high volatility.
However, higher volatility also comes with higher risk, as false signals can lead to mistaken decisions. Moreover, higher trading frequency leads to higher fees on exchanges, which affects performance – in any case, when selecting a strategy, please take time to carefully consider your exchange’s fees policy.
As with all strategies, it’s up to you to evaluate whether or not Pulse strategies fit your trading goals and risk appetite.
Investing involves risk, including the possible loss of all the money you invest. In particular, crypto-assets are a highly volatile and speculative asset class. HAL is only suitable for traders who are willing to bear the risk of loss and experience sharp drawdowns. Past performance is not necessarily a guide to future performance.
The purpose of this material is to provide objective, educational and interesting commentary and analysis on developments in the crypto-assets sector. Nothing in this material should be interpreted as constituting an offer of (or any solicitation in connection with) any investment products or services by any member of the CoinShares Group where it may be illegal to do so. Access to any investment products or services of the CoinShares Group is in all cases subject to the applicable laws and regulations relating thereto.