jare.cloud

hi and welcome to this next edition in our series on arbitrage and bitcoin trading bots and all that fun stuff my name is jared i’m from chief i’m rather i am the chief liquidity officer of coin next labs uh in coindex labs who are we and how can you try our five day free trial on our market maker where you can view this youtube video down here to see that in action and while the market maker is actually on pause right now or at least the free trial is that’s because we’ve been redesigning the bot to be more uh beneficial for our users and uh less risk-averse um so if you take a look at our live chart here on chart.condexlabs.com you can see the bot uh is live with a balance um and you can see that it’s actually done fairly well in this dump so the blue line here is the bitcoin the us dollar price uh and it dumped significantly and we gained a whole bunch of bitcoin value and a whole bunch of us dollar value on our returns and we’re currently at about 12 bitcoin over the last couple days and uh four percent on the us dollar so once this is all back up and ready and ready to deliver we’ll uh reinitiate our five-day trial and you can have a look at our other video to see how that works so today what we’re looking at is the challenges of executing arbitrage opportunities in algorithmic trading and for instance uh we’re going to take a look specifically at three-way arbitrage uh crypto trading opportunities on binance on their spot markets so what does that look like what is three-way arbitrage what is three-way arbitrage well let’s say i have an asset let’s say i have an asset on finance let’s take a look at finance to take a look at what this looks like we’ll take a look at the markets let’s take a look at the us tether us dollar tether markets um so let’s say i had something use dollar tether i wanted to sell that us dollar title for bnb uh and then i wanted to use that bnb to buy bitcoin cash and then i wanted to sell that bitcoin cash back for tether let’s say i could do that and find a profitable uh opportunity among all of these markets and there’s hundreds of markets on this exchange so we have an asset trade it for a second asset trade it for a third asset and then back to original asset and that’s why we call it three-way arbitrage because we have two trades and then we have three trades then we have back to the original asset um so if this fees evolved let’s take a look at what the binance fees are for their bottom tier because they have tiered fees as you get more volume hold more of their exchange token you get less fees um but for the bottom fee it’s uh 0.075 percent or seven yeah and then if you hold the bnb token and pay the fee in the b b token instead of paying in whatever token or coin you’re trading it’s 0.6 from the maker or the taker and we’re only concerned with taker fees because we’re looking at initiating the trades in each of these cases against whatever is on the books so we can act on the opportunities that exist so 0.06 then we have one trade at 0.06 we have two trades at 0.06 percent again i’m gonna do three trades at 0.06 and then we have back to the original asset at 0.06 percent what this looks like is 4 times 0.06 percent what is that that’s uh 12 24 0.00 which is actually a huge amount of fees and we can take a look what this looks like with a freeware bot that i found on the internet and this guy has a donation link if you want to take a look at reimbursing them for the information that really provided us but if we do site github.com binance triangular arbitrage we can find this uh this spot so here he is here and you can actually use this spot to automatically trade these opportunities let’s say you negotiated lower fees or you you managed to trade a lot of volume and highlights and bnb and got lower fees this might actually be advantageous to you uh but i’ve set this up already on one of my virtual machines and let’s take a look at what that looks like so here we are let’s open up that config file here’s our market maker but what i want to do is look for finance triangular arbitrage and config file open up the config file let’s change our taker fee to zero percent let’s see what kind of opportunities we can find at zero percent so actually i already had it running let’s run it again uh what coin are we looking at here so hold we’re holding us dollar tethered to begin with we’re going to trade us dollar tether for other uh financial instruments and other financial instruments again so again the point of this video was the uh the challenges of executing arbitrage opportunities in algorithmic trading so another problem that we might face is how long does it take to do all of these trades because let’s say we bought uh our first asset let’s say the opportunity exists at 0.1 percent for all of these items if it takes me 100 milliseconds and i notice i can’t have these in here let’s say it takes me 100 milliseconds per trade let’s say i trade for the first asset 100 milliseconds trade for second asset i should say second third 200 milliseconds total let’s say that after i commit complete these trades then the trade for the third asset back to the original asset is no longer at the arbitrage opportunity that we found so let’s say that we get less of our original asset back than we had originally planned um then because it takes us 300 milliseconds to do all of this the opportunity might disappear so i mean let’s say if i well i mean let’s say we have a dollar of our asset we’re going to trade for the second asset and get a dollar in a cent trade for a third asset and get half of that back and trade for our first asset back and get a little bit less than that back let’s say this was the opportunity that we had so what we might find is that any of these legs of the trade might actually disappear in the time it takes to complete all of these legs of the trade and we just call that the execution challenge the execution time challenge and we can actually take a look what that looks like here in our freeware finance triangular arbitrage trading bot that we found so again we have zero percent fees here we’re actually finding that there are no profitable trades available for zero percent fees on the us tether whole uh base asset but you can see here the ab age that’s the the for the the first uh trade the second trade and the third trade um are changing all the time which means that these these these things exist for less than a second usually before they disappear and you can see that changing in real time but if i was to change these fees again and make them 0.06 percent which is what most people will pay if they just start this off with the traditional fees we’ll run that again what did i just break it’s this one that i want we’ll see that our negative 0.1 percent arbitrage opportunities that we found are no longer that attractive when we run with 0.06 percent taker fees which is our second challenge in executing these arbitrage opportunities is what happens if i have to pay more fees than what is ideal and we will find that out shortly so again if the arbitrage opportunity exists uh and then you execute one or two of these trades um and actually i have a freeware uh github repository that failed recently because of this exact reason um basically it would find an arbitrage opportunity and then because it was on chain or rather it was using the ethereum blockchain to execute these arbitrage opportunities we’d find that after one block or two blocks to to execute on those opportunities um that we are no longer able to find a profitable trade and then we’re actually left helding or we’re actually left holding rather um it would be left holding one of these intermediary assets as the opportunity didn’t last long enough all right let’s go back to our finance trader that we found on github and now you see that these these opportunities that this funding are much less profitable um they’re actually less profitable by as you’d imagine a magnitude of zero point zero six percent times four which is zero point zero two four percent um because we’re now paying fees on each of those legs um and that’s basically what most arbitrage opportunities face as issues when we’re trying to execute on them is is this this age limit here and then also the fees that we have to pay alrighty thank you

hi and welcome to this introductory video introducing coin deck slabs our inaugural market-making bought and the free five-day trial that we have on offer for new signups so what’s the agenda for today what is coin deck collapse well my novice understanding of the underlying artificial intelligence algorithms lives at this hacker noon article which I’ll put in the video description we’re just after coming on I gave a brief overview of how I thought the artificial intelligence works but basically what it is is it’s a proprietary and patent pending algorithmic trading engine that can apply to a whole bunch of stuff other than just trading markets but it’s actually really well suited at trading markets and this particular version of artificial intelligence is highly resistant to overfitting which is a classic problem that artificial intelligence faces when you train it too much and it becomes too used to be input data and can’t react well to the new data so our algorithms or our average intelligence is much smarter than that but in short coined xlab’s is exactly that it’s the company surrounding this artificial intelligence for market making and perfer creating opportunities in markets and they found me on my birthday actually of this year August 2019 Ryan the CEO of coined XO you can find here on the team page near the talk Ryan found me through my github which has over 100 auditories mostly dealing with arbitrage or crypto markets and it sent me an email he said hey would you like to take part in in corn X labs here’s me on I’m Jared Diamond Bailey the chief Lakota the officer actually your lead engineer Marcus liquidity get coin next laps I’m in Nova Scotia Canada you’ll find me a medium afternoon which are linked here actually so I could throw this link in here and actually one post on hacker noon that’s gotten some attention recently is this most recent one where is it where I discuss negotiating and successfully landing different preferred rates packages with derivate and Finance where we have better market maker market and and taker fees for our trading boats but we’re going to use in our inter Consolidated Fund which we’re launching at a later date but for now we have our software service offering soft launched and that’s part of the point of this video is that in the end we’re gonna go into subscribing and how to set up a trading bot with my help using the five-day trial that we have on offer anyway you can see some of the returns that we’ve seen in the past this one was on a balance of 0.9 Bitcoin or this many Satoshi shoes over the course of less than a day and we’ll get into more of the performance later here when we get through this video so basically cornets Labs has been around for about three years making their it official intelligence that powers the bots that we have and I’ve been here since August which is a few months anyway basically working on a free and open source bog that we’ve taken and completely revamped and recreated in our own image so what is the market maker then um the market maker that we have in production is a version of a bot that we’ve added a bunch of basically a dozen different custom provider indicators to we’ve also added hedging logic something so that it’s most of the time perfectly hedged between futures and perpetual zon and Arabic we’re gonna extend it to a whole bunch of other exchanges in the near future it is working on Finance and FTX right now on a whole bunch of different pairs on FTX because they have our edge tools and features we’ll bunch of different stuff but that’s not really long yet so the bot earns on trading feed rebates on debit and I can actually show you what that looks like live so it looks like we’re up by a whole bunch of little bitcoins here from our balance of this many bitcoins which is good news when I show you the performance later but what this looks like for our closed trades is that the fees here are actually negative in all of these cases and they would be in most of the cases for the recent trades so we’re actually earning this many Bitcoin every day every single time we trade sometimes more than that this is a bigger fraction of the beat and every single time we trade or earning that little tiny amount of feet it earns on the spread itself which means that if we take a look at one of these futures contracts would probably see a larger spread and what the spread is is the difference between this lowest ask in this highest bid I think I have that the right way around so you can see here it’s actually not that much of a spread it’s only 50 Cent’s it’s right on the dog in between these two orders but you can see where my orders are placed these little X’s show that I can cancel these orders that means that if the market was to go down to 602 five and then up to six or to 750 I would make that difference in the 2 bucks in 30 cents on those orders that have executed that’s on average and it takes a while to average out over over many many tens of thousands of trades in order for the spread to be successful in earning because sometimes you’ll see that the markets will go down signaling more than we expect and we have to basically size or orders and hedge our positions to resist the downwards potential there it earns on the spread itself it earns on the convergence of futures prices to perpetual is also known as cash and carry arbitrage now I wonder if I can find my medium post where this actually happened in a very favorable way somewhere in here I have a day when we’ll go back to the urban interface a day when the price of one of these features I think it was September went from say sixty seven hundred dollars or so down below the price of professionals and because we’re always buying and selling to keep a net sum that’s close to zero to reduce our risk that means that when it exactly reversed from my situation now so we’re buying features because they’re lower in price than perpetual which means that as the futures price the the mark price approaches perpetual will gain well I mean it says right here the average price that we bought for this June feature was 604 six the average price we bought for this September feature was six over four and the average price we sold was six one two three so as approaches converge or move as the prices converge or move closer together we’ll realize the difference in buying low and selling high and that’s all that means but I think there’s a really good article that explains yeah on one day a couple of weeks ago two of our subscribers before we even had the subscription model launched managed to do ten times and 40 times their balance in a matter of minutes because of this this effect of convergence of huge prices to perpetual basically the funding for perpetual is flipped from positive to negative or from negative to positive and in that process that the price of December futures came crashing down and our shorts on those features cashed in kind of heavily what has performance been like let’s go back here nope go back here and go back here we actually have a testimonials link now on the home page which is gonna show you first this anonymous testimonial from our trader with the largest balance he’s actually over one Bitcoin total balance now from his original balance of a combined balance from his hedging account and his main account at 0.9 Bitcoin you can see the hedging account this is daily and weekly the edging account was up over double in less than a day when this screenshot was taken and his total balances up in the nearly 10% and he gave us this testimonial testimonial here our second testimonial that we’ve thrown in here it was actually a 10% increase in less than a day’s not since this started trading it was less than a day and this person asked if he could then increase his balance and let’s take a look at the live trader now I haven’t checked these results to see if they’re gonna be really positive or promising so hopefully the livest Raider since the boss reset it on an error maybe half an hour ago have been seeing some success let’s find out so it looks like the average Bitcoin on profit and loss projected over 24-hour period is about 12% gains a day on Bitcoin while the USD value of that Bitcoin has gone down and if we look at the one-hour chart which is yep the value of Bitcoin 2 USD the ticket price has gone down by about 60 bucks which explains that but you see that our Bitcoin balance has been creasing as time goes on this shows all of our subscribers profit and loss in Bitcoin and USD as you can see that this subscriber NS he’s the fellow it was one Bitcoin which is our largest balance of a subscriber account right now you can see he’s got 8% Bitcoin yield every day on his realized gains of point 17 percent in a shorter period of time while his his USD games look like they’re third in the list of 65 here so this person is in the lead with more than one percent daily yield and this person has a little bit less losses but the person with one Bitcoin comes right about in the middle which is less than half the losses the theoretical losses it depends if you like Bitcoin or if you like US dollars more or whether or not count these as losses but altogether I think if you’re up nearly 13% in Bitcoin and only down coup percent on average every day and US dollars this is again over a very small sample size but it is live and updating from our running subscribers now all of this brings me to my final point how do you as people that are new to this idea or new to corn X labs or maybe have known me or Ryan or any other members for a longer period of time but looking to sign up how do we do that practically so I’ve included the link here this is going in the description of the YouTube video and I think this video was actually going on this page the SUBSCRIBE page to help people with their subscribing so this subscription page goes over the base tier the pro tier and the master class here and basically the difference between these tiers are described in these short little bullet points here this recommended trading balance is probably going to increase because as I just showed you the live trade with the fellow with one Bitcoin is doing far more sustainable results than the people with less than one week going by the way you would select one of these tiers and hit the subscribe button that being said like I promised there is a free trial if you read this little blurb here it says you can optionally take advantage over a five day free trial instead of first sending in your subscription fee the trial is a maximum balance of point one Bitcoin we’re probably gonna change that though so people can see more gains in your market making account there are details on how to participate in the trial after you solicit after you select your subscription tier here submit your email and details and receive our welcoming now thank you so if I hit subscribe on anyone these yeah it’s gonna present me with a forum to fill it my name my email a referral code if I have one choose a tier that I’d like to subscribe to your according to the benefits that are described may be optionally join the discord server and we should change that subscribe and pay button to just say subscribe and I should have got a welcome email from myself let’s go look so in my email box I see that I have an email for myself this will of course come from me and not from yourself to yourself this will be from me to you thank you fairly filling out a form on the website or otherwise expressing interest this basically says you could have the trial or not have the trial if you don’t have the trial if you don’t have the limited balance for the first five days you can send your subscription for you to this blocking Bitcoin address otherwise if you’ve done that already or if you’re signing off the five day free trial you can figure my trading account now what you need at this point is a debit account now we are going to support more exchanges in the very near future a lot of people like new people oops I do not want to do that you can hear that dinging in the background is actually the market maker making trades and earning feet big this is gonna be my account that I set up now people in the US aren’t able to create brand new accounts I don’t know a way around this and I don’t think it’s wise to try and find a way around it as it would violate their of its Terms of Service by anybody outside of the US and in my country not in Quebec which i think has something to do with their laws being a nation within a nation Caine created an account now that I’ve created an account I think I need to check my email and sign up to direct Cognito window now I’m activated so if I log into this the next step would be to fund my account now I’m not gonna walk through how to is that non plus demo plus test I’m so sorry what did I just do okay I’m not gonna walk through actually how to buy Bitcoin there’s tons of guides and it all depends on your country and your preferences how many fees you want to pay all you want to wait you’re gonna log into your account you’re gonna be unverified which means you’re not able to deposit the bitcoins that you just bought into my name my last thing my date of birth is gonna be a long time ago it’s gonna be done here please nobody steal my identity but my address and city this is gonna be test two o matic because people probably will steal my identity and I’m in Canada now that my personal information is saved I’m able to withdraw up to twenty one Bitcoin every 24 hours or up to fifty ether every 24 hours if I want to withdraw more than that I would need to submit my ID documents which is the ID document itself and a photo of me with a webcam or mobile phone now that I’ve verified two levels zero which you can see this green little area this text up here I can go to the deposit screen I needed to generate an address I would send my Bitcoin to this address if I’m signing up for the trial again the maximum balance right now is pulling one Bitcoin but that might go up so be able to withstand some gains or more sustainable gains by the way you would you would submit as much Bitcoin as you want to to this address now the next optional part is if you want it’s tough to explain let me see if I can figure out what the chart that I have if you want to hedge against Bitcoin USD movements so that your US dollar returns remain neutral as Bitcoin goes up and down we can optionally short Bitcoin for as many dollars as you have in both your trading account and hedge account what this means is in practice I’ll show you here this account has 0.1 Bitcoin and this hedge account that’s about 500 600 hours this hedge account here is actually shorting all of these contracts for about a thousand dollars which should be right actually we have more balance in here which is why it’s a little bit confused so it’s a little bit too sensitive to the market price right now which I can fix I could probably fix just by doing this it’s probably gonna be less than that much you wouldn’t have to worry about this so yeah I know it’s sold up to 640 dollars which is what we have in the accounts so we’re short six hundred forty dollars which means if I go back to this this page you see that as Bitcoin goes up and down in price and which is the blue line the Bitcoin US dollar value the black line which is our USB return our US dollar of returns remains about the same and the Green Line does whatever it wants the Green Line actually goes up and down as an inverse to the blue line because of the fact that we’re short and that makes our net position much happier when the big one price goes down but our black line our US dollar returns remains about equal and should hopefully be increasing over time but the markets are big fluctuate I mean in general it’s up its down since this chart started since we withdrew some funds but altogether it it is making gains like from here to here it gained about 0.2% total which is good on the US all the returns so to create a hedge account in our brand new David account we would go into mmm settings by clicking your username in the top right you click on the sub accounts now this is optional some of our people don’t have sub accounts created that are hedging against the main accounts and that’s fine too so now that I have a sub account one my deposit it is in all I would do is go to this transfer button here I would transfer from my main account to my sub account I would transfer about a tenth or maybe a fifth of the total Bitcoin that I have so if I had point one in here in my trading balance I would just trade put point zero one five maybe I can’t right now but I would put zero point zero one five I can to my other account I can show you so this is the account with balance I’m not actually gonna do it but if I was to do it this is what it would look like so I appoint zero eight in there so I put a point point zero one in there into the hedge account which is about a tentacle balance or between a fifth and a tenth of the balance in a later version of the software it’s gonna automatically we gained even more Bitcoin here since I started the video which is pretty good sorry uh where was I the hedge account in the future version of the software that the main account will transfer to and from the hedge account to adjust the balances in order to avoid the chance that the hedge account liquidates which actually happen in one of our subscribers cases recently he just basically had to top it up again and now he’s back up over his original balance which is great that’s how I create a hedge account that’s how I fund the hedge account after I deposit my Bitcoin and now I need to create an API key how do I do that well for both the hedge account and the main account you would go into this API settings screen you would create a read and read write on account and trade for this API key and you would I this API key you would then copy this client ID with this handy copy button here throw it in the notepad mean I can be main I cannot secret actually we don’t even have to throw it in notepad it’s easier than that because as you’ll see in the sign up email you had this link to configure my trading account so insight configure my trading account we would throw the trading I can’t API key which is I have too many screens open this one raid in here my trading account API secret I would throw in here my starting balance this is just for us to know we can actually check using the API and actually tell you the truth we do the the insurer over sizes in logic will not put your account at undue risk we do this automatically now without this form field so it might not even need this form field in the future which I can actually say my email address are we doing a trial or no yes or no with our maximum BTC equity I should change this just a sec Brian manages the site for Mossberg versus so are we running a trial yes or no continue and lastly the hedge account API key which is the second account the sub account that we created which again is optional and it describes it here for you we submit this form I’m gonna get an email to my index account which says this person has signed up this is the API key and then I would go and create you your trading instance which is located generally close to their bit servers for our master class here that’s actually located in the same building as the Dara bit servers which increases latency by a fraction of a millisecond which is actually very helpful for high-frequency trading that said as soon as you notice me set up your account and I’m gonna talk to you probably to make sure that your balances are there and that you’re ready and all that fun stuff when I set up your account and launch the bot you’ll see that it’s gonna enter into positions I don’t know why I don’t have open orders right now see this is why we add the personal touch because sometimes there’s no open orders I actually tell you think truth I think it did this on purpose it looks like it uh it did some limit as market orders paid some fees and exited out of the net position it was in or it should have all look into this later basically all I think I need to do is restart that instance to get it going again and again that’s why we have the personal touches in case anything goes wrong we can react to it and make sure everything is right I should probably check the logs to see exactly what happened there from from what I understand from that from the transaction history it looks like it it noticed there was gonna be a lot of volatility in the market decided it wasn’t gonna trade that volatility and exited out of it accordingly and took a little break but I just wanted to trade now so I’m gonna manually restart it and we’ll see my trader start the trade balance I’m actually gonna wait first like to see that those no orders to show you because that’s what it’s gonna look like when the bot starts for the very first time but you’ll have no position so you’ll have no positions and it’s gonna go ahead and open a bunch of orders actually just takes a few minutes to start through so we’re just gonna waiting patiently I might as well throw in our Twitter and our LinkedIn because I think that you guys should follow us he also he also should like this video if you did like watching it and subscribe to our brand and YouTube account we’re gonna do useful tutorials on lots of things like how to set up free and opensource bots comparing free and open-source products to our software specifically also fun things like how does our software handle order sizing and obviously give you a little preview of what that video is gonna look like basically I’m gonna say the initial quantities based on bled it’s further refined but bled if position is negative returns to something a position is positive returns do something and let’s watch as I manipulate the skew which is the net position difference between all the positions watch the skew affects our order sizes and that’s actually playing for one of the next videos another the next video we’re gonna go over is some github repositories like they’re a bit market maker and this is actually the bots that ours is based off of made by a guy named Muriel and he’s kinda fantastic this is the wrong repository it’s the one that actually is hosted by Dara bit somewhere in here there’s a market maker hope it removed it oh that’s funny anyway they did have a sample market maker so let’s see if I can find it somewhere I was under examples so here it is here’s their market maker we’re gonna set this up in another video we’re gonna see how do we can manipulate some of the input variables like all of this stuff here to do different things and accomplish different goals we’re gonna get it set up on the test net it’s also set up to run for another live net if you were to use the test net perimeter of the live net parameter we’re also gonna then compare that against the bit max sample market maker github which is a much more simple part basically placing some grid orders on the market book regardless of price and we’re gonna set that up we’re gonna give that running and we’re gonna get some testing that balances thrown around on picnics which should be fun so is that bought trading them live trader maybe that’s why the USD Delta is so fine so now we get to actively debug why something is not working the way that we expect it to so the first thing I’m gonna bid is to eat the sentence actually I’ll do bug that off the call so I don’t have to show off my processes or my API keys which should probably remain semi-private are any well that’s basically it for now I do wish that I could show you that bond or maybe I can show you a different part through the logs so let’s take a look at that Bart that’s running a balance and show you the logs so we can show you it doing stuff basically I’m a fairly advanced Linux user so I know some commands to give us some output from the logs that’s gonna hopefully show us the bought in action now the bought the logs are very much development Long’s and they don’t make a lot of sense to most people do you do do do do do do and apparently it’s not letting me connect come on Google Cloud okay let’s try a different one yeah we might just give up on this if Google cloud doesn’t want to play ball I’m already connected one no no I’m not yeah it doesn’t want to do that maybe I can do this a different way if I can go in here to my remote desktop session going here and g-cloud compute this is H root this oh no I don’t Europe West to see oh it needs to be the instance name all right tail bar logs Islam the chef well it doesn’t look like it’s actually generating logs let’s just look at all of the logs and look for Delta and that was probably too many logs and you can see that the bot was trading and the total of the amounts between all of the positions the net position Delta has been changing regularly and now and now the video is complete I guess and we’ll we’ll continue this conversation over there our next video is like I said we have a few planned we’re gonna plan a bunch more and we’re gonna make this YouTube really popular and we’re gonna hopefully seen you on the discord just the very friendly chat um in here for all those folks that like coin decks and like to run bots talk about stuff like wine alright can stuff thank you so much and have a wonderful day