When you exchange currency for another, it is referred to as trading. Cryptocurrency trading is exchanging cryptocurrencies at prices determined by the forces in the market. The idea is to help people who want to keep the coins for a specified period of time, as a way to make money off the margin of the trade. This kind of trading can be carried out on desktop applications, exchange websites, and mobile apps.
The ideal cryptocurrency trading application is one that guarantees efficiency by making practices like portfolio rebalancing easier for the user.
For a lot of people, this is just a financial buzz word with hardly any significance to their investment strategy. Nothing could be farther from the truth than to think of it this way.
Imagine yourself as a young person with a target portfolio of 90% in stocks and the rest as bonds. After 12 months, your bonds grow to make 20% of the portfolio. You still have an appetite for risk and so you want to invest more in stocks. Here is where you will need to rebalance back to the original plan.
In essence, rebalancing is that process where you modify the way you allocate assets alongside the fluctuations in your investment and the market. It all boils down to asset allocation, whether it is mutual funds and equities, stocks, bonds or cash.
How rebalancing works
There are two major rebalancing strategies. In the threshold based approach, rebalancing depends on the way allocations change relative to each other and tracking the variance over time. Rebalance takes place when that variance exceeds a threshold.
Periodic rebalancing, on the other hand, takes place after a specific period.
From the surface, it appears as though rebalancing is simple: you just realign allocations with a target number. However, the complexities are in the details and it gets harder with cryptocurrency.
Rebalancing for cryptocurrencies
The rebalancing complications increase when exchange restrictions are introduced to the equation. For example, orders often have a minimum requirement that you can trade. In such a case, you will need to resolve the debt. In another example, exchanges tax assets that performed extremely well. These two can result in cases where debt is more than what is available to pay it off.
To construct an algorithm that can trade crypto successfully, one must bear in mind things like fairness, consistency, usability, and affordability and this is where Shrimpy comes in.
What Shrimpy does
Many people create and manage their cryptocurrency portfolios using trackers. They are useful if you own many accounts in different exchanges. With a tracker, you do this without having to make multiple logins.
In this sense, Skimpy is an application to track your assets. However, it goes beyond that. When there is a change in prices, you can use Shrimpy’s exchange API to rebalance your portfolio automatically. You also get the benefit of social features and analytical tools but you will need paid access for this.
Getting started with Shrimpy
Any new member can access the sign-up page from the website here. The sign-up page is typical and you only give details like your name and email and you create a password. If you have a referral code, you can use it there.
Upon logging in, the site gives you a prompt to perform tasks like allocating portfolios, setting rebalance periods and securing your assets. You connect an exchange using your API key.
As of the writing of this review, Shrimpy can work with the following exchanges:
Things to know before using Shrimpy
Before you hitch your wagon, remember that you do not have to connect an exchange immediately you sign up. You do not even need to rebalance right then.
You can also stop whenever you like. As you set allocation for any coin, you have to use whole numbers, never fractions.
When it comes to the period for rebalancing, you have options like weekly, daily, or hourly. You can even rebalance manually if that is your preference. You can see your portfolio in USD or BTC.
Note that you will have to create many accounts for the different exchanges. The first page on the interface will reveal features including:
Features of Shrimpy
This is the first view as soon as you log in. From this feature, you will be able to track the performance of your assets. You will be able to switch between exchanges using a menu at the top of the interface.
This second view contains the automatic rebalancing feature. When you key in your target percentages, the application initiates a trade for you to ensure that your percentages do not change. You can use the automatic rebalance after an hour, a day or weeks.
If you use a cold wallet to keep your cryptocurrency assets offline, you can access them from the platform such that they will feature in your portfolio. There is a ‘blacklist’ option that will allow you to block the app from managing any assets that you would rather handle manually.
The history tab allows you to see the actions that the application has performed. They are typically produced in a list with timestamps.
With this view, you can see what other traders are doing, follow, and interact with them. By default, the platform will put the users with the strongest portfolios at the top of the results when you perform a search. This feature and the next are only fully available for paid users.
The backtesting tool allows you to see if the platform’s rebalancing will benefit your portfolio. It compares standard holding strategies to rebalancing using the app. The interface gives you an example of a portfolio that demonstrates how backtesting will work.
Shrimpy’s project will make it easy for the diligent crypto trader to earn from their assets. The most interesting feature is the platform’s ability to rebalance portfolios and the addition of a social feature. Few exchanges can boast of this.
The algorithm only gains access to your API so as to trade for you, but your funds will still be safe. There is an optional authentication setting that you can use if you want more security. The main limitation of the platform is that it is still relatively new so the developers are still adding support. There is also no available mobile app, but at least, the interface adapts to smaller displays.
However, the fact that the platform offers excellent customer care and support works to their advantage. It also helps that the core features of the platform are free and upgrading is fair.
The platform’s future success will depend on how well the team communicates the benefits of its platform to new users. As it is, many investors may still be unaware of the benefits they draw by rebalancing using Shrimpy.