Why Every Newbie Should Use Shrimpy Tool and How Does it Work

Handy Tips / 25.07.2019

With constant price volatility in the crypto market, many traders tout HODLing crypto as the perfect strategy to soothe all traders’ woes. For them, it means holding on to your current portfolio and waiting out the storm before heading into the market to sell-off.

Though that might work, trading in the face of the price bloodbath that seems to have no end often translates to a situation where you buy high and sell low. Luckily, an even better way of managing your assets is through rebalancing and automating your trade strategy.

Applying automated solutions like Shrimpy gives crypto investors and traders the leverage to maintain balance on their portfolio by automatically reshuffling assets. This piece explores how the Shrimpy tool works and what it could mean for crypto traders.

Portfolio Rebalancing Strategy: How Does it Work?

Rebalancing is an age-old strategy widely used in the traditional investment market, yet to gain full traction in the crypto market. It majorly involves reshuffling a portfolio’s assets to pumped back into the target allocations for better returns.

For instance, you invest in an asset with 80% of your target percent portfolio based on it and the rest to another asset. Then, any of the assets grows in size and increases beyond the desired percent allocated. You decide to take more risks and invest more. You’ll need a rearrangement of your portfolio to meet up with your original investment plan.

Portfolio rebalancing entails channeling your assets allocation structure to flow with the market tides and track their changes over time. There are two approaches to this strategy – periodic and threshold method.

For the periodic method, you track your allocations’ variations over a specific period and decide whether to rebalance. You set a threshold on your allocations for the threshold and track the variations for moves beyond the set threshold.

Rebalancing in the Crypto Market

In some cases, the threshold and periodic approaches work hand-in-hand, depending on the asset class and the market’s state at that period. Ultimately, rebalancing is one of the best ways to maximize your profits and take calculated risks.

However, the imbalances in the crypto sphere have made this method a complex one. Rebalancing portfolios in the crypto market requires a great deal of analysis due to the market move factors. Investing in the crypto market isn’t really as straightforward as perceived, especially as an inexperienced trader or investor. It is subject to various factors such as the top market players, the price volatility, and the platforms through which trade is carried out.

Crypto trading on exchanges, for instance, is limited by several issues, which, in a way, goes against the decentralized nature of crypto assets. These issues include the limit to the number of transactions you could run per day, legal compliances, and, ultimately, the market flow. Hence, trading in maximum capacity or rebalancing might be restricted, and you would need a comprehensive study of the market to know where to channel your funds. This is where automation comes.

Automating the way your portfolio is managed gives you an edge over others by creating opportunities to track your assets’ performances and automatically rearrange or rebalance your portfolio.

Shrimpy Tool: How does it Work?

Tracking your assets as a newbie in the crypto scene or one with multiple accounts on various exchanges, especially in the light of the storm in the market, can be daunting. Shrimpy is designed to simplify this process by automating the process.

Shrimpy allows the automatic rebalancing of your portfolio and allows you to create indices in the process. This automated rebalancing happens based on a preset schedule by you. You could choose to do so on a weekly, monthly, daily, or even hourly basis.

Shrimpy gives users the benefits of analytical tools and integrated social features that allow traders to leverage the change in prices for rebalancing through its Exchange API. It is built to be compatible with various exchanges and support multi-exchange transactions.

This automated tool is integrated with various features that allow ease of operation. They include the Dashboard, Portfolio rebalancing, and Wallet Interoperability, Social platform, Backtesting tool, and history:

  • The Dashboard: Like a regular web interface, the dashboard is the first feature you see. This shows the performance of your assets in the market and allows you to track them. Also, it is built with a function key that allows you to switch between exchanges.
  • Portfolio Rebalancing: This is perhaps one of its most enticing features. With this feature, you can rebalance your portfolio by entering your target percentages. This feature automatically regulates your trade system by ensuring that your portfolio is rebalanced after a price change or trade.
  • Wallet Interoperability: While trading is important for revenue generation, keeping your portfolio safe is important. Shrimpy equips users with its cold wallet compatibility. As such, you can access and manage any of your cold-stored assets on their platform and use the ‘blacklist’ option to exclude the management of any asset you don’t want managing.
  • Social Platform: Like any other social media platform, it allows you to follow, track, and interact with other traders. This is perfect for newbies to crypto trading as it allows them to view the top traders with the strongest portfolio.
  • Backtesting Tool: The backtesting tool gives you more insight into how using the platform’s rebalancing tool will help your portfolio by doing a comparative analysis of automatic rebalancing and standard HODL strategies.
  • History: This gives you a detailed view of what the platform has been doing with your portfolio. It provides it with timestamps and gives you an overview of the action taken.

Why Every Newbie Should Use Shrimpy Tool

As a crypto trader, catching up with every market move and identifying every trading opportunity is not really feasible. By automating your trades and analysis, you get to save the time and hassle of calculating trading amounts and manually managing your trades on various platforms.

The Shrimpy tool is designed to create avenues whereby traders can maximize their profits despite market volatility. Newbies have the added advantage of tracking their assets, analyzing the market trends, and checking how more experienced traders manage their portfolios.

Sudarshan M is a long time crypto-enthusiast. Pulled in by bitcoin early on, it did not take long for Sudarshan to divert all of his academic attention from business studies to blockchain by doing his Masters and eventually pursuing his PhD in the subject.