How the Honey Maker works

Harrison Kinsley

Goals of the fund

  • The main purpose of the fund is to act as a hedge against the market and volatility.
  • Limit exposure, buying into the lows and selling into the highs, shaving margins along the way.
  • Act as a lower-risk alternative to buying and holding Bitcoin. The strategy seeks to hold clients around 50% bitcoin and 50% fiat to limit exposure. As price falls, the algorithm collects more bitcoin, and, as price goes up, the fund sells into the highs.
  • Simplicity, Security and Transparency.

Supported Exchanges:

  • Coinbase
  • Bitfinex
  • Bitstamp
  • BTC-e
  • Others can possibly be supported, depending on their ToS.

How we achieve these goals:

Sea of BTC works by connecting to your account via exchange APIs.

Via exchange APIs, withdrawing and transferring is not allowed, or can be set to be not allowed, therefor you retain full control of your account. You are also able to stop the service at any time by simply disabling the API access, you do not need Sea of BTC permission. Also, many exchanges offer the ability to "whitelist" specific IPs, so that only those IP addresses can connect and trade via your API key.

Once you have supplied the required API key and API secret, we are able to run our trade bot on your account. You can view your account's information and current trades at any time by logging into your exchange account, or by viewing your peformance data on this website.

We use a modified grid-trading system. A nice, short, definition of this is:

"A series of positions and open orders that are built with a predetermined spread defined by the trader."

A grid trading strategy has a few implications:

  • There is no stop-loss. Instead, risk is hedged via only small portions of the account being traded at a time. Typically, ~5% or so of your account's value is traded at a time.
  • If price drops, it is with mathematical certainty that your account value will drop less in % than the market.
  • If price rises consistently for a long period of time, you will likely under-perform in that time-frame until price retraces, though you will still profit.
  • Patience is key. It can be unsettling to watch as price rises and outperforms your account. The reason for the out-performance is you will have sold at varying intervals, and you are not usually fully invested, meaning you might have half of your account in dollars instead of Bitcoin, for example. While it might be uncomfortable, this is part of the strategy, risk management, and the point of investing. No one can predict the markets, and the old adage about selling into highs and buying into lows applies.

This strategy is not a get-rich-quick strategy, nor is it to be seen as some sort of side-income. Instead, it is meant to act as a hedge, or insurance, against the volatile bitcoin market. We lower risk by keeping exposure to bitcoin around 50%. We buy into the lows, and sell into the highs, so the actual balance can vary.

How to create an API key:

This will differ from exchange to exchange, see the How to Get Started page for specific exchange instructions on how to set up your account.