Long Only strategy
Ira avatar
Written by Ira
Updated over a week ago

Long Only is an index-based altcoin portfolio. Long-only aims to build and rebalance a diversified portfolio with many different assets, regularly selling assets that performed well to take profits.

How does Long Only work?

At a high level, constructing an investment portfolio involves addressing two key questions:

  • Which assets to include?

  • What proportion of the portfolio to allocate to each asset?

The optimal solutions to these questions aim for maximum potential return while minimizing the risk of drawdowns.

One approach is a diversified portfolio like the S&P 500. This is termed a capital-weighted portfolio, where each asset's share mirrors its capitalization relative to the total market capitalization.

An alternative strategy is to follow trends, known as momentum trading. This strategy involves identifying assets with upward price trends expected to continue, and selling them when the likelihood of further price increases diminishes compared to the probability of a correction.

Discretionary traders use personal skills, while algorithmic traders like Stoic rely on math. Long Only's algorithm combines both methods, known as smart beta.


Here is how the process looks from a high level:

  • Review everything: The algorithm considers all assets with at least $10 million in trading volume. For each asset, it assigns a weight based on its capitalization.

  • Buy more of what will go up: The algorithm also analyzes previous returns, price volatility, correlation with other assets, and other factors to identify the assets that are rising and are likely to continue to go up. Stoic increase the weighting for this asset.

  • Sell assets that might go down: Likewise, the algorithm estimates the likelihood of the asset going down. If it statistically looks like the price has peaked, Stoic sells the asset or at least decreases its share in the portfolio.

You can see that on any day, Stoic’s portfolio will include lots of different assets. Typically, a share of each asset is under 1%. The largest weighting would be 2-3%.

This means that a Stoic portfolio gives exposure to the broad altcoins market. It’s diversified: the risk of any crypto crashing balances out. Yet the portfolio is also likely to catch any moonshots.

Although Stoic has a purely mathematical approach to building a portfolio, many users still ask about specific assets.

Performance

In the previous bull market, our altcoin-based strategy yielded almost +2,800%, outperforming Bitcoin and other benchmarks. If you’re new to crypto, you might even think that this appears too good to be true. However, there is no magic: Stoic’s long-only portfolio systematically capitalizes on opportunities in the altcoin market.

Long Only Prerequisites

To use Long Only, 2 simple prerequisites need to be fulfilled:

  1. Users must have a Binance Global/US or Coinbase account

  2. The minimum of $1000 to invest in the strategy

Long Only effectively trades starting from a portfolio with a minimum of $1000. Any amount less than $1000 will not allow the strategy to perform efficiently, resulting in poor progress.

Let’s get started!

Follow these simple steps to success:

  1. If you haven’t already, sign up for a Stoic AI account

  2. Sign up / fund a Binance Global/US or Coinbase account with a minimum of $1000

  3. Choose the Long Only strategy inside the Stoic app

  4. Follow the steps to connect your Binance Global/US or Coinbase account to Stoic

  5. That’s it… Happy trading!

Please read on for frequently asked questions regarding Long Only

Long Only FAQs

Why did Stoic buy XYZ? Why did Stoic sell ABC?

Sometimes you might see some crypto shot up by 50% or more on some major news. Or maybe some hot token was listed on Binance or Coinbase. Or some crypto partnered with TikTok or whatever.

Stoic ignore all that noise.

Instead, Stoic looks at (1) capitalization to select weighting and then 2) evaluates the asset’s momentum to buy what’s going up and to sell what’s about to go down.

Furthermore, if you see crypto assets in the news, on Twitter, or among the top gainers on Coinmarketcap.com, this likely means that its price has already pumped — and in most cases, it’s too late to buy them.

In any case, Stoic will algorithmically assess whether the price will continue to go up or down.

Why does Stoic hold (no) BTC or ETH?

Occasionally, Stoic might hold BTC and/or ETH.

Yet these two assets dominate market capitalization. And large-cap assets tend to underperform assets with smaller market caps. Assets that are already flushed with capital usually appreciate at slower rates than assets that are less capitalized. That’s a well-documented phenomenon in the stock market.

So Stoic gives preference to smaller assets that are more likely to deliver higher returns.

Yet Stoic’s job doesn’t stop at just building the portfolio — it also rebalances it daily.

Further questions?

Feel free to reach out to stoic@cindicator.com or contact our support in the in-app chat.

Did this answer your question?