MoonQuant Capital is a probabilistic multi-crypto asset fund manager that specializes in algorithmic, systematic trading strategies. The company ​​was founded by seasoned entrepreneurs, educators, and experienced traders. They employ talented software developers, statisticians, and data scientists who create and manage proprietary algorithmic trading strategies. MoonQuant Capital has been active in the crypto industry for a long time, as well as on several other algorithmic copy-trading marketplaces.

We are very proud to tell you MoonQuant Capital has joined the Mercor platform since the release of the Mercor Early Beta environment. Besides the deployment of their state-of-the-art algorithms on the platform, they are helping Mercor immensely by giving invaluable feedback and suggestions from their extensive experience within the industry.

One of MoonQuant’s strongest bots on the platform, which peaked at almost 60% profit in less than a month!

Mercor values transparency and education highly. We like to keep our community up to date and as informed as possible. That’s why we launched a new Mercor series: the Mercor Developer AMA series. Given their extensive expertise and after achieving incredible results, we figured MoonQuant Capital would be a fitting candidate for our second Mercor developer AMA series.

In this article, we will set out last week’s AMA, held in the Mercor community chat. The article will give you an insight into a prime developer on the Mercor platform. The AMA was a great success and gave exclusive insights into the benefits of algo trading. Below is a detailed summary of what was covered in the AMA. Enjoy reading!

The AMA

Mercor CEO:
‘It is time for our second developer AMA. MoonQuant Capital is a crypto asset fund manager specializing in algorithmic and probabilistic trading strategies. Founded by seasoned entrepreneurs, educators and experienced traders. They employ talented software developers, statisticians, and data scientists who create and manage proprietary algorithmic trading strategies.

The format will be as follows, we will mute the chat for the first part of the AMA where we will ask several questions to MoonQuant. After which we will open up the chat and you will be able to ask questions directly.

Rodrigo | MoonQuant Capital:
‘Cool’

Mercor CEO:
‘So lets start!’

Mercor CEO:
‘Please give us a brief introduction about yourself (background, experience).’

Rodrigo | MoonQuant Capital:
‘I’ll go first. My Name is Rodrigo Benadon. I discovered bitcoin in 2012. And I was immediately seduced by it. At that time, I was an entrepreneur….

I was also trading commodities futures (oil, soybeans, sugar, dow, gold). Since then, I have only traded crypto. I saw that bitcoin was a technological innovation that I could buy and trade. And the charts comported like any other asset.’

Alfredo | MoonQuant Capital:
‘I’m Alfredo Roisenzvit, I am an economist. I teach grad school economics, Big Data, and since a few years ago, Crypto. And of course, work at Moonquant developing the algo’s.’

Mercor CEO:
‘Impressive resumes!’

Rodrigo | MoonQuant Capital:
‘The forces of nature…’

Mercor CEO:
‘Interesting you got into crypto assets because many individuals believe crypto-assets behave much differently than other assets, what is your take on that?’

Rodrigo | MoonQuant Capital:
‘As a technical analyst, you look at the chart. More volatility, but if there is a price and a market it can be traded. It is like a movie playing at 2x speed 😊’

Alfredo | MoonQuant Capital:
‘I can attest to that, Sometimes Rodrigo would call a Tech Bottom or a target, and I will say: that’s impossible in the next x days. And he´ll say: the graph is there, and most of the time it’s a good call!!!’

Mercor CEO:
‘Alright, interesting, and yes crypto definitely is way more volatile, sometimes the movie can last only a few minutes ;). For the next question let’s dive a bit deeper into algorithmic trading, how and when did you get involved in algorithmic trading?’

Rodrigo | MoonQuant Capital:
‘The trick is to make the trade, hahaha’

Rodrigo | MoonQuant Capital:
‘In 2014, I was doing arbitrage between mtgox and Bitstamp and other exchanges. It was theoretical because you could not withdraw from mtgox. But you could still find plenty of opportunities in Bitfinex and Bitstamp, for example.’

Mercor CEO:
‘Right…’

Rodrigo | MoonQuant Capital:
‘I realized that only a machine could take advantage of those price differences.’

Alfredo | MoonQuant Capital:
‘About the same time I was working with Big Data Algorithms on Risk management models for banks, and I was related to algo trading models from the risk measurement standpoint.

I also started experimenting with some algo traders for fun on a small account. But nothing too serious.

Then, when I went into crypto shortly after, it was the only possible way. I mean, I still do some manual trades for fun.’

Mercor CEO:
‘And when did you guys decide to focus completely on algorithmic trading and what is the story and mission of MoonQuant Capital?’

Rodrigo | MoonQuant Capital:
‘MoonQuant Capital is a crypto-asset fund manager specializing in algorithmic and probabilistic trading strategies. Our goal is to create wildly successful signals across a wide spectrum of crypto assets — both for signal marketplaces (centralized and decentralized) and for the Moonquant Fund.’

Alfredo | MoonQuant Capital:
‘On the story, we were interacting and commenting about bots, and we started doing it more often. Before that, Rod had put together a big group of crypto founders, that had basically everyone in the business in Argentina, that had a very early coming crypto community. So that’s how we started communicating our signals to (Rod has been truly instrumental in getting in touch with everyone, in fact).

At one point we decided to make this more professional and long-standing. And started putting together a team.’

Rodrigo | MoonQuant Capital:
‘In fact, Leo, our lead programmer is actually a postdoc Ph.D. Nuclear Physicist that was previously working on a particle accelerator. Now he’s working on a crypto accelerator!’

Mercor CEO:
‘Great story, and amazing to see such a committed group of early innovators come together. So how many people are currently involved with MoonQuant?’

Alfredo | MoonQuant Capital:
‘That varies, 4 full time, and then we have what we call consultants, that work closely with us on different elements as needed.’

Mercor CEO:
‘If we look at crypto and/or bitcoin and compare it to a typical product life cycle, where do you feel we are currently at?’

Rodrigo | MoonQuant Capital:
‘We strongly believe in the transformative nature of this invention (Bitcoin).’

Alfredo | MoonQuant Capital:
‘I don’t see bitcoin as a product… I think of it as an innovation and that we are very early in the S curve of adoption. This is only the beginning. To the Moon!… Quant.’

Rodrigo | MoonQuant Capital:
‘Like Saylor likes to say, it will go up forever…perhaps because fiat will depreciate forever…’

Mercor CEO:
‘Haha, good point 😉. Alright, that’s what we like to hear!’

Mercor CEO:
‘So let’s dive a bit deeper into your algorithms, what do your algorithms focus on? How do the algorithms of MoonQuant Capital differ from other algorithms?’

Alfredo | MoonQuant Capital:
‘We try to capture a market sentiment in the different timeframes the bots operate. And also to understand the trading conditions. There are 2 signal or 3 signal bots, depending on these conditions. For example, at Mercor there are 2 signals since they trade direct pairs. Futures are 3 signals for instance.’

Mercor CEO:
‘For now 2 signals 😉.’

Alfredo | MoonQuant Capital:
‘3 signals are long/short/close. 2 signals is only 2 of those, depending on the configuration and parameters of the bot.’

Rodrigo | MoonQuant Capital:
‘We use a variety of strategies to create a bot. We believe in cold-calculated, data-driven strategies. Our “secret sauce” combines a variety of indicators (EMAs, FIbs, BBANDS, and many others) and on-chain metrics.’

Mercor CEO:
‘So far the secret sauce has been quite profitable!’

Alfredo | MoonQuant Capital:
‘Usually, there is one engine (algo or combinations of algos) for each signal (one for long, for example) and a different for short, since they tend to have different dynamics.’

Rodrigo | MoonQuant Capital:
‘MoonQuant bots also have Multiple timeframe analyses for one signal… They analyze prices across timeframes.’

Mercor CEO:
‘How long does it take to develop such a strategy?’

Alfredo | MoonQuant Capital:
‘Forever.’

Rodrigo | MoonQuant Capital:
‘It’s a never-ending task…’

Mercor CEO:
‘And how often do you change them?’

Alfredo | MoonQuant Capital:
‘Constantly.’

Mercor CEO:
‘That’s what I figured as I know you guys are continuously improving them.’

Rodrigo | MoonQuant Capital:
‘Strategies work great until they don’t.’

Alfredo | MoonQuant Capital:
‘In crypto, there are epochs, the secret to algo trading is actually identifying those epochs as soon as they change. This is more technical, but for example, Elon tweets marked 2 epochs, there is no modeling to that, you can only model each epoch. Finding those breaks is very difficult.’

Rodrigo | MoonQuant Capital:
‘News-driven events are unpredictable and create distortions that the algos have trouble managing.’

Mercor CEO:
‘I see, obviously, it is a very demanding and difficult task. So of course your algorithms have not been live for that long yet on the Mercor platform, therefore could you share some performance history of your algorithms, as well as what we can expect long-term.’

Alfredo | MoonQuant Capital:
‘There is a point that’s more tech, but maybe interesting to the readers here, let me expand on that.’

Mercor CEO:
‘Alright, sure thing! I know many people are interested in the details!’

Alfredo | MoonQuant Capital:
‘We have logic for signals, as explained, but also each signal has maybe 20 parameters that affect how it fires. So if the performance stalls, we can bring it back playing with the parameters, if the epoch allows.’

At the same time, we constantly work on improving the signals as well, that is more coding and logic. So it’s always one or the other we are working on.’

Rodrigo | MoonQuant Capital:
‘Cheeky’

Mercor CEO:
‘It’s interesting how these algorithms still need continuous work, adjustments, etc.’

Alfredo | MoonQuant Capital:
‘There is one very important point to make about backtesting. We can do that with the questions, but backtests are somehow overrated, I can expand on that.’

Mercor CEO:
‘Please do.’

Alfredo | MoonQuant Capital:
‘Concretely about performance, we have a couple of the longer timeframe bots, which have a 700% yearly turnover, but these long-term signals do get floating drawdowns.’

‘We have a couple of the longer timeframe bots, which have a 700% yearly turnover.’

Rodrigo | MoonQuant Capital:
‘Our bots failed to recognize the big retracement from 60k to 35k… (at least they did not close the position at the bottom). We are now working on improving drawdowns…’

Alfredo | MoonQuant Capital:
[In reply to Alfredo Roisenzvit]
‘Measured in USD’

Alfredo | MoonQuant Capital:
‘It’s difficult to type long and fast, but I’ll try to be concrete.

Backtests are a statistical tool, used to measure the past, basically to analyze how predictive models will work, on PARAMETRIC functions. Simplified, if the future will resemble the past, and I can identify a parametric function that describes the past, and the variables are normal or parameterized enough, this will help me understand the future.

You can do that with the shares of Coca-Cola. However, as explained, with crypto it doesn’t work like that. So backtesting 1 year back will have 3 epochs and 3 dumps. There is no way to use that in a model. So all the indicators people see in a backtest are most of the time pretty much useless, other than to show what has already happened.

I have bots that backtest like a charm, and then perform poorly, and the other way around, so you have to be very careful. We try to backtest only within epochs, this is very difficult, and only sometimes really works, until the next epoch.

I can further expand on this during the questions part, if necessary.’

Rodrigo | MoonQuant Capital:
‘Order execution is not a factor in backtesting. It does not take into account liquidity, speed, server error, volume…’

Mercor CEO:
‘Amazing information, very useful for all members and for our team. And we fully agree with your take on backtesting. Let’s move on to the next question for now, but I am sure some community members will have more questions about this in the next part of the AMA.

We are of course very happy to have you on the Mercor platform and your support, suggestions, and feedback have been extremely useful to us. I would like to ask you what you think of the Mercor platform, its functionalities, the team, and its ambitions?’

Alfredo | MoonQuant Capital:
‘We like the decentralized aspect very much. It’s also rather easy to use and navigate. And very easy to connect the bots. Also, your approach to developers is really very welcome as well as you are very active on improvements.’

Rodrigo | MoonQuant Capital:
‘The fact that we are even halving this space… 😊’

Mercor CEO:
‘Alright that brings an end to the first part of the AMA, I will now open up the chat and allow community members to ask questions! The best question will win 1 BNB.

Community Questions

Onbex, Mercor Community Member:
‘Hello! I have 2 questions

My first question: It is relatively easy to create an algo that follows the trend, it is more difficult to exit it at the right moment (so that the profit does not turn out to be a loss and the loss does not turn out to be a missed profit). How does your algo protect our capital against the loss of invested capital and already earned profit?

And second:

The trend is a good friend of most algos, but as we know, it does not last forever, and there comes a time of… consolidation, which usually generates significant losses.

How does your algo behave during this hard-to-play time? They stop playing, try to fight the market, or is there another option?’

Alfredo | MoonQuant Capital:
[In reply to Onbex]
‘Let me start with the second question. Every algo out there tries to buy low and sell high. So it’s a question of how the algos work in the longer term, it’s difficult to see in the short term where everything goes up. To track the long-term performance. No algo will be created to protect your capital, these are speculative tools, so users should use caution and always DYOR.’

John, Mercor Community Member:
‘My question, do you offer other forms of algorithmic trading other than spot trading, and if yes, do you plan on introducing them to the Mercor platform in the future?’

Rodrigo | MoonQuant Capital:
‘This is gonna take a while… 😊’

John, Mercor Community Member:
‘What are you guys’ efforts to improve on your algos to benefit investors more than they are doing now? Also, are there plans in place to introduce more pairs on the Mercor platform?’

Alfredo | MoonQuant Capital:
[In reply to John]
‘As said, we constantly work on improving our algos. Regarding tokens, we understand this is something that Mercor is working on.’

John, Mercor Community Member:
‘Alright. Satisfactory response. 😊’

Zanzib4r, Mercor Community Member:
‘In a downtrend market where both pairs go down, are algos still able to trade with profit? Everybody is looking for a safe haven during these periods.’

Alfredo | MoonQuant Capital:
[In reply to zanzib4r]
‘Depends on the pair, and what you want to protect yourself with. If you always want to be in BTC then USD is irrelevant, if USD is your benchmark, you should be in pairs that have USD as base.’

Alfredo | MoonQuant Capital:
‘Nothing in crypto is guaranteed, banks are good at that. Crypto is a risky investment. We seek good performance, and history shows it´s ok. But, there is no guarantee. Audits are not necessary because every move is on the blockchain, accessible to anyone with an internet connection.’

J G, Mercor Community Member:
‘Which parameters are you using to identify the secret in crypto as you call it, the epochs? Can you backtest from a specified epoch which will give you maybe a better understanding of how the bot will perform?’

J G, Mercor Community Member:
‘Another question which might be nice, is in what way your own crypto experience is influencing the bots parameters, are some parameters left out due to distrust? Do you ever feel like the bot is making the wrong move and subsequently stop it from making a bad move? Or does the hard statistical data always trump your idea’

Alfredo | MoonQuant Capital:
[In reply to J G]
‘We have a large number of parameters that we configure for each signal, they could be basic ones like MA´s BB’s, etc, and then some other in-house ones, using math and derivative formulas, that work with other indicators in the charts. Regarding epochs, it’s just how the price behaves, something we identify by the charts, and then by testing the different formulas to try to identify the breaks.

Many times we feel tempted to intervene, but in the long term, the bot will make fewer mistakes than we will. it’s better to work on improving the bots than running behind individual trades.’

Raprbz, Mercor Community Member:
‘Hi Alfredo, I’m very impressed by your story.

I’m curious about your vision regarding algorithmic trading. Will it ever become popular for the greater public? If yes, in which time frame? If not, why? Lastly, I’m curious to know what your thoughts are on what should be done in order to make algorithmic trading widely available to the general public.

Thanks!’

Mercor CEO:
‘We will cap new questions from hereon and leave @ARoisenzvit and @Benadon the time to answer a few more questions and end the AMA right after.’

G, Mercor Community Member:
‘What ratio of on-chain data vs machine learning/programming do you rely on?’

Alfredo | MoonQuant Capital:
[In reply to G]
‘No fixed ratio. It all depends on timing, on-chain is more for sentiment. So fewer indicators but more profound, and the market is more for movement, more indicators, more precise, there is no fixed formula, it changes all the time.’

Alfredo | MoonQuant Capital:
[In reply to Raprbz]
‘Platforms like Mercor will do that, it will have better interfaces for the public, but definitely, this is one way to bring it closer.’

Rodrigo | MoonQuant Capital:
[In reply to Raprbz]
‘In terms of volume today most trades are machine-driven. If the bot is making a mistake, our efforts are to improve the bots and the next trades.’

Mercor CEO:
‘Alright that is it guys, amazing AMA and I would like to thank @ARoisenzvit and @Benadon for your time and great answers!