Have You Wondered How Alphr Finance Finds The Best Performing Wallets?
This article best explains how the DeFi protocol, Alphr Finance finds the best performing wallets in crypto.
Copy-trading has a nice ring to it. The opportunity to trade using the trading activity of renowned traders is something everyone secretly desires. However, the so-called trading gurus tell you one thing but do another. While on centralized exchanges, copy trading feels like a lost cause, but it’s plausible on a DEX.
The Alphr Offer
Alphr is making copy trading extremely sophisticated. The blockchain-based platform provides traders with the opportunity to see what the best traders are trading with the chance to copy their exact move immediately.
At the moment, Alphr is compatible with Uniswap only, though more DEXs are in the pipeline. On Alphr, you can copy trades of the wallet without the trader being the wiser.
What’s special about Alphr is the opportunity to add your resources to the mirror pool so copy trades can be done on your behalf when you’re not available to execute them.
Trading is about making a profit. If copy trading is to be successful, consistent profit has to be almost guaranteed — the copied wallet has to be high performing. Nevertheless, picking winners isn’t anyone’s prerogative, so users might have to keep their expectations in check.
Alphr increases the potential of picking winners through its wallet ranking. The blockchain-based project lines up wallets using stringent criteria, ensuring Alphr users are better positioned to execute profitable trades in the long term.
The top wallets in DEX trading are ranked based on PnL ratio, frequency of trades, and much more. Alphr’s goal is to arm users with as much information as possible, so they can decide the wallet trades to copy.
The Selection Process
The general assumption is that wallets worth copying are those with a high-profit margin. Yet, nothing could be farther from the truth than that.
Different wallet addresses have distinct trading habits, trading capital, and a whole lot more — people call the shots behind the activities of these wallets addresses.
So how does Alphr pick the best of the bunch without misunderstanding the proficiency of one or more wallet addresses? It’s more complicated than it seems on the surface. The blockchain-based project relies on several factors, including Gross Market Value (GMV), Profit and Loss (PnL) Number, Sharpe Ratio, and more.
Each of these factors helps Alphr evaluate the worthiness of a wallet for the viable position of having its trades copied by users. While it’d be easier to select such wallets based on their PnL number, it’s not an accurate method of determining the profitability of a wallet address trades.
Combining the GMV and PnL numbers does help. Where PnL paints a black and white picture of a wallet’s suitability for copy trading, the GMV fleshes it out by adding color. This way, it’s easier to see why Wallet A deserves a spot on the top performers’ leaderboard and Wallet B doesn’t despite having a high PnL.
We can’t ignore the vital role of the Sharpe Ratio in the selection process. A popular metric for judging performance, Sharpe Ratio does wonders for sniffing out the duds masquerading as winners. Where GMV and PnL Number works with what’s in front of them, Sharpe Ratio unearths what’s hidden behind the glitz.
A poor-performing wallet that appears to be profitable based on its PnL Number and GMV is often exposed through its low Sharpe Ratio. The reliance on all three factors helps Alphr in selecting the high-performing wallets for copy trading.
Alphr’s meticulous selection process improves the chances of a copy trade being successful. The decision to look beyond the surface will pay off for users of the mirror-trading platform. However, users still need to do some due diligence and not copy trades blindly.
You may want to read up more on Alphr Finance by following their official websites below: