How-To

How to Set Up Hodlbot

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hodlbot

If you’d prefer to automate your crypto portfolio, one of the best tools to use is Hodlbot. It works with the Binance and Kraken exchanges and allows you to adopt a “set-it-and-forget-about-it” approach to your investing.

But how do you set up Hodlbot? Which different strategies are available? Keep reading to find out.

Create API Keys on Binance or Kraken

hodlbot binance

Before you can start using Hodlbot, you first need to create an API key on either Binance or Kraken. The API key allows the Hodlbot app to interact with your exchange account and perform trades on your behalf.

Keep in mind that there’s no way to make Hodlbot only use a percentage of your assets on either exchange— it’s all or nothing. If you’d rather keep some of your portfolio under your own control, you need to make a secondary account on your preferred platform. Neither Binance nor Kraken forbid having more than one account in their Terms and Conditions; there’s nothing to worry about if that’s the approach you’d prefer to take.

To create a new API on Binance, log into your account, and go to Settings > API Management. In the Create new API section, give the API and name and click on Create. You’ll new to confirm the creation using the email link. After accepting the confirmation, make sure the Enable Trading box is checked in the API settings.

If you’re a Kraken user, go to [Username] > Settings > API and click on Generate New Key. Again, ensure that you have enabled trading permissions before confirming the creation.

Sign Up for Hodlbot

Now it’s time to make your Hodlbot account. Click on the sign-up link on Hodlbot’s homepage and choose a username and password.

You will be prompted to enter the API key that you just created for either Binance or Kraken, click on Verify, and you’ll be looking at the app’s Account Overview page.

Creating Your Portfolio

hodlbot porfolios

Before you get into the minutiae of customizing your Hodlbot account, you first need to decide how to set up your portfolio. Click on the Portfolio tab on the left-hand side of the screen to get started.

You can choose from four pre-made portfolios, or you can make your own. The four native portfolios are:

  • Coinbase Index: Tracks the 12 assets available on Coinbase. It is weighted by market cap.
  • Hodlbot 10 Index: The top 10 coins by market cap, weighted by root-cap.
  • Hodlbot 20 Index: The top 20 coins by market cap, weighted by root-cap.
  • Hodlbot 30 Index: The top 30 coins by market cap, weighted by root-cap.

To use any of the four, click on Select Portfolio.

How to Create a Custom Portfolio on Hodlbot

Alternatively, you can create your own portfolio. Hit the + button to begin the process. You’ll immediately be presented with two options: Create your Own Index and Create your Own Portfolio.

Create Your Own Index on Hodlbot

A market cap ranked index is perfect for giving yourself broad exposure to the crypto markets.

If you create your own index based on market cap rank, you’ll need to decide which range of coins to include. Enter your choices in the [X] to [X] section. You can also add a minimum and maximum percentage of your portfolio to hold in each coin.

Next, select your weighting strategy. Three options are available:

  • Even: Your portfolio is divided equally between each coin in your portfolio.
  • Market Cap: The percentage holding of each coin in your portfolio is weighted according to its market cap. The coins with a higher market cap will be allotted more funds.
  • Root-Cap: Coins are balanced according to the square root of their market cap.

Create Your Own Portfolio on Hodlbot

hodlbot custom porfolios

If you’d prefer to limit your investments to select group of coins, choose Create your Own Portfolio instead.

On the left-hand side of the screen, you can select which coins you want to include. There is no limit to the number you can add. However, keep in mind that the more coins you choose, the larger your exchange balance needs to be in order to cover trading fees and to meet the minimum trading amounts that Binance and Kraken impose.

Once again, you can choose to weight your portfolio evenly, by market cap, or by root-cap.

Both tools also have a Backtest button. You can use it to see how your new portfolio would have performed historically—though remember that past performance is not an indicator of future returns.

Set Your Rebalancing Period

Hodlbot lets you choose how frequently you want to rebalance your portfolio; the default is set at 28 days. You can access the setting in the Utilities tab in the left-hand panel.

Although it might be tempting to rebalance more frequently, remember that multiple studies have shown that there’s no correlation between more regular rebalancing and better returns. For smaller portfolios, it might even be a disadvantage—the fees associated with more frequent trading will only serve to nibble away at your returns continually.

Create Your Blacklist

hodlbot blacklist

Hodlbot lets you set up a blacklist of coins. The app will never buy any coins you add to the list, regardless of which portfolio you select.

At the very least, it’s prudent to add the top stablecoins to the list. They don’t provide returns and will take up a place in your portfolio that a different asset could use.

You can also use the blacklist to exclude coins you fundamentally don’t like, or to remove coins with massive market caps that you already have exposure to elsewhere.

Use the Cashout Tool

If you need to sell all your coins in a hurry, it might be impractical to trade them all individually on an exchange—especially if you have 40 or 50 assets in your portfolio.

The cashout option lets you consolidate a percentage of your portfolio into a single coin of your choosing with just one click.

Learn More About Hodlbot

This guide will help you set up Hodlbot. However, if you’d like more information about the service before you dive in, make sure you read our other articles on Hodlbot’s best features and the top crypto index funds.

Disclaimer: This is not investment advice. Bitcoin and other cryptocurrencies are highly speculative. Nothing is guaranteed in cryptocurrency. Always perform your own research before investing and never commit more money than you are comfortable losing.

We earn commission if you purchase items using an affiliate link. We only recommend products we trust. See our affiliate disclosure.

Dan Price
Dan is the Managing Editor of Blocks Decoded. He has a background in both finance and technology and holds professional qualifications from the UK's Chartered Insurance Institute, including a Certificate in Discretionary Investment Management and a Diploma in Financial Planning. In his early career, Dan worked for more than five years as a private financial consultant, advising clients on investments, fund portfolios, and long-term savings. Today, Dan also writes for MakeUseOf. He started at the company in January 2014 and has gone on to hold several key positions in the organization.
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