That nipple just below the "radiator" or coolant cap is the overflow. Old cooling systems did not have an overflow, they had an airspace at the top of the cooling system that allowed for expansion in the closed system when the engine heated up. If over-filled, these systems would "burp" coolant when hot until there was enough airspace to accommodate the expansion. Then someone had the idea to allow the coolant to overflow into a bottle, filled from the bottom. This allowed the cooling system to be filled to capacity, as the coolant expands from heating up it moves into the overflow bottle, then when the system cools down it is pulled back into the system. This allows the cooling system to be filled to capacity with no airspace. I'm guessing if you open your system and look into the reservoir the coolant will be an inch or so down from the top. Thats the airspace. Your system is currently burping air, not coolant from a bottle. If you choose to add an overflow bottle, and its not a bad idea, make sure you have the correct coolant cap. The old style caps only have one gasket as they will not pull coolant back in when cooling off. The other reason there is an overflow is overheating, the bottle catches the coolant as it is pushed out. The bottle is not usually large enough to hold much coolant but caught early enough it will keep coolant from getting all over your engine room.
Hope this helps, RT