Oreo – Trade in Bitcoin is somewhat erratic and volatile. Many traders will be compelled to turn to buy-and-hold techniques that will yield meager returns since many of them struggle to effectively capture the variations. This great variety of techniques could make it difficult to choose which will work best.
We looked at several bitcoin trading techniques and adopted their pattern since their development for such a challenge. QuantifiedStrategies.com is here where we have developed and tested several strategies using sound technical analysis and historical data so that traders may make wise judgments in this somewhat volatile market.
Three effective Bitcoin trading techniques over time are these ones here. We will go over the mechanics of every technique in this article, investigate some backtested data, and provide you practical ideas to improve your trading approach. Let’s begin!
Strategy 1: the MACD histogram approach
MacD: Understanding
The plan mostly depends on the MACD indicator itself. Among the most used indicators available to any trader is this one. MACD consists on three main elements:
- The two exponential moving averages differ mathematically by 26-day and 12-day respectively.
- The Signal Line Difference between the MACD line and the Signal Line
- this is known as the MACD Histogram; a 9-day exponential moving average of the MACD line
Trade Policies
This approach bases its MACD histogram-centered focus on The trade policies follow this: BUY once the histogram starts to run positively. SELL once the histogram starts to run negative. It’s built on profit-making by catching Bitcoin’s momentum after it’s begun to trend. ### Performance Perspectives We developed this approach in Python, and the code has been backtested starting in 2015. The amazing outcomes are listed here: Annual Return: 77%. Purchase and Hold Return: 61% In particular, – Time invested: 54%
This approach was producing better returns while investing in less events, hence reducing the temporary draw-downs. Based on MACD histogram momentum trading finds, momentum trading could perhaps be an even better approach in the Bitcoin market too.
Strategy 2: Momentum Breakout
Overview of Strategy
The second is similarly a momentum-based approach aimed on explosive price of Bitcoin movements. The guidelines are really clear-cut.
- Purchase when the price crosses the 25-day close mark above
- Sell when the price drops below the 25-day old closing value.
Performance Guidelines
Over all, this approach has turned out to be really successful. Among the outstanding transactions, one may get a return of up to 42% in 43 days. Though average returns still outperform buy-and- hold, the victory rate is only 43%.
- The average return surpasses buy-and-hold.
- 56% of the time spent
This approach also justifies the fact that, despite reduced winning percentages, the momentum-based approach will still produce really strong performance as it is executed so effectively.
Strategy 3 : Trading Patterns grounded on seasonal fluctuations
seasonal patterns
The third approach follows seasonal trends that have proven successful in past markets and surprisingly also flourish with Bitcoin. This plan calls for:
- acquiring Bitcoin on the fifth-to- final trading day of the month.
- Trade on the day three of the new month.
Outcomes and Profitability
The record of success of this seasonal approach is quite outstanding. Most deals are winners; even the typical profit is shockingly 6.6%. Most trades yield an average profit of a healthy 3.2%, overall. The yearly return is thus approaching 41%.
- Time Invested: That comes to just 23%.
Although this trend is flat for the past several months, for traders hoping to play based on past performance it is still perhaps a profitable approach.
Conclusion
Let me summarize three winning Bitcoin techniques to improve your trading approach:
- MACD Histogram Strategy: Invested just 54% of the time, MACD Histogram Strategy is momentum-based with an annual return of 77%.
- Momentum Breakout Strategy: This is only a known to provide decent earnings with a reduced win ratio breakout method.
- Seasonal Trading Patterns: Operating inside historical cycles of trends, seasonal trading patterns are the time-based approach used to generate smooth profitable returns.
Every one of these techniques has advantages and can be fit for personal trading choices. These are some decent trading techniques for the always shifting Bitcoin market even if previous performance is never a guarantee for the future. Visit QuantifiedStrategies.com for more thorough understanding and other ideas. Good trading.
