03/08/2018/22:00CET Hunting and trading strategies work!
This is an update to a post I wrote a few days ago regarding a trading strategy for bear markets in crypto. When I did a simple analysis of the price action in relation to the 21Day EMA indicator, it seemed to yield a return even in our Bitcoin bear market of 2018.
Off course I was not happy to just leave this so I started to think of how to put this strategy into action.
The key problem I saw from the start was that it was easy in hindsight to know when price action turned vs this indicator turned bullish or bearish, but in real time, a short lived breakdown could be a false signal.
So I did some recalculation to see what would happen.
Here is a calculation if we were to be super pessimistic.
The Price column is the lows in sell side, or highs in the buy side of price action on the days following a close crossing either upwards (buy signal) or downwards (sell signal)
As you can see, this is looking far worse than the rosey numbers I showed in the initial post.
This is even worse than if we were to just hold onto our 1 BTC! (we are left with 0.95442BTC in fact)
But this is an unrealistic scenario.
Here is what I think one could achieve:
In this strategy, we trade at the end of the trading day when it is clear that we are going to close on the other side of the 21day EMA.
This strategy is doable since all we need to do is to set an alert whenever price action crosses this indicator and then trade all our holdings either into BTC or USD depending on the direction. That would have been 15 trades since 22nd Dec 2017.