In this technical analysis I will walk you through the methodology that I applied to verify a hypothesis that I've been forming while looking at BTC recently.
This is a slightly different analysis than the one I usually publish, I'd be very interested to hear your feedback. I want to experiment a bit with different forms of ideas that I publish here on the platform.
I am taking the bollinger bands over the last weeks and check every time the price comes above or below it. I want to see if it has predictive value over the next movement.
I hope that together with some of you I can extend this theory to make it more accurate. Perhaps there are ways that I can make it more accurate by discovering connections that I hadn't seen yet.
So please feel free to drop me a comment below if you have more ideas!
So what about the strategy? This will be a good lesson on risk-reward as you will see unfold that we can make a good profit with a near 50/50 win loss strategy.
So what would the strategy actually look like? The strategy would be as follows: You would wait for the price to break out of the Bollinger bands and immediately start a BTC trade.
Then, if it is above the upper band you would place a short. Conversely if it is below the lower band you would place a long.
The hard part is about determining where to place your stop loss and where to take profit. I played with a few numbers, but it seems that if you take a profit of 3% and place a stop loss at a 2% risk you would get a very interesting results.
And what about the results? There are: - 32 breakouts in total - 17 of which are positive - 15 of which are negative - 53% win-loss (17/32) total
To keep things simple and not work with compound interest now, this gives us a total of: - 17*3 percent points profit, - 15*2 percent points loss - This is a net net 21% percent points profit
I'm super curious to hear your thoughts on this one. A new format where we discuss a trading strategy. Also what do you think of the strategy itself or the methodology I apply here to calculate how successful it is?
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-------------------------------------------------------------- Disclaimer! This post does not provide financial advice. It is for educational purposes only!
Again another interesting and different idea on Trading View from you. I really like these kinda ideas you share with us.
about your strategy, I think this will better work on a range market condition rather than a trend market like as it is right now. but If you combine BB with another momentum indicator like Stochastic or RSI or MACD then I think your stopped out trades will be much less. please share more ideas about strategies than just sharing trading signals and moon charts.;
Trading-Guru
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@TiranTrading, This is a great point too, especially the bb-breakouts above the upper band might fail a lot due to the fact that it's anyways in an uptrend. A sideways market might benefit way more from such a strategy as there is some inherent mean reversal. Thanks for this feedback!
jasonbhart
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@Trading-Guru, is a particular momentum indicator better for foretelling the market conditions (range vs trend), or when this transitions?
Mohsen_f78
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You are considering percentage, while the gap between each touch is essential too. For example in last two recent touches, gap is 3000$ and false short signal.
FieryTrading
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My view on Bitcoin:
Oscamoon
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Very nice Job. I think that you can use the bollinger weekly and use as well the funding and premium index. We should see next week a huge correction to 33.000.
Dont you think ?
Trading-Guru
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@antoscar, would you then apply the bollinger weekly on a 1h timeframe like this?
ovylord
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@Oscamoon, nice call mate! Can you tell me how did you arrive at it? eventually what indicators do you use?
Pazarci2019
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Hi
Thank you for sharing your ideas with us. Please also explain the Bollinger Bands standard deviation settings. thank you
Trading-Guru
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@Pazarci2019, I used the 2.0 stdev settings on this one
about your strategy, I think this will better work on a range market condition rather than a trend market like as it is right now. but If you combine BB with another momentum indicator like Stochastic or RSI or MACD then I think your stopped out trades will be much less. please share more ideas about strategies than just sharing trading signals and moon charts.;