TradingView
Trading-Guru
Jan 7, 2021 9:51 PM

A BTC Study on the Bollinger Bands 

Bitcoin / DollarBitfinex

Description

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!

Comments
TiranTrading
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
@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
@Trading-Guru, is a particular momentum indicator better for foretelling the market conditions (range vs trend), or when this transitions?
Mohsen_f78
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
My view on Bitcoin:

Oscamoon
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
@antoscar, would you then apply the bollinger weekly on a 1h timeframe like this?
ovylord
@Oscamoon, nice call mate! Can you tell me how did you arrive at it? eventually what indicators do you use?
Pazarci2019
Hi
Thank you for sharing your ideas with us. Please also explain the Bollinger Bands standard deviation settings. thank you
Trading-Guru
@Pazarci2019, I used the 2.0 stdev settings on this one
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