ADA has been one of the best investments in the last 12 months. Holding would have racked you in a whopping +2412%. Beating this on spot requires simplicity. The strategy presented here brings in +3406% in the same period.
WILL POST ALL POSITIONS AT THE BOTTOM
When creating strategies around trending assets it's best to keep it simple for a plethora of reasons but mainly: 1. The more complicated your strategy the harder is to execute it correctly and stay disciplined 2. In a bull run you are trying to avoid the downside. By throwing in plenty of conditions you might miss big upwards moves that put you at peril of underperforming HODL. If you are not beating holding there's no point to trade
Strategy objectives: 1. Hold open positions for days rather than minutes or hours. We don't want to be scalping assets like ADA with solid fundamentals that are already attracting attention. 2. Losing positions should be closed quicker on average 3. Willing to tolerate some drawdown but it needs to be less than 50% 4. Use technical indicators or price levels that are recognisable by the majority of traders - we want to be reacting when the masses are
The strategy: It started with the investigation on which indicators, patterns and price levels ADA has been reacting to in the past. In the investigation stage we tested single candles, candlestick patterns, oscillators and variations of moving averages. In terms of timeframe, we did want to maintain swing trading, but we know most of retail is watching lower timeframes. So we focused on strong signals that don't appear often on low time-frames.
The rules: On the 30 minute chart 1. Open position when candle is bullish Marubozu 2. Close position when candle is bearish Marubozu AND price is below EMA(120) To be clear we wait for the candle to form and if it is a Marubozu we act on the candle after. No stop loss or take profit as we are working with market based close conditions that are respected 100% of the time. That's it, that's all the rules!
The results: Since 03 Mar, 2020 till 03 Mar, 2021 the strategy had a return of +3406% on spot. It actually had a win rate of 46.1%. Yet the average win brought in +18.5% while the average loss was only -3.09%. In a year it opened 102 positions. The max drawdown was 33.1%, which is pretty steep but acceptable for a strategy running for a year in crypto. The calculated profit factor of 7.38 (above 2 is usually considered good) gives us a good indication of justified risk.
The strategy was checked on other trading pairs like ETH/USDT as well and is profitable, but please do run your testing and optimisation before going live.
If I can answer any questions please let me know. Feel free to test or chnage this strategy to suit your needs.
The positions:
25/02/2021 12:00 02/03/2021 19:00 5 days OP 1.0464 CP 1.2041 +15.1%
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