Effective Intraday Breakout Strategy on Bitcoin (BTC)
In this article, we will explore the effectiveness of an intraday breakout strategy on Bitcoin. The strategy takes advantage of the cryptocurrency’s volatility, aiming to find alternative paths to profit without the usual oscillations.
Volatility Breakout Strategy on Bitcoin (BTC)
The strategy focuses on the long side of Bitcoin due to its bullish bias. It buys at a specific level based on the previous day’s session close, plus the average true range of the last two days. The entry levels are calculated on daily bars, while the system operates on 60-minute bars.
Each trade has a fixed monetary value of $10,000, with no money management applied. The trade closes at the end of the session unless the wide stop loss of $1,000 is triggered.
The average true range is used to measure volatility by calculating the range between the high and low of a bar. This indicator is suitable for Bitcoin’s high volatility.
Comparison with Buy & Hold Strategy
The strategy shows a consistently growing equity line and profitable trades in all years of backtesting. However, holding Bitcoin with a buy & hold strategy would have yielded higher profits but also higher drawdowns.
Position Sizing Application
An advanced method of position sizing called “volatility position sizing” can be applied to Bitcoin. By using the average true range, the position size and stop loss can be adjusted based on market volatility. Testing shows that increasing levels of tolerated volatility lead to higher net profits compared to a fixed trade size of $10,000.
Optimizing Stop Loss and Profit Target
Optimization tests suggest that not having a stop loss can yield the highest net profit due to the short-term and trend-following nature of the intraday strategy. However, it is advisable to use a wide safeguard stop loss of $800. The profit target has minimal impact on the strategy’s metrics, but including a target of $700 or $800 can slightly improve net profits.
Conclusions on the Volatility Breakout Strategy on Bitcoin (BTC)
The results of this strategy show promising potential for consistent and stable profits compared to long-term holding. It can be a valuable addition to a trader’s arsenal, especially considering the upcoming “Halving 2024” event that often brings positive seasonality to the crypto world.
Happy trading!
Andrea Unger
Hot Take: Exploring an Effective Intraday Breakout Strategy on Bitcoin (BTC)
In this article, we dive into an intraday breakout strategy specifically designed for Bitcoin. By capitalizing on Bitcoin’s volatility, this strategy offers an alternative approach to profiting from the cryptocurrency without enduring its usual heart-pounding oscillations. The results of backtesting indicate consistent and stable profits, showcasing the effectiveness of this trend-following strategy compared to traditional long-term holding. As we approach the “Halving 2024” event, which historically brings positive seasonality to the crypto market, this breakout strategy becomes an even more powerful tool in our trading arsenal. So, gear up and get ready to take advantage of Bitcoin’s volatility with this intraday breakout strategy!
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