Bitcoin Forum

Me and my friend are newbies and would like to try the following strategy and would love to hear your opinion about it:

It is probably a known strategy which is based on trends, but we don't know how it's called, therefore cannot find info specifically about it.

The concept is:

Whenever the trend goes up we hold the position.
Once it goes down 1% (or any other % that we will set), we are selling it, expecting a down trend.
Then holding to that until it goes up again 1%.

Summary:

   - We hold to it as long as it goes up
   - We sell once it went down at least 1% (expecting a down trend)
        - We buy it again when it went up 1% (expecting an up trend)

In our excel simulation it was almost as good on an up trend and loss was significantly lower on a down trend.

Sorry in advance if the question is very basic.

Here is a small illustration of the concept.
Green arrow - buy
Red arrow - sell

https://pasteboard.co/JLThBHL.jpg

Just try simulating it.

If you're not pulling live data (eg importing open and close prices into excel) then you're going to have to remember to factor in candle closes on any bot you build to trade this (or wait for the candle to close). 

You might also want to add trading fees to the simulation as those could turn something that makes a profit into something that doesn't...

It's a good strategy when the market is on an uptrend (you get to make more profits than the 1% losses due to stop loss triggers) but on a down trending market or when the market prices are sideways, You might not realize any profits as stop loss might be triggered most of the time due to the high volatility of crypto market

Ok, but this way I will minimize the losses on the down trend, no?

You are gonna pretty much lose your investment in the opposite direction expecting it go as per your strategy.
Because 1% upswing/downswing is just too easy in crypto since the volatility is so high. You should consider at least 3% - 5% swing to predict a trend in my opinion.
Just look at the daily charts of any cryptocurrency and you will see that it's just too easy for any coin to get a swing of more than 1% and then completely go in the opposite direction.

The truth is that you never going to know when a trend sets in or when one changes. So, practically you will be basing your trading on assumption, except you're going to be relying on leading indicators. Even with that you can't really be too sure you're getting the best direction on trade. Trading for what it is, is speculative. Thinking you can buy back after selling because you think the momentum has turned south, may also cost you not being able to gain entry again at the initial price level. A lot of people sold once Bitcoin crossed $21,000 and haven't been able to buy back now. They already missed the train. If you want to be on the safe side, equip yourself with the TA aspect of trading. Make a pivot point and try to buy whenever price bounces off that point. Again, this too can't be absolutely right. Just remember that there isn't any holy grail in trading. That way you can cut your losses short and preserve capital.

This is correct and i would definitely take this advise but for the sake of testing out the waters then having 1% limit isnt really a bad idea either but its true that if you do really just indicate or having set limits of 1%
then you would really be actively changing up or updating your actions since it can be possibly hit up a in short span of time in a day to day basis.
When it comes to the strategy itself then we cant say it isnt really effective nor working because market movements is really unpredictable.
It would take lots of time to take grasp on the strategy that you had been plotting. Just simulate and continue to find out its pro's and con's.

If you're doing trading while on uptrend situation, please make sure that there's a daily activities of your coins holdings. Sometimes you might fail to acquire gains due to pressures, because your set limit will not be meet and price maybe going down. What I can advise right now when sudden price declines, is to avoid short term trades as it could potentially leads you losing more percentage of capital.

You and your friend are really doing wrong.
You don't suppose to hold when the market trend goes, better sell it since we want profit right?

TBH, stop-loss is still a loss on our side. This is a common practice of many traders but we shouldn't have to make it always as we are stilling in losing status not profiting. Why not hold if we are able to make it and sell it when the market pumps back again? It can't be all the time it dumps unless if you are choosing useless coins.

I appreciate the strategy you have done and have shared with us, but during a downtrend, do not use stop losses,
because it can harm you, it's better when the downtrend does buy gradually or accumulate in each support,
the first 20%, or 10% then 20% on the second support, and 40% or 60% on the third support, I'm sure the price will bounce again.

You can make profit both in bullish and bearish market. Most times the trend reverses. Its pretty cool to trade with the trend after u have analyzed the market properly.

To me price action strategy would enable u appreciate trading the trend much better even without an indicator.

If you've got a lot of time repeating that strategy, it will rewarding to you guys. The 1% decrease and which will trigger you to sell is what we call stop loss. And I say that you're doing it correctly but some traders are even going further from 5%-10%.

What is important with this strategy is you know how to execute it and you can control your emotions properly. Remember that when a trader relies on his emotion, such plans won't be executed and followed.

Stop loss orders need to be used in all market because you can get loss in all market.

If you use only 1%, you will earn very little profit but lose many for trading fee on exchanges. If you trade, you need to have your own filter and I think the changes from 3.5% to 5% is better for you to trade and get profit. It will happen a few times every day.

Changes with 1% happen more frequently (its frequency is 5 times more than the frequency of 3.5% or 5%) but you have to count for trading fee as said.

I think that you will be making greater mistake if you are relying on just 1% drop to rebuy in the market after you sold. You should rather hodl and not sell in the first place. You seem to be seeing the volatility as your partner or friend but it is not because that 1% drop you think or expect may turn out to be a bear trend eventually and it can go down far than you will think.
Look for support or resistance to take your position and trade with stoploss

That's right, with the strategy that you apply, losses will be minimal if you use the 1% benchmark and use the stop loss again. You just need to be in front of the screen and see the current trends. Using this pattern you can have a great chance when the uptrend exceeds the stop limit order you created.

The question is which coin you are trading. If you trading Bitcoin/USD then it's changing within minutes. So how will you act then? Don't forget there are trading fees as well. I think most day traders following this strategy. They buying when the candle is green and hold. They selling when the candle is red means when starting the dump. You have to calculate your profit always, who knows if the coin starts dump after you bought it? Still, will you sell in 1%? What if coin pump after you sold? I think 1% is too narrow. In crypto trading, you wouldn't gainer always. Luck wouldn't favor you always. It looks like stop-loss, but you are doing it manually. I think you should increase your percentage.

Make it 3% at the very least. In a volatile market like Bitcoin, 1% is way too small to even identify if a trend is happening or not. Plus, it would still generally be a loss in the long term, especially if it were a downtrend market or even a sideways movement only. Mostly because there are chances that buying at an expected uptrend but goes the opposite way would still result in a loss. Yes, you basically minimized it, but considering how your profit is also minimized, it isn't honestly worth it.

Profiting from every trade is completely impossible imo, so you might as well acknowledge the losses and use that to your advantage so that when you profit, it would still be greater generally than what you lost.

My idea of trading is similar is based around 3% in uptrend and but stop loss around 2.5% With that in mind goal is to have over 60% successful rate. But to have that you need to make it like a job to follow the news how market moves etc. It's possible but not easy for sure.

Selling at 1%? You are going to have a million sells by the end of the day, stop loss is not something you deal with that small, it is not even profitable to do it that way, in the end you have to realize that bitcoin is volatile and you have to keep working hard to keep it going, otherwise if you keep selling like that, you are not going to profit from it at all.

I would say 10% is the stop loss that is both still low but also not risky enough that you would sell many times a day, even more could be done if you are not sure what you want to do. I understand the idea of ping pong type strategy where you buy and sell constantly in order to keep profiting small but consistently but this would make sure you lose small but consistently instead. Believe me I had worked with these kinds of strategies before and 1% stop loss makes you lose more than you are fine with.

Trading on the uptrend quiet risky because you don’t know when the market falls but since there’s a lot of indicators that can be use, this will be your guide so you can know when to buy and sell. Newbies have to find way to learn trading, and you’re doing great just continue to learn many strategies and know the market not just by its trend.

Actually in general your trading strategy is quite good, but I have corrected a little. If the price drops 1% you sell it seems too fast for me,
because crypto prices are volatile. So sometimes down 1% keeps going up again, my suggestion is to try to increase it to 3% -5% to set a stop-loss.
Then buying coins when it rises 1% is not wrong, usually it will go even higher. But it can be more optimal when the price drops above 5% -10%,
this is the right time to buy. So when the price goes up, the resulting profit should be much greater.

Most people will be panic if the price is down by 1%, so they sell it as fast as they can. They can not see another decrease in the value of their money, and they think that fast selling can help them buy back the coin at a low price. But they can make a wrong analysis because the price will not always get down too deep after the price is down by just 1%. Having a calm down will be important in that time, so we can analyze more to find out the other signal.