Bitcoin Forum

I am currently trying to figure out a good trading strategy and also learn pine script. I have been trying to develop a strategy using trend analysis with MA signals. Nothing majorly complicated. On paper it is going OK
I developed a systen with long and shorts and over 16 pairs had an average success rate of 56%
I think the code for shorts was off so removed it and when with longs
Got an average over the 16 pairs of 75% wins although there where major differences 90% with btc 30% with XRP

The issue I am having however is with stop loss and general risk reward.
Basically I have a tight tp level and a loose sl. This means with BTC going long despite a 90% win rate I have only got 10% profit going all in each trade (this is better than the 0.39% if I held during the same period)
While with ETH I have a win rate of 75% but a loss of 8% on account

I am trying to figure out how to get the balance right between r:r in a market that is volatile. I am looking at a moving stop loss and connecting it the ATR but having issues coding this properly.

What are peoples thought on the best r:r or how do you set these levels
 

Using a tight take profit margin will make it somehow impossible to consider losses as part of the business and will make you find it difficult using stop loss. Go for a more higher profit that is realistic so if you make profits it should be able to cover up for losses if your stop loss get triggered. Setting your stop loss is upto you based on your method of analysis but it should be void of greed and should be capable of withstanding your account size

We have different strategies so maybe it will not work for you, i always used the 1 is to 2 ratio to prevent massive losses.. But sometimes below the weak candle i consider it a safe placed as well to protect my capital from errors and the take profits it depends on my analysis . By the way i used to trade swing, break and sometimes scalping and for me that risk to reward setup is very useful. Less losses and big profits that's what it's.

I read you saying you have a tight to and a loose stoploss and I think that is where you are having your issue. As a beginner I was thinking that was the right way to do money management but nope that is not the right and professional way to trade for profit. For maximum profit , you need to reverse your strategy to tight stoploss and a loose profit margin so that you can accumulate more profit and cut your losses faster.

Investment does really involve lots of trial and error which means that whenever you do make out some mistakes on a particular strategy then you would

really make out some adjustments which would really be making you a lot better than before. Risk and Reward thing indeed and good management on someones investment is all  you do need.

It should be balanced and dont make yourself to be that impulsive.

You can't actually say that's the reality, having huge profit isn't consistent in most certain cases. There were times you need to take the risk in order to see whether you're losing or gaining, and most whales always take that actions because they had money to rule over. With us small time traders, fears and anxiety lingers within us because of financial capability issues so if you wanted to avoid several problems minimize the risk through acquiring focused trading skills.

for the best rr in my opinion at least 1:1, the smaller the stoploss ratio, the better, I think whatever strategy you use and you feel comfortable, then continue. Everyone has their own strategy, of course, but don't forget to practice trading psychology, because I think that's the most important thing to become a professional trader.

I copied another strategy I found on youtube. It was just a cross over strategy and the you tuber was saying it worked "100%" of the time. I tested it and it did not work 100%  :o but was successful 70-80% with a lot of trades.
However same issue as before with stop loss and take profit levels also the strategy worked best with ETH and LTC 30 and 50% gain on the account while it bleed on Dodge.

Looking at these two strategies and in future testing I think a multi take profit or movement of stop loss will be needed. This will me allow to cut down on losing trades while hopefully allowing runs be it shorts or long
Doing a moving stop loss on one strategy would allowed me have made 100% gain on account since October

I need more testing and trying out different strategies before moving in the new year to paper trading

Personally I think strategy that works for you 70-80% of the time is a good strategy and you already have a tool in your hand that you can look out the remaining percentage that you are looking for if you are not satisfied with the 80% profit. Instead of trying to look for other fresh strategy, you can work with what you have because the YouTuber saying it works 100% may not be telling you the truth. I believe strategies don't work 100% if it is 100% it means no failure which is impossible in the market and that is why there is stop loss.

I know a strategy working 70% of the time is good my issue is it is working 70% with a r:r of 4:1 I am trying to bring that down to 1:1 or 1:2 thats what I am having difficulty with and as I said may need to move my stop loss

Then you need to search for what strategy will work for you. That is why we always modify our strategy to work from time to time. To have the right strategy, we need to learn more and test one by one. Hopefully, we can improve our skills because we can get much information and experience by modifying the strategies. Maybe right now you feel difficult but if you do not stop from what you did, I am sure you will have the right strategy that will work for you.

like the current moment of course the whales are taking their profits and the market is in a bear condition. all the small traders started to panic and sell their assets cheaply. Whales have the power to manipulate the market well because there is a lot of capital, we as small traders can only follow them, don't go against the flow if you don't want to sink, just follow the whales game.

But how you would determine if its a whales game? Its really hard to determine between a manipulative kind of movement and a typical movement made out by sell offs with those retail traders or investors which it

makes more hard to understand and made out some presumptions on how things should really be done next in line.Speaking of risk and reward ratio then if you are dealing with investment then this is a must.

Proper money and risk management is crucial for you to be able to sustain this market which is really hard to predict on.

After reading your posts I am glad that someone is finally backtesting their strategy before they implement it in the market, now truth to be told there is not such a thing as an absolute balance between the risk and reward ratio, and there are many reason for this, as you are experimenting what works in bitcoin does not work on xrp, by the way this is something I found myself as well on my research, this is how I know you are actually doing your homework, however a strategy needs to work on several different markets at the same time so it is not really a surprise there will be markets where your strategy losses money, but as long as you make money in the majority of the markets then you will do fine.

I will say you go for high take profit the reason is that if set your stop lost too close then there is a tendency that you will continue to be making loses almost at all the time of your trading and that chose that your straight if not working. At this point you have to rethink of doing something new.

in trading we must also plan a portfolio for the development of our trading in a healthy manner, there may be a loss at some point, but we must also control it so that the loss is in accordance with the stop loss we planned, so that everything goes according to plan, and over time our account will become big by itself

But choosing a tight stoploss can still save you from huge losses than when you open it wider but the important thing is to have a working strategy that will show you the trend of the market because if you spot out the trend,  you are likely to get your trade order right and accumulate your profit faster and the trend won't turn against you. The reason we lose is because the trend are not properly spotted, so if we enter against the waves it will hit the stoploss.

OK I have tested a couple of strategies but haven't found anything ground breaking. I am still having issues with stop loss and taking on too much risk
IE if I have a r:r of 4:1 then I can get a 70%+ win rate but gain on account is smallish and as I said can range hugely based on the coin
As mentioned moving the stop loss and trailing it seem to be a good bet. Also using ATR as a stop loss but risks large losses.

What I want to do and I am sure we all do is capture large moves and ride the wave. Alot of losses seem to be created by either opening trades in an area of conciliation or a wick or general move the wrong direction before continuing in the right direction
I may try and combine the ADX but tried looking at it and didnt see any major benefit to it 

The principle of trend following doesnt seem that hard but risk management and emotions seems to be the issues to over come
I will do more testing and learning of Pine Script but wont really know for certain what works and doesnt until I live trade with a demo account or for real

Honestly it’s very difficult to code any type of trading bot system that will work long term. You might also code one, and run a backtest and see if it’s profitable but when you trade it live you will find that it doesn’t work.

With crypto this is very common due to slippage and liquidity. A bot can’t account for slippage or liquidity. And a big issue with crypto is that many times during huge market volatility, the exchanges might go offline.

In a backtest you never account for this issues hence the bots are never going to be reliable.

You are correct talking about the volatility and the challenge it cause to the exchange. The volatility time is a moment of uncontrollable market movement that will force the platforms to go off maybe temporarily and this time, the bots can't also function. The volatility is also a time that traders have accused exchanges of manipulation and whether true or false is to be determined.

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

I think the stop loss must be put by doing the technical analysis. You will get the price to set stop loss. If you need any ratio then I think you must trade 1 is to 2 or 1 is to 3.

Only 56% ? I guess you must work on your strategies. You must have your hitting ratio more than 85% which is because on average you may not make same kind of profits hence just counting the profitable trades against losing trade may not help until you are near to 99% hitting rate.

The current overall trend of crypto space is bullish hence your strategies might look good when you go longs and might get you losses when you you short. A good strategy may not produce different hit ratios between long and shorting.

You must follow same kind of technical strategy for stoploss and risk-reward ratio should be 90-10. If you follow trailing stoploss then you can easily get higher profits against cutting losses early.

Lots of trial and error I would say because we cant really just set out a fix kind of strategy on every trade that we do make and we do have different level of risk reward ratio to be set since not all would be having the same of capital or bankroll that they do have on their trading accounts.It is just typical or normal stuff that you should balance both things if you do like to sustain this market.
Try to balance as much as a you can and don't have that kind of gambler like mind because you would really just making your capital to be fastly be depleted once you do
make out bad decisions.

That is always a bit of a problem for me and I never really believe that exchanges can't handle it. I get that during the hype periods we may get 10x or even 100x more people going to exchanges and exchanges can't handle that much load at all times, which means there are times when exchanges go down and we can't trade properly and it makes it very volatile.

However, these are billion dollar worth companies, look at coinbase, they worth north of 100+ billion dollars even on their bottom price (by marketcap calculated from stock market) which means that they should be able to have servers that can handle any load people can throw, like tens of millions of people going to their website even during hyped periods. Which means that we are talking about them having a solution but yet they are not really doing it, so maybe they are doing it on purpose?

Yep, it's good to always keep the charts neat and simple. Too many indis complicate things and confuses the eyes in picking up prompt signals.

That's a big issue, honestly. Basically, it should be the other way round with what you're practicing. Have a tight SL and a loose TP. It's a bad practice to allow your trades run loose or adjust your SL below whenever you think you might be taken out on a trade, just to keep it running. The only good SL adjustment one should do is the one when one is already in profit. And that's taking it up, and not lowering it.

I like a 1:3 and above as Risk to Reward. I don't pick a trade that's anything less than that ratio.

It can be adjusted but it is better that it is steady because that will help us to maintain our plans and choices of what to trade and when to trade. If we have the adjustment mentality on that, you will realize you want to enter into any trade just because you can adjust to suit your need to trade.

It is not a good idea to make trading decisions on short-term basis. You have to take time to sit down and study what the market is doing at any time. When you think of your trade you should really know that the overall direction of the market is more important than the short-term performance of the market. This is something that no bot or automated trading tool can do, as far as I know.

What kind of issues that you are facing when implementing such features? Basically for trailing or moving stoploss you need to alter the existing order to update the new stoploss level as some exchanges are allowing to edit the pending orders whereas in most exchanges, we need to cancel the pending stoploss order and need to place a new order. I am not expert in such coding still trying to suggest what practically I tried in my beginning days. Only innovating new concepts are difficult and implementing them in coding is not a big deal so googling may help you better.

Hm, working on risk to reward ratio is good strategy for many reasons and the very important aspect out of all is risk here. When we start minimising the risk we ultimately adding more into our profits. After all the profits that comes to us while trading is because of the risks that we take in the market, starting from investing our hard earned money to getting on to those marginal differences which are our profits at the end.

The right balance for me is how much I’m investing, how much I’m getting back, and how much I could rely on my technical analysis too. So it’s many of the things really.

I agree with the first part, stop loss is a must for any trade, especially when trading lesser-known and tokens with a smaller market cap because you never know what token could turn out to be the next Squid Game Token scam. I am not sure about the risk and reward factor because I am a trade who believes in instincts and if you are going to code a bot that works on numbers, more often than not, you will lose money because the market is volatile.

Yeah, I as well agree though that the 1:3 Risk-Reward ratio, respectively, should be good because you don't want to be too complacent with small profits in crypto trading. I still prefer trading based on what you feel and no I'm not talking about external factors but internal ones like what you really feel in isolation about the token and the project as a whole.

And you wont feel out those things if you dont have sufficient experience because you wouldnt really be that confident towards your decisions if you dont have this kind of experience.
Risk reward balance ration will vary but of course we would really be targeting out considerable profit level on a specific capital that we had thrown off.

Right balance is something we should be mindful because you wouldnt really sustain this market if you wont really be that versatile when it comes into your decisions.

Everything should be balanced even though it wont be precise or perfect but at least you are really on the right path of things.

Adjusting your parameters because you don't want to lose or you want to gain more is a factor that will take your account off. It is easy to achieve a risk reward ratio by setting our stop loss so that when there is volatility, we already know what we are going to lose and that is the only way we can achieve it.

Yeah, the role of stoploss order must be too crucial on balancing better risk-reward ratio. When you are able to cut your losses early and with the help of trailing stoploss, if you maximize your profits then obviously you will get  higher rewards against losing trades. For example, we need to cut losses at 5% or 10% but when we are sailing at market directions then we could try to cover maximum profits which may be even 100% hence if you face more number of losing trades will not bother you in any means.

I agree that without cutting your losses early, you cannot get the maximum rewards out of crypto trading. When you are letting your losses grow then your rewards will get shrink. To handle the negative market situation better we must need to go for stop-loss order which eventually lead you to get you better risk-reward ratio.

I doubt anyone will be patience enough for letting their profits to run up to 100%. Because, when you are seeing your positions are into profits then probably you will be getting emotions and then you might be going for booking profit as early as possible which is the reason most people are not getting balanced risk-reward ratio.

Stoploss would only be just relevant when you are really making out active trades or day trading but if you are really going for long term then better not to make use of it.Speaking of balance then its a must thing to consider because this had been always the set up when it comes to risk reward ratio.

Always consider out on having balance in between your decisions because not all is really good at this and once you do gain up experience then you would really be finding
the right decisions on regards with your investment if you dont let yourself to be greedy.

Long term holding doesn't require stop loss but it also doesn't require a risk to reward ratio as well.
OP is asking a strategy to maintain a good risk to reward ratio which means either he is doing day trading or short term trading or swing trading.
In all of these cases a good risk to reward ratio can only be achieved with the help of stop losses.

I noticed that you had a tight to and a loose stoploss, and I believe that is where your problem lies. As a novice, I believed that this was the proper method of money management, but it turns out that this is not the proper or expert method of trading for profit. To make the most money, you should switch your technique to a tight stop loss and a loose profit margin so you can make more money and cut your losses more quickly.

It is still risky with tight stoploss and a loose profit margin because you see the stop loss taking you out steadily and that will pull your capital down. I think the best way to tackle stoploss is putting it on support or resistance levels and by that you are looking more comfortable not to put stoploss just anywhere you feel.