What is the Best Trading Strategy You Use for Cryptocurrency?

[ktabb]

I agree with you, using quantitative methods to do long term predictions is... a little bit tricky.
But we are not forced to do long term prediction. This is why when using quant models, the prediction should be made on shorter time frames and taking advantage of smaller market movements. The biggest great side effect of this would be an increased Sharpe ratio(at the expense of higher trading cost).

And regarding inefficient markets: I stick to my view. The more the price is above/below the right price, the more trading opportunities.


The thing is that there is no correct answer, some can make money using fundamentals, others using systematic algos while others use both. So getting back to your initial claim "fundamental information about the asset is much more important/valuable than mathematical models" is wrong because it depends on who you ask: a systematic or a fundamental/value trader? As I showed you above, the mathematical models can generate huge profits.

I just spent a while reading about this Medallion fund, and it looks very interesting. It looks too good to be true, which leads me to believe it is not true. A lot of people seem to speculate that Simon's returns may be false and they could be used to lure people into investing in his other funds. There is no proof of those returns anywhere and the fund is so secretive that there is no way to verify anything they claim.

Anyway, regardless of whether or not the fund's returns are real, I have a few thoughts on the issue:
1. The most successful investor of our time is Warren Buffett, and he is clearly all about the opposite of this - fundamentals beat mathematical analysis. Warren Buffett's success can be verified, whereas Medallion's cannot.

2. The smartest people in CS/AI/Math are not working at hedge funds - they are working either at a company like Google, or their own startups. People who are this good in those fields rarely care about money, and care much more about impacting the world with their research/technology. They mention that a lot of the researchers at Medallion were working on speech recognition and AI at IBM before going to Renaissance - if they were worth their salt, they would have stayed at IBM and made massive strides in AI, generating far more money than they ever could at a hedge fund. By the way, I say this as someone who has worked with many of the smartest people in these fields and who works in CS today.

3. Trading only based on mathematical patterns means that you ignore the real value of the asset, which can change based on things that aren't considered by mathematical models (such as analyst research reports, unfounded rumors, etc). This method will at least lose money sometimes. If a trade based on quant goes in the wrong direction, there is no assurance that it will come back and bring a profit, so you are likely better off exiting your position. With fundamentals, the story is very different. If you determine the intrinsic value of a company to be a certain amount and make a trade based on that information, even if the price moves in the opposite direction of your trade, you can simply double down and increase your profits when it does finally come back to its intrinsic value, which you know with a very high probability that it will. We know that the markets have enough efficiency that asset prices will eventually meet their intrinsic value, even if it takes a little while. Basically, my point is that your chances of losing money are greater if you don't consider fundamentals, whereas not considering technical/mathematical patterns does not mean you will lose money. Even if the trade goes south, you know it will come around eventually if you have done everything right in valuing the asset.

The more the price is above/below the right price, the more trading opportunities.

I agree with this, but only because the markets are efficient enough to eventually correct this. The more inefficient they are, the less likely they can correct something like this, eliminating the opportunity.

[1714956747]

1714956747

[1714956747]

1714956747

[1714956747]

1714956747

[1714956747]

1714956747

[batang_bitcoin]

Best strategy to use = never read bitcointalk posts , buy low seel high ,is it clear enough for you ?

Why never read posts here? There are a lot of trading experts here and is giving free signals to what crypto currency is going to pump and has the potential to generate profit. Just read those helpful and factual posts and ignore those posts that are just giving traders fear. Because there are times that most of their speculations are good.

There might be some people who are talking nonsense and just hyping some coins with no actual reasons but this forum has members who have years of experience and trustworthy. You just need to be wise what to listen and not that is by examining their post and their supporting details as to why should and why not.

On the other hand, speculation is another thing but if you say it has some logical back ups then we can say it as prediction rather than speculation. Prediction has more solid ground than speculation.

Again, be wise what you will listen and not to.

It's hard to determine those predictions that are legit and will possible to happen. But I have read someone here that did predicted before the drop happened last year. And I never saw him posted his prediction, so the lesson I learned is yes there are some members who has actual experience and trustworthy, just test their posts.

[YodaYoda]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

Personally, I trade on a few signals;
1. News cycles. Positive news, like scaling and other stuff. Trumps win. Negative news, for going short is the PBOC hitting the chinese exchanges, which rendered a succesful short.
2. Long term upswings, and looking for signs of resistance (3000 for bitcoin, 400 for etherum) and then estimating that it will lead to a sell-off/profit harnessing. When it comes close to hitting certain key numbers, you often get that happening. If you trade with a bit of a leverage, say 10x and 10% move and you double your money. Risky, yeah, but it does work. Just don't leave trades open and leave the computer for a long time. And be prepared to take a loss if you dabble with high leverages.
3. If you see StochRSI hitting max for a long time, it will just be more and more time for a correction. I look at 4-6 hour charts normally, sometimes 12h-1d.   If you see a 100 EMA (moving average) being much below the current price, it is also a symptom of an overheated market, and a correction can come due. Don't just look on the chart, look on how the depth charts stack up, see the buy/sell volumes to detect a building sell-momentum and then go short.  Once you hit what you think is a bottom, sell your short, and go long. For etherum last week, I had it pegged at hitting 250 before turning. It hit 252, i think it was. Why did  i hose 250? For one, I thought it was going to be a large move, from some artciles on CBS and Cuban being quoted; but also due to the very large upswing all currencies had enjoyed. I thus saw a large profit harnessing come.
The 250 i pegged at the 100 SMA on the 6 hour chart. I use 50 period SMA or EMA for 12-24 hour charts to estimate a bottom.  Scientific? Hardly. Just watch the trades, look at the money flow, and estimate when turns come; either for shorting or going long. 

I mean, guys that have gone long in this environment have done very very well. But you don't want to be the last guy in on a long just before a correction. So when you use leveraged trades; be careful.

Good luck trading!

[shield132]

Now from what I understand I believe best strategy is to buy bitcoins when there is panic in people and they are selling it and result is a little fall price of bitcoin. Everytime I do things like that, always got profit. In most cases, after people's panic and little fall, bitcoin is rising in one or some week.
Also nothing is as important as controlling your nerves because going deep when you lose is bad usually.

[Singwala]

the best strategy is wait patient ,  sell high buy low ,  sell high buy back again if the price go down you can earn 10% to 20% daily by doing this strategy

[eagle10]

the best strategy is wait patient ,  sell high buy low ,  sell high buy back again if the price go down you can earn 10% to 20% daily by doing this strategy

I am a short trader so the volume is important. I became impatient when the target price is short of what I expected.

[DevilSlayer]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

It is very simple, I but tokens or coins if the price is low and I sell it if the price is high. Patience is the no.1 need. Just wait to time that your token or coins will rise up. This is the best strategy that you can do.

[Amy bowden]

I was investing on low btc volume coins in poloniex...i hold RADSCOIN at 0.0021at that time volume is70BTC...now at 218BTC volume the price is 0.0024

[gabmen]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

It is very simple, I but tokens or coins if the price is low and I sell it if the price is high. Patience is the no.1 need. Just wait to time that your token or coins will rise up. This is the best strategy that you can do.

Well you have to first realize that not all coins in low price will have the chance to move up again. If you happen to stumble on a coin that has exhausted its life already, then you're in for a disappointing return. It's nit just buy low sell high sort of thing as we have to also know which coin would provide us with profit and won't die at least. So researching about coins we plan to buy would be very essential

[Barbut]

Best strategy for me is buying good alts and keeping them until they rise at least 200%. Next question is how to find a good alt, there is couple things on which you need to pay attention, first is community, how active they are, next is in which exchanges you can trade with that coin and how high trading volume is, also take a look their official page and take a look what are their plans for the future. Buy in the beginning while prices are very low, and later you can just think to sell and earn or to wait more, decision in the end is always on you. Good luck my friend, you will need it with trading.

[Low Sigma]

I just spent a while reading about this Medallion fund, and it looks very interesting. It looks too good to be true, which leads me to believe it is not true. A lot of people seem to speculate that Simon's returns may be false and they could be used to lure people into investing in his other funds. There is no proof of those returns anywhere and the fund is so secretive that there is no way to verify anything they claim.

So you think that their returns are not true? They have about 290 employees and 65 Billions AUM as of 2015(I don't have time to search for their latest figures) and if their returns were false, it would be know by now. The thing is that after Madoff case a lot of things changed and I bet that their audit firm has access to their public funds(custodian), so to me everything is legit.
I think that they closed Medallion fund for outside investors and invest only employee money because they hit liquidity problems/slippage.
You can also search for TwoSigma HF which use quant models and are very successful.

I partially agree with your other points but I can't respond to them because you said that Warren B. is the best investor. While I was talking about traders not investors. So we are clearly approaching markets from a different point of view:)

[Rahar02]

The best strategy maybe different for everyone, I don't know how some people do math to calculate cryptocurrencies prices charts and predict what will happen in the next day/week. But, I know some people who did that and share their investment on some coins which mostly benefited for people in the group. You can learn how some coins are better than others and invest for long term on those coins.

[merlin_btc]

I usually watch some coins for some days (sometimes it takes more than one week) and then I set a buy limit which I think is very good. It usually takes some days/weeks till it reaches it and buys it. After I bought it I set a sell price (with 10-100% above the buy price, depending on which coin I bought). It takes a lot time & patience, but if you do some very good trades it´s better than a lot bad trades. I think this strategy is only worth it if you have a good budget, for example 1 btc or more per coin. If I buy & sell 5 coins (each 1 btc worth) I can make atleast 0.5 btc profit per month. You can upscale the profit with investing in more coins (do your own research before investing in a coin!) & with a bigger investment per coin. But if you are just a beginner you have to test, test, test!  It´s no guarantee that it will work for everyone, it takes a lot time to figure it out (experience). Never get greedy & never invest in cryptos more than you can afford to lose!

[YodaYoda]

Forget about RSI, MACD, candlestick patterns, etc, these are nonsense. Professional traders use advanced mathematical models: stochastic or deterministic models. You can have a look at how derivatives(like options instruments) are priced under market neutral idea and you will get a feeling about them.

Trust me, I have about 9 years years of experience in trading and like you, I went through that nonsense like RSI and other known technical analysis indicators but they couldn't provide me a real edge.

Yes that's what I noticed. Some old and standard trading strategies are not working good in cryptocurrency trading they are still good in forex and stocks trading.

I did notice some relavance for RSI on the chinese exchanges when trading leveraged futures. But it's more a self-fulfilling prophecy; many trade on rsi, so when it turns, they will sell; hence it becomes self-fulfilling in that sense.

[YodaYoda]

Best strategy for me is buying good alts and keeping them until they rise at least 200%. Next question is how to find a good alt, there is couple things on which you need to pay attention, first is community, how active they are, next is in which exchanges you can trade with that coin and how high trading volume is, also take a look their official page and take a look what are their plans for the future. Buy in the beginning while prices are very low, and later you can just think to sell and earn or to wait more, decision in the end is always on you. Good luck my friend, you will need it with trading.

Thanks for the reply, Barbut.

Question is: what is a 'good alt' coin? I see you are from a sportsbook. I myself have developed gambling software and been operational, so I did look at the ICO's for the gambling concepts. I saw something like Wagerr, which basically have nothing, their business plan doesn't make sense for someone that comes from the gambling industry.  They raised over 10 million on vapor-ware.
Then i looked at funtime. Those guys come from pkr.com and sounds like they gave a nice concept, but again, no demo.  They also wanted to have between 50 million to 125 million in initial market cap, and get about 1/3 to founders which does sound like way to much for something that have yet to produce revenues and in fact a demoable product.  Not to bash those guys; they seem smart and savvy, I just don't like the eval they put on the ico.  I then looked at Golem and Dwave along with IOTA and found them to have very lofty goals, or moonshots. If they pull it off- amazing, but it seems like a long shot; like betting on a 100-1 horse.
But what I have found is so many ICO's are now coming out with an initial market cap that is so high that a multiple on the investment then comes harder. Along with risks of ICO's, I'm honestly having difficulties of finding value in ICO's. I'm a bit conservative (for a cryptocurrency investor/trader).

[Sniper44]

there are not good altcoin or bad altcoin if you are trading altcoins since everyone else seems to be in this topic.
all the altcoins are good at some point and all of them will turn bad at some point afterwards. you just have to find that time that they are good and get involved then and figure out when they will stop being good and start thinking about taking your profit.

[--DarkSecrets--]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

RSI and MACD is a good method it will mkae gou a clear vision or goal. Although this is not a sure one we just spculate and predicte how much it will rise based on its projects.
For me it is by researching and i sell always the news this is the best next is to learn skills base on your mistakes.

[Oilacris]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

Ive been trying to use these technical tools but i would really say that these indicators doesnt work anytime you do make use of it but still a good tool on knowing the particular trend of a coin.Unlike on forex or stocks these technical analysis would really be helpful but on cryptoworld is different since pumps and dumps do happen on unexpected events.

[geegaw]

My trading strategy is to divide my capital into 2 parts, one part I use for short term investment, the rest I will invest long term. Firstly talk about long term investment, I choose the potential coin as eth or ltc to invest, I will buy it at the lowest possible price and set up the price I want to sell then do not care and forget about it. For short-term investment, I usually use technical analysis, reading charts and news, I also never buy at a price, I buy at many different prices, and always determine the price will be sold before the transaction and the price will sell if our prediction is wrong

[Bagaji]

What do you think is the best strategy in identifying the trade in cryptocurrency world. RSI is not that very effective. I also use MACD for normal trading studies. The morning and evening star is a good indicator too.

Some times what work for you may not work for the other person. So in currency trading you have to identify or develop what work for you and not what work for the other person because it might not work for you. Some people may have problem with MACD but to me, it work for me in some occasions.