DYNAMIC - A SWING TRADING SYSTEM - CRYPTO
Motivation
The momentum feature is well known and researched in the market. Momentum trades/signals often result in out sized positive returns when trades go well in their favor. At the same time, almost all momentum methods/signals suffer from frequent, small and multiple losses.
Dynamic indicator/system is a proprietary systematic method designed to capture momentum on well established and liquid Crypto currencies such as Bitcoin and Ethereum.
It aims to identify bullish / bearish patterns in a systematic manner and uses volatility adjusted entry levels and trailing points. The method employs a proprietary method to filter out market noise from an underlying trend to ensure whipsaws arising from a trend-following method are removed.
The expected outcome of using this is to improve risk adjusted returns on Bitcoin and Ethereum.
Time Frame
Crypto trades 24 hours a day and 7 days a week. Most of the movement in the market is limited to UK and US time zones. Thus, it is prudent to use this strategy on 60 Minutes or higher time frame. Given the volatile nature of the Crypto, it is otherwise susceptible to whipsaws.
Our preference is to use this on 90 Minute or 4-Hour charts to balance the trade-off adapting to changing market dynamics quickly and trade costs.
Trade Usage
The indicator is available as a TradingView Indicator if you wish to use it yourself to trade. It can be used either as a standalone indicator/method or can be used as an additional confirmation to user’s Long/Short method.
Elements of the indicator
BUY/SELL markers - They depict the BUY or SELL at the open of that bar. The set up is ready at the bar prior.
EXIT BUY/EXIT SELL markers - They depict the EXITs on BUY or SELL at the open of that bar.
SAR SELL - Stop And Reverse to Sell - They depict when to Exit a Long and Enter a Short at the same time
SAR BUY - Stop And Reverse to Buy - They depict when to Exit a Short and Enter a Long at the same time
A ready BUY set up is depicted by Green vertical bar. A ready SELL set up is depicted by Red vertical bar.
Example Chart:
Automated Trading of DYNAMIC - Crypto Signals
DYNAMIC - Crypto can be configured to auto-trade on your crypto trading account. The strategy is now available for automated trading on MUDREX, a platform that allows automated trading in Bitcoin and other Crypto pairs across several platforms. You can link your existing Bitcoin or Crypto trading account to their platform and avail the benefit of this strategy automatically placing trades for you based on the risk parameters set up by you.
You can join now to get a $25.00 Signup Bonus.
Leverage in CRYPTO Trading
Several Bitcoin trading platforms offer very high leverages (as much as 1:100 or 100x) to lure retail/small traders into trading Bitcoin with an allure of lofty returns. These set-ups are usually recipes of disaster. While it is certainly possible to make outsized returns using such leverage for a very short duration of time, over the long run such endeavors only result in wealth loss and heartbreak.
Our aim is to provide users with a consistently profitable strategy that can survive over long periods of time and with manageable Drawdowns. We therefore suggest no more than 0.5x-0.6x Leverage. Yes, you read it correctly - we advocate a maximum of 50-60% of your capital allocation to a trade while the rest should provide cushion for weathering through tough times.
Back Test Performance
The initial Backtest was conducted on TradingView PineScript and following are the results:
ETH/USD - 90 Minute Time Frame
Time Period: 4 Years - Jan'17 - Dec'20 Starting Capital: USD 5,000
Leverage Used: 0.5x of account equity Commission & Slippage: 0.05% on each side of trade
Total Return: 1178% CAGR: 89% Max DD: 31.6%
ETH/USD - 4 Hour Time Frame
Time Period: 4.5 Years - June'16 - Dec'20 Starting Capital : USD 5,000
Leverage Used: 0.5x of account equity Commission & Slippage: 0.05% on each side of trade
Total Return: 3183% CAGR: 117% Max DD: 27.5%
BTC/USD - 90 Minute Time Frame
Time Period: 4 Years - Jan'17 - Dec'20 Starting Capital : USD 5,000
Leverage Used: 0.6x of account equity Commission & Slippage: 0.05% on each side of trade
Total Return: 864% CAGR: 76% Max DD: 31.5%
BTC/USD - 4 Hour Time Frame
Time Period: 4.5 Years - June'16 - Dec'20 Starting Capital : USD 5,000
Leverage Used: 0.6x of account equity Commission & Slippage: 0.05% on each side of trade
Total Return: 1043% CAGR: 72% Max Draw Down: 23.7%
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What is DYNAMICDYNAMIC is our proprietary trend-following system designed for Index and Crypto
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I have obtained access, but can't view anything on charts. Help?"The following video should help you troubleshoot. Please ensure you are using Normal Candles and not Heiken Ashi or other such special candles.
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How much money is needed to trade DYNAMIC?You can trade the system with 1 Lot of Nifty Futures and 1 Lot of Bank Nifty Futures. The margin requirement may vary by broker that you utilize.
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How much return is expected from the system?Systematic or Algorithmic trading aims to generate returns that are above and beyond the simple underlying returns. Returns go hand in hand with the risk undertaken and capital deployed. Decibel Capital has provided an indicative backtest on the product page and that can be used as an assessment of risk:reward of the system.
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How do I get access to the system/indicator?Currently, DYNAMIC is being offered through TradingView. You can click on the button "Request Access" on the page above and submit a request to get access.
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Do I need a paid account with TradingView to access this system?No. As a user, you can avail benefits even with a free account of Tradingview. Go to www.tradingview.com to set up your free account.
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Do I need other indicators to trade using DYNAMIC?DYNAMIC is a full fledged systematic system that aims to capture large trends. You can club it with more indicators to improve it's performance as per your comfort. DYNAMIC provides a starting point from which several other systems can be germinated.
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How much does it cost to get access?For a limited time, the access to the system is being provided free of cost. Just sign up and let us know your TradingView User Name to get access.
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When to Buy or Sell or Exit?The indicator comes with labels that will tell you when the system is entering a buy mode or a sell mode. For ease of visualization, an occurence of vertical "GREEN" line on the chart will indicate that the system has identified a "BULLISH" regime. If not already Long, you can initaite a position at next bar open. Similarly, a vertical "RED" line on the chart will indicate that the system has identified a "BEARISH" regime. If not already Short, you can initiate a position at next bar open.
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Is this a SAR (Stop And Reverse) or Always In Trade system?NO. The trade strategically enters and exits trades. The easiest way is to look at the bottom of the chart that shows the current state. Green - Long Position in market Orange - Short Position in market Purple - FLAT or No position in market It may happen that at the time of an exit, next entry is also triggered. However, it is not always the case.