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: 

ETHUSD - 90M Indicator.png
Computer Programming

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%

ETHUSD - 90M Backtest.png

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%

ETHUSD - 4H Backtest.png

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%

BTCUSD%20-%2090M%20Backtest_edited.jpg

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%

BTCUSD - 4H Backtest.png

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