The optimum Bitcoin Trading strategy - *10K to 1M+ In just 12 trades*
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This time, we talk Bitcoin, but as always for those new to the channel please consider subscribing, and for those that find value please hit the like button…
We usually review trading or investing strategies from some of the most well-known experts, this time however, we look at how I use many of the principles covered, to trade Bitcoin, and how I traded Bitcoin from 2016 to today, through bull and bear markets, and how I intend to trade this next phase and beyond, with of course, good risk management.
Before we look at the strategy in detail, lets first summarise the results from 2016 through to today.
I took twelve trades in total, starting from November 2016, through to today. I either took a cash position, or I took a long position on Bitcoin.
The results of each trade can be seen here, ranging from a maximum gain of 241%, to a maximum loss of just under 15%, whilst my last trade was closed today.
To put these results into perspective, a ten-thousand-dollar investment compounded against each of the eleven trades, would have returned just over 1.3 million dollars. Personally, I rebalanced my portfolio as my trading account grew whist seeing more moderate equity growth.
A buy and hold strategy on the other hand would have seen the same ten-thousand-dollars grow to just over $450,000, but with an astonishing 84% drawdown along the way.
Not forgetting that buy and hold would have seen you fully invested for over 1500 days, resulting in opportunity cost, whereas my strategy would have seen you invested for just 680 days.
The strategy is rather simple, leaning on the principles of momentum, price action and solid risk management.
The key component that I apply to Bitcoin and my bread-and-butter strategy, is the mack dee indicator, however due to the volatility of Bitcoin I use a variation to reduce risk. I refer to it as ‘dual mack dee’.
The purpose of the video however, is not to dig deep into the methodology of the indicator, but rather see its application against the price of Bitcoin, in conjunction with other criteria.
In summary, mack dee stands for Moving Average Convergence Divergence. Simply put, it is a trend following momentum indicator, which measures the relationship between two moving averages.
It is calculated by subtracting the 26-period exponential moving average, from the 12-period exponential moving average. This creates the mack dee line.
A nine-day exponential moving average is then plotted over the mack dee line. This is called the signal line.
The most common use amongst traders looking to buy a position (or go long) would be when the mack dee line crosses above the signal line, this crossover is seen as a bullish signal. This is the same signal I use to trade Bitcoin, although I use the combination of the daily timeframe and the weekly timeframe, hence the name dual momentum.
Let us look at my method and the signals generated.
First, I look at the weekly Bitcoin chart, then add the mack dee indicator.
Using the weekly chart of Bitcoin, we can see how the mack dee line crossed above the signal line. This is when I made my first bitcoin trade back in November 2016.
This crossing marks the beginning of a trading window, the trading window will remain open for Bitcoin so long as the mack dee line remains above the signal line on the weekly chart.
The entry trade was made here, the opening of the week and the week after the mack dee line crossed and closed above the signal line.
Step 2 is therefore buying at the crossover.