Simple Buying Strategy

Updated

TA is all well and good. Its fun and informative. There is however a lot of ambiguity, so I have been working on building a simple strategy. I have tested it over the period since the downturn and tripled the investment. However its all been theoretical and I am now putting it into practice. I will keep the complex TA going, but also keep it separate from this buying strategy. The strategy is relatively safe and simple, and as you can see from the chart, I have really pulled back on getting sidetracked by anything that can draw away from the strategy.

Basics:
Step 1: Only buy when 1day StochRSI is bullish and above 30%
Step 2: Only buy when 4hr StochRSI is bullish and above 30%.
Caveat: 4hr bullish crossovers must also be below 50% (eg a bear trend turning to bull at 90% is avoided)

Trades are stopped when 4hr StochRSI turns bear and is below 70% (will consider entering early for extreme circumstances)

BTC has now confirmed step one, however, Step 2 is not confirmed, so now I wait patiently.

Note

4hr StochRSI did not go bullish, so Step2 not completed - no trade

Note

1D StochRSI bearish crossover. Step 1 now unfulfilled, so back to the beginning.
Note: Price has gone down about 3.5% since Step 1 initially fulfilled, so good decision to not enter trade.

Note

1D StochRSI bullish crossover has occurred below 50%, completing step 1. Normally I would wait for the candle to close at midnight.

However, the 4hr has a bearish crossover, ruling out Step 2. Again, I should wait for midnight to confirm. However, it been a long day, I am knackered and the 1hr StochRSI is on the way down, so little chance the 4hr will reverse in the next 30 minutes.

Note

Holding Your Nerve
The single biggest cause of trade failures is emotion. One of the purposes of creating a set of personal trading rules is to avoid emotion.
For the last few days price has been increasing in general and its tempting to enter a trade. However, the rules laid out in the steps have not been fulfilled.
If I enter a trade now, 1 of two things would occur:

Make profit, thus invalidating our rules before even testing them
Make a loss, thus 1) proving the rules are good 2) proving I am an idiot 3) making a loss

The first option is "reward" and the second option is "risk." In this case the risk far out ways the reward.

So in my head I look at the numbers and repeat the mantra:

"Hold Your Nerve"

Trade active

1 day StochRSI has fulfilled initial requirement for a while:

4hr StochRSI, has just passed Step 2 requirements.

Entering trade now.
Price: 8335

Trade closed: stop reached

Apologies for not keeping this up to date - been very busy.

Pulled out of the trade on 16th at 8050
Loss: 4%

Trade active

Updating with a sub step / rule:
When entering a trade check the 1hr interval to improve the timing of the entrance.

With this in mind, a trade that would have been made on 18th, was delayed
A) because I was asleep
B) further delayed due to new sub rule.

Enter trade at 7926

Trade closed manually

4hr StochRSI is bearish below 80%. Trade closed at 8780.

Trade profit: 10%
Project Profit: 105%
tradingview.com/x/zs05QxNz/[/inage]

Note

Next Trade
The next trade has the potential to be very good or very bad. The rules of this general setup are kept simple, however we must always keep an eye on the bigger picture. In this case a very strong triangle is closing. To stick with the rules this must not effect the trade in itself, as that would allow emotion to creep in. However, knowing it is there allows us to be recognise that vigilance is important on this particular trade. Below is the current chart, showing a bull crossover, but right at the end of the triangle. We must watch the StockRSI 4hr (1 day still good) to complete our requirements, but also watch lower time intervals to time the purchase correctly, and make sure there is no underlying reversal.
Always remember: the safe trade follows the trend. This results more successful trades with lower risk, but smaller profits.
This is an ideal stratergy for beginners, allowing a profit to build, whilst learning the TA skills needed to create well managed high risk/reward strategies.

Note

Almost but not Quite

The 4hr StochRSI, just sneaked into a buying position, but did so on a red candle. So as stated above, we need to be vigilant for the next trade, so no trade was entered.

Trade active

Got very lucky and happened to be on line just after the bull cross over occurred on the StochRSI4hr.
Note: Both long term resistance and triangle are broken.
Trade entered at 8975

Note

Project idea updated here:

reppac

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