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One must see drops in Bitcoin like medicine that is required for Bitcoin to get better.

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Bitcoin is currently at $11,000+ as I write this. Looking at the charts and historical movements it should surpass $12,000+ on this next leg up. Each leg up is adding far more dollars than the previous leg up and the speed is simply frightening .

 

A lot of media (noise) suggested that Bitcoin would simply crumble and crash once $10,000 was hit. This is not proving to be the case at the moment. It may still happen who knows but the current trend is still strong and intact. 

 

The price action is telling the market that Bitcoin is going higher in the short term. There is a saying that you never bet against the trend. Especially when that trend is super strong like Bitcoin's. What traders and investors have to understand that corrections along the ways are healthy. They must embrace these volatile corrections. If Bitcoin was going up and up without any drops or profit taking then I would be more concerned and extremely worried.

 

One must see drops in Bitcoin like medicine that is required for Bitcoin to get better.

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I agree with that assessment. It is unrealistic to expect a smooth trend upwards without any corrections and pullbacks along the way!

 

My strategy is automated and trades in the direction of the underlying trend; signals are triggered when the short-term price action rejoins the long term trend and it is precisely this sort of pullbacks that fuels such an approach. 

 

That is, when IG actually allows me to place trades which is increasingly not the case. I spent the last week coding an adaptor so that the system can switch to an alternative broker when a signal is triggered and IG has BTC flagged as 'unlongable'. I quite like the REST API provided by IG but it really is no help at all when trades are rejected left, right and centre.

 

My secondary broker's API is not as robust (i.e. required a lot more code on my side to integrate) but it does the job, and the BTC market is always available. Annoying 'cause I now have to keep funds with two brokers but I can't afford to let the system fail if only some of the signals are actually taken.

 

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Luigo your strategy sounds interesting. Care to explain a bit about the signals and automated trades. Sounds to me you are talking about something far more advanced than limit orders. Feel free to educate novices like me!

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Hi there. 

 

Happy to try! I can't claim to be an expert in any form or shape BTW and my strategy is relatively simple. It is fully automated for two main reasons; 1) I have a day job so I can't afford to be glued to the screen all the time and 2) I want the rules to be followed consistently so the automation ensure my own opinions and biases don't get in the way! ;-) 

 

The system uses the IG REST API and trades BTCUSD on a 15-minute bar. It uses two pairs of moving averages to trigger signals; a long term one to determine whether the market is trending up or down, and a short-term one to capture short-term momentum. BTCUSD is obviously on a massive uptrend at the moment but it tends to display smooth short-term bursts followed by small, but sharp sharp corrections. The double MA crossover approach seems to be capturing these moves well. It's rare these days but the strategy has gone short a few times in the past.

 

The system adds an ATR-based stop-loss to every trade which protects it from catastrophic loss. I spent quite a lot of time fine-tuning the stop level to achieve a good balance between containing risk and not being kicked out of trades to quickly.

 

The system also closes any open trades on Friday at 10:00pm which is when IG takes the market offline and re-engages on Saturdays 8:00am.

 

As we've seen repeatedly in this forum, especially over the last few months, IG has been making the market unavailable ('unlongable' I think is the term they use) to manage their risk and that has meant that many of the system's trade attempts have been rejected. This obviously prevents the strategy from being effective as signals can't be acted upon so recently, I have enhanced the system to use Bitmex as an alternative broker.

 

I hope that roughly summarises the approach but please shout with any questions.

 

L   

 

 

 

 

 

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Thanks for sharing. I am just getting going myself with automated trading and back testing a few strategies. In order to use the API into IG do you have some special API client ? 

 

I am personally using PRT to get going but will probably switch to python once i get everything established. 

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Python is my weapon of choice. Lots of good libraries for this sort of thing.

L

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Great info guys thank you for sharing with the community. A well thought out strategy luigo and sounds like you know what you are doing. I need to get to grips with using APIs.

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What put me off reading any more was when I read:-

 

 "best known for popularizing the controversial trading strategy TREND FOLLOWING"

 

It immediately felt like a joke statement.

 

Also there was a list of points of wisdom that looked cheap especially so because the list was just so long my eyes were about to go hungry.

 

Also anything that is included free has got to be suspect.

 

It looked like a website just trying to sell some very ordinary looking books.

 

He looked like a snake oil salesman to me. Sorry!!!!

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