Pyramiding Entries On Early Trends (by Coinrule)

2020年12月17日

Pyramiding the entries in a trading strategy may be risky but at the same time very profitable with a proper risk management approach. This strategy seeks to spot early signs of uptrends and increase the position's size while the right conditions persist.

Each trade comes with its stop-loss and take-profit to enforce a proportional risk/reward profile.

The strategy uses a mix of Moving Average based setups to define the buy-signal.

• The Moving Average (200) is above the Moving Average (100), which prevents from buying when the uptrend is already in its late stages
  
• The Moving Average (9) is above the Moving Average (100), indicating that the coin is not in a downtrend.
  
• The price crossing above the Moving Average (9) confirms the potential upside used to fire the buy order.
  

Each entry comes with a stop-loss and a take-profit in a ratio of 1-to-1. After over 400 backtests, we opted for a 3% TP and 3% SL, which provides the best results.


The strategy is optimized on a 1-hour time frame.


The Advantages of this strategy are:

• It offers the possibility of adjusting the size of the position proportionally to the confidence in the possibilities that an uptrend will eventually form.
  
• Low drawdowns. On average, the percentage of trades in profit is above 60%, and the stop-loss equal to the take-profit reduces the overall risk.
  
• This strategy returned good returns both with trading pairs with Fiat/stable coins and with BTC. Considering the mixed trends that cryptocurrencies experienced during 2020 vs BTC, this strengthens the strategy's reliability.
  

The strategy assumes each order to trade 20% of the available capital and pyramids the entries up to 7 times.

A trading fee of 0.1% is taken into account. The fee is aligned to the base fee applied on Binance, which is the largest cryptocurrency exchange.