Today is July 9th. Two days ago I projected that I was going to become bullish on Bitcoin in 3 days. Today I'm projecting I'll become bullish on Bitcoin in 4 days. Or maybe tomorrow, if Bitcoin hits 7069 tomorrow.
Why can't I make up my mind? I must digress.
Slightly before May 16, 2018 I figured out that my strategy and plan for crypto investing was not working and needed an overhaul.
On May 16, the 12 day EMA and 26 day EMA for Bitcoin made a bearish cross and I exited my Bitcoin positions. The same is true of my Litecoin positions. Eight days later the same thing happened for Ethereum and I exited my Ethereum positions.
It has been all downhill since then for cryptos and my exits avoided losses of 20% in BTC, 42% in LTC, and 22% in ETH as of today. And my prior losses, realized by my exits, were pretty ugly already. Education has always been painful and expensive.
But the tide may be turning.
The 12 EMAs are converging on the 26 EMAs now.
My trading spreadsheet is set up to measure the spread between the 12 and 26 EMA as follows: %spread = (12ema - 26ema) / ((12ema+26ema)/2)
When the EMAs are converging, I do a simple linear projection to see how many days away do they crossover.
I've also set up a formula to show what closing price tomorrow would cause them to crossover tomorrow.
So I'm not predicting a bullish cross for the Bitcoin EMAs in 4 days. But I am projecting that it will happen if the price action remains similar to what it has been recently, and I've decided what I'll do. And tomorrow I'll update my projection again by importing the most recent daily price history.
And I know that if Bitcoin trades up to 7069 tomorrow the crossover will happen much sooner than I had projected and I've decided what to do already, too.
To me it is important to make all trading and investing decisions while free of emotion and hype. Plan the trade and trade the plan.
If things go as currently projected:
BTC bullish cross in 4 days
LTC bullish cross in 43 days (not holding my breath for that)
ETH bullish cross in 12 days (meh)
alternatively
if BTC trades to 7069 (+6%) tomorrow the cross will happen shortly after that
if LTC trades to 117 (+46%) tomorrow...nah ain't gonna happen
if ETH trades to 568 (+21%) tomorrow...unlikely for a mature and sizable crypto like ETH
But I have a plan and a method to adjust the plan and I'm ready to rock and roll when the market comes to me.
What more could you ask for?
Regards,
Rick
There is nothing magical about using a moving average crossover strategy. It just requires discipline and patience. I wish I could remember who to thank but I was reading a trading board 4 or 5 months ago and then had to think about it and suffer more losses under my then current plan.
My plan is long only (no short selling) using the 12 day and 26 day EMAs because that is what my scripts pull from Cryptocompare's chart data exports, and also what Coinbase/GDAX displays on their (almost useless) charts.
Here is a backtest of the Bitcoin GDAX data from 1/30/17 thru 5/16/18 showing a 467% return over the period. All entries were "made" at the high of the day on the day after the crossover and all exits were "made" at the low of the day on the day after the bearish crossover. So each entry and exit is a discrete worst case execution of the basic plan.
