This is a simple trading strategy that I made for use in “almost” every market (including cryptos). The base strategy’s numbers average somewhere around 70-75% with a Profit Factor of 1.67. (Red arrows are short positions, purple arrows are closing positions; blue arrows are long positions)
With some number crunching and tuning we can also reach some really incredible results.
The basic idea
KISS is a simple algorithm that plots slopes on the chart, indicating buying or selling pressure. You simply buy in green slopes and sell in red slopes, this gives decent results, however we can improve a lot by adding a few extra rules.
KISS isn’t included in any charting platform since I developed it, so you’ll need to go to tradingview.com and add it from the indicators list as of today.
Basic setup
The extra rules to improve performance
- Buy on dips and sell on highs. Easier said than done, so keep it simple, if we see a red candle inside a green slope, BUY! If you see a green candle inside a red slope, SELL! Well, on crypto exchanges you can only buy a coin and then sell it again, you can’t short a position using a contract on most places (not yet anyways).
- Ignore small slopes. Basically you’ll want to follow the strategy when the slope is at least a little big, if you go buying small bumps in big red trends you won’t last long.
- Get into strong color slopes. KISS has two levels of colors depending on the pressure, if you see a light green and a light red, just wait; if you see only green in the indicator, then it’s a good sign.
- Move your SL to small win once price moves a certain amount. The idea is that if you plan to make 4% with your trade and price has gone over 2% in earnings, you’ll move your SL to about 0.2% so if price suddenly makes a weird reversal, you’ll at least break even with a small win (depending on slippage and liquidity).
- Stay calm, be patient. Don’t rush to kill a position before it turns even worse, that’s the first reason why many people lose money, just hold on and wait until your SL gets hit.
- Set your take profit and stop loss orders with a ratio favoring wide SL. This means that if you buy a currency expecting 7% appreciation in the next two days, you’ll want to set your TP somewhere near 5.5% and your SL somewhere around 8 or 8.5%
- If in doubt, never go short. Prices steadily rise, but crash VERY fast; the algorithm generates more profits in average buying only (going long) instead of trying to short, trying to cash in the bear markets is almost always a bad idea, since when you’ll join the crash is done or almost done.
Okay, these are general rules to apply with this particular strategy, other rules for managing portfolio, like diversification, insider info or getting knowledge of news and rumors may help as well. The following is a list of images showing how the backtests change the results as we add these rules.
Buy on dips
Small win
Lack of patience and closing early
Ideal TP/SL ratio, this magic number is different for every market, but usually 0.6 to 1 or 1 to 1.4 works fine
Long only
Final words and considerations
KISS is very simple, but very powerful; people who sit in front of their screen watching prices go up and down will get old and tired very fast; for modern trading you need computers to beat computers, it’s as simple as that.
However there is a fun detail, computers optimize their algorithms based on historical data, this leads to algorithms that agree worldwide on price direction, making price prediction even easier. Why? Simple, if most algorithms buy on dips, then we can have a huge % of chance that price will go up after a dip, the only exception being human beings trading manually and selling over the buying algorithms.
The KISS base indicator is available for free at tradingview.com, but the strategy for backtesting and for optimization and alerts isn’t; please keep that in mind. If you’d like access to the strategy to backtest it in your favorite markets and test what works and what doesn’t feel free to contact me.
If you want to learn more about crypto trading or which coins are the best to buy, you might want to consider joining the One Network community on discord: https://discord.gg/EQbf5jf
If you're a fan of cryptos and decentralization you might want to consider joining Adsactly or steemIT central
ADSactly: https://discord.gg/ZnjxS2n https://steemit.com/adsactly/@adsactly/adsactly-on-adsactly-welcome-to-adsactly
SteemIT Central: https://discord.gg/aaNEqzC
(Disclaimer: I'm not affiliated with them and there are many more, I'm just pointing the ones relevant to this post)
Kind regards and happy trading
Eilder Jorge