Over the past couple months, trading cryptocurrency has gone viral. After looking at some of the percentage gains on the biggest crypto exchanges, I decided to give trading a try. Before I really got started, I did some research to see if there are any tools for getting buy signals so I can make the most educated trades possible. I found a few tools that showed some promise so I have decided to conduct a series of case studies to see which ones are the best. These are the results of my first one.
Case Study Parameters
Case Study Term: April 19th 2017 – April 29th 2017. Liquidated (sold) 100% of holdings on May 6th.
Entry Strategy: Buy .01 BTC every single time I receive a buy signal. I know this is very risky but if I am going to see if these buy alerts actually work, then I need to buy every single one.
Exit Strategy: For this particular case study, I decided to hold everything until I liquidate all of my positions after April 29th.
Total Buy Orders: I received a total of 97 buy signals and bought .01 BTC at each one for a total of .97 BTC invested. You can do the same thing but scale it down to .005 BTC for each buy signal so your total invested would only be .485 which is about $750 USD at today’s price.
Gross Return: 82/97 positions were profitable! My gross return on investment was 1.37 BTC on an initial investment of .97 BTC. That’s a gross profit of .4 BTC / 41% in 17 days!
Costs & Overhead: I paid .06 BTC for a 30 day membership to get the buy signals.
Net Profit: My gross profit of .4 BTC – .06 BTC for the buy signals = a net profit of .34 Bitcoins in 17 days! That’s a 35% profit in just 17 days! That’s an insane return on investment for such a short period of time but I think I can do better on my next study.
What’s even more exciting is that the price of bitcoin rose about 20% during my study ($1,326 USD to $1,597 USD on BitFinex) so not only did I turn .97 BTC into 1.34 BTC, but .97 BTC was worth about $1,286 at the beginning of my study and 1.34 BTC is currently worth about $2,139 so my USD percentage gain is 66%! …in 17 days!
In just 17 days, I learned a lot about how crypto markets work and the massive upside opportunity for gain in short periods of time however I definitely left some money on the table with a number of my trades. That being said, here are a few things that I learned from this study.
A Progressive Exit Strategy: I will do some experimenting with various progressive exit strategies to see if I can catch some profits on coins that shoot up and come back down before the end of the study. One example from this study is NEOS. I bought .01 BTC worth of NEOS on April 19th at .00076692 and sold on May 6th for 0.00075999 which is a loss of about 1% but on May 3rd there was a spike up to .001250000 which would have been a 63% gain if I had managed to sell at least some above my purchase price. On my next study, I will try to find a way to cash in on some of those sporadic price hikes with some progressive sell orders.
Hold Currencies vs. Taking Loss: When I sold off all of my positions, I took a loss on 15 out of 97 positions. If I simply held all of them, there is still potential for gain with those currencies as the price of the crypto market continues to increase. Moving forward, I will hold all currencies that didn’t produce a profit instead of selling them off at a loss. Maybe I will lose money but I will only find out if I experiment.
Thanks for taking the time to read my case study. If you think the bitcoin community would benefit from this article, please share it.
What tools do you use to make the most calculated trades? Let us know with a comment below or a tweet at @BitcoinReasons