On this article, we dive into an insightful Bitcoin backtest of the MACD technique all year long 2023. Our focus is on answering key questions:
How did the MACD technique carry out when backtested with particular parameters on Bitcoin’s every day chart in 2023?What had been the outcomes of every bullish and bearish MACD crossover commerce?How do the outcomes evaluate by way of win charges and monetary returns?Is the MACD technique simpler than a easy buy-and-hold strategy for Bitcoin buying and selling?
Anticipate a simple, data-driven exploration that cuts by the complexities of cryptocurrency buying and selling methods, offering clear insights into the sensible software and effectiveness of the MACD technique in Bitcoin buying and selling for the 12 months 2023.
Earlier than we take a more in-depth take a look at the Bitcoin backtest outcomes, we should perceive the backtest situations we utilized. To begin with, our Bitcoin backtests targeted on buying and selling each bullish and bearish MACD crossover on Bitcoin’s every day chart (we’ll clarify what this implies in a second).
We simulated these trades with an preliminary capital of $1,000, a take revenue of 4%, a cease lack of 1%, and a 2x leverage. This strategy allowed us to scrupulously backtest the efficacy of this technique below particular, managed situations. Furthermore, it is very important point out that our Bitcoin backtest was primarily based on the every day chart. Subsequently, the variety of trades is sort of restricted.
Understanding the Transferring Common Convergence Divergence (MACD) and the underlying commerce alerts of our Bitcoin Backtest
The Transferring Common Convergence Divergence (MACD) is a extensively used technical indicator in buying and selling that helps establish traits and momentum in an asset’s worth. Primarily, it entails two key elements: the MACD line, which is the distinction between the 12-day and 26-day Exponential Transferring Averages (EMAs) of the asset, and the sign line, normally a 9-day EMA of the MACD line itself.
As we already talked about, our Bitcoin backtests relied on two buying and selling alerts:
Bullish Crossovers happen when the MACD line crosses above the sign line, indicating potential shopping for alternatives, which suggests an upward momentum within the asset’s worth. Merchants usually view this as an indication that the asset’s worth may begin an upward development, making it a good time to enter a protracted place.Conversely, Bearish Crossovers occur when the MACD line crosses under the sign line, signaling potential promoting alternatives or a time to promote brief. This crossover is usually interpreted as an indication of downward worth momentum, suggesting that the asset’s worth may be heading right into a downtrend.
Need extra Backtest outcomes? Take a look at this text: Crypto Backtest: The Most Intensive Evaluation (15+ Buying and selling Methods)
Alright, it’s time to get to enterprise and take a look on the outcomes of our Bitcoin backtest. On this chapter, we’ll present unbiased outcomes, whereas the subsequent chapter will present our evaluation of the buying and selling methods.
MACD Bullish Crossover — Outcomes
Strictly buying and selling the bullish MACD crossovers would have made you 18% when utilizing a 2x leverage. Out of 11 trades, the alerts had been profitable in 36% solely.
Total Variety of Trades: 11Win Trades: 4Win Price: 36percentMax. Drawdown: $58Final Win/Loss: +18percentFinal Quantity: $1,181
MACD Bearish Crossover — Outcomes
Strictly buying and selling the bearish MACD crossovers would have made you 7.2% when utilizing a 2x leverage. Out of 11 trades, solely three alerts confirmed a profitable outcome.
Total Variety of Trades: 11Win Trades: 3Win Price: 27percentMax. Drawdown: $0Final Win/Loss: +7.2percentFinal Quantity: $1,071
Whereas our evaluation of the MACD technique for Bitcoin in 2023 yielded optimistic returns, a deeper dive into the outcomes reveals a number of regarding elements. This chapter critically assesses these outcomes, highlighting the less-than-optimal efficiency of the technique when considered from totally different angles.
Devastating Win Price
When taking a look at Bitcoin backtest outcomes, it’s apparent that the win charges for each bullish and bearish crossovers are notably low. With a win price of roughly 36.36% for bullish crossovers and 27.27% for bearish crossovers, the technique falls in need of expectations.
Within the unstable and unpredictable realm of cryptocurrency buying and selling, such a win price is considerably devastating, notably for a foreign money as distinguished as Bitcoin. This low win price alerts a major degree of threat and unpredictability related to relying solely on MACD crossovers for buying and selling selections.
Affect of Leverage and Variety of Trades
Using leverage, on this case, an element of two, and the restricted variety of trades (11 for every crossover kind) additional intensify the technique’s shortcomings.
Whereas leverage can amplify features, it equally magnifies losses, particularly in a market as unstable as Bitcoin’s. The low variety of trades, coupled with the technique’s inconsistent efficiency, means that the technique may not adequately seize the market’s alternatives.
Consequently, the ultimate outcomes, although optimistic, usually are not optimum when contemplating the potential dangers and alternatives misplaced in the course of the buying and selling interval.
