Trading BTC can beat HODL

[virtusa]

I think that most people never really studied the in and out instead of buy and hold.
I made a small simulation based on daily and weekly charts.
First I buy and close each position when a signal is generated.
You can see that after each trade the size is increasing, and that is what most people don't realize. After a few trades, even the smallest move has a huge impact on your account due to the size. So you can enter later and take a more secure price (as the trend will be more clear), and still make more money than the buy and hold.

The buy and close generated an ending account at 364K, while the buy and hold only had an ending account with 90K.

On top of that the buy and hold had huge drawdown risks while the buy and close did not have that. All the big drops happened when the buy and close had no open position, so no risk.
It is very clear that buy and hold will always be beaten. At least if you are a qualified trader (so not fitted for the majority on ET).

With a drop like the actual one, from 60K like I posted, till today would enable you to triple your size for the same money. Buy and hold can never catch that up as profits for the buy and close are from that moment on TRIPLED.

The frequency of trading is very important to realize the compounding effect.

 

[deaddog]

Only backtesting (Monte Carlo) would reveal whether that would have consistently beaten buy & hold.

And it would have to have beaten buy & hold by a wide margin (or at least substantially reduced drawdowns) for it to be even worth the bother. And there's always the risk that it underperforms going forward.

For the vast majority of people, buy & hold is the best strategy. With Bitcoin, you just have to accept that it's a really wild ride, and if you invest money you can't afford to lose then you could end bitterly regretting it.

I went back and ran the exercise.
I used the open price of the bar after a weekly bar closed above or below the 30 week ma.
From 2015 to today there were 8 trades. 4 winners and 4 losers. The first trade was a loser and had the biggest drawdown (16%)
$1000 invested and held is now worth $73,000
$1000 traded is now worth $121,400 and waiting to be deployed when the trend changes

Don't believe that buy and hold is the best strategy. Remember that advise comes from the industry that has your best interest at heart.

 

[David's faith]

To be fair index cost averaging was easy the last few years... Buy when the fed prints, sell when it stops, rinse, repeat...

 

[deaddog]

To be fair index cost averaging was easy the last few years... Buy when the fed prints, sell when it stops, rinse, repeat...

If you don't know what you are doing, dollar cost averaging into an index fund or index ETF is probably the way to go. If you can't outperform the index you probably should not be trading.

The index manages your portfolio by rebalancing every so often and kicking out the non performers and replacing them with stocks on the move. Even the index doesn't buy and hold.

 

[Tokenz]

There's definitely a different set of rules when trading crypto. I tried trading normal stocks after trading crypto, and I hate to say it, but it was extremely easy.

 

[deaddog]

There's definitely a different set of rules when trading crypto. I tried trading normal stocks after trading crypto, and I hate to say it, but it was extremely easy.

How so? What did you find to be the biggest difference?

 

[Ed48]

$1000 invested and held is now worth $73,000
$1000 traded is now worth $121,400 and waiting to be deployed when the trend changes

But buy & hold has done pretty well, with zero effort, especially when you consider it's just suffered a 70% drawdown. That $73,000 would have been $250,000 back in November.

Don't get me wrong, I'm not against trading, I just think market timing is dangerous in the wrong hands. Your average Bitcoin investor may not have the discipline to do what's required when it's required (ie. have a plan and stick to it).

 

[deaddog]

But buy & hold has done pretty well, with zero effort, especially when you consider it's just suffered a 70% drawdown. That $73,000 would have been $250,000 back in November.

My point exactly. And people just sat and watched.

Don't get me wrong, I'm not against trading, I just think market timing is dangerous in the wrong hands. Your average Bitcoin investor may not have the discipline to do what's required when it's required (ie. have a plan and stick to it).

LOL!! Are you being insulting to the average bitcoiner. .

What you might find interesting is that when the system called for a sell on the last trade it had about 10 less bitcoin than when it started. And the system didn't sell anywhere close to the top. The last sale was at around 47k. down about 35% from the top.

But it is in cash and when /if bitcoin turns as long as the buy signal is below 35K it will have more than the starting amount.

 

[Tokenz]

How so? What did you find to be the biggest difference?

I don't know. If you don't understand what i'm talking about already, then how will you understand when I explain it? Sorry bud, I'd rather not waste my breath or energy. I'm too lazy for that shit.

 

[deaddog]

I don't know. If you don't understand what i'm talking about already, then how will you understand when I explain it? Sorry bud, I'd rather not waste my breath or energy. I'm too lazy for that shit.

OK Thanks any way. I didn't know what you were talking about or I wouldn't have asked.
Aside from crypto being 24/7 (which makes it easier to control risk) I couldn't see any difference. Mind you I use the same rules for trading every thing.
Lazy people make the best traders, they find the easiest way to get things done.