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 each day chart in 2023?What had been the outcomes of every bullish and bearish MACD crossover commerce?How do the outcomes examine when it comes to win charges and monetary returns?Is the MACD technique simpler than a easy buy-and-hold method for Bitcoin buying and selling?
Count on a simple, data-driven exploration that cuts via the complexities of cryptocurrency buying and selling methods, offering clear insights into the sensible utility 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 circumstances we utilized. Initially, our Bitcoin backtests targeted on buying and selling each bullish and bearish MACD crossover on Bitcoin’s each 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 method allowed us to carefully backtest the efficacy of this technique below particular, managed circumstances. Furthermore, it is very important point out that our Bitcoin backtest was primarily based on the each day chart. Subsequently, the variety of trades is kind of restricted.
Understanding the Shifting Common Convergence Divergence (MACD) and the underlying commerce alerts of our Bitcoin Backtest
The Shifting Common Convergence Divergence (MACD) is a extensively used technical indicator in buying and selling that helps determine tendencies and momentum in an asset’s worth. Primarily, it includes two key elements: the MACD line, which is the distinction between the 12-day and 26-day Exponential Shifting Averages (EMAs) of the asset, and the sign line, often 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 would possibly begin an upward pattern, making it a good time to enter an extended place.Conversely, Bearish Crossovers occur when the MACD line crosses beneath the sign line, signaling potential promoting alternatives or a time to promote brief. This crossover is often interpreted as an indication of downward worth momentum, suggesting that the asset’s worth is likely to 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 Charge: 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 Charge: 27percentMax. Drawdown: $0Final Win/Loss: +7.2percentFinal Quantity: $1,071
Whereas our evaluation of the MACD technique for Bitcoin in 2023 yielded constructive returns, a deeper dive into the outcomes reveals a number of regarding facets. This chapter critically assesses these outcomes, highlighting the less-than-optimal efficiency of the technique when considered from completely different angles.
Devastating Win Charge
When Bitcoin backtest outcomes, it’s apparent that the win charges for each bullish and bearish crossovers are notably low. With a win charge of roughly 36.36% for bullish crossovers and 27.27% for bearish crossovers, the technique falls wanting expectations.
Within the risky and unpredictable realm of cryptocurrency buying and selling, such a win charge is considerably devastating, notably for a foreign money as distinguished as Bitcoin. This low win charge alerts a big degree of threat and unpredictability related to relying solely on MACD crossovers for buying and selling selections.
Affect of Leverage and Variety of Trades
The usage of 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 risky as Bitcoin’s. The low variety of trades, coupled with the technique’s inconsistent efficiency, means that the technique won’t adequately seize the market’s alternatives.
Consequently, the ultimate outcomes, although constructive, aren’t optimum when contemplating the potential dangers and alternatives misplaced in the course of the buying and selling interval.