Portfolio: $8,500 on Cryptos in One Week with These Trading Systems

by Francesco Placci

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Systematic trading on cryptocurrencies, again!

In this video, we show you some strategies on Bitcoin and other cryptos that have performed pretty well over the last few weeks and gaining $8,500!

As it is logical to expect, given the nature of the cryptocurrency market, most of these trading systems are breakout strategies.

However, towards the end of the video, you'll find a little gem. It's a system that, perhaps, you'd never expect to work on cryptos.

Watch the video to learn more!

Transcription

Hey guys, and welcome! I'm one of the coaches of Unger Academy, and this is our usual overview of the systems in our portfolio, and how they performed.

As you can see, today we're going to be talking about cryptocurrencies.

So let's start with the first trading system. It works on Ethereum and has a 4-hour time frame. It's a breakout system, which means that after searching for a volatility compression, it identifies a significant entry level, such as 10- or 20-period highs and the high of the previous day, and it opens positions when this entry level is broken through.

Positions tend to last for a short time – generally less than one day – and include a profit target and a stop loss. Let's take a look at the performance of this system over the last period.

Here is the equity line and it's very good. As you know, this is definitely a good period for cryptocurrencies. They resumed rising after the significant fall of 4 or 5 months ago, and Ethereum is undoubtedly one of the best markets for developing trading systems.

Let's also take a look at the trades, the list of the trades. As you can see, the last trade made a $1,700 gain. Note that this system works with a fairly low capital of $25,000 and works on the future. As in this case, it's clear to see, given the high volatility of cryptocurrencies, we can make some excellent profit even by trading them with a low capital.

Let's move on to another system for Ethereum that took two good profit targets. This is also a breakout system. It hit a series of stop losses but has been doing pretty well lately.

Let's take a look at the system. For sure, this system had suffered a little more. It went into a drawdown but, thanks to the rise that took place over the last two weeks, it's managed to go back to an equity peak.

Let's look at the list of the trades. Recently there have been two nice trades of $788 and $1,777 after hitting a series of stop losses. The previous target was also pretty good.

Now let's move on to another system. It's an Opening Range Breakout system, which perhaps is the oldest algorithmic system mentioned in books. I'm talking about Toby Crabel's very famous book, and so many of you probably know what I'm talking about. The opening range breakout model tends to struggle quite a lot in modern traditional markets but produces good profits on cryptocurrencies.

Let's look at the equity line. As you can see, this system makes a lot of trades, and the equity line is rising. It was in a very slight drawdown before July, and this is what it has produced over the last few months.

Remember that we used a capital per trade of about $25,000. I say "about" because this amount varies slightly based on volatility since I apply a Volatility Position Sizing logic.

However, it's pretty surprising to see how much we can earn on cryptocurrencies compared to the capital we invest.

Recently, this system has made some excellent trades, as we have seen. Let's take a look at the list of the trades. Here we are. The last trade hit a stop loss but, as you can see, before it, there is a series of good profit targets.

Notice that this system applies a scaling out logic, that is, positions are not closed all at once. As certain levels of profit are touched, the position is closed little by little. It may not be the best way to make the most out of this system, but from a psychological point of view, taking home some earnings when reaching specific targets can undoubtedly be helpful.

Finally, here's another breakout system. It works on Bitcoin with a 15-minute timeframe. This system starts from the recent lows, adds to them a percentage of the volatility, and enters at the breakout of the level identified in this way.

We're using a scaling out logic in this case as well. The system has made a partial exit and is currently still in position.

Let's take a look at the equity line. As you can see, even in this case, it's very good. The horizontal period you can see here corresponds to the drawdown of the markets because these systems open only long positions. So when a cryptocurrency market falls, we settle for a horizontal equity curve and are happy with gaining only in bullish market phases.

Let's take a look at the list of the trades. The latest trades are all very good. As we have seen, we still have a partially open position. We'll see how it is going to be closed in the next few hours.

Finally, I'd like to show you our latest trading system for cryptocurrencies. What's interesting about this system is that it's based on a mean-reverting logic. As you know, cryptocurrencies are purely breakout instruments, which is quite in contrast with the idea of trading them with a mean-reverting approach.

However, I have realized that in some instances, such as when the market makes a huge downward movement, mean-reverting approaches could also make sense.

Let's see how the system performs on different cryptos. I didn't adapt it to the various markets, yet it seems to work more or less on all of them.

Let me show the equity lines on some cryptocurrencies. This is the equity line on Link, and this is the equity line on Avax. These are all minor cryptocurrencies, the so-called altcoins. This is the equity line on Algo. Here we have the equity line on Vet. And this is the equity line on Cardano. As you can see, they're all very similar and fairly regular. They alternate many small profits with more significant losses, as it generally happens in mean reverting systems. Here's the equity line on Dot, that on Ripple, and finally, that on Ethereum. 

I just wanted to show you these equity lines to make you understand that even if an underlying produces good results with a breakout logic, there can be cases in which investigating different logics could have some good results as well.

So if you're interested in learning more about how we develop systems at Unger Academy following the method of the only 4-time world trading champion Andrea Unger, click on the link you find in the description of this video. It's a webinar in which Andrea condensed much of what he's learned since he started trading in 2001, which led him to develop the Unger Method.

That's it for today! 

Till the next one! Goodbye, everyone!

 

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Francesco Placci

Hi, I'm Francesco Placci, a professional trader since 2005 thanks to the systematic approach to the markets.

My skills range from trading on index futures to bonds, from stocks to commodities, with a particular focus on volatility and options, which I consider to be among the most versatile and fascinating instruments available to traders.

After an experience with leading Italian credit institutions where I learned the basics of institutional finance, I became a successful independent trader, with great personal satisfaction.

Founder of Algoritmica.pro, in 2019 I joined Unger Academy as head of Research and Development.