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Bitcoin Moving Average-based Trailing stop

 

You can follow the price trend using a moving average. That means you can set up also a moving Average-based trailing stop to take profit after entering into a trade after a breakout.

In recent days, we had an interesting breakout on Bitcoin.

We can see here from the chart BTC/USD that we already had the actually the first breakout on April 1st that didn’t ignite a significant uptrend, so we went lateral for four or five days before a new breakout upward.

 

Bitcoin price breakout

 

Maybe you bought the breakout, and you are waiting for the right moment to take profit or completely close your position depending on the timeframe of your strategy. 

So I think that one interesting thing that you can do at this point is to look at a moving average (9). 

We can see that every time there is a solid uptrend, and then the price retraces below the moving average (9), or we have a severe price drop, or the market moves sideways for a bit of time. You really don’t want to be on a trade with a trend following strategy in neither of these situations. Other strategies catch better these market cycles and just looking at the moving averages, it’s just not a good fit. 

How to set up this strategy with Coinrule

So if you just the breakout and you are looking for a good time to sell part of all your position, one thing that you can do is to wait for the moment in which the price crosses below this moving average. This is something that you can automatically set up with Coinrule. 

So here we are on our rule page. Let’s select first the exchange. In the event block, you select 

IF BTC has price crossing below MA (9) in a 4 hours time frame

Let’s now add an action when this condition will be met. 

Sell 50% of that coin back to my USDC wallet.

 

Coinrule trailing stop based on moving average

 

One other very interesting thing is that using this strategy. You are able also to catch a potential further upside of the trend. At this point, you don’t know if the trend is exhausted. You don’t know if it’s already time for selling, leaving there the strategy because maybe potentially you can still gain from further upside.

You can view so this strategy as a moving Average-based trailing stop based on a moving average. And it will take profit when the trend reverts.

 

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