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 more practical than a easy buy-and-hold method for Bitcoin buying and selling?
Count on a simple, data-driven exploration that cuts by way of 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 yr 2023.
Earlier than we take a better 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 each day chart (we are going to 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 scrupulously backtest the efficacy of this technique underneath particular, managed situations. Furthermore, it is very important point out that our Bitcoin backtest was primarily based on the each day chart. Due to this fact, 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 traits and momentum in an asset’s value. Primarily, it entails 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, 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 value. Merchants typically view this as an indication that the asset’s value may begin an upward development, making it a good time to enter a protracted 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 value momentum, suggesting that the asset’s value may be heading right into a downtrend.
Need extra Backtest outcomes? Try 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 are going to present unbiased outcomes, whereas the following 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 totally 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 fee of roughly 36.36% for bullish crossovers and 27.27% for bearish crossovers, the technique falls in need of expectations.
Within the risky and unpredictable realm of cryptocurrency buying and selling, such a win fee is considerably devastating, significantly for a foreign money as distinguished as Bitcoin. This low win fee alerts a big stage of danger and unpredictability related to relying solely on MACD crossovers for buying and selling selections.
Influence 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 sort) additional intensify the technique’s shortcomings.
Whereas leverage can amplify positive factors, 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 may not adequately seize the market’s alternatives.
Consequently, the ultimate outcomes, although constructive, should not optimum when contemplating the potential dangers and alternatives misplaced through the buying and selling interval.
