Within the quickly increasing world of cryptocurrencies, Binance's token, BNB, stands out as probably the most influential and extensively used digital cash. Initially launched in 2017 by international trade platform Binance, BNB was conceived as a utility token that supplied customers reductions on buying and selling charges. Since then, its software has expanded far past its mere use on Binance, changing into the idea for a wide range of monetary operations and decentralized functions on the BNB Chain.

With a market capitalization that constantly ranks among the many high 5 cryptocurrencies on the planet, BNB has established itself not solely as a number one foreign money, however as a barometer of the monetary well being of the crypto sector as a complete. This outstanding place in comparison with different digital currencies resembling Bitcoin and Ethereum, which dominate the market by market capitalization, places BNB in ​​a singular place to benefit from market fluctuations and new developments within the crypto area.

On this article, we are going to discover benefit from the distinctive properties of BNB to construct a strong algorithmic buying and selling technique primarily based on an inversion method utilizing Bollinger Bands.

bollinger bands

The title of this indicator comes instantly from its inventor John Bollinger, who analyzed the motion of costs away from and in direction of shifting averages. Bollinger determined to incorporate his two bands calculated as the usual deviation of the easy common of costs. Due to this fact, Bollinger's band is shaped by three parts and is calculated via the next mathematical operate:

• higher band = plus the typical value of the previous N durations 2 normal deviation;
• median value = Common value of the previous N durations (Really useful beginning quantity is 20);
• decrease band = worth minus the typical value of the previous N durations 2 normal deviation.

Reversal buying and selling technique utilized to BNB (Bollinger Bands)

The technique employed is an automatic system with “imply reversion” logic that makes use of Bollinger Bands as market reversal factors. Promote ​​when the worth reaches the higher band and purchase when the worth reaches the decrease band.

As cryptocurrencies are quoted 24 hours a day, the session into account historically begins at 00:00 GMT and ends at 23:59 GMT, coinciding with the photo voltaic day.

Assuming you use with $10,000 per commerce, your commerce will shut once you attain your revenue goal of $3,000 as your preliminary worth. It is vitally helpful to make use of a set cease loss (assuming $1,000) from the start. A cease loss ought to by some means shield the invested capital from trades with very massive losses.

Making use of this technique to the 15-minute BNB/USDT pair, it’s attainable to see how this “working engine” has carried out from 2021 to right this moment. Since 2021, BNB has began to ascertain itself because the world's main cryptocurrency, so earlier information just isn’t taken under consideration. This phenomenon can also be because of the total sturdy development of the cryptocurrency world, particularly his DeFi sector, which has seen a big improve in Whole Worth Locked (TVL) on varied platforms primarily based on the BNB chain. BNB is used as the primary token for buying and selling and governance on many platforms, and this has elevated demand, ensuing within the value rising greater than 15 occasions its common worth in 2020.

Outcomes of reversal technique (Bollinger Bands) utilized to BNB

Figures 2, 3, and 4 show the symptoms obtained from the imply reversion technique primarily based on Bollinger Bands. The outcomes are encouraging with an rising fairness line. That is undoubtedly start line.

If we analyze the outcomes extra intently, we will see that the typical transaction worth is round $41. This corresponds to 0.41% in comparison with the quantity of his one operation ($10,000), and this worth doesn’t assure that it’ll cowl the working prices. .

Optimization of reversal buying and selling technique (Bollinger Bands) utilized to BNB

You may get higher outcomes when you attempt to outline a special operation window. Due to this fact, we proceed to optimize the beginning time of the operation and its period (expressed within the variety of 15-minute bars). The optimization outcomes are proven in Determine 5. Working from 00:00 to the top of the subsequent 60 bars or till 15:00 will considerably enhance the worth. The system's whole revenue will increase to $222,450 (2,875) with over 30% fewer operations, leading to a median commerce worth of $77.

The outcomes are clearly higher, the typical commerce measurement is bigger however nonetheless not very excessive, and it’s nonetheless tough with a reasonably excessive drawdown in comparison with web revenue (web revenue/max DD = 3.6). Exhibits technique.

To go additional, you’ll be able to attempt to optimize the cease loss and take revenue values ​​that you just initially assumed. The truth is, from the primary optimization concerning the cease loss, it’s confirmed {that a} worth of $1,000, which is 10% of the place worth, achieves fascinating outcomes. Persevering with additional, in Determine 6 we see that various the take revenue in $500 increments yields fascinating and pretty steady outcomes round $5,000 to $6,000. Rising these values ​​will enhance the metric, however it gained't be very significant, so that you may select to make use of $6,000, for instance.

Including a sample to the reversal technique (Bollinger Bands) utilized to BNB

On condition that this technique nonetheless has numerous trades (roughly 2,800 over 4 years), there’s in all probability nonetheless room to additional filter the operations. To do that, you should use a number of value patterns that permit you to establish the optimum situations for performing the operation and exclude situations with a low chance of success.

For this goal, we use our personal record containing many various value mixtures. It will enable you to perceive in what conditions BNB appears to reply higher to this method's entry logic.

When analyzing varied mixtures of patterns, for instance, if a sample resembling “PtnLN=19” on the lengthy facet and “PtnSN=11” on the quick facet happens, by suppressing the operability, a stability between the 2 will be achieved. You possibly can see that there are. Most important reference parameters (web revenue, common commerce, most intraday drawdown). Within the sample PtnLN = 19, the lengthy might be averted if the closing value of the final session candlestick was greater than his 0.5% of the closing value of his two classes. Utilizing PtnSN=11 as a substitute will forestall you from coming into quick provided that the earlier session confirms an ongoing downtrend (decreasing each the high and low).

It's fascinating to see how this mixture of filters truly will increase the typical transaction measurement ($240) and the online revenue is over $400,000. Even the drawdown has decreased to -39,702$. The nice enchancment will also be seen within the extra common form of the capital line (Determine 8), though it seems to have misplaced a few of its luster within the second half of 2023. Solely time will inform whether or not the alternatives made through the optimization section are good.

Conclusion on technique

The reversal technique utilizing Bollinger Bands has confirmed to be very fascinating for the BNB/USDT pair, however it wants additional refinement to be operational available in the market. Though this specific cryptocurrency is well-established, it’s nonetheless very younger and presents many alternatives for merchants who need to strive completely different approaches to the market. As all the time, it’s as much as the reader to experiment and develop this concept to the fullest.

Till subsequent time, pleased buying and selling!

andrea unger