On this article, we are going to develop a method utilizing quite simple logic, which may be utilized to completely different cryptocurrencies and yields actually attention-grabbing outcomes. On this explicit case, it applies to SOL, the native token of the Solana blockchain. SOL has acquired loads of consideration lately, each as a consequence of SOL's important worth will increase and its position as an revolutionary platform aiming for mass adoption. Because of excessive transaction pace and scalability.

The logic of the trend-following breakout technique utilized to the cryptocurrency Solana (SOL)

The technique in query is an easy development after a breakout, ready to go lengthy (or quick) on a break of a sure worth stage, and the concept such a transfer could proceed within the course taken. It’s based mostly on. The periods thought of are from GMT 00:00 to GMT 23:59. Cryptocurrencies commerce 24 hours a day, so these are conventional occasions chosen to coincide with periods and photo voltaic days.

On this instance, the worth stage we break to enter lengthy would be the highest recorded in the identical session, and we are going to enter quick as soon as it breaks by way of the minimal. It’s crucial to attend a sure period of time after the beginning of the session for the excessive and low costs of the day to kind and develop into important. Assuming you wait the primary hour of the commerce, it’ll begin and finish the commerce at 1:00 GMT. It's 23:00 GMT.

Assuming you use with a set measurement of $10,000 per commerce, your commerce will exit while you attain your revenue goal of $2,000 or your cease lack of $1,000.

Making use of this technique on the Solana spot market (SOL) in opposition to USDT (dollar-anchored stablecoin) from January 2017 to February 2024 didn’t yield very encouraging outcomes, and the inventory line ultimately elevated But it surely doesn't appear to go wherever.

Presently, this technique solely permits the market to create a reference excessive and reference low for one hour. Subsequently, defining completely different operation home windows could yield higher outcomes because it gives a extra important entry stage. By optimizing the beginning and finish occasions of your operations, you’ll find which you can considerably enhance efficiency by working from 6 PM to midnight or on the finish of your session.

Within the following picture, you’ll be able to see that utilizing a set measurement of $10,000 per commerce, the whole revenue of the system is over $42,000 in 480 operations, with a median commerce of $88. These outcomes nonetheless symbolize a tough technique, and the common commerce shouldn’t be significantly enticing in comparison with the dimensions used (88/10,000 = 0.88%).

Refine your technique in Solana: cease losses and worth patterns

The present technique makes use of a cease loss at $1,000, which is 10% of the place worth. In Determine 4, we will see that various the cease loss from 1% to 30% of the place worth (final column on the fitting) provides very attention-grabbing outcomes. Particularly, the common commerce will increase to $127 with a cease lack of $2,100. Contemplating the indications between $2,000 and $2,400, this worth additionally appears to be like very secure.

In the event you take a look at the capital line for lengthy or quick trades solely, you’ll be able to see how quick trades decrease the system indicators. Contemplating that opening a brief place within the spot market is dear (in truth, you’re borrowing cryptocurrencies), it’s attainable to function solely lengthy with a easy code change. Nevertheless, on this case we attempt to exclude quick entries by working solely when a sure worth sample happens and never when one other worth sample is prone to happen.

To additional enhance the metrics, you should use a number of worth patterns that will let you establish the perfect situations for performing operations, and exclude situations with a low chance of success.

On this regard, we embrace numerous worth combos that can allow you to perceive in what conditions the cryptocurrency Solana (SOL) appears to reply nicely to breakout logic, even on the quick facet. Use your personal record.

The mix of patterns “PtnSY=3” and “PtnSN=17” generally is a good compromise between the principle reference parameters (web revenue, common commerce, most intraday drawdown). Actually, for the sample PtnSY=3, provided that the “substance” of the 5-day candlestick (open worth 5 days in the past minus yesterday's shut worth) was lower than 50% of the whole vary for a similar interval. Quick entries are allowed. (highest worth minus lowest worth). This situation, the place the “physique” shouldn’t be greater than 50% of your entire vary, successfully identifies days when there’s little market confidence. This present day usually happens earlier than the development resumes in case of a breakout. However, if PtnSN=17, quick entries are merely blocked if yesterday's candlestick was bullish (shut > open).

Trying on the outcomes, you’ll be able to see how this mixture of filters truly will increase the common commerce ($322) and web revenue ($77,309). The drawdown has additionally decreased to -10,450$. The optimistic enchancment can be seen within the extra common form of the capital line.

Conclusion on the development following Solana Cryptocurrency Breakout Technique

Though good outcomes have been achieved with the addition of patterns, they’re definitely nonetheless removed from the outcomes achieved with a easy “purchase and maintain” of Solana (SOL) from 2017 to current.

Nevertheless, the volatility of a “purchase and maintain” shouldn’t be akin to the volatility skilled by a buying and selling system. Additionally, the buying and selling system makes use of a set measurement, whereas with a “purchase and maintain”, the earnings made are as follows: being reinvested.

The trend-following breakout technique has confirmed to be very attention-grabbing with Solana (SOL) and may be utilized to many different cryptocurrencies with the required changes and optimizations. This market continues to be very younger, exhibiting excessive volatility and infrequently explosive ranges, which inserts nicely with this breakout buying and selling logic. As all the time, I'll go away it to the reader to experiment and develop this concept.

Till subsequent time, pleased buying and selling!

andrea unger