Bollinger bands, a popular analytical tool in Trading, have been applied to Ethereum (ETH) to examine their effectiveness. Bollinger bands consist of three lines – the upper band, lower band, and average price – and are based on the idea that prices tend to stay within certain ranges. The strategy involves entering long positions when a 30-minute bar closes above the upper band and closing the trade when a bar closes below the lower band or at the end of the session. Applying this strategy to Ethereum from September 2016 to September 2023 resulted in positive results, with over $60,000 in total profit from 1,850 trades. However, the average trade size remains low at $33. To improve the strategy, the use of a stop loss was considered, which reduced the drawdown but did not significantly impact the average trade. Optimization of the periods of the Bollinger bands also did not show significant improvement. It was then suggested that Bollinger bands should be used in conjunction with other conditions to identify the best days for buy trades. By adding a proprietary pattern to the strategy, the average trade and net profit increased, while the drawdown decreased. However, the results of the strategy still do not match the performance of a simple buy and hold strategy for Ethereum since 2016. The article concludes that the Bollinger bands strategy is interesting for Ethereum trading, especially when combined with a pattern, but further improvements may be needed to match the performance of a buy and hold strategy. Bollinger bands have proven to be effective for building trading systems across different markets, including the relatively young Market of Ethereum..
#Trading #Ethereum #ETH #analysis #effectiveness #strategy #Bollinger #bands
#Trading #Ethereum #ETH #analysis #effectiveness #strategy #Bollinger #bands
