Profitable day trading Bitcoin futures following continuous bullish (bearish) candlesticks

ABSTRACT

We explore the profitability of day trading Bitcoin futures following diverse consecutive 3 bullish (bearish) one-minute candlesticks and then adopt stop-loss or take-profit only as exits. We reveal that different from our cognition, adopting take-profit strategies would have a notable average positive profit per trade (APPT), which is robust by employing the upward trend out-of-sample data different from the downward trend in-sample data. We infer that such impressive findings might result from temporary rising (falling) prices likely manipulated for appealing to investors pursuing long (short) positions. As a result, investors may realize profit instead of suffering loss frequently by adopting take-profit exits since mean reversion might often occur after such manipulation. Moreover, we argue that stop-loss might be redundant for day trading such futures because stop-loss seems enclosed in the mechanism of day trading.

KEYWORDS:

• Bitcoin futures
• take-profit
• stop-loss
• candlestick technical trading
• investing strategies

JEL CLASSIFICATION:

• G10
• G14

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

¹ The above description is from the website, https://www.bitdegree.org/crypto/best-cryptocurrency.

² We employ the data from BitMEX since, in addition to the concern of obtaining data, Bitcoin Mercantile Exchange (BitMEX) operated in Hong Kong is the world’s largest cryptocurrency derivatives trading platform.

³ We set 5% and 10% in this study because the mean and standard deviation of M% defined as the maximum percentage change of Bitcoin futures price per day measured as (highest price/lowest price per day)-1) are 6.43% and 4.85% for the year of 2018.

⁴ Taking long positions deemed as momentum strategies as various three one-minute bullish candlesticks shown; taking long positions deemed as contrarian strategies as diverse three one-minute bearish candlesticks shown.

⁵ The brackets, (-∞, 5%) and (-∞, 10%), means 5% and 10% take-profit without stop-loss; the brackets, (−5%,∞) and (−10%, ∞), means 5% and 10% stop-loss without take profit.