Re: How To Trade Crypto Using Statistics & Probabilities (My Data-Driven Approach!)
Here's the first Data-Drop Guys....[/center]
What Does The Data Show?[/center]
Key:
Higher High = HH
Higher Low = HL
Lower High = LH
Lower Low = LL
(I promise this won't get too confusing
The tabels above show the probability of 1-hour candlesticks creating new
HH/HL (bullish candles) or LL/LH (bearish candles) compared to the previous 1-hour candles own highs
and lows.
Specifically, the data shows:[/b]
• The number of times a HH/HL & LL/LH occurred on every 1-hour candle (from 2017 - 2023)
• The frequency of candles with HH/LL occurrences relative to the total number of bullish and bearish candlesticks.
• The probability of a high/low forming, calculated as a percentage of the total bullish or bearish hours, respectively.
Key Takeaways:
1) ALL 1-Hour BULL candles = 71.71% chance of LOW forming higher than the previous candle low.
2) ALL 1-Hour BEAR candle = 70.51% chance of HIGH forming Lower than the previous candles high.
Use these probabilities to help set stop loss orders!
Say you see swift rise on the 1-hour timeframe (or lower) and decide to buy to capture the momentum.
Rather than place a large stop using technical analysis (which is very subjective), you can place the stop
a few pips under the previous hours low and then trail it up whenever a new hour begins!
All bullish 1-hour candles hold a 71.71% chance of forming a LOW higher than the
previous hours low – whether it closed bullish or bearish!
Why this works:
• Data shows 71.71% of bullish 1-hour candles form a low higher than the previous hour's low.
• This means your stop has a high probability of staying untouched, even if there's a minor pullback.
And don't forget: ALL losses are reduced compared to using standard TA levels (S&R/FIBS/MA's Etc)!
Your stop sits closer to the current price action, reducing risk and improving profit
taking (if you decide to trail the stop!)
I'll get some more stuff up in the coming days...
Ask me if ya need help!