Monday, July 29, 2019

Long Only Bitcoin Trading

I continue to struggle psychologically with shorting Bitcoin futures and as a result make mistakes and lose money. So, I investigated how taking only the long trades would perform. If the "model" says to short Bitcoin, we close the long and stay out of the market. This is equivalent to being always long 1 unit of Bitcoin and going long or short one unit in addition.

Statistics since March 2018 for long trades only are very similar to the statistics for all trades. But because you are in the market only half the time, total returns will be lower. Since the beginning of 2019 total returns have been the same - short trades have added nothing to returns. Winning long trades outnumber losing long trades 10 to 6. Losing short trades outnumbered winning short trades 10 to 5.

So, I think that in the interim I will only take long trades in Bitcoin.

Note that in the last 10 months of 2018, long only trades gained a total of 18% while Bitcoin lost 65%. So, taking long only trades doesn't mean losing if Bitcoin returns to a bear market.

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