Technical update: Consolidation Breakout Trading System

Today after many years i’ve reinstalled Metastock Professional, i was curious to see if there was some old Expert Advisors giving good result with bitcoin and i’ve found this one: “Consolidation Breakout” from Trading Systems Analysis Group.

Basically it works with volatility breakouts to identify entry/exit points and while this system uses John Bollinger’s Bollinger Bands and Welles Wilder’s Average True Range indicator, it is not linked to the methods of those two authors.
It’s based upon a strict observation of the Bollinger Band width compressing/decompressing (a method used by many traders) around the prices until the distance between the upper and lower bands is less than 1 ¾ times the 1 period average true range; it then looks for a breakout in either direction of the Bollinger Bands to capture the movement of the breakout. Once a position is entered, it looks to cross the 20-period simple moving average to exit the position but any other money management approach can be used for the exit.

I attach below the above expert advisor applied to a daily bitcoin chart. It works fairly well when volatility is high enough, even with less volatility performances aren’t so bad without substantial losses.
At the moment the system is flat and exited a short position on 4 Sept. at $231.

I’d like to add that because bitcoin recently has been very boring from now on there will be updates about Currencies, Equities and Gold, all instruments that i trade regularly with my btc broker since September 2012.


7 thoughts on “Technical update: Consolidation Breakout Trading System

  1. Arthur

    Hi Enky, say that again… Bitcoin boring… Great idea though, to write about trading with a broader scope. Would you be willing to add silver to that list? It just happened that I bought a monsterbox of Philharmonics on August 26th, when the Comex silver price hit $13.80/ounce. In fact it went slightly lower, but I grabbed the box at forementioned price + some market premium of course. That specific day, a 6 year low in the silver price was reached, if I’m right.

    Anyway, good to see you again, keep up the good work!

    1. Enky

      Thanks! Remember that i post on twitter weekly updates every monday.
      I think that the bear market in silver is over. Support is at 13.50

      1. Arthur

        Yup, I’m following you on Twitter since a long time already. 🙂

        Thanks for the silver update, I had the same idea. I’m hoping it will perform well the upcoming years, alongside a bear period for stocks and the dollar. Let’s see how it plays out, same for bitcoin (and Ethereum and Safecoin, for that matter). At the moment only my Ethereum is doing well, currently around tenfold my investment.

  2. Christian A

    Enky, do you always look at daily charts exclusively or do you sometimes take other (shorter time frames) into account as well; and why?

    Thanks in advance for your insight!

    1. Enky

      With btc it doesn’t make too much sense to look a hourly chart, it’s an illiquid asset thus very noisy at lower time frames. I stopped looking shorter time frames with btc

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