CoinCharted

What after your first simulation?

                                                              

                  

Congratulations on making your first cryptocurrency simulation.

But you have to take a step back and start thinking that you can use coincharted to actually make a profit in the cryptocurrency market. As you can see, you can simply go to “Create a Model and Forecast”; Every day and set your own rules “on the go”.

For example: one day you will accept predictions from models with an error of 0.3% and the other day you will accept predictions from models with an error of 10%. However, if you do this you will be like cryptocurrency traders without a fixed strategy. Imagine that you trade Bitcoin today based on MACD only, and then tomorrow you trade based on RSI only, you wouldn’t do that, would you? So in order to have a profitable cryptocurrency trading strategy in the long run, you will need to use the “Trading Strategy Simulator” service.

 First: A trading strategy is a set of rules or conditions that you set for yourself and that determine when to make a buy, sell or wait decision.

For example: when using traditional technical analysis of currencies you may decide to use Stochastic (14.3) and buy only if the fast %K crosses above the slow %D line and sell only if the fast %K crosses below the slow %D line or decide not to trade in Any digital currency if neither of the two happens.

In coincharted you also need to set your own rules for trading in cryptocurrencies, but let’s first talk about “what conditions really make a difference”: the first set of conditions is called “simulation accuracy limits”. As the name suggests, these values ​​describe how accurate the currency simulations are, and you can always see these values ​​after running any simulation in the predictions page. We will discuss in more detail these statistical values ​​in a later article on cryptocurrencies, but for now, you need to know that if you want an accurate simulation of Bitcoin prices, it must have the following conditions:

1-Average prediction error (MAPE) is low.

2-Low trend line value.

3-A high value for log .likelihood

The second category of conditions is “Signal Source.” These conditions specify how you want to generate a signal from the forecast data. coincharted provides 7-day forecasts for all simulations that use daily crypto price data.

So you can for example:

Consider only one day’s forecast and ignore the next 6 days, or you can consider the average forecast of the next 3 days and ignore the next 4 days, and so on.

The third set of conditions are “risk mitigation policies”:

Since currency price predictions cannot be calculated with complete accuracy, and because you may not be interested in very small changes in the price of a cryptocurrency, you may decide to buy only if the expected price movement is

big enough .

For example, you can ignore all buy signals when the price of Bitcoin tomorrow is expected to be 2% higher than the price of Bitcoin tomorrow.

Today while you decide to buy if the expected bitcoin price for tomorrow is more than 2% higher than today’s price.

What can a trading strategy simulation do for you?

The trading strategy simulator tells you

” how much you would have earned” Depending on the conditions you set for yourself to decide to buy or sell cryptocurrencies, or to maintain your position, this is also called a “trading strategy”. Here at coincharted, we believe that using a crypto trading strategy simulation is not optional. We believe that it is essential for the successful use of the AI ​​predictions that you can build here is to test different trading strategies (i.e. the different terms you can use to make your trading decisions in the crypto market) and stick to a specific trading strategy. For now, you can look at examples of trading strategies in the table on the “Trading Strategy Simulation” page; And try to repeat some of them. When you’re done, check out our next article to learn exactly how to build and test your first crypto market trading strategy.”

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