Bitcoin trading: Momentum strategies with different moving averages By Cointelegraph


Bitcoin trading: Momentum strategies with different moving averages

One of the simplest strategies for trading cryptocurrencies involves the application of moving averages (MA). The basic premise is that if the price of an asset is above its moving average for a certain number of days, this is considered a buy signal. Once it falls below its moving average, the asset is sold, and a cash position is maintained until the price crosses the moving average again in the upper direction.

Cointelegraph Consulting’s latest bi-weekly newsletter issue looks at the many ways moving averages can be tweaked to catch price swings. Using Coin Metrics’ price data, this analysis is broken down into four parts. The first part uses trading strategies for different simple moving averages (SMA) — i.e., equal weighting of all past prices within the specified time window. The second part of this analysis looks at a specific form of moving average, the exponential moving average (EMA), where the weight of the more recent periods increases exponentially.