Profitable day trading Bitcoin futures following continuous bullish (bearish) candlesticks

Min-Yuh Day, Paoyu Huang, Yirung Cheng, Yin-Tzu Lin and Yensen Ni

Applied Economics Letters, 2022, vol. 29, issue 10, 947-954

Abstract: We explore the profitability of day trading Bitcoin futures following diverse consecutive 3 bullish (bearish) one-minute candlesticks and then adopt stop-loss or take-profit only as exits. We reveal that different from our cognition, adopting take-profit strategies would have a notable average positive profit per trade (APPT), which is robust by employing the upward trend out-of-sample data different from the downward trend in-sample data. We infer that such impressive findings might result from temporary rising (falling) prices likely manipulated for appealing to investors pursuing long (short) positions. As a result, investors may realize profit instead of suffering loss frequently by adopting take-profit exits since mean reversion might often occur after such manipulation. Moreover, we argue that stop-loss might be redundant for day trading such futures because stop-loss seems enclosed in the mechanism of day trading.

Date: 2022
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DOI: 10.1080/13504851.2021.1899115

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