Adrian Reid explains how to backtest crypto trading systems when historical data is scarce. He recommends simple, robust daily and weekly trend-following or mean-reversion rules with breakout stops, tested across a few accelerated market cycles. Complex systems requiring deep historical patterns won't work in crypto yet.
I think you need to be careful. I have actually, I do trade daily crypto systems and we've got data back to 2014, 2015 for that. And there's several bull bear cycles that we've been through now. So, you know, my approach for crypto is I still trade daily charts. I even have a weekly crypto system if you can believe it. It works amazing.
And the systems are designed to be what I call fail safe. Now fail safe means it doesn't really matter what happens in the market, they're not going to blow up. There's always something that will get you out, get you to cash. There's always something that will get you in to the big move. You know, I'm not looking for very precise patterns that need huge amounts of data to prove that they're, they're real. They're very blunt systems. And by making them simple, blunt, but very robust, then you can back test with, with less data. I think with crypto because the market is so accelerated compared to stocks, you know, the bull bear cycles are much faster than the typical stock market or at least in the past they have been. That means as long as you've got a few cycles then you can back test a simple system and build confidence in it. But if you want to have a very complicated patent based system or a seasonality type system in crypto, there's probably not enough data to, to validate it yet on a daily chart. But a blunt trend following system, breakout stop, loss trailing stop or mean reversion system with a profit target, you can get plenty of trades over plenty of market cycles. And I feel, you know, build confidence in.
Sam.
