5-min chart Bitcoin Trading Strategy with Parabolic SAR, RSI and Heikin Ashi candles

Updated: 12 April, 2022 seen 123

For the past two months, I've been experimenting with trading Bitcoin and Ethereum futures on the Deribit platform. So far I can report mixed success.

For most of the time, I was trading a 1-min chart, as it seemed to offer more trades, more excitement, yes it worked quite well, even profitable, but in the end, I always ended up blowing up my account, because of some open overnight trade e.t.c. For now, I can say 1-min candle charts are too noisy. 5-min candle charts take away some noise, at least I believe so. 

This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.

I stopped trading for a few weeks until one lovely Sunday afternoon sipping cappuccino at one of the posh Tbilisi restaurants I decided to give bitcoin trading another chance. Again I went to the 1-min charts and again I almost blew up my account. I watched a YouTube video about trading a 5-min chart with Parabolic SAR, RSI, and Heikin Ashi candles.

I decided to give it a try. After the first day of trading, I was really impressed. In this article, I'll share some notes from my trading setup.

Disclosure:  This article contains affiliate links to the deribit.com bitcoin futures trading website, by clicking on links on this page and by investing with deribit, I will earn affiliate income at no cost to you. Also, I'm not a financial advisor and I don't give you any advice, I'm just sharing my own experience. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset. 

Trading Bitcoin with Parabolic SAR, RSI and Heikin Ashi candles
Trading Bitcoin with Parabolic SAR, RSI, and Heikin Ashi candles

Chart setup:

  • timeframe: 5 min
  • candles: Heikin Ashi

Indicators:

  • Parabolic SAR: default
  • EMA: 200
  • RSI

I left default settings for Parabolic SAR and EMA, a little bit fine-tuned RSI (but in general you can leave it intact)

Entering trades:

enter trades only when all three parameters are met.

  1. Depending on a bullish or bearish pattern (bitcoin price above or under EMA 200). If Bitcoin trades above EMA 200 we enter buy trades only, if bitcoin trades under EMA 200, we short bitcoin. The yellow line in the above chart.
  2. Once we know the direction of the market, enter the trade after the parabolic SAR changes direction. For example, we short when a Parabolic Sar blue dot is above the candle
  3. Use RSI for confirmation, for shorting we use RSI under 50 to confirm our trade

I did 5 trades with shorting bitcoin using this strategy and to my surprise, all 5 were winning trades and in fact, were among some of my best trades so far

Bitcoin trading journal
Bitcoin trading journal

The Bottom Line

Seems that fewer trades with longer timeframes offer better results.