Beginner’s Guide to Profitable Price Prediction Strategies on BTCduels

March 5, 2024

Ever wished to turn your knowledge into a winning game strategy? On BTCduels, a social player-vs-player platform, you can see your predictions come to life and get handsomely rewarded. The rules are straightforward: just guess the direction of Bitcoin’s price and get paid if you are right.  

In our game, the emphasis is on openness: players compete against each other in 45 and 60-second rounds, with the winnings going to the participants whose predictions about Bitcoin’s price movement were most accurate.

In this guide, we’ll unveil a few secrets that will let you master Bitcoin’s price movements. It’s time to stop putting all your eggs in the lucky lottery basket and start using probability theory to your advantage.

Understanding Your Odds

The idea of a 50% win ratio in BTCduels is similar to a simple coin tossing: the odds of correctly predicting whether the price of Bitcoin will go up or down are just about equal. 

To understand the basics of probability theory concerning forecasting, you need to calculate the expected values, assess the risks and rewards, and assess the likelihood of events. The first thing you need to do is lay the groundwork for smart decision-making so that patterns and probabilities will allow you to study your chances of individual rounds.

Although predicting individual round outcomes in BTCduels may seem like catching lightning in a bottle, don’t let the unpredictability trick you! We promise that as you become more experienced over time, you’ll start noticing all those subtle patterns and probabilities. With these insights, you can spice up your trades for better long-term success.

The Basics of Probability Theory

Probability theory is a branch of mathematics that deals with the likelihood of events. In the context of BTCduels, probability theory is applied to assess the chances of different outcomes when predicting Bitcoin’s price movements during each round. It helps users understand the probability of specific events happening based on historical data, enabling them to make informed decisions. 

Understanding risk and reward is crucial when engaging in any form of guessing. In our case, risk refers to the potential of losing the wagered amount, while reward represents the potential profit. Calculating the expected value (EV) of a trade involves weighing the probability of winning against potential gains or losses.

Understanding Probability: BTCduels’ Practical Examples 

Key Premise: You’re trading on the price movement of Bitcoin within 45-second rounds on BTC Duels, using Matic as your currency. The win ratio is about 50%, similar to a coin toss, but strategic trades based on probability theory can enhance your chances.

Example 1: Making Informed Trades

You start with a bankroll of 100 Matic. You decide to trade 10 Matic on Bitcoin’s price going up in the next round.

• If you win, you get your 10 Matic back plus an additional 10 Matic (assuming a 1:1 payout ratio).
• If you lose, you lose your 10 Matic trade.

Let’s play out two rounds as an example:

• Round 1: Trade 10 Matic on a price increase, and you win. Bankroll is now 110 Matic.
• Round 2: Play 10 Matic on a price increase again, but this time you lose. Bankroll is back to 100 Matic.

Over these two rounds, your net gain is 0 Matic, illustrating the expected outcome over time with a 50% win ratio.

Using Probability to Your Advantage

The objective is to use bankroll management and strategic trading to potentially stay in the game longer and capitalize on winning streaks.

Starting with a bankroll of 100 Matic, you aim to make trades close to 10% of your current bankroll, considering the available trade sizes (5, 10, 15, 25, 50 Matic etc.) 

Strategy:

• Start with a bankroll of 100 Matic.
• Choose trades from the available options, aiming for close to 10% of your bankroll.

Execution:

• Round 1: Your starting bankroll is 100 Matic. The closest trade to 10% of your bankroll is 10 Matic.

Outcome if you win: you receive your 10 Matic back plus an additional 10 Matic (minimum 100% of your trade), for a total gain of 20 Matic.

New Bankroll after Winning: 100 Matic (starting) + 10 Matic (winnings) = 110 Matic.

• Round 2: With your new bankroll of 110 Matic, 10% would be 11 Matic, but you stick with the nearest available trade size, which is 10 Matic again.

Outcome if you lose: you subtract the lost trade from your bankroll.

New Bankroll after Losing: 110 Matic – 10 Matic (lost trade) = 100 Matic.

Example 2: Adjusting for Confidence Levels

If you notice a pattern or trend in Bitcoin’s price movement, you might adjust your trade size accordingly.

• Observation: Significant price drop in the last round.
• Action: Increase your next trade to 15% of your bankroll, playing on a price increase due to higher confidence in a rebound.

For example:

• Bankroll before the play: 100 Matic.
• Adjusted trade size: 15% of 100 Matic = 15 Matic.
• Outcome: If you win, your bankroll increases significantly and will be around 130 Matic, more than it would have with a standard 10% trade.

This strategy requires careful observation and discipline, as it involves adjusting your trade size based on perceived patterns or trends in the market.

Practical Example with Kelly Criterion

Suppose, after observing patterns on BTC Duels, you conclude that you have a 55% chance of winning a trade on Bitcoin’s price movement in the next 45-second round. Here’s how you could calculate the optimal trade size using the Kelly Criterion:

Winning Probability (W): 55% or 0.55

Losing Probability (L): 45% or 0.45

Odds (O): Assuming a 1:1 payout, the odds are 1.

The Kelly formula is:

(W\*O)−L / O

Plugging in your numbers:

(0.55\*1)−0.45 / 1 = 0.1

This means the Kelly Criterion suggests you should play 10% of your bankroll on each trade to maximize growth while minimizing risk.

If your bankroll is 100 Matic, a Kelly Criterion-based strategy suggests trading 10 Matic on your next move. This method dynamically adjusts to your bankroll size and perceived edge, ensuring you play more when conditions are favorable and less when they’re not.

Understanding Psychological Aspects

Beyond numbers and formulas, trading is also a psychological game. Two common biases are as follows.

Overconfidence Bias: After a series of wins, you might feel invincible and start making larger, riskier trades, assuming your winning streak will continue. This can quickly deplete your bankroll during an inevitable losing streak.

Gambler’s Fallacy: If you lose several rounds in a row, you might believe a win is “due” and increase your trades, thinking your luck has to change. However, each trade is independent, and previous outcomes don’t influence future ones.

Avoiding Psychological Pitfalls

There are at least three things you can do to combat these biases.

1. Stick to Your Strategy: Whether it’s a fixed percentage of your bankroll, the Kelly Criterion, or another method, having a disciplined approach helps mitigate emotional decision-making.

2. Set Limits: Decide in advance how much you’re willing to trade in a session, and stick to it. If you hit a losing streak, don’t chase losses; take a break and assess your strategy.

3. Keep a Log: Documenting your plays, outcomes, and thoughts can help you identify patterns in your trading behavior and adjust accordingly.

Advanced Trading: A Holistic Approach

Advanced trading on BTC Duels isn’t just about sophisticated mathematical formulas; it’s equally about understanding and managing your psychological biases. By integrating the Kelly Criterion into your trading strategy and staying vigilant against common cognitive biases, you can optimize your trade sizes and make more informed decisions, potentially leading to a more profitable and enjoyable trading experience. 

Remember, the goal is to enjoy the game responsibly while continuously refining your strategy for the best possible outcomes. 

Closing Tips

If you want to use probability theory in your BTCduels game plan, you must figure out how to manage your money and make good decisions. 

Here are some of the essential tips.

Effective Bankroll Management

• Allocate a specific portion of your funds (bankroll) for BTCduels’ predictions.
• You should not put all of your money on one trade in order to weather the inevitable volatility.

Consistent Percentage Trading

• To keep your bankroll in check, play a fixed percentage on each prediction.
• Using this method, you can lessen the blow of losing streaks and make the most of winning ones.

Adjusting Trade Sizes

• You should weigh the potential benefits and drawbacks of each prediction before deciding how much to wager. 
• When you are feeling confident, raise your trades; when you are feeling uncertain, lower them.

Discipline and Consistency

• Do not chase losses or get overconfident after trades; instead, remain committed to a well-planned strategy.
• A level head and lack of impulse control are hallmarks of a disciplined approach to the game.

You can improve your game experience on BTCduels and increase your chances of winning by applying these tips and using the principles of probability theory.

Have anything else in mind? We want to hear your thoughts, questions, and feedback. Let’s shape the future of crypto gaming together!