Can ETH's historical hourly volatility be used directly as the maximum loss or stop-loss distance? I wouldn't use it that way; it's just a measure of dispersion for returns over this period.
For the 1-hour candles from Oct 30, 20:00 to Oct 31, 20:00 UTC, the 24 closing prices give 23 consecutive returns, with a sample standard deviation of about 0.166%. The worst hourly close-to-close drop was about 0.274%, already more than one standard deviation.
The sample is too short, and the worst observed value is not a ceiling for future losses. It also doesn't include intrahour volatility. Stop-loss levels should also account for strategy invalidation and your loss budget, and a price touching your stop doesn't guarantee execution as planned.
This content may generate Binance Creator Rewards or trading commissions; rewards are not guaranteed.
AI-assisted content; data from official Binance futures market data.
For the 1-hour candles from Oct 30, 20:00 to Oct 31, 20:00 UTC, the 24 closing prices give 23 consecutive returns, with a sample standard deviation of about 0.166%. The worst hourly close-to-close drop was about 0.274%, already more than one standard deviation.
The sample is too short, and the worst observed value is not a ceiling for future losses. It also doesn't include intrahour volatility. Stop-loss levels should also account for strategy invalidation and your loss budget, and a price touching your stop doesn't guarantee execution as planned.
This content may generate Binance Creator Rewards or trading commissions; rewards are not guaranteed.
AI-assisted content; data from official Binance futures market data.
