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B4100 - NW Trend Ribbon StrategyB4100 - NW Trend Ribbon Strategy: Adaptive Trend Following with Kernel Smoothing This strategy is a sophisticated trend-following system designed to identify and capitalize on sustained market trends. It combines a ribbon of custom-built moving averages with multiple layers of filtering and confirmation to generate high-probability entry and exit signals. It's highly customizable, allowing you to fine-tune its sensitivity and responsiveness to adapt to various market conditions and timeframes. What the Strategy Does: The NW Trend Ribbon Strategy aims to: Identify the prevailing trend: It uses a ribbon of five moving averages (MAs), each with configurable length and smoothing type, to visually represent and quantify the current market trend. Filter out noise and false signals: It employs several filters, including an RSI filter, a trend strength filter (based on the RSI of a selected MA), and a trend confirmation period, to reduce the likelihood of entering trades based on short-term fluctuations. Generate precise entry signals: Entry signals are triggered only when a specified number of MA crossovers occur, the RSI filter (optional) is satisfied, the trend strength filter (optional) is met, and the trend conditions have persisted for a user-defined confirmation period. Manage risk and protect profits: The strategy includes multiple exit options: Percentage Trailing Stop: A classic trailing stop that activates at a specified percentage profit and trails the price by a defined offset. ATR Trailing Stop: A volatility-based trailing stop that uses the Average True Range (ATR) to dynamically adjust the stop level. ATR Take Profit: A volatility-based take profit that uses the ATR to set a profit target. Hard Stop Loss: A fixed stop loss, either percentage-based or ATR-based, for maximum risk control. Control Trade Direction : Allow the user to decide whether they want to enter Long trades, short trades, or both. How It Works: The strategy's core logic revolves around these key components: Kernel-Smoothed Moving Averages: Instead of standard moving averages (SMA, EMA, etc.), this strategy uses *kernel smoothing*. This allows for more flexible and adaptive smoothing than traditional MAs. You can choose from three kernel types: Beta Kernel: This is the most versatile option. It allows you to control *positive* and *negative* lag independently using the `alpha` and `beta` parameters. This means you can make the MA react slower to price increases and faster to price decreases (or vice versa), which can be particularly useful in trending markets. Gaussian Kernel: A classic smoothing kernel that creates a bell-shaped weighting. The `bandwidth` parameter controls the width of the bell curve; a smaller bandwidth makes the MA more responsive. Epanechnikov Kernel: Similar to the Gaussian kernel, but with a slightly different shape. It also uses a `bandwidth` parameter. MA Ribbon: The five MAs form a "ribbon" on the chart. The alignment and relative positions of the MAs provide a visual indication of trend strength and direction. Crossover Detection: The strategy monitors the crossovers between consecutive MAs in the ribbon. You can specify how many crossovers are required to generate a potential signal. RSI Filter (Optional): This filter helps avoid entries during overextended market conditions. For long entries, the RSI must be below the oversold level; for short entries, it must be above the overbought level. Trend Strength Filter (Optional): This unique filter uses the RSI of one of the moving averages (you choose which one) to measure the *strength* of the trend. This helps to ensure that you're entering trades in the direction of a strong, established trend. Trend Confirmation: To further reduce false signals, the strategy requires that the entry conditions (MA crossovers, RSI, and trend strength) be met for a specified number of consecutive bars before a trade is actually triggered. Exit Logic: The strategy prioritizes exits in the following order: Hard Stop Loss, Trailing Stop (Percentage or ATR-based), and Take Profit (ATR-based). This ensures that losses are minimized and profits are protected. What Makes It Unique: This strategy stands out from other indicators and strategies due to several key features: Highly Customizable Kernel Smoothing: The use of kernel smoothing, especially the Beta kernel, provides a level of control over MA responsiveness that is not available with standard MAs. This allows for a much more adaptive and nuanced approach to trend following. Combined Trend Strength and Confirmation: The combination of the trend strength filter (using the RSI of an MA) and the trend confirmation period provides a robust filtering mechanism that goes beyond simple MA crossovers or RSI readings. This helps to filter out weak trends and whipsaws. Multiple, Prioritized Exit Options: The strategy's exit logic is sophisticated, offering a combination of fixed and dynamic stops and take profit levels. The prioritization ensures that the most conservative exit (hard stop) is triggered first, followed by the trailing stops, and finally the take profit. Comprehensive Input Grouping: All inputs have been sorted into groups that control certain aspects of the strategy. This allows users to easily and quickly locate and adjust inputs as they see fit. Trade Direction Control : Unlike many strategies, this one lets you independently enable or disable long and short trades. All-in-one trend system: This indicator combines multiple aspects needed for trading: entry signals, stop loss calculations, take profit calculations. In summary, the NW Trend Ribbon Strategy is a powerful and flexible trend-following system that combines the visual clarity of a moving average ribbon with the advanced filtering and risk management capabilities of kernel smoothing, RSI, trend strength, and multiple exit options. It's designed for traders who want a customizable and robust tool for identifying and trading sustained market trends.
Pine Script™ strategy
by B4100
Bollinger Bands Buy/SellBollinger Bands Overview Definition: Bollinger Bands are a technical analysis tool that consists of a middle band and two outer bands. The middle band is typically a simple moving average (SMA), while the outer bands are placed two standard deviations away from the SMA. Components Middle Band: Usually a 20-period SMA. Upper Band: Middle band + (2 x standard deviation). Lower Band: Middle band - (2 x standard deviation). Buy Signals Price Touches Lower Band: When the price touches or dips below the lower band, it may indicate that the asset is oversold and can signal a potential buy opportunity. Bullish Divergence: If the price makes a lower low while the indicator (like RSI or MACD) makes a higher low. This can signal a future price increase. Sell Signals Price Touches Upper Band: When the price touches or exceeds the upper band, it could suggest that the asset is overbought, signaling a potential sell opportunity. Bearish Divergence: When the price makes a higher high while the indicator makes a lower high. This might indicate a price drop in the near future. Trading Strategy Tips Avoid Trading in Ranges: In sideways markets, Bollinger Bands are often unreliable. Consider waiting for a breakout. Confirmation: Always look for additional confirmation through other indicators before making a trade decision.
Pine Script™ strategy
by atikulaysha
1
Long-Only MTF EMA Cloud StrategyOverview: The Long-Only EMA Cloud Strategy is a powerful trend-following strategy designed to help traders identify and capitalize on bullish market conditions. By utilizing an Exponential Moving Average (EMA) Cloud, this strategy provides clear and reliable signals for entering long positions when the market trend is favorable. The EMA cloud acts as a visual representation of the trend, making it easier for traders to make informed decisions. This strategy is ideal for traders who prefer to trade in the direction of the trend and focus exclusively on long positions. Key Features: EMA Cloud: The strategy uses two EMAs (short and long) to create a dynamic cloud. The cloud is bullish when the short EMA is above the long EMA, indicating a strong upward trend. The cloud is bearish when the short EMA is below the long EMA, indicating a downward trend or consolidation. Long Entry Signals: A long position is opened when the EMA cloud turns bullish, which occurs when the short EMA crosses above the long EMA. This crossover signals a potential shift in market sentiment from bearish to bullish, providing an opportunity to enter a long trade. Adjustable Timeframe: The EMA cloud can be calculated on the same timeframe as the chart or on a higher/lower timeframe for multi-timeframe analysis. This flexibility allows traders to adapt the strategy to their preferred trading style and time horizon. Risk Management: The strategy includes adjustable stop loss and take profit levels to help traders manage risk and lock in profits. Stop loss and take profit levels are calculated as a percentage of the entry price, ensuring consistency across different assets and market conditions. Alerts: Built-in alerts notify you when a long entry signal is generated, ensuring you never miss a trading opportunity. Alerts can be customized to suit your preferences, providing real-time notifications for potential trades. Visualization: The EMA cloud is plotted on the chart, providing a clear visual representation of the trend. Buy signals are marked with a green label below the price bar, making it easy to identify entry points. How to Use: Add the Script: Add the script to your chart in TradingView. Set EMA Lengths: Adjust the Short EMA Length and Long EMA Length in the settings to suit your trading style. For example, you might use a shorter EMA (e.g., 21) for more responsive signals or a longer EMA (e.g., 50) for smoother signals. Choose EMA Cloud Resolution: Select the EMA Cloud Resolution (timeframe) for the cloud calculation. You can choose the same timeframe as the chart or a different timeframe (higher or lower) for multi-timeframe analysis. Adjust Risk Management: Set the Stop Loss (%) and Take Profit (%) levels according to your risk tolerance and trading goals. For example, you might use a 1% stop loss and a 2% take profit for a 1:2 risk-reward ratio. Enable Alerts: Enable alerts to receive notifications for long entry signals. Alerts can be configured to send notifications via email, SMS, or other preferred methods. Monitor and Trade: Monitor the chart for buy signals and execute trades accordingly. Use the EMA cloud as a visual guide to confirm the trend direction before entering a trade. Ideal For: Trend-Following Traders: This strategy is perfect for traders who prefer to trade in the direction of the trend and capitalize on sustained price movements. Long-Only Traders: If you prefer to focus exclusively on long positions, this strategy provides a clear and systematic approach to identifying bullish opportunities. Multi-Timeframe Analysts: The adjustable EMA cloud resolution allows you to analyze trends across different timeframes, making it suitable for both short-term and long-term traders. Risk-Averse Traders: The inclusion of stop loss and take profit levels helps manage risk and protect your capital.
Pine Script™ strategy
by Charted_Trades
AZZAM KHALID 1H Comprehensive Trading StrategyEMA (Exponential Moving Average) for trend detection. RSI (Relative Strength Index) to identify overbought and oversold areas. ATR (Average True Range) to calculate dynamic stop loss and take profit. Reversal candlestick patterns such as: Hammer and Hanging Man Morning & Evening Star Shooting Star Clear buy and sell orders with: Clear entry and exit signals Dynamic stop loss and take profit by ATR Works on all timeframes.
Pine Script™ strategy
by azzamaljashami1
Short-Only MTF EMA Cloud StrategyOverview: The Short-Only EMA Cloud Strategy is a robust trend-following strategy designed to help traders identify and capitalize on bearish market conditions. By utilizing an Exponential Moving Average (EMA) Cloud, this strategy provides clear and reliable signals for entering short positions when the market trend is unfavorable. The EMA cloud acts as a visual representation of the trend, making it easier for traders to make informed decisions. This strategy is ideal for traders who prefer to trade in the direction of the trend and focus exclusively on short positions. Key Features: EMA Cloud: The strategy uses two EMAs (short and long) to create a dynamic cloud. The cloud is bearish when the short EMA is below the long EMA, indicating a strong downward trend. The cloud is bullish when the short EMA is above the long EMA, indicating an upward trend or consolidation. Short Entry Signals: A short position is opened when the EMA cloud turns bearish, which occurs when the short EMA crosses below the long EMA. This crossover signals a potential shift in market sentiment from bullish to bearish, providing an opportunity to enter a short trade. Adjustable Timeframe: The EMA cloud can be calculated on the same timeframe as the chart or on a higher/lower timeframe for multi-timeframe analysis. This flexibility allows traders to adapt the strategy to their preferred trading style and time horizon. Risk Management: The strategy includes adjustable stop loss and take profit levels to help traders manage risk and lock in profits. Stop loss and take profit levels are calculated as a percentage of the entry price, ensuring consistency across different assets and market conditions. Alerts: Built-in alerts notify you when a short entry signal is generated, ensuring you never miss a trading opportunity. Alerts can be customized to suit your preferences, providing real-time notifications for potential trades. Visualization: The EMA cloud is plotted on the chart, providing a clear visual representation of the trend. Sell signals are marked with a red label above the price bar, making it easy to identify entry points. How to Use: Add the Script: Add the script to your chart in TradingView. Set EMA Lengths: Adjust the Short EMA Length and Long EMA Length in the settings to suit your trading style. For example, you might use a shorter EMA (e.g., 21) for more responsive signals or a longer EMA (e.g., 50) for smoother signals. Choose EMA Cloud Resolution: Select the EMA Cloud Resolution (timeframe) for the cloud calculation. You can choose the same timeframe as the chart or a different timeframe (higher or lower) for multi-timeframe analysis. Adjust Risk Management: Set the Stop Loss (%) and Take Profit (%) levels according to your risk tolerance and trading goals. For example, you might use a 1% stop loss and a 2% take profit for a 1:2 risk-reward ratio. Enable Alerts: Enable alerts to receive notifications for short entry signals. Alerts can be configured to send notifications via email, SMS, or other preferred methods. Monitor and Trade: Monitor the chart for sell signals and execute trades accordingly. Use the EMA cloud as a visual guide to confirm the trend direction before entering a trade. Ideal For: Trend-Following Traders: This strategy is perfect for traders who prefer to trade in the direction of the trend and capitalize on sustained price movements. Short-Only Traders: If you prefer to focus exclusively on short positions, this strategy provides a clear and systematic approach to identifying bearish opportunities. Multi-Timeframe Analysts: The adjustable EMA cloud resolution allows you to analyze trends across different timeframes, making it suitable for both short-term and long-term traders. Risk-Averse Traders: The inclusion of stop loss and take profit levels helps manage risk and protect your capital.
Pine Script™ strategy
by Charted_Trades
EMA MACD Long Scalper5 EMA & 20 EMA Cross-Up with MACD Histogram – Bullish Scalping Strategy This scalping strategy leverages the 5 EMA (Exponential Moving Average) crossing above the 20 EMA as the primary signal for a bullish trade. The MACD histogram serves as a confirmation indicator to increase the probability of success by ensuring momentum aligns with the trade direction. ________________________________________ Timeframe & Market Selection • Best suited for lower timeframes (3-minute, 5-minute, or 15-minute charts) to capture quick intraday moves. • Works well in highly liquid assets such as large-cap stocks, or crypto with high volatility (e.g., BTC/USDT, NASDAQ 100, SPY). • Ideal during high-volume trading hours. ________________________________________ Indicators Setup 1. 5 EMA (Fast Moving Average) – Short-term trend filter. 2. 20 EMA (Slow Moving Average) – Medium-term trend filter. 3. MACD (12, 26, 9) Histogram Only – Measures momentum strength.________________________________________ Entry Criteria (Bullish Confluence for a Long Trade) 1. 5 EMA Crosses Above the 20 EMA o The fast EMA moving above the slow EMA signals a potential short-term uptrend. o The EMAs should not be flat; rather, they should be sloping upwards to indicate a trend forming. 2. MACD Histogram Goes from Negative to Positive o This confirms increasing bullish momentum. o Ideally, the first positive histogram bar appears after a series of negative bars. o The MACD line should also be crossing above the signal line or showing signs of strength. 3. Price Pullback into EMAs and Bounces Off Support o Avoid chasing the initial breakout; instead, wait for a minor pullback where price holds above the EMAs. o A bullish candle (e.g., hammer, engulfing, or strong close) confirms continuation. 4. Increased Volume on the Breakout Candle o A spike in volume supports a strong move. o If volume is low, the move might lack follow-through. ________________________________________ Entry Execution • Entry Trigger: Once price pulls back and holds above the 5 EMA after the cross-up, enter on the next bullish candle close. • Order Type: Market order for instant execution or a limit order near the EMAs. • Confirmation: Ensure the MACD histogram remains positive before entering. ________________________________________ Stop Loss & Risk Management • Stop-Loss Placement: o Conservative: Below the most recent swing low. o Aggressive: Below the 20 EMA if structure is strong. • Risk-Reward Ratio (RRR): o Aim for at least 1.5:1 or 2:1 RRR to ensure profitability over multiple trades. ________________________________________ Exit Strategy (Take Profit & Trade Management) 1. First Take Profit (Partial Exit): o At 1:1 RRR, close 50% of the position to secure profit and move stop-loss to breakeven. 2. Final Take Profit: o When price shows exhaustion, such as multiple small candles or bearish divergence on MACD. o Strong resistance levels or psychological price points. 3. Trailing Stop Option: o Move the stop loss below the 5 EMA as long as price trends upwards. o If price closes below 5 EMA, consider closing the trade. ________________________________________ Example Trade Execution • Timeframe: 3-minute chart • Stock: SPY • Price Action: Price consolidates, then 5 EMA crosses above 20 EMA. • MACD Confirmation: Histogram flips positive after being negative. • Volume Spike: Breakout candle closes above EMAs with increasing volume. • Entry: Market order at $455.00 • Stop Loss: Below 20 EMA at $454.50 (-$0.50 risk) • Take Profit 1: $455.75 (1:1 RRR, close 50%) • Take Profit 2: $456.50 (Final exit) ________________________________________ Additional Considerations ✅ Best Market Conditions: Trending markets or breakouts after consolidation. ❌ Avoid Choppy Markets: If price repeatedly crosses EMAs without direction, stay out. 🔁 Backtesting & Optimization: Test on historical data to refine entry/exit rules. ________________________________________ Conclusion This strategy combines moving average crossovers with MACD momentum to identify high-probability scalping opportunities. By waiting for a pullback and confirming with volume, traders can improve their win rate and risk management.
Pine Script™ strategy
by StonkCartographer
TMA StrategyThe **TMA Strategy** is a trend-following strategy that leverages **Smoothed Moving Averages (SMMA)** and **candlestick patterns** to identify high-probability trading opportunities. It is designed for traders who want to capture strong trends while minimizing noise from short-term fluctuations. **Key Features:** ✔ **Multiple Smoothed Moving Averages (SMMA):** Uses 21, 50, 100, and 200-period SMMAs to identify market trends and key support/resistance zones. ✔ **Candlestick Pattern Confirmation:** Incorporates **3-line strike** and **engulfing candle** patterns to confirm trade entries. ✔ **Dynamic Trend Filter:** A **2-period EMA** ensures that trades align with the dominant trend, reducing false signals. ✔ **Customizable Session Filter:** Allows users to enable/disable trading within specific market sessions (New York, London, Tokyo, etc.), ensuring trades are executed only during high-liquidity hours. ✔ **Risk Management:** Uses predefined exit conditions based on EMA/SMMA crossovers to lock in profits and minimize losses. **Trading Logic:** 📌 **Long Entry:** - Bullish Engulfing or 3-Line Strike pattern appears. - Price is above the 200 SMMA. - 2 EMA confirms an uptrend. - Trade executes if session filter allows. 📌 **Short Entry:** - Bearish Engulfing or 3-Line Strike pattern appears. - Price is below the 200 SMMA. - 2 EMA confirms a downtrend. - Trade executes if session filter allows. 📌 **Exit Conditions:** - Long trades exit when EMA(2) crosses **below** SMMA(200). - Short trades exit when EMA(2) crosses **above** SMMA(200). **Ideal Markets & Timeframes:** ✅ Best suited for **Forex, Stocks, and Crypto** markets. ✅ Works well on **higher timeframes (15m, 1H, 4H, Daily)** for stronger trend confirmation. 📢 **Disclaimer:** This strategy is for educational purposes only. Backtest results do not guarantee future performance. Always use proper risk management and test in a demo account before live trading. 🚀 **Try the TMA Strategy now and enhance your trend-following approach!**
Pine Script™ strategy
by PRIDELEGENX005
TEMA OBOS Strategy PakunTEMA OBOS Strategy Overview This strategy combines a trend-following approach using the Triple Exponential Moving Average (TEMA) with Overbought/Oversold (OBOS) indicator filtering. By utilizing TEMA crossovers to determine trend direction and OBOS as a filter, it aims to improve entry precision. This strategy can be applied to markets such as Forex, Stocks, and Crypto, and is particularly designed for mid-term timeframes (5-minute to 1-hour charts). Strategy Objectives Identify trend direction using TEMA Use OBOS to filter out overbought/oversold conditions Implement ATR-based dynamic risk management Key Features 1. Trend Analysis Using TEMA Uses crossover of short-term EMA (ema3) and long-term EMA (ema4) to determine entries. ema4 acts as the primary trend filter. 2. Overbought/Oversold (OBOS) Filtering Long Entry Condition: up > down (bullish trend confirmed) Short Entry Condition: up < down (bearish trend confirmed) Reduces unnecessary trades by filtering extreme market conditions. 3. ATR-Based Take Profit (TP) & Stop Loss (SL) Adjustable ATR multiplier for TP/SL Default settings: TP = ATR × 5 SL = ATR × 2 Fully customizable risk parameters. 4. Customizable Parameters TEMA Length (for trend calculation) OBOS Length (for overbought/oversold detection) Take Profit Multiplier Stop Loss Multiplier EMA Display (Enable/Disable TEMA lines) Bar Color Change (Enable/Disable candle coloring) Trading Rules Long Entry (Buy Entry) ema3 crosses above ema4 (Golden Cross) OBOS indicator confirms up > down (bullish trend) Execute a buy position Short Entry (Sell Entry) ema3 crosses below ema4 (Death Cross) OBOS indicator confirms up < down (bearish trend) Execute a sell position Take Profit (TP) Entry Price + (ATR × TP Multiplier) (Default: 5) Stop Loss (SL) Entry Price - (ATR × SL Multiplier) (Default: 2) TP/SL settings are fully customizable to fine-tune risk management. Risk Management Parameters This strategy emphasizes proper position sizing and risk control to balance risk and return. Trading Parameters & Considerations Initial Account Balance: $7,000 (adjustable) Base Currency: USD Order Size: 10,000 USD Pyramiding: 1 Trading Fees: $0.94 per trade Long Position Margin: 50% Short Position Margin: 50% Total Trades (M5 Timeframe): 128 Deep Test Results (2024/11/01 - 2025/02/24)BTCUSD-5M Total P&L：+1638.20USD Max equity drawdown：694.78USD Total trades：128 Profitable trades:44.53 Profit factor:1.45 These settings aim to protect capital while maintaining a balanced risk-reward approach. Visual Support TEMA Lines (Three EMAs) Trend direction is indicated by color changes (Blue/Orange) ema3 (short-term) and ema4 (long-term) crossover signals potential entries OBOS Histogram Green → Strong buying pressure Red → Strong selling pressure Blue → Possible trend reversal Entry & Exit Markers Blue Arrow → Long Entry Signal Red Arrow → Short Entry Signal Take Profit / Stop Loss levels displayed Strategy Improvements & Uniqueness This strategy is based on indicators developed by "l_lonthoff" and "jdmonto0", but has been significantly optimized for better entry accuracy, visual clarity, and risk management. Enhanced Trend Identification with TEMA Detects early trend reversals using ema3 & ema4 crossover Reduces market noise for a smoother trend-following approach Improved OBOS Filtering Prevents excessive trading Reduces unnecessary risk exposure Dynamic Risk Management with ATR-Based TP/SL Not a fixed value → TP/SL adjusts to market volatility Fully customizable ATR multiplier settings (Default: TP = ATR × 5, SL = ATR × 2) Summary The TEMA + OBOS Strategy is a simple yet powerful trading method that integrates trend analysis and oscillators. TEMA for trend identification OBOS for noise reduction & overbought/oversold filtering ATR-based TP/SL settings for dynamic risk management Before using this strategy, ensure thorough backtesting and demo trading to fine-tune parameters according to your trading style.
Pine Script™ strategy
by PakunFX
EMA 5 Alert Candle ShortThe 5 EMA (Exponential Moving Average) Strategy is a simple yet effective trading strategy that helps traders identify short-term trends and potential entry and exit points. This strategy is widely used in intraday and swing trading, particularly in forex, stocks, and crypto markets. Components of the 5 EMA Strategy 5 EMA: A fast-moving average that reacts quickly to price movements. 15-minute or 1-hour timeframe (commonly used, but adaptable to other timeframes). Candlestick Patterns: To confirm entry signals. How the 5 EMA Strategy Works Buy (Long) Setup: Price Above the 5 EMA: The price should be trading above the 5 EMA. Pullback to the 5 EMA: A minor retracement or consolidation near the 5 EMA. Bullish Candlestick Confirmation: A bullish candle (e.g., engulfing or pin bar) forms near the 5 EMA. Entry: Enter a long trade at the close of the bullish candle. Stop Loss: Place below the recent swing low or 5-10 pips below the 5 EMA. Take Profit: Aim for a risk-reward ratio of at least 1:2 or trail the stop using a higher EMA (e.g., 10 or 20 EMA). Sell (Short) Setup: Price Below the 5 EMA: The price should be trading below the 5 EMA. Pullback to the 5 EMA: A small retracement towards the 5 EMA. Bearish Candlestick Confirmation: A bearish candle (e.g., engulfing or pin bar) near the 5 EMA. Entry: Enter a short trade at the close of the bearish candle. Stop Loss: Place above the recent swing high or 5-10 pips above the 5 EMA. Take Profit: Aim for a 1:2 risk-reward ratio or use a trailing stop. Additional Filters for Better Accuracy Higher Timeframe Confirmation: Check the trend on a higher timeframe (e.g., 1-hour or 4-hour). Volume Confirmation: Enter trades when volume is increasing. Avoid Sideways Market: Use the strategy only when the market is trending. Advantages of the 5 EMA Strategy ✔️ Simple and easy to use. ✔️ Works well in trending markets. ✔️ Helps traders capture short-term momentum. Disadvantages ❌ Less effective in choppy or sideways markets. ❌ Requires discipline in following stop-loss rules.
Pine Script™ strategy
by sachinsachhus58
2
IBS (Internal Bar Strength) Trading Strategy for SPY and NDQImplementation by AlgoTradeKit Overview The IBS Trading Strategy is a daily bars long-only trading system, based on the concept of Internal Bar Strength (IBS). The strategy aims to identify potential reversals by monitoring how the previous bar’s close positions itself within its high-low range. It is suitable for stock and US indices. The default parameters are optimized for SPY/SPX and NDQ/QQQ Strategy Concept The Internal Bar Strength (IBS) is calculated using the formula: IBS = (Previous Close - Previous Low) / (Previous High - Previous Low) This value always lies between 0 and 1. An IBS value below 0.2 is typically interpreted as an oversold condition, while a value above 0.9 suggests an overbought state. Trading Rules - Long Entry : - Condition 1 : IBS is below the user-defined entry threshold (default is 0.2). - Condition 2 : The current price is above an N-period Exponential Moving Average (EMA) (default period is 252). - Note : You can disable the EMA condition by setting the EMA period to 0. - Long Exit - The position is closed when IBS rises above the user-defined exit threshold (default is 0.9). Customization Options - IBS Entry Threshold : Adjust to set the sensitivity for entering a long trade based on oversold conditions. - IBS Exit Threshold : Customize to define the exit point when the market becomes overbought. - EMA Period : Set the lookback period for the EMA to align with your trend bias; disable this condition by setting the period to 0. Risk Management & Trading Considerations - Designed for daily charts, the strategy captures higher timeframe trends and minimizes noise. - The entry and exit conditions are straightforward, aiming to avoid over-trading while letting clear signals dictate trade management. - Always use proper risk management techniques and test the strategy thoroughly on historical data and in a simulated environment before applying it in live markets. Disclaimer This strategy is for educational and informational purposes only and does not constitute financial advice. Trading involves risk, and past performance is not indicative of future results. Always conduct your own research and consider your risk tolerance before making any trades.
Pine Script™ strategy
by Algotradekit
2
Neon Momentum Waves StrategyIntroduction The Neon Momentum Waves Strategy is a momentum-based indicator designed to help traders visualize potential shifts in market direction. It builds upon a MACD-style calculation while incorporating an enhanced visual representation of momentum waves. This approach may assist traders in identifying areas of increasing or decreasing momentum, potentially aligning with market trends or reversals. How It Works This strategy is based on a modified MACD (Moving Average Convergence Divergence) method, calculating the difference between two Exponential Moving Averages (EMAs). The momentum wave represents this difference, while an additional smoothing line (signal line) helps highlight potential momentum shifts. Key Components: Momentum Calculation: Uses a fast EMA (12-period) and a slow EMA (26-period) to measure short-term and long-term momentum. A signal line (20-period EMA of the MACD difference) smooths fluctuations. The histogram (momentum wave) represents the divergence between the MACD value and the signal line. Interpreting Momentum Changes: Momentum Increasing: When the histogram rises above the zero line, it may indicate strengthening upward movement. Momentum Decreasing: When the histogram moves below the zero line, it may signal a weakening trend or downward momentum. Potential Exhaustion Points: Users can define custom threshold levels (default: ±10) to highlight when momentum is significantly strong or weak. Visual Enhancements: The neon glow effect is created by layering multiple plots with decreasing opacity, enhancing the clarity of momentum shifts. Aqua-colored waves highlight upward momentum, while purple waves represent downward momentum. Horizontal reference lines mark the zero line and user-defined thresholds to improve interpretability. How It Differs from Traditional Indicators Improved Visualization: Unlike standard MACD histograms, this approach provides clearer visual cues using a neon-style wave format. Customizable Thresholds: Rather than relying solely on MACD crossovers, users can adjust sensitivity settings to better suit their trading style. Momentum-Based Approach: The strategy is focused on visualizing shifts in momentum strength, rather than predicting price movements. Potential Use Cases Momentum Trend Awareness: Helps traders identify periods where momentum appears to be strengthening or fading. Market Structure Analysis: May complement other indicators to assess whether price action aligns with momentum changes. Flexible Timeframe Application: Can be used across different timeframes, depending on the trader’s strategy. Important Considerations This strategy is purely momentum-based and does not incorporate volume, fundamental factors, or price action confirmation. Momentum shifts do not guarantee price direction changes—they should be considered alongside broader market context. The strategy may perform differently in trending vs. ranging markets, so adjustments in sensitivity may be needed. Risk management is essential—traders should apply proper stop-losses and position sizing techniques in line with their risk tolerance. Conclusion The Neon Momentum Waves Strategy provides a visually enhanced method of tracking momentum, allowing traders to observe potential changes in market strength. While not a predictive tool, it serves as a complementary indicator that may help traders in momentum-based decision-making. As with any technical tool, it should be used as part of a broader strategy that considers multiple factors in market analysis.
Pine Script™ strategy
by Brian_Heady
[3Commas] HA & MAHA & MA 🔷What it does: This tool is designed to test a trend-following strategy using Heikin Ashi candles and moving averages. It enters trades after pullbacks, aiming to let profits run once the risk-to-reward ratio reaches 1:1 while securing the position. 🔷Who is it for: It is ideal for traders looking to compare final results using fixed versus dynamic take profits by adjusting parameters and trade direction—a concept applicable to most trading strategies. 🔷How does it work: We use moving averages to define the market trend, then wait for opposite Heikin Ashi candles to form against it. Once these candles reverse in favor of the trend, we enter the trade, using the last swing created by the pullback as the stop loss. By applying the breakeven ratio, we protect the trade and let it run, using the slower moving average as a trailing stop. A buy signal is generated when: The previous candle is bearish (ha_bear ), indicating a pullback. The fast moving average (ma1) is above the slow moving average (ma2), confirming an uptrend. The current candle is bullish (ha_bull), showing trend continuation. The Heikin Ashi close is above the fast moving average (ma1), reinforcing the bullish bias. The real price close is above the open (close > open), ensuring bullish momentum in actual price data. The signal is confirmed on the closed candle (barstate.isconfirmed) to avoid premature signals. dir is undefined (na(dir)), preventing repeated signals in the same direction. A sell signal is generated when: The previous candle is bullish (ha_bull ), indicating a temporary upward move before a potential reversal. The fast moving average (ma1) is below the slow moving average (ma2), confirming a downtrend. The current candle is bearish (ha_bear), showing trend continuation to the downside. The Heikin Ashi close is below the fast moving average (ma1), reinforcing bearish pressure. The real price close is below the open (close < open), confirming bearish momentum in actual price data. The signal is confirmed after the candle closes (barstate.isconfirmed), avoiding premature entries. dir is undefined (na(dir)), preventing consecutive signals in the same direction. In simple terms, this setup looks for trend continuation after a pullback, confirming entries with both Heikin Ashi and real price action, supported by moving average alignment to avoid false signals. If the price reaches a 1:1 risk-to-reward ratio, the stop will be moved to the entry point. However, if the slow moving average surpasses this level, it will become the new exit point, acting as a trailing stop 🔷Why It’s Unique Easily visualizes the benefits of using risk-to-reward ratios when trading instead of fixed percentages. Provides a simple and straightforward approach to trading, embracing the "keep it simple" concept. Offers clear visualization of DCA Bot entry and exit points based on user preferences. Includes an option to review the message format before sending signals to bots, with compatibility for multi-pair and futures contract pairs. 🔷 Considerations Before Using the Indicator ⚠️Very important: The indicator must be used on charts with real price data, such as Japanese candlesticks, line charts, etc. Do not use it on Heikin Ashi charts, as this may lead to unrealistic results. 🔸Since this is a trend-following strategy, use it on timeframes above 4 hours, where market noise is reduced and trends are clearer. Also, carefully review the statistics before using it, focusing on pairs that tend to have long periods of well-defined trends. 🔸Disadvantages: False Signals in Ranges: Consolidating markets can generate unreliable signals. Lagging Indicator: Being based on moving averages, it may react late to sudden price movements. 🔸Advantages: Trend Focused: Simplifies the identification of trending markets. Noise Reduction: Uses Heikin Ashi candles to identify trend continuation after pullbacks. Broad Applicability: Suitable for forex, crypto, stocks, and commodities. 🔸The strategy provides a systematic way to analyze markets but does not guarantee successful outcomes. Use it as an additional tool rather than relying solely on an automated system. Trading results depend on various factors, including market conditions, trader discipline, and risk management. Past performance does not ensure future success, so always approach the market cautiously. 🔸Risk Management: Define stop-loss levels, position sizes, and profit targets before entering any trade. Be prepared for potential losses and ensure your approach aligns with your overall trading plan. 🔷 STRATEGY PROPERTIES Symbol: BINANCE:BTCUSDT (Spot). Timeframe: 4h. Test Period: All historical data available. Initial Capital: 10000 USDT. Order Size per Trade: 1% of Capital, you can use a higher value e.g. 5%, be cautious that the Max Drawdown does not exceed 10%, as it would indicate a very risky trading approach. Commission: Binance commission 0.1%, adjust according to the exchange being used, lower numbers will generate unrealistic results. By using low values e.g. 5%, it allows us to adapt over time and check the functioning of the strategy. Slippage: 5 ticks, for pairs with low liquidity or very large orders, this number should be increased as the order may not be filled at the desired level. Margin for Long and Short Positions: 100%. Indicator Settings: Default Configuration. MA1 Length: 9. MA2 Length: 18. MA Calculations: EMA. Take Profit Ratio: Disable. Ratio 1:4. Breakeven Ratio: Enable, Ratio 1:1. Strategy: Long & Short. 🔷 STRATEGY RESULTS ⚠️Remember, past results do not guarantee future performance. Net Profit: +324.88 USDT (+3.25%). Max Drawdown: -81.18 USDT (-0.78%). Total Closed Trades: 672. Percent Profitable: 35.57%. Profit Factor: 1.347. Average Trade: +0.48 USDT (+0.48%). Average # Bars in Trades: 13. 🔷 HOW TO USE 🔸 Adjust Settings: The default values—MA1 (9) and MA2 (18) with EMA calculation—generally work well. However, you can increase these values, such as 20 and 40, to better identify stronger trends. 🔸 Choose a Symbol that Typically Trends: Select an asset that tends to form clear trends. Keep in mind that the Strategy Tester results may show poor performance for certain assets, making them less suitable for sending signals to bots. 🔸 Experiment with Ratios: Test different take profit and breakeven ratios to compare various scenarios—especially to observe how the strategy performs when only the trade is protected. 🔸This is an example of how protecting the trade works: once the price moves in favor of the position with a 1:1 risk-to-reward ratio, the stop loss is moved to the entry price. If the Slow MA surpasses this level, it will act as a trailing stop, aiming to follow the trend and maximize potential gains. 🔸In contrast, in this example, for the same trade, if we set a take profit at a 1:3 risk-to-reward ratio—which is generally considered a good risk-reward relationship—we can see how a significant portion of the upward move is left on the table. 🔸Results Review: It is important to check the Max Drawdown. This value should ideally not exceed 10% of your capital. Consider adjusting the trade size to ensure this threshold is not surpassed. Remember to include the correct values for commission and slippage according to the symbol and exchange where you are conducting the tests. Otherwise, the results will not be realistic. If you are satisfied with the results, you may consider automating your trades. However, it is strongly recommended to use a small amount of capital or a demo account to test proper execution before committing real funds. 🔸Create alerts to trigger the DCA Bot: Verify Messages: Ensure the message matches the one specified by the DCA Bot. Multi-Pair Configuration: For multi-pair setups, enable the option to add the symbol in the correct format. Signal Settings: Enable whether you want to receive long or short signals (Entry | TP | SL), copy and paste the the messages for the DCA Bots configured. Alert Setup: When creating an alert, set the condition to the indicator and choose "alert() function call only. Enter any desired Alert Name. Open the Notifications tab, enable Webhook URL, and paste the Webhook URL. For more details, refer to the section: "How to use TradingView Custom Signals". Finalize Alerts: Click Create, you're done! Alerts will now be sent automatically in the correct format. 🔷 INDICATOR SETTINGS MA 1: Fast MA Length MA 2: Slow MA Length MA Calc: MA's Calculations (SMA,EMA, RMA,WMA) TP Ratio: This is the take profit ratio relative to the stop loss, where the trade will be closed in profit. BE Ratio: This is the breakeven ratio relative to the stop loss, where the stop loss will be updated to breakeven or if the MA2 is greater than this level. Strategy: Order Type direction in which trades are executed. Use Custom Test Period: When enabled signals only works in the selected time window. If disabled it will use all historical data available on the chart. Test Start and End: Once the Custom Test Period is enabled, here you select the start and end date that you want to analyze. Check Messages: Enable the table to review the messages to be sent to the bot. Entry | TP | SL: Enable this options to send Buy Entry, Take Profit (TP), and Stop Loss (SL) signals. Deal Entry and Deal Exit : Copy and paste the message for the deal start signal and close order at Market Price of the DCA Bot. This is the message that will be sent with the alert to the Bot, you must verify that it is the same as the bot so that it can process properly so that it executes and starts the trade. DCA Bot Multi-Pair: You must activate it if you want to use the signals in a DCA Bot Multi-pair in the text box you must enter (using the correct format) the symbol in which you are creating the alert, you can check the format of each symbol when you create the bot. 👨🏻‍💻💭 We hope this tool helps enhance your trading. Your feedback is invaluable, so feel free to share any suggestions for improvements or new features you'd like to see implemented. __ The information and publications within the 3Commas TradingView account are not meant to be and do not constitute financial, investment, trading, or other types of advice or recommendations supplied or endorsed by 3Commas and any of the parties acting on behalf of 3Commas, including its employees, contractors, ambassadors, etc.
Pine Script™ strategy
by 3Commas
Boilerplate Configurable Strategy [Yosiet]This is a Boilerplate Code! Hello! First of all, let me introduce myself a little bit. I don't come from the world of finance, but from the world of information and communication technologies (ICT) where we specialize in data processing with the aim of automating it and eliminating all human factors and actors in the processes. You could say that I am an algotrader. That said, in my journey through trading in recent years I have understood that this world is often shown to be incomplete. All those who want to learn about trading only end up learning a small part of what it really entails, they only seek to learn how to read candlesticks. Therefore, I want to share with the entire community a fraction of what I have really understood it to be. As a computer scientist, the most important thing is the data, it is the raw material of our work and without data you simply cannot do anything. Entropy is simple: Data in -> Data is transformed -> Data out. The quality of the outgoing data will directly depend on the incoming data, there is no greater mystery or magic in the process. In trading it is no different, because at the end of the day it is nothing more than data. As we often say, if garbage comes in, garbage comes out. Most people focus on the results only, on the outgoing data, because in the end we all want the same thing, to make easy money. Very few pay attention to the input data, much less to the process. Now, I am not here to delude you, because there is no bigger lie than easy money, but I am here to give you a boilerplate code that will help you create strategies where you only have to concentrate on the quality of the incoming data. To the Point The code is a strategy boilerplate that applies the technique that you decide to customize for the criteria for opening a position. It already has the other factors involved in trading programmed and automated. 1. The Entry This section of the boilerplate is the one that each individual must customize according to their needs and knowledge. The code is offered with two simple, well-known strategies to exemplify how the code can be reused for your own benefits. For the purposes of this post on tradingview, I am going to use the simplest of the known strategies in trading for entries: SMA Crossing // SMA Cross Settings maFast = ta.sma(close, length) maSlow = ta.sma(open, length) The Strategy Properties for all cases published here: For Stock TSLA H1 From 01/01/2025 To 02/15/2025 For Crypto XMR-USDT 30m From 01/01/2025 To 02/15/2025 For Forex EUR-USD 5m From 01/01/2025 To 02/15/2025 But the goal of this post is not to sell you a dream, else to show you that the same Entry decision works very well for some and does not for others and with this boilerplate code you only have to think of entries, not exits. 2. Schedules, Days, Sessions As you know, there are an infinite number of markets that are susceptible to the sessions of each country and the news that they announce during those sessions, so the code already offers parameters so that you can condition the days and hours of operation, filter the best time parameters for a specific market and time frame. 3. Data Filtering The data offered in trading are numerical series presented in vectors on a time axis where an endless number of mathematical equations can be applied to process them, with matrix calculation and non-linear regressions being the best, in my humble opinion. 4. Read Fundamental Macroeconomic Events, News The boilerplate has integration with the tradingview SDK to detect when news will occur and offers parameters so that you can enable an exclusion time margin to not operate anything during that time window. 5. Direction and Sense In my experience I have found the peculiarity that the same algorithm works very well for a market in a time frame, but for the same market in another time frame it is only a waste of time and money. So now you can easily decide if you only want to open LONG, SHORT or both side positions and know how effective your strategy really is. 6. Reading the money, THE PURPOSE OF EVERYTHING The most important section in trading and the reason why many clients usually hire me as a financial programmer, is reading and controlling the money, because in the end everyone wants to win and no one wants to lose. Now they can easily parameterize how the money should flow and this is the genius of this boilerplate, because it is what will really decide if an algorithm (Indicator: A bunch of math equations) for entries will really leave you good money over time. 7. Managing the Risk, The Ego Destroyer Many trades, little money. Most traders focus on making money and none of them know about statistics and the few who do know something about it, only focus on the winrate. Well, with this code you can unlock what really matters, the true success criteria to be able to live off of trading: Profit Factor, Sortino Ratio, Sharpe Ratio and most importantly, will you really make money? 8. Managing Emotions Finally, the main reason why many lose money is because they are very bad at managing their emotions, because with this they will no longer need to do so because the boilerplate has already programmed criteria to chase the price in a position, cut losses and maximize profits. In short, this is a boilerplate code that already has the data processing and data output ready, you only have to worry about the data input. “And so the trader learned: the greatest edge was not in predicting the storm, but in building a boat that could not sink.” DISCLAIMER This post is intended for programmers and quantitative traders who already have a certain level of knowledge and experience. It is not intended to be financial advice or to sell you any money-making script, if you use it, you do so at your own risk.
Pine Script™ strategy
by yosietserga
CBC Strategy with Trend Confirmation & Separate Stop LossCBC Flip Strategy with Trend Confirmation and ATR-Based Targets This strategy is based on the CBC Flip concept taught by MapleStax and inspired by the original CBC Flip indicator by AsiaRoo. It focuses on identifying potential reversals or trend continuation points using a combination of candlestick patterns (CBC Flips), trend filters, and a time-based entry window. This approach helps traders avoid false signals and increase trade accuracy. What is a CBC Flip? The CBC Flip is a candlestick-based pattern that identifies moments when the market is likely to change direction or strengthen its trend. It checks for a shift in price behavior between consecutive candles, signaling a bullish (upward) or bearish (downward) move. However, not all flips are created equal! This strategy differentiates between Strong Flips and All Flips, allowing traders to choose between a more conservative or aggressive approach. Strong Flips vs. All Flips Strong Flips A Strong Flip is a high-probability setup that occurs only after liquidity is swept from the previous candle’s high or low. What is a liquidity sweep? This happens when the price briefly moves beyond the high or low of the previous candle, triggering stop-losses and trapping traders in the wrong direction. These sweeps often create fuel for the next move, making them powerful reversal signals. Examples: Long Setup: The price dips below the previous candle’s low (sweeping liquidity) and then closes higher, signaling a potential bullish move. Short Setup: The price moves above the previous candle’s high and then closes lower, signaling a potential bearish move. Why Use Strong Flips? They provide fewer signals, but the accuracy is generally higher. Ideal for trending markets where liquidity sweeps often mark key turning points. All Flips All Flips are less selective, offering both Strong Flips and additional signals without requiring a liquidity sweep. This approach gives traders more frequent opportunities but comes with a higher risk of false signals, especially in sideways markets. Examples: Long Setup: A CBC flip occurs without sweeping the previous low, but the trend direction is confirmed (slow EMA is still above VWAP). Short Setup: A CBC flip occurs without sweeping the previous high, but the trend is still bearish (slow EMA below VWAP). Why Use All Flips? Provides more frequent entries for active or aggressive traders. Works well in trending markets but requires caution during consolidation periods. How This Strategy Works The strategy combines CBC Flips with multiple filters to ensure better trade quality: Trend Confirmation: The slow EMA (20-period) must be positioned relative to the VWAP to confirm the overall trend direction. Long Trades: Slow EMA must be above VWAP (upward trend). Short Trades: Slow EMA must be below VWAP (downward trend). Time-Based Filter: Traders can specify trading hours to limit entries to a particular time window, helping avoid low-volume or high-volatility periods. Profit Target and Stop-Loss: Profit Target: Defined as a multiple of the 14-period ATR (Average True Range). For example, if the ATR is 10 points and the profit target multiplier is set to 1.5, the strategy aims for a 15-point profit. Stop-Loss: Uses a dynamic, candle-based stop-loss: Long Trades: The trade closes if the market closes below the low of two candles ago. Short Trades: The trade closes if the market closes above the high of two candles ago. This approach adapts to recent price behavior and protects against unexpected reversals. Customizable Settings Strong Flips vs. All Flips: Choose between a more selective or aggressive entry style. Profit Target Multiplier: Adjust the ATR multiplier to control the distance for profit targets. Entry Time Range: Define specific trading hours for the strategy. Indicators and Visuals Fast EMA (10-Period) – Black Line Slow EMA (20-Period) – Red Line VWAP (Volume-Weighted Average Price) – Orange Line Visual Labels: ▵ (Triangle Up) – Marks long entries (buy signals). ▿ (Triangle Down) – Marks short entries (sell signals). Credits CBC Flip Concept: Inspired by MapleStax, who teaches this concept. Original Indicator: Developed by AsiaRoo, this strategy builds on the CBC Flip framework with additional features for improved trade management. Risks and Disclaimer This strategy is for educational purposes only and does not constitute financial advice. Trading involves significant risk and may result in the loss of capital. Past performance does not guarantee future results. Use this strategy in a simulated environment before applying it to live trading.
Pine Script™ strategy
by PumpCTrader
Smart MA Crossover BacktesterSmart MA Crossover Backtester - Strategy Overview Strategy Name: Smart MA Crossover Backtester Published on: TradingView Applicable Markets: Works well on crypto (tested profitably on ETH) Strategy Concept The Smart MA Crossover Backtester is an improved Moving Average (MA) crossover strategy that incorporates a trend filter and an ATR-based stop loss & take profit mechanism for better risk management. It aims to capture trends efficiently while reducing false signals by only trading in the direction of the long-term trend. Core Components & Logic Moving Averages (MA) for Entry Signals Fast Moving Average (9-period SMA) Slow Moving Average (21-period SMA) A trade signal is generated when the fast MA crosses the slow MA. Trend Filter (200-period SMA) Only enters long positions if price is above the 200-period SMA (bullish trend). Only enters short positions if price is below the 200-period SMA (bearish trend). This helps in avoiding counter-trend trades, reducing whipsaws. ATR-Based Stop Loss & Take Profit Uses the Average True Range (ATR) with a multiplier of 2 to calculate stop loss. Risk-Reward Ratio = 1:2 (Take profit is set at 2x ATR). This ensures dynamic stop loss and take profit levels based on market volatility. Trading Rules ✅ Long Entry (Buy Signal): Fast MA (9) crosses above Slow MA (21) Price is above the 200 MA (bullish trend filter active) Stop Loss: Below entry price by 2× ATR Take Profit: Above entry price by 4× ATR ✅ Short Entry (Sell Signal): Fast MA (9) crosses below Slow MA (21) Price is below the 200 MA (bearish trend filter active) Stop Loss: Above entry price by 2× ATR Take Profit: Below entry price by 4× ATR Why This Strategy Works Well for Crypto (ETH)? 🔹 Crypto markets are highly volatile – ATR-based stop loss adapts dynamically to market conditions. 🔹 Long-term trend filter (200 MA) ensures trading in the dominant direction, reducing false signals. 🔹 Risk-reward ratio of 1:2 allows for profitable trades even with a lower win rate. This strategy has been tested on Ethereum (ETH) and has shown profitable performance, making it a strong choice for crypto traders looking for trend-following setups with solid risk management. 🚀
Pine Script™ strategy
by pratik-r
1
BTC Future Gamma-Weighted Momentum Model (BGMM)The BTC Future Gamma-Weighted Momentum Model (BGMM) is a quantitative trading strategy that utilizes the Gamma-weighted average price (GWAP) in conjunction with a momentum-based approach to predict price movements in the Bitcoin futures market. The model combines the concept of weighted price movements with trend identification, where the Gamma factor amplifies the weight assigned to recent prices. It leverages the idea that historical price trends and weighting mechanisms can be utilized to forecast future price behavior. Theoretical Background: 1. Momentum in Financial Markets: Momentum is a well-established concept in financial market theory, referring to the tendency of assets to continue moving in the same direction after initiating a trend. Any observed market return over a given time period is likely to continue in the same direction, a phenomenon known as the “momentum effect.” Deviations from a mean or trend provide potential trading opportunities, particularly in highly volatile assets like Bitcoin. Numerous empirical studies have demonstrated that momentum strategies, based on price movements, especially those correlating long-term and short-term trends, can yield significant returns (Jegadeesh & Titman, 1993). Given Bitcoin’s volatile nature, it is an ideal candidate for momentum-based strategies. 2. Gamma-Weighted Price Strategies: Gamma weighting is an advanced method of applying weights to price data, where past price movements are weighted by a Gamma factor. This weighting allows for the reinforcement or reduction of the influence of historical prices based on an exponential function. The Gamma factor (ranging from 0.5 to 1.5) controls how much emphasis is placed on recent data: a value closer to 1 applies an even weighting across periods, while a value closer to 0 diminishes the influence of past prices. Gamma-based models are used in financial analysis and modeling to enhance a model’s adaptability to changing market dynamics. This weighting mechanism is particularly advantageous in volatile markets such as Bitcoin futures, as it facilitates quick adaptation to changing market conditions (Black-Scholes, 1973). Strategy Mechanism: The BTC Future Gamma-Weighted Momentum Model (BGMM) utilizes an adaptive weighting strategy, where the Bitcoin futures prices are weighted according to the Gamma factor to calculate the Gamma-Weighted Average Price (GWAP). The GWAP is derived as a weighted average of prices over a specific number of periods, with more weight assigned to recent periods. The calculated GWAP serves as a reference value, and trading decisions are based on whether the current market price is above or below this level. 1. Long Position Conditions: A long position is initiated when the Bitcoin price is above the GWAP and a positive price movement is observed over the last three periods. This indicates that an upward trend is in place, and the market is likely to continue in the direction of the momentum. 2. Short Position Conditions: A short position is initiated when the Bitcoin price is below the GWAP and a negative price movement is observed over the last three periods. This suggests that a downtrend is occurring, and a continuation of the negative price movement is expected. Backtesting and Application to Bitcoin Futures: The model has been tested exclusively on the Bitcoin futures market due to Bitcoin’s high volatility and strong trend behavior. These characteristics make the market particularly suitable for momentum strategies, as strong upward or downward movements are often followed by persistent trends that can be captured by a momentum-based approach. Backtests of the BGMM on the Bitcoin futures market indicate that the model achieves above-average returns during periods of strong momentum, especially when the Gamma factor is optimized to suit the specific dynamics of the Bitcoin market. The high volatility of Bitcoin, combined with adaptive weighting, allows the model to respond quickly to price changes and maximize trading opportunities. Scientific Citations and Sources: • Jegadeesh, N., & Titman, S. (1993). Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. The Journal of Finance, 48(1), 65–91. • Black, F., & Scholes, M. (1973). The Pricing of Options and Corporate Liabilities. Journal of Political Economy, 81(3), 637–654. • Fama, E. F., & French, K. R. (1992). The Cross-Section of Expected Stock Returns. The Journal of Finance, 47(2), 427–465.
Pine Script™ strategy
by EdgeTools