This tool was developed to capture good entries for long and short positions. It utilizes moving averages to find best times to executive trades (long or short) and it overlays same on the chart thus minimizing chart noise i.e. no need for indicators. New traders can use this without any hassle or confusion.
In addition to the long (buy or strong buy) and short (sell or strong sell) overlays, the tool also indicates, with the background colour, areas and periods of potential upside or downside movements.
1. Blue background shows areas most conducive for potentially sustained upside price action;
2. Red background shows areas most conducive for potentially sustained downside price action.
Back-testing:
Results show that the indicator is more profitable than “Buy and Hold” (aka hodl). The back-test period was from the beginning of BTC bear market (17th December 2017) to date (10th Nov. 2019). 10% equity on $1,000 was applied to all back-test trades. Using 100% equity gives even better results.
Control conditions:
- Start date: 17th Dec 2016 (BTC ATH)
- Buy and Hold ROE: about 51% loss
Strategy script condition 1:
- Start date: Same as control date
- TF 4H
- Initial Capital $1,000
- Order size: 10% of equity
- ROE: approx. 131%
Strategy script condition 2:
- Start date: Same as control date
- TF 4H
- Initial Capital $1,000
- Order size 100% of equity
- ROE: approx. 67,000%
How to use:
Simply add the indicator to your chart, WAIT FOR CANDLE with the signal (buy or sell) to CLOSE before you go long or short.
Please note that this version 1.0 is suitable for ONLY 4H and 6H timeframes. Subsequent version(s) will include more TFs.
This tool can be used in isolation, however using it in conjunction with
1. A Moving Average (preferably the 32 EMA) gives users more information about ongoing price-action.
2. Applying trendlines (horizontal and/or dynamic support and resistance) give users better overview of the space and where sudden price bursts or reversals may occur.
Possible scenarios:
a. Buy signals (buy or strong buy) above the EMA is very bullish;
b. Sell signals (sell or strong sell) below the EMA is extremely bearish.
Variant conditions that do not confirm to the above two conditions may occur.
This tool was developed SPECIFICALLY for XBTUSD pair on Bitmex. It may be used for other trading pairs and exchanges although primary back-testing was not extended to other pairs or exchanges.
Development/improvement is a continuous thing!
Disclaimer:
Past performance does not guarantee future results. This tool/indicator is for educational purposes. As always you should fully understand there are high risks involved when trading cryptocurrencies and other digital instruments.