Trading Strategy based Indicator
Trading Strategy based Indicator
Now, we will analyze the most profitable and effective trading strategy of 2021. The percentage of profitable trades is over 77%. You can combine different methods and tools.
To start trading using a trading strategy, you need to add indicators to the tradingview chart and configure them.
Add indicator to the chart
First step - create an account on Tradingviews.com. This is one of the most famous social network for traders. Join right now .(link).
Second step - subscribe to our indicator. Fill the form (link) and get access to all our indicators.
Third step - add indicators to any chart and configure it by following our instructions.
Adding indicators to the chart
Open any trading pair. Let's pick bitcoin. Set the time frame to 5m (5 minutes).
Next, Go to indicators - scripts invite only.
Add one Trend Indicator Lite 5-8-15m
Add two indicators PRO_Traiding Trend Indicator
Now your chart looks the same as in the screenshot below.
The result of adding indicators
Step two - setting up the indicator of the trading strategy
You can already see that we have added three indicators. One indicator on the chart, two indicators below the chart.
The indicator that is located on the chart and the first indicator below the chart are already configured by default.
To configure the second indicator under the chart, you must put the cursor on its name and click on the gear.
Setting up the second indicator below the chart
First thing - set the time frame to 1 hour.
Second-remove all check marks and enable the Show new filter ROP checkbox.
This is a last step in the setting up the indicators to work with a trading strategy.
Now you can compare you chart with the screenshot below.
Example of configured indicators
Instruments have been added to our chart, they are divided into two groups according to their functionality:
1. Tools for understanding the direction of opening a deal, such a group is called trend filters.
2. Tools to enter a trade.
The first group of instruments designed to filter the direction of entry into a trade includes:
1. Balance line of Trend Indicator Lite 5-8-15m, this red line is located on the chart itself, near the price bars.
2. Hourly line ROP RSI, located on the first indicator below the chart, the line is yellow.
3. New Filter ROP hour lines are located on the second indicator below the chart.
Direction filtering indicators
The second group of indicators, tools for entering a trade, include:
1. The 5 minute ROP RSI line, this is the red line located on the first indicator below the chart. Signals from this line are also marked on the chart with dark green and dark red arrows.
2. Signals of the five-minute line New filter rop, they are marked on the chart with light green and light red arrows.
Trade entry indicators
Step one. Determine the direction of entry into a trade
Before you start trading, the first thing you need to do is make sure in which direction the yellow ROP RSI hour line is going.
The yellow hour line can go in three directions: up, down, and stand still - go to the side.
In order to understand in which direction it is going, zoom out the graph.
Directions for entering a trade on the hourly ROP RSI yellow
The line goes down - we are looking for a sell deal, that is, a short, using the tools to enter the deal.
The line goes up - we are looking for a buy deal, that is, long, using the instruments to enter the deal.
The line goes sideways - it is worth avoiding a trade, or working on the basis of the readings of other trend filters.
The best signals come immediately after the change in the main trend of the yellow ROP RSI hour line.
The screenshot shows the trend changes, after which the best entry points appear, are located near the dotted lines, the lower one at level 5, the upper one at level 95.
The trend changes to downtrend when the yellow ROP RSI line crosses from top to bottom of the dotted line 95.
The trend changes to upward when the yellow ROP RSI line crosses from the bottom to the top of the dotted line 5.
This is the best option. Also, sometimes the line does not reach these values and makes a reversal a little earlier.
Trade entry direction using New filter ROP
Let's take a look at the second indicator below the chart.
This indicator is called New filter ROP. The indicator has two lines, green and orange. The green line is the direction of the trend, the orange control line. The green line is either above the control or below the control.
When the green line of the indicator crosses the orange from the bottom up, and starts to go above the orange, we are looking for a buy deal, that is, a long, using the instruments to enter the deal.
When the green line of the indicator crosses the orange line from top to bottom, and begins to go under the orange one, we are looking for a sell deal, that is, short, using the instruments to enter the deal.
Determining the direction of entry into a trade using the balance line
When the price bars are above the balance line, we are looking for a buy trade, that is, long, using the instruments to enter the trade.
When the price bars are below the balance line, we are looking for a sell deal, that is, short, using the instruments to enter the deal.
Balance line direction
Combining three direction finding methods
Let's mark the places in which the conditions of each of the filters coincide.
When the indicators of all three filters converge, these are the best directions for entering a trade. Now all that remains is to enter the trade.
Second step. Trade entry.
After filtering and finding the best conditions for entering a trade. Using the tools to enter a trade, we start trading.
A buy signal - long, occurs when the five-minute ROP RSI crosses the dotted lower line 5 from the bottom up. Also when crossing the 5 minute new filter rop. These signals appear on the chart as a dark green and light green upward triangle. The signal is confirmed by the closing of the bar.
A sell signal - short, occurs when the five-minute ROP RSI crosses the dotted upper 95 line from top to bottom. Also when crossing the 5 minute new filter rop. These signals appear on the chart as a dark red and light red down triangle. The signal is confirmed by the closing of the bar.
Now, below we will analyze examples of each case noted in the screenshot above.
Conclusion
This strategy works with more than 77% success. Stop exits are minimal, and the profit more than covers the loss from the stop.
We have analyzed the strategy of 5m and 1h. The strategy using 5m ROP RSI and 15m new filter rop to enter a trade, filtered by hourly ROP RSI and new filter rop, also performed well.
This strategy is also applicable on the higher time frame for 1h entry, for 1d filter.
You can trade several trades in a trend or try to take the very first signal after confirming a reversal, moving the stop as the trend develops.
You can also combine this strategy with auxiliary tools such as horizontal volumes, ischimoku cloud and Wyckoff method.
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