This works on most time frames, but I noticed the 4 hour for BTCUSD on coinbase seems to work well as an example. The strategy is pretty simple. I was inspired by a youtube video that said to backtest their strategy so I did. Most of the time it doesn't work but sometimes it's pretty good as in the case I showed.
Basically, you buy if the MacD crossers over the signal line and the histogram is below 0 and you are above the 200 day moving average. Do the opposite to sell!
The thing about the risk/reward, although its always 1.5, is if the stop loss weren't always the same, the profit/loss will oscillate a lot.
If you choose to set your stop loss in the previous low, that same low can be 2% in one trade and 5% on the other.
Then the so called 60% win ratio of the strategy doesn't matter, if you loose on the "5% SL" and win in the "2% SL".
In my opinion its almost as important as everything, to set up your stop losses always on the same range of values.
Sorry for my bad English.
Thims
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This requires allow_entry_in() to prevent the first entry from being a short. Otherwise all of your results are offset because of the initial short entry...
I found that adding the following fixes the issue by preventing short initial entries.
I added it right before the conditional code block.
Cheers for the good strategy though. Nice, easy foundation for development!
bennypesto
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Thanks for sharing, is there a way you change it from 200 SMA to 200 EMA? I believe he uses 200 EMA in his video. Also, regarding the previous comment, although his stop losses are somewhat arbitrary, they are based on the nearest previous swing high or low. Thanks for all your work!
Gentleman-Goat
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@bennypesto, Yeah I will see what I can do, I'll make a variation using EMA instead.
v4rf4lvy
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@x11joe, That would be wonderful indeed! Thanks for that :)
souichiro
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Yes, I agree with the risk:reward ratio of 1.5.
I backtested his strategy (currently 350 times manually, only backtested for long) and realised that a green candlestick which causes MACD to cross the signal line (and is less than 0) produces a higher win rate compared to when a red candlestick causes MACD to cross the signal line (if that makes sense...) So basically, if the red candlestick is what caused the MACD to cross the signal line (below zero), then it's better not to enter the next candlestick.
Currently win rate (without red candlestick) for 15min in stock is 64% and 69% for 30min.
Also, if you add a VWAP to this strategy, you realise that you win a lot of trades when the candlestick is higher (better when the candlestick is not touching the VWAP) than the VWAP.
I'm not good with scripting and if possible do you think you can add this to your current script?
Thanks!
Sorry if this might sound confusing since English is not my first language...
Gentleman-Goat
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@souichirohimuro, Thanks for your comment, I'll see if I can make a modified version of this to give that a try. Send me a message if you can to chat on here I would love to hit you up to discuss doing that together if you have time.
souichiro
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@x11joe, yeah sure!
hyounan80
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@souichiro, how did this go guys im really a fan of this strategy, very new to it. Would be great if you guys could give a update of this upgraded concept. Thanks.
If you choose to set your stop loss in the previous low, that same low can be 2% in one trade and 5% on the other.
Then the so called 60% win ratio of the strategy doesn't matter, if you loose on the "5% SL" and win in the "2% SL".
In my opinion its almost as important as everything, to set up your stop losses always on the same range of values.
Sorry for my bad English.