WaveTrend Oscillator [WT] — LazyBear Modified by PickMyTrade

This strategy is built upon the well-known “WaveTrend Oscillator [WT]” indicator originally published by LazyBear. The WaveTrend is widely used across markets for spotting momentum reversals, especially when the oscillator crosses the signal line within overbought and oversold zones.

The PickMyTrade team has converted this classic indicator into a fully automated, risk-managed trading strategy designed to maintain consistent performance with controlled drawdown. It includes additional trend and momentum filters, along with a complete capital protection framework aimed at meeting the strict requirements of prop firm evaluations.

This version focuses heavily on profit factor stability, drawdown reduction, and risk management, making it suitable for traders who must operate within strict rules.

What Makes This Version Different?
LazyBear’s original WaveTrend indicator provides excellent reversal detection, but this strategy expands it significantly by adding:

1. Risk-Management System Designed for Prop Firm Rules
Maximum equity drawdown limit
Daily loss limit
Automatic “stop trading” mode when limits are reached
Optional position size reduction as drawdown increases
These protections help keep the account within typical challenge requirements such as 5–10% max drawdown.

2. ATR-Based Stop Loss and Risk-to-Reward Targeting
Adaptive volatility-based stop losses
Configurable R:R take-profit targets
Position sizing based on percent of equity or fixed contracts
Ensures consistent risk exposure across all market types.

3. Improved WaveTrend Logic
While the original WT uses simple crossovers, this strategy adds several filters:
Histogram momentum direction (WT1 – WT2)
RSI momentum confirmation
ADX trend-strength filter
Optional overbought/oversold only mode (classic WT behavior)
These help reduce false reversals and improve the signal quality in choppy environments.

4. Multi-Market & Multi-Timeframe Compatibility
The strategy performs reliably on:
Stocks
Crypto
Forex
Indices
Futures
It works on both short-term charts (15m) and higher timeframes (1H, 4H).
Higher timeframes tend to show lower drawdown and higher profit factors.

5. No Repainting
All logic is based strictly on closed candles.
The strategy does not repaint past signals.

How It Works
WaveTrend Core Logic
WT1 = EMA-smoothed channel deviation
WT2 = smoothed signal of WT1
Main signals come from crossovers of WT1 and WT2
Optimal conditions occur below oversold or above overbought zones

Entry Conditions
Long Entry
WT1 crosses above WT2
Histogram momentum positive
RSI supports upward momentum
ADX confirms trend strength (optional)
Optional: WT1 below oversold threshold

Short Entry
WT1 crosses below WT2
Histogram momentum negative
RSI supports downward momentum
ADX confirms trend strength (optional)
Optional: WT1 above overbought threshold

Exit Conditions
Opposite WaveTrend signal
ATR stop loss hit
Take profit target hit
Optional: trend strength on ADX weakens
Optional: momentum reversal detected

Risk-Management System
Developed specifically with prop-firm challenge rules in mind.

Equity Protection
Max equity drawdown limit (e.g., 10–15%)
Daily loss limit (e.g., 3–5%)
Full suspension of trading once limits are hit

Sizing Controls
Position size shrinks automatically as drawdown increases
Minimum size multiplier to maintain controlled exposure
Prevents overleveraging during account recovery cycles

Stop Loss & Take Profit
ATR-based dynamic stop loss
Configurable percentage stop loss
Configurable take profit with desired R:R ratio


Credits
Original Indicator: LazyBear
Original Script: “WaveTrend Oscillator [WT]”
All indicator logic belongs to the original creator.
Strategy Conversion & Risk-Management Enhancements: PickMyTrade Team

About PickMyTrade
PickMyTrade specializes in converting TradingView strategies into fully automated trading systems with live execution across multiple brokers.
Supported connections include:
Rithmic
TradeStation
Interactive Brokers
TradeLocker
ProjectX
Tradovate (futures)
For automation and execution services:
pickmytrade.io
pickmytrade.trade

Disclaimer
This strategy is for educational and informational purposes only.
It does not guarantee profits and is not financial advice.
Trading involves significant risk.
Always test in simulation before trading live.
Past results do not guarantee future performance.
Slippage, commissions, and execution delay will impact results.