🎯Strategy "Return to Volume"
Last updated
Last updated
Step 1. Go to "Add Widget" and open the Trading View tab.
Step 2. In the Trading View tab, select the trading instrument and the timeframe of interest.
Step 3. Open the "1EX Indicators" and turn on the "Balance indicator", then select the Rolling period
IMPORTANT!!!
The "Rolling period" field is the time interval for which the indicator calculates a certain value.
To get better results, you need to choose a period that will be a multiple of 20-50 times your working timeframe on the instrument chart. Lower multiplicity means higher sensitivity, higher multiplicity means lower sensitivity.
Example: TF = 5 minutes, Period = 4 hours (48 candles of 5 minutes each).
We get such a workspace window:
The value of the indicator lines:
Green line - relative value of the dominance of green candles (upward dynamics).
Red line - relative magnitude of the dominance of red candlesticks (downward dynamics).
Description of the trading strategy!!!!!
We find a situation in which the balance indicator shows a critical imbalance, that is, the obvious dominance of one of the sides (red or green candles), then apply the "Fixed Range Volume Profile" tool (horizontal volume) to the interval from the balance point to the point of critical imbalance, after which we measure the distance from the current asset price to the maximum volume level horizontal balance (Point of control "POC") and we expect the price to return to the maximum volume.
First, you need to determine what the critical imbalance will be, that is, how strong the dominance of one of the sides (red or green candlesticks) should be to determine the reversal.
The critical imbalance will vary depending on the type of traded instrument (more volatile, medium volatile, less volatile). The higher the volatility of the instrument, the higher the critical imbalance.
The optimal value is considered to be from 0.67, since this value corresponds to the "Two-thirds" rule - going beyond two-thirds has a low probability, therefore such values are considered critical (game theory).
Using vertical lines, we select the interval from the balance point (point A) to the point of critical imbalance (point B).
On the AB interval, we apply the "Fixed Range Volume Profile" tool (horizontal volume), which is located in the left panel of the graph window.
We measure the price movement potential using the Ruler tool (in the left panel of the chart window) from the current asset price (point P) to the maximum volume level (point V).
We enter the position at the opening of the next candle (point S) and the PV segment will be our potential profit.
The trading result in this situation is +1.06% excluding leverage.
Additional conditions!
The horizontal volume should have a normal distribution (based on the "Normal Gaussian distribution" rule).
After entering a trade, it is necessary to monitor the flow of volume, as it reduces the potential profit.
See the examples below
CONCLUSIONS:
You can use this strategy both independently and as one of the filters within a variety of trading strategies used by traders.
IMPORTANT! Trading involves risks. The user is solely responsible for their actions or inactions when using the described trading strategy. The strategy and its description are for informational purposes only. The information provided here does not constitute personalized investment advice. News, articles, expert comments, research, forecasts, and other information are presented without considering any specific investment profile, and the financial instruments or operations mentioned may not align with the expected returns, investment horizon, or acceptable risk levels for any particular user. Company 1EX is not responsible for any potential losses resulting from trades based on the described strategy or investments in the financial instruments mentioned in this publication.
