📉Strategy "Counter market dynamic"
Last updated
Last updated
Step 1. Go to "Add Widget" and open the Trading View tab.
Step 2. In the chart window that opens, select a trading instrument and set a minute timeframe, since this strategy refers to scalping.
Step 3. Open the "1EX Indicators" and select "Market dynamic", then set the Rolling period = 1 minute.
Step 4. Now you need to determine the mean market dynamics. To do this, go back to "Add widget" and open the Screener.
Step 5. In the window that opens, we find the tool we are interested in, fix it and set the following parameters (as in the screenshot below) for the fields "Timeframe", "Rolling period", "Market dynamic basis".
Step 6. Open the "Columns" (in the upper right corner of the screener) and leave only Mean dynamic and Market dynamic.
Step 7. In the "Mean dynamic" column, we find the average dynamics and put a horizontal line on the indicator with this value, after which we close the Screener widget.
Step 8. You need to approximately select 4 standard deviations of the "Market Dynamic" indicator, so that 68% of all values are in the 1st standard deviation, 95% of all values are in the 2nd deviation, 99% of values are in the 3rd deviation and almost all values are in the 4th deviation, except for the most extreme ones.
After all the setup, the workspace looks like this:
The value of the lines!
Green line - market dynamics, which shows the strength of the direction of the asset price over a certain period of time.
Orange line - average market dynamics.
Blue lines - different values of deviations in market dynamics.
Description of the trading strategy!!!!!
Theory: After a surge in market dynamics, the price usually reacts by reversing the direction. The greater the deviation of the dynamics from the average, the more likely it is to get a reversal. If there is a deviation in market dynamics, but the price does not react with a reversal, then you need to wait for a larger deviation in dynamics and analyze the price's reaction to it until the price reverses from a larger deviation.
In the beginning, you need to monitor the dynamics when it is below the average value and get into a reversal position as soon as the dynamics comes to the average value.
If there is no price reaction, then we wait for either a larger deviation, or the arrival of the same deviation and get back on the turn, analyzing the price reaction.
IMPORTANT!
If the extremes of the chart are updated, while the extremes of the indicator are not updated, that is, divergence/convergence occurs, which leads to the end of the trend and a full-fledged reversal, then in such situations the price reaction should be strong.
We continue to do the previous steps until there is another deviation.
If the dynamics comes to the 1st, 2nd or 3rd deviation, while there is no price reaction to this deviation, then we expect a larger deviation.
When the dynamics comes to the 4th deviation, the price is more likely to react and subsequently reverse, but it is advisable to wait for divergence/convergence to confirm the reversal.
IMPORTANT!
If the market dynamics begins to increase more and more each time, while candlesticks (price) of the same direction and the body of candlesticks become more and more, then it is better to trade this situation according to the "Acceleration of market dynamics" strategy, since these two strategies intersect with each other.
Option №1:
Closing a position when the dynamics comes to the average value (in the case when you entered into a trade at the average value, then close the position at the minimum values).
The trading result in this situation is +1.53% excluding leverage.
Option №2:
Fixation at significant levels.
The trading result in this situation is +2.39% excluding leverage.
Option №3:
The exit from the deal is at the last obvious extreme.
The trading result in this situation is +1.58% excluding leverage.
CONCLUSIONS:
All of the above transactions were made in 4 hours and 35 minutes, respectively, the total return was +5.2% without leverage, taking into account the human factor in the speed of decision-making and commissions with slippage.
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.
