Robust Trend Tracking Strategy

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The main idea behind this strategy is to combine 123 reversal formulas and Smart Money Flow Index (SMI) indicators to achieve stable trend tracking. The strategy establishes a corresponding multi-head or blank position when two signals simultaneously send a buy or sell signal.

The Principles of Strategy

The strategy consists of two parts:

1. 123 reversal strategy: This strategy is based on the closing price of the stock and the 9th day of the Stoch indicator to achieve reversal trading. Specifically, when two consecutive days of closing price relationships occur reversal (i.e. the closing price of the previous day is higher than the previous two days, the closing price of the next day is lower than the previous one) and the Stoch fast line is higher than the slow line, do more; when two consecutive days of closing price relationships occur reversal (i.e. the previous day is lower than the previous two days, the next day closing price is higher than the previous day), and the Stoch fast line is lower than the slow line, do more.

2. SMI strategy: This strategy is based on smart money flow index to implement trend tracking. The SMI indicator can reflect the volatility of institutional and retail funds, with a rise in the SMI indicating that institutional funds are being absorbed and a fall in the SMI indicating that institutional funds are being sold.

The strategy takes a multi-head position when both the 123 reversal and the SMI are simultaneously signaling to buy; the strategy takes a blank position when both are simultaneously signaling to sell.

Strategic advantages

The strategy combines reversal patterns and trend tracking indicators to effectively identify market turning points and track trends to achieve stable profitability. The specific advantages are as follows:

1. The 123 reversal form has a higher win and profit rate and can effectively identify short-term reversal opportunities.

2. SMI indicators can reflect institutional capital flows and track institutional funds to achieve more stable returns.

3. In combination with the use of reversal form and trend tracking indicators, the quality of the signal can be improved, unnecessary transactions can be reduced and the risk effectively controlled.

Strategic risks

The strategy also carries some risks, mainly focusing on the following:

1. 123 Reversal mode: There is a certain risk of false signals, which cannot completely avoid loss-making transactions. Parameters can be optimized appropriately to improve signal quality.

2. The SMI indicator has a certain lag and does not fully reflect the real-time flow of funds. It can be verified in combination with other indicators to improve accuracy.

3. Double signals bring the problem of being too conservative and may miss stronger unilateral trends. Signal conditions can be loosened appropriately, lowering filtering standards.

Optimized directions

The strategy can also be further optimized in the following areas:

1. Optimize parameters, find the best combination of parameters and improve strategic profitability.

2. The increase in stop-loss mechanisms can effectively control single loss.

3. In combination with other indicators or formats, further verify signal quality and improve signal accuracy.

4. Optimizing parameters for different varieties to improve strategy adaptability.

Summary

The strategy is well thought out and effectively combined with reversal formulas and trend tracking indicators to steadily identify short-term reversal opportunities and track medium- and long-term trends. The strategy's profitability and risk control capability can be further enhanced through parameter optimization and mechanism design improvements.

Overview

The main idea of this strategy is to combine the 123 reversal pattern and the Smart Money Index (SMI) indicator to achieve stable trend tracking trading. The strategy will only establish corresponding long or short positions when both signals issue buy or sell signals at the same time.

Strategy Principle

The strategy consists of two parts:

1. 123 reversal strategy: This strategy implements reversal trading based on the closing price of the stock and the 9-day Stoch indicator. Specifically, go short when the closing price relationship reverses for two consecutive days (i.e. the previous closing price is higher than the one before the previous day, and the next closing price is lower than the previous day), and Stoch fast line is above slow line; go long when the closing price relationship reverses for two consecutive days (i.e. the previous closing price is lower than the one before the previous day, and the next closing price is higher than the previous day), and Stoch fast line is below slow line.

2. SMI strategy: This strategy implements trend tracking based on the Smart Money Index. The SMI indicator can reflect the game between institutional funds and retail funds. The rise of SMI indicates that institutional funds are absorbing funds, while the fall indicates that institutional funds are selling out. Go long when SMI rises and go short when SMI falls.

The strategy will only take a long position when both the 123 reversal pattern and the SMI indicator issue a buy signal at the same time. It will only take a short position when both issue a sell signal at the same time.

Strategy Advantages

The strategy combines reversal patterns and trend tracking indicators to effectively identify market reversal points and track trends for steady profits. The specific advantages are as follows:

1. The 123 reversal pattern has a relatively high win rate and profit rate, which can effectively identify short-term reversal opportunities.

2. The SMI indicator can reflect the direction of institutional funds. Tracking institutional funds can obtain more steady profits.

3. The combined use of reversal patterns and trend tracking indicators can improve the quality of signals, reduce unnecessary trading, and effectively control risks.

Strategy Risks

The strategy also has some risks, mainly concentrated in the following areas:

1. The 123 reversal pattern has a certain risk of false signals and cannot completely avoid losing trades. Parameters can be optimized appropriately to improve signal quality.

2. The SMI indicator has a certain lag and cannot completely reflect the direction of funds in real time. Other indicators can be combined for verification to improve accuracy.

3. Double signals can lead to over-conservative problems, possibly missing stronger one-sided trending opportunities. Signal conditions can be appropriately relaxed to reduce filtering criteria.

Optimization Directions

The strategy can also be further optimized in the following aspects:

1. Optimize parameters to find the optimal parameter combination and improve the profitability of the strategy.

2. Add stop loss mechanisms to effectively control single loss.

3. Combine other indicators or patterns to further verify signal quality and improve signal accuracy.

4. Optimize parameters separately for different varieties to improve the adaptability of the strategy.

Summary

The overall idea of the strategy is clear, effectively combining reversal patterns and trend tracking indicators to steadily identify short-term reversal opportunities and track medium-to-long term trends. By improving parameters optimization and mechanism design, the profitability and risk control capabilities of the strategy can be further enhanced.