This strategy observes the change of K-line colors to determine the market trend and establish long and short positions accordingly. The strategy principle is simple and straightforward, aiming to capture short-term trends.
The strategy judges the color of K-lines based on the relationship between closing price and opening price. Closing price greater than opening price is a red K-line, and vice versa is a green K-line.
When there are specified consecutive K-lines of the same color ( adjustable), take actions accordingly:
If red, go long.
If green, go short.
When the K-line color changes, close all positions.
The principle is clear and simple, easy to understand and implement.
Can track relatively short-term trends and trade frequently.
The number of K-lines is customizable to adjust strategy sensitivity.
Can go long or short only to reduce trading frequency.
Trading time frame can be set to avoid certain periods.
Unable to determine trend direction, risk of being whipsawed.
Unable to determine optimal entry timing, risks of premature entry or missing opportunities.
Risks of reversal as color changes do not necessarily represent real trend changes.
Chasing short-term may lead to excessive trading and commission pressure.
Inappropriate parameter settings may lead to poor strategy performance.
Consider adding trend judgment indicators to avoid reverse entry, e.g. MACD, KD.
Set up trailing stop loss to reduce loss risk.
Relax exit criteria appropriately to avoid over-frequent exits.
Combine other factors to optimize entry timing, e.g. surging volume, breaking previous high.
Use market orders to reduce slippage impact.
This strategy originates from the simplest K-line technical analysis, achieving basic trend tracking by judging K-line colors. The advantages are simplicity, high trading frequency, and flexible parameter adjustment. But it also has some blindness, unable to determine the quality of the trend. It can be improved by adding trend judgment indicators while keeping it simple, thereby enhancing strategy performance.
/*backtest
start: 2023-09-10 00:00:00
end: 2023-10-10 00:00:00
period: 2h
basePeriod: 15m
exchanges: [{"eid":"Binance","currency":"BTC_USDT"}]
*/
//2018
//Noro
//@version=2
strategy("Noro's Candles Strategy v1.0", shorttitle = "Candles str 1.0", overlay=true, default_qty_type = strategy.percent_of_equity, default_qty_value = 100.0, pyramiding = 0)
//Settings
needlong = input(true, defval = true, title = "Long")
needshort = input(true, defval = true, title = "Short")
bq = input(2, defval = 2, minval = 2, maxval = 6, title = "Bars Q")
fromyear = input(2018, defval = 2018, minval = 1900, maxval = 2100, title = "From Year")
toyear = input(2018, defval = 2018, minval = 1900, maxval = 2100, title = "To Year")
frommonth = input(01, defval = 01, minval = 01, maxval = 12, title = "From Month")
tomonth = input(12, defval = 12, minval = 01, maxval = 12, title = "To Month")
fromday = input(01, defval = 01, minval = 01, maxval = 31, title = "From Day")
today = input(31, defval = 31, minval = 01, maxval = 31, title = "To Day")
//Bars Q
bar = close > open ? 1 : close < open ? -1 : 0
gb = bar == 1
rb = bar == -1
redbars = bq == 2 and rb and rb[1] ? 1 : bq == 3 and rb and rb[1] and rb[2] ? 1 : bq == 4 and rb and rb[1] and rb[2] and rb[3] ? 1 : bq == 5 and rb[1] and rb[2] and rb[3] and rb[4] ? 1 : bq == 6 and rb[1] and rb[2] and rb[3] and rb[4] and rb[5] ? 1 : 0
greenbars = bq == 2 and gb and gb[1] ? 1 : bq == 3 and gb and gb[1] and gb[2] ? 1 : bq == 4 and gb and gb[1] and gb[2] and gb[3] ? 1 : bq == 5 and gb[1] and gb[2] and gb[3] and gb[4] ? 1 : bq == 6 and gb[1] and gb[2] and gb[3] and gb[4] and gb[5] ? 1 : 0
//Signals
up1 = redbars == 1
dn1 = greenbars == 1
exit = bar != bar[1]
if up1
strategy.entry("Long", strategy.long, needlong == false ? 0 : na)
if dn1
strategy.entry("Short", strategy.short, needshort == false ? 0 : na)
if time > timestamp(toyear, tomonth, today, 00, 00) or exit
strategy.close_all()