This strategy combines momentum indicators and moving averages to identify market trends and reversal points for trading when the trend changes direction. It belongs to trend following and countertrend trading strategies. The main components include supply and demand zones, EMA, various HH, LL, LH, HL long and short zones, ATR trailing stop loss etc.
Distinguish supply and demand relationship based on high and low range of Kline. Red areas indicate supply exceeds demand supply zones. Green areas indicate demand exceeds supply demand zones.
Plot 200 period EMA and determine uptrend and downtrend by comparing price with EMA. Price above EMA is considered as uptrend, while price below EMA as downtrend.
Determine reversal zones based on recent 2 candle’s high and low points:
Calculate 14 period ATR value which will be multiplied by a factor of 2 to derive the stop loss level.
Monitor price relationship with previous candle’s high/low points. Long signal triggers when price breaks above previous high. Short signal triggers when price breaks below previous low. Delay entry signal confirmation until the 3rd candle to avoid false signals. Exit with stop loss when price pulls back beyond the ATR trailing stop loss level.
Risk Solutions:
This strategy combines supply/demand analysis, trend determination, reversal identification and risk management modules effectively to spot market reversal opportunities at key areas. It is a robust system for trend following and countertrend setups. Continuous testing, optimization and human experience judgements are crucial for long term steady profits.
/*backtest start: 2023-12-01 00:00:00 end: 2023-12-20 23:59:59 period: 1h basePeriod: 15m exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}] */ //@version=5 strategy("Supply and Demand Zones with EMA and Trailing Stop", shorttitle="SD Zones", overlay=true) showBuySignals = input(true, title="Show Buy Signals", group="Signals") showSellSignals = input(true, title="Show Sell Signals", group="Signals") showHLZone = input(true, title="Show HL Zone", group="Zones") showLHZone = input(true, title="Show LH Zone", group="Zones") showHHZone = input(true, title="Show HH Zone", group="Zones") showLLZone = input(true, title="Show LL Zone", group="Zones") emaLength = input(200, title="EMA Length", group="EMA Settings") atrLength = input(14, title="ATR Length", group="Trailing Stop") atrMultiplier = input(2, title="ATR Multiplier", group="Trailing Stop") // Function to identify supply and demand zones getZones(src, len, mult) => base = request.security(syminfo.tickerid, "D", close) upper = request.security(syminfo.tickerid, "D", high) lower = request.security(syminfo.tickerid, "D", low) multiplier = request.security(syminfo.tickerid, "D", mult) zonetype = base + multiplier * len zone = src >= zonetype [zone, upper, lower] // Identify supply and demand zones [supplyZone, _, _] = getZones(close, high[1] - low[1], 1) [demandZone, _, _] = getZones(close, high[1] - low[1], -1) // Plot supply and demand zones bgcolor(supplyZone ? color.new(color.red, 80) : na) bgcolor(demandZone ? color.new(color.green, 80) : na) // EMA with Linear Weighted method ema = ta.ema(close, emaLength) // Color code EMA based on its relation to candles emaColor = close > ema ? color.new(color.green, 0) : close < ema ? color.new(color.red, 0) : color.new(color.yellow, 0) // Plot EMA plot(ema, color=emaColor, title="EMA") // Entry Signal Conditions after the third candle longCondition = ta.crossover(close, high[1]) and (bar_index >= 2) shortCondition = ta.crossunder(close, low[1]) and (bar_index >= 2) // Trailing Stop using ATR atrValue = ta.atr(atrLength) trailStop = close - atrMultiplier * atrValue // Strategy Entry and Exit if (longCondition) strategy.entry("Buy", strategy.long) strategy.exit("TrailStop", from_entry="Buy", loss=trailStop) if (shortCondition) strategy.entry("Sell", strategy.short) strategy.exit("TrailStop", from_entry="Sell", loss=trailStop) // Plot Entry Signals plotshape(series=showBuySignals ? longCondition : na, title="Buy Signal", color=color.new(color.green, 0), style=shape.triangleup, location=location.belowbar) plotshape(series=showSellSignals ? shortCondition : na, title="Sell Signal", color=color.new(color.red, 0), style=shape.triangledown, location=location.abovebar) // Plot Trailing Stop plot(trailStop, color=color.new(color.red, 0), title="Trailing Stop") // Plot HH, LL, LH, and HL zones plotshape(series=showHHZone and ta.highest(high, 2)[1] and ta.highest(high, 2)[2] ? 1 : na, title="HH Zone", color=color.new(color.blue, 80), style=shape.triangleup, location=location.abovebar) plotshape(series=showLLZone and ta.lowest(low, 2)[1] and ta.lowest(low, 2)[2] ? 1 : na, title="LL Zone", color=color.new(color.blue, 80), style=shape.triangledown, location=location.belowbar) plotshape(series=showLHZone and ta.highest(high, 2)[1] and ta.lowest(low, 2)[2] ? 1 : na, title="LH Zone", color=color.new(color.orange, 80), style=shape.triangleup, location=location.abovebar) plotshape(series=showHLZone and ta.lowest(low, 2)[1] and ta.highest(high, 2)[2] ? 1 : na, title="HL Zone", color=color.new(color.orange, 80), style=shape.triangledown, location=location.belowbar)