An exoTrader Strategy Analysis

This document provides a detailed explanation of an exoTrader trading strategy that incorporates the H4 SMA 200, RSI, Bollinger Bands (BB), and Wave Core to adapt dynamically to varying market conditions. The strategy is described in the context of different market scenarios—ranging, bullish, and bearish. This document only serves as a review for discussion in the Quanta channel for developing a fully automated function.

Strategy Overview

The foundation of the strategy is based on the H4 SMA 200 to assess the macro trend. The additional guarding technical indicators (RSI and BB) with the Wave Trend Oscillation, are utilised to refine entry and exit decisions.

Indicator Explanations and Hypotheses

Hypothesis 1: Ranging Market

Reasoning:

• Wave Core: In a ranging market, price movements are typically less pronounced. symetric OB_LEVEL_ONE and OS_LEVEL_ONE do not need changes, the wave core will control entry and exit points.

Guards:

• Bollinger Bands: Disabled.

• RSI: Maintain standard threshold to reduce noise.

Selling Strategy:

• Partial Sell: In a ranging market, significant gains are rare, making it prudent to capture small profits frequently. Selling 50% of holdings at minimal profits allows for profit realisation while maintaining exposure for potential additional gains if prices extend beyond the typical range.

Hypothesis 2: Price Above H4 SMA 200 (Bullish Market)

Reasoning:

• Wave Core: Lowering the overbought threshold allows for early detection of potential reversals or pullbacks in a bullish market. This early warning helps in taking profits before a possible downturn.

Guards:

• Bollinger Bands: Wider bands accommodate the increased volatility and larger price swings typically seen in bullish conditions. This prevents the strategy from exiting positions too early during rapid price ascents.

• RSI: Increasing the overbought threshold lets the asset run longer in its upward trend before considering a sell, maximising potential gains during strong rallies.

Selling Strategy:

• Tiered Selling: Wave Core ensures systematic profit-taking during an extended rally. This method helps in capitalising on the trend while securing profits incrementally.

Hypothesis 3: Price Below H4 SMA 200 (Bearish Market)

Reasoning:

• Wave Core: Raising the oversold threshold helps prevent premature buying in a bear market, where prices may continue to fall. It ensures that only deep and potentially more reliable reversals are considered for buying.

Guards:

• Bollinger Bands: Increasing the band width helps absorb fluctuations and avert premature sell triggers, accommodating the lower lows common in bearish trends.

• RSI: Lowering the oversold threshold means the strategy waits for more extreme conditions before initiating buys, which can be indicative of a stronger potential reversal and thus better buying opportunities.

Selling Strategy:

• Full Sell at Break-Even: In bear markets, preserving capital is crucial. Selling all holdings once they slightly recover offers a defensive tactic to mitigate losses and protect the investment from further declines.

Conclusion

This strategy outlines just one method for conversation/debate.