No matter your views about where the price moves, what matters is where the price heads to. The market is always right, and ultimately it decides who gets the profit and who has to take a loss.
The purpose of this strategy is to spot when it's the most suitable time to buy an asset profiting from a potential short-term price increase. The strategy tends to open trades frequently, closing them on average in one and a half days.
The buy order is placed on assets that present strong momentum when it's more likely that it is about to increase further in the short term.
To capture momentum on the asset, the rule strategy requires:
The rule, then, places the order when
The price crosses above the MA9.
This strategy comes with a stop loss and a take profit which adapt dynamically to market conditions.
The trade is closed in profit when the RSI is greater than 70, as the trend could experience a pull-back.
Alternatively, the trade is closed when the RSI is lower than 30, being this a sign of weakening of the trend.
Pro tip: The 1-hour time frame has proven to return the best results on average. The strategy can also work well in the 15-min time frame if you want to increase the trades' frequency.
The strategy assumes each order to trade 30% of the available capital and opens a trade at a time. A trading fee of 0.1% is taken into account.
According to the results of our analysis, entering the trade when the price crosses below the MA9 improves the results on average by 2.5 times on the 1-hour time frame.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.