Cracking Cryptocurrency - Bottom Feeder Strategy Tester

10 mar 2020

Bottom Feeder - Strategy Tester

The Bottom Feeder is designed to algorithmically detect significantly oversold conditions in price that represent profitable buying opportunities. Combining this with it’s unique Stop and Target System, the Bottom Feeder is designed to return consistent return with minimal draw down. Whether used as a Market Bottom Detector or as a system for executing safe, profitable mean reversion trades, the Bottom Feeder is a powerful tool in any trader’s arsenal.

Bottom Feeder was designed to be used on BTCUSD, however it is also effective on other USD/USDT pairs. One will have to check the individual pair they wish to trade with the Strategy Tester to simulate performance.

Strategy displayed is from 2018-2021 on **Conservative Mode** with Percent of Equity (30%) enabled.

Options

Let’s go through the input options one by one, so that you are able to comfortably navigate all that this indicator has to offer. The link below will display a picture of the layout of the settings for your convenience.

For the sake of simplicity, let’s note now that all settings marked **Conservative Mode** will not work in Aggressive Mode.

Mode: Determines how aggressively Bottom Feeder generates a buy signal. In Conservative Mode, trades can only be opened once per candle and the stop and target will update as new signals appear. In Aggressive Mode, a separate trade is opened each time Bottom Feeder signals, which may be multiple times within one Daily candle.

Position Sizing Strategy: Determines what Risk Management system you will deploy when trading Bottom Feeder. Your options are “Percent of Equity” and “Distance to Stop Loss”. If Percent of Equity is selected, a trade size will be equal to a percentage of your equity, pursuant to the value in the ‘Percent of Equity’ box. If Distance to Stop Loss is selected, then your Position Size will be determined based off the distance to your stop loss and the value in the ‘Risk Percentage’ box.

Percent Of Equity: Determines what percentage of your equity will be allocated to each trade when ‘Position Sizing Strategy’ is enabled.

Risk Percentage: Determines the size of each trade if ‘Distance to Stop Loss’ strategy is enabled. This value reflects what percent of your account you will lose per trade if the trade hits your stop loss.

Plot Target and Stop Loss: Toggles on/off the visualized take profit and stop losses on the chart.

**Conservative Mode** TP Multiplier: This is an input box, it requires a float value. That is, it can accept either a whole number integer or a number with a decimal. This number will determine your Take Profit target. It will take whatever number is entered into this box and multiply the Average True Range against it to determine your Take Profit.

**Conservative Mode** SL Multiplier: See above - this will modify your Stop Loss Value.

**Conservative Mode** Average or Median True Range: This is a drop-down option, the two options are Average True Range or Median True Range. If Average True Range is selected, then this indicator will use the Average True Range calculation, that is, the average of a historical set of True Range values to determine the Average True Range value for Target and Stop Loss calculation. If Median True Range is selected, it will not take an average and will instead take the Median value of your historical look back period.

**Conservative Mode** True Range Length: This is an input that requires an integer. This will represent your historical lookback period for Average/Median True Range calculation.

**Conservative Mode** True Range Smoothing: This is a drop-down with the following options: Exponential Moving Average ( EMA ), Simple Moving Average ( SMA ), Weighted Moving Average ( WMA ), Relative Moving Average (RMA). This will determine the smoothing type for calculating the Average True Range if it is selected. Note: if Median True Range is selected above, this option will not have any effect as there is no smoothing for a Median value.

**Conservative Mode** Custom True Range Value?: This is a true/false option that is false by default. If enabled, it will override the Average/Median True Range calculation in favor of a users custom True Range value to be input below.

**Conservative Mode** Custom True Range Value: This is an input box that requires a float value. If Custom True Range is enabled this is where a user will input their desired custom True Range value for Target and Stop Loss calculation.

From Month/Day/Year to Month/Day/Year: This sets the Time Frame of your backtest for the Bottom Feeder Strategy. It will run FROM the date selected TO the date selected.

Stop and Target Description

Because Bottom Feeder is designed only to scalp the various market bottoms that can appear over time in the market and not to identify trends or to trade ranges, it’s imperative that the indicator notify us not just to when to enter our trades, but when to exit! In the service of that, CC Bottom Feeder has a built in Stop and Target system that tracks and displays the stop loss and take profit levels of each individual open trade, whether in Aggressive or Conservative Mode.

Conservative Mode Targeting: In Conservative Mode, Bottom Feeder signals are aggregated into a compound trade. The signal will appear as a green label pointing up below a candle, and will appear upon a candle close. If Bottom Feeder then generates another signal the stop loss and target price will be updated. The process will continue until the aggregated trade completes in either direction. On a trade with multiple signals, a larger position is slowly entered into upon each buy signal.

Aggressive Mode Targeting: In Aggressive Mode, Bottom Feeder signals are individually displayed as they are generated, regardless of how many signals are generated on any single candle. If Bottom Feeder continues to signal, each individual open trade will have their own stop loss and target that will be displayed on the chart until the individual trade completes in either direction. As opposed to a large compound position, aggressive mode represents a higher number of independent signals with their own stop and target levels.

Stop losses and targets are designed to be hard, not soft. That is, they are intended to be stop market orders, not mental stop losses. If price wicks through the target or stop, it will activate.

28 maj 2020

Informacje o Wersji

//1.1 Change Log:
//1. Updated Inputs Menu and Code Layout.
//2. Take Profit and Stop Loss Assignment changed from old ternary style of Variable Declaration and if statement version.
//3. Distance to Stop Loss changed to Risk Percentage.
//4. Updated Position Sizing code placed. Will position size correctly on BTC quote pairs now and USD/USDT/USDC pairs.
//5. Exit functions fixed to include the >= and <=. Previously they were missing the = sign.
//6. Updated position sizing assignments to new code base. Removed a lot of redundant code.

3 cze 2020

Informacje o Wersji

//1.2 CHANGE LOG
//Added an if statement for very rare situations in which a negative position size would be calculated when using Average True Range as Stop Loss Type. This places a nominal position instead of erroring the code out.

3 cze 2020

Informacje o Wersji

//1.3 CHANGE LOG
//Tweaked previous fix to be cleaner code.

3 cze 2020

Informacje o Wersji

//1.4 CHANGE LOG
//Another minor tweak. Perfect now. :)

1 gru 2022

Informacje o Wersji

Upgraded to Pine Script Version 5.

Refactored the inputs for a much easier user experience, and added in tool tips for every option so that the user has much more clarity on how to adjust and tune the strategy to their desired outcome and risk tolerance.