Trend Identifier Strategy

This trading strategy identifies trends using price-normalized Arnaud Legoux Moving Average (ALMA) and its derivatives to generate buy or sell signals based on color changes from a plotted graph. It includes specific conditions based on these color changes and the values of indexed indicators.

To trade this strategy manually on TradingView:

• Set up the ALMA indicator using the ALMA function with a length of 140, offset of 1.1, and sigma of 6 to calculate 'ema'.
• Calculate the first derivative by taking the difference between the current and previous 'ema' values, then normalize it by dividing by 'ema' to get 'dema'.
• Smooth 'dema' using a Stochastic oscillator with a length of 100 and a triple Exponential Moving Average (EMA) smoothing with periods 3 and 3, resulting in 'stodema'.
• For the second derivative 'd2ema', calculate the EMA of the difference between the current and previous 'dema' values with a period of 5.
• Smooth this second derivative 'd2ema' using the same triple EMA Stochastic as before to generate 'stod2ema'.
• Define 'ind' using a normalized EMA of the close price with a dynamic length based on the timescale, subtract it from the current close price, and divide by close price.
• 'heat' is the EMA of the Stochastic oscillator applied to 'ind' with dynamic length and a single EMA smoothing with a period of 3.
• The 'index' is the EMA of 'heat' with a length dynamically adjusted to 7 times the defined timescale.
• Color-code the plot based on the values of 'dema' and 'd2ema' where green indicates a positive 'dema' and 'd2ema', yellow indicates a positive 'dema' and negative 'd2ema', red indicates a negative 'dema' and 'd2ema', and blue indicates a negative 'dema' and positive 'd2ema'.
• To determine the entry (buy condition), look for a color change to green under specific conditions related to

Improving the Trend Identifier Strategy in manual trading on TradingView requires a multifaceted approach that emphasizes precision in indicator settings, consideration of additional technical analysis tools, and fine-tuning based on market feedback.

• Enhance Indicator Accuracy: Adjust the ALMA settings beyond the default 140,1.1,6 parameters by testing different lengths, offsets, and sigmas through backtesting to determine which provides the best signal confluence with price action on the 1D BTC.USD timeframe.
• Incorporate Price Patterns: Pair the derivative indicators with classical chart patterns recognition (e.g., triangles, head and shoulders) to identify potential trend reversals or continuations, confirming the signals suggested by the color changes of the strategy's plotted graph.
• Utilize Volume Analysis: Implement volume indicators like the Volume Profile Visible Range (VPVR) or On-Balance Volume (OBV) to validate the trend strength indicated by the 'dema' and 'd2ema'. Strong volume supporting a buy or sell signal adds another layer of confirmation to the trade.
• Experiment with Multiple Timeframe Analysis: Look for confirmation of trend signals on higher timeframes (e.g., weekly) to ensure alignment with the broader market trend, potentially increasing the strategy's success rate.
• Employ Risk Management Tools: Use a combination of fixed and trailing stop-loss orders to protect capital. Implement a risk-reward ratio to define exit points, potentially using Fibonacci retracement levels for refined take-profit areas.
• Add Oscillator Confluence: Validate entry signals with momentum oscillators like the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) to increase the robustness of the entry points.
• Sentiment Analysis: Integrate sentiment indicators or on-chain analysis as a part of the decision-making process. High leverage or funding rate extremes can indicate potential turning points in the market complementing the technical analysis.
• Continuous Learning: Maintain a trading journal to document all trades, the reasoning behind them, and their outcomes. Review these periodically to learn from patterns of success and failure.
• Dynamic Position Sizing: Adjust position sizes based on the conviction of a signal. If multiple confluence factors align, consider increasing the position size within risk management constraints.

The Trend Identifier Strategy is best suited for traders with a long-term investment horizon who prefer a methodical approach to capitalizing on significant trend movements in the cryptocurrency market. This strategy aligns with the trading style of positional traders who are not looking for immediate gains but rather aim to build positions with the intention of holding through multiple market cycles.

• Positional Traders: Those willing to hold their positions for days, weeks, or even months will find this strategy aligns with their approach.
• Technical Analysts: Traders who rely on technical indicators to inform their trade decisions will appreciate the use of derivative-based signals.
• Risk-Averse Investors: The strategy's emphasis on a higher Sortino Ratio suggests it is managed for downside volatility, making it suitable for risk-conscious traders.
• Strategic Portfolio Builders: Traders looking to optimize long-term portfolio growth while mitigating the stagnation risks associated with HODLing.

• Strategy Essence: Employs smoothed moving averages and derivatives to identify 4-stage market cycles.
• Working Mechanism: The strategy uses color-coded signals to indicate buying and selling points based on the ALMA derivatives.
• Trading Application: Can be automated on TradingView, or traders can set alerts for specific conditions or manually enter trades based on indicator output.
• Manual Trading Enhancement: Backtest different ALMA settings and integrate chart patterns and volume analysis for confirmation.
• Additional Insights: Use higher timeframes for signal confirmation and momentum oscillators for additional entry point validation.
• Risk Management: Apply fixed and trailing stop-loss orders, adjust position sizes, and ensure a favorable risk-reward ratio.
• Trader Suitability: Ideal for long-term positional traders and technical analysts, especially those managing downside volatility.