Strategy: Combo Z Score

This trading strategy is a multifactor based on a combination of z-scores from different market instruments and a Bollinger Band percentage for entry and exit signals. It uses comparisons of VIX, MOVE, and Oil Volatility to determine overbought or oversold conditions.

To trade this strategy manually on TradingView:

• Add the VIX, MOVE (TVC:MOVE), VVIX, and Oil Volatility Index (CBOE:OVX) to your chart.
• Calculate a z-score for each by comparing the instrument to its own inverse, then deriving the mean and standard deviation over a predefined period (Length = 266 days).
• Create Bollinger Bands for the price action with a 20-period moving average and a standard deviation multiplier (BB mult = 2).
• The Bollinger Band percentage (bb_percent) is calculated as (close - BB_lower) / (BB_upper - BB_lower).
• Additionally, apply an Exponential Moving Average (EMA) over 100 periods to filter trades.
• Entry condition for long: All three z-scores are below zero, and the price is above the 0.5 Bollinger Band percentage, indicating an oversold market.
• Entry condition for short: All three z-scores are above zero, and the price is below the 0.5 Bollinger Band percentage, signaling an overbought market condition.
• Exit conditions are opposite to entries or when preset conditions for taking profits or cutting losses are met.

Improving the Combo Z Score strategy for manual trading on TradingView involves a series of analytical enhancements and additional filters to refine entry and exit points. Here is an actionable plan to upgrade this trading method:

• Detailed Correlation Analysis: Conduct a thorough correlation study between VIX, MOVE, and Oil Volatilities against SPY movement over multiple time frames. Moving beyond z-scores, use scatter plots and correlation coefficients to quantify the relationships.
• Adaptive Lookback Period: Experiment with a dynamic lookback period instead of a fixed one. The length for calculating z-scores and Bollinger Bands could be adjusted based on prevailing market volatility – shorter during high volatility and longer during stable phases.
• Volume Confirmation: Incorporate trading volume as a confirmation indicator. Examine spikes in volume that coincide with z-score and Bollinger Band signals to filter out false positives.
• Macro Factor Integration: Take into account macroeconomic factors that might impact the SPY's movement, such as interest rate changes, inflation data, and major economic announcements. Integrate this analysis to time entries and exits more effectively.
• Multiple Time Frame Analysis: Use multiple time frame analysis to confirm signals. A signal on a longer time frame can validate an entry on a shorter time frame, leading to greater conviction in the trade.
• Risk Management Optimization: Fine-tune the position sizing based on the risk associated with each signal, calculated through a combination of z-score extremes and distance from the key EMA levels.
• Stop Loss and Take Profit Trials: Experiment with various stop loss strategies, including trailing stops and fixed percentage stops, to protect capital. Similarly, test different take profit scenarios based on a risk-reward ratio or predefined z-score levels.
• Behavioral Pattern Study: Observe patterns that emerge around z-score extremes and Bollinger Band breakouts. Historical pattern recognition could signal potential reversals or continuation.
• Indicator Customization: Refine the EMA and Bollinger Bands by applying custom weights or incorporating additional indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) for enhanced signal strength.
• Continuous Backtesting: Routinely backtest the improved strategy against past data for different market conditions, such as bull, bear, and sideways markets, to ensure reliability and adaptability.

The Combo Z Score trading strategy is catered to traders who have an analytical mindset and a keen interest in quantitative trading methodologies. It's designed for the following types of traders and trading styles:

• Technical Traders: Who utilize statistical indicators such as Z-Scores and Bollinger Bands to gauge market sentiment and volatility.
• Swing Traders: Given the use of daily moving averages and the need to hold positions to capitalize on anticipated market movements.
• Volatility Traders: Those who specialize in deciphering market dynamics through volatility indicators like VIX and MOVE.
• Adaptable Traders: Traders comfortable with customizing parameters, such as the length of periods and EMA, to suit varying market conditions.
• Backtesters: Individuals who rely on historical data to validate and fine-tune their trading strategies continuously.

• Strategy Essence: Uses VIX, MOVE, and Oil Volatility z-scores with Bollinger Bands to forecast SPY movement.
• Operation Method: Automated via TradingView, adaptable for manual trades or hybrid with alerts for specified conditions.
• Manual Trading: Add required indicators, calculate z-scores, apply EMA filters, and validate with Bollinger Bands for entry/exit signals.
• Strategy Optimization: Adjust lookback periods, add volume data for confirmation, consider macroeconomic factors, and integrate multiple time-frame analysis.
• Risk Management: Tailor position sizes based on signal risk, utilize stop loss strategies, and set take profits according to risk-reward assessments.
• Indicator Customization: Modify EMA and Bollinger Bands, incorporating RSI or MACD, for refined trading signals.
• Backtesting: Continuously test the strategy against historical data to ensure robust performance across different market phases.