MarketCipher B Wavetrend Divergences
Created for the MarketCipher Community and friends :)
I have published this before but it was taken down by Tradingview and PineCoders because they wanted a more in depth description so here it is:
This strategy is mainly based on Wavetrend Oscillator by LazyBear / blue momentum waves on MarketCipher B.
The Wavetrend indicator is a combination of 2 oscillator lines that signals the short term direction of the price once the lines cross. The Wavetrend indicator is useful but only once a divergence has been identified based on the crosses and the price which is what this strategy partly uses to open trades.
Here is a list and description of the different conditions that goes into the entries and exits.
Long trade:
1) Bullish divergence, regular or hidden
2) Price is above Exponential Moving Average
3) Chande Momentum Oscillator value is above x
Short trade:
1) Bearish divergence, regular or hidden
2) Price is below Exponential Moving Average
3) Chande Momentum Oscillator value is below x
The Exponential Moving Average (EMA) is a type of moving average that is price based, lagging (or reactive) indicator that displays the average price of a security over a set period of time. The EMA is however different from a normal moving average and values the recent price action. A Moving Average is a good way to confirm trends which is what it is used for in this strategy. If enabled the strategy will only open long trades above the EMA and only short trades below the EMA.
The Chande Momentum Oscillator is a technical momentum indicator and was designed specifically to track the movement and momentum of a security. The oscillator calculates the difference between the sum of both recent gains and recent losses, then dividing the result by the sum of all price movement over the same period. In this strategy it is used like the EMA to filter out bad trades that goes against the trend. The EMA is better at trading the overall trend but the Chande Momentum Oscillator is a lot better at identifying short term market conditions that are favorable for entering at divergences.
One of the most important aspects when creating a trading strategy is to know when to take profit and to make it as dynamic as possible so that it changes to the market conditions. This is what i have tried to do and the reason why this divergence trading strategy works well.
These are the 3 different exit conditions:
1) A dynamic take profit that will signal a short term trend reversal that is based on pivot points and moving averages.
2) Another dynamic take profit based on pivot points that like the previous take profit is used to determine and anticipate potential changes in market price and reversals.
3) A normal % fixed take profit
Photo of what the dynamic take profit looks like on the chart:
The pivot pointexit comes from this indicator that i have helped update and modify from the original script:
When you have found the right settings you can insert the messages from your automatic trading platform at the bottom of the inputs and then create an alert with your unique webhook address along with the alert message below:
{{strategy.order.alert_message}}
I hope this strategy will be useful to automate part of your trading or help you identify and backtest divergences for your manual trading.
Future updates to come.
Enjoy!
I have published this before but it was taken down by Tradingview and PineCoders because they wanted a more in depth description so here it is:
This strategy is mainly based on Wavetrend Oscillator by LazyBear / blue momentum waves on MarketCipher B.
The Wavetrend indicator is a combination of 2 oscillator lines that signals the short term direction of the price once the lines cross. The Wavetrend indicator is useful but only once a divergence has been identified based on the crosses and the price which is what this strategy partly uses to open trades.
Here is a list and description of the different conditions that goes into the entries and exits.
Long trade:
1) Bullish divergence, regular or hidden
2) Price is above Exponential Moving Average
3) Chande Momentum Oscillator value is above x
Short trade:
1) Bearish divergence, regular or hidden
2) Price is below Exponential Moving Average
3) Chande Momentum Oscillator value is below x
The Exponential Moving Average (EMA) is a type of moving average that is price based, lagging (or reactive) indicator that displays the average price of a security over a set period of time. The EMA is however different from a normal moving average and values the recent price action. A Moving Average is a good way to confirm trends which is what it is used for in this strategy. If enabled the strategy will only open long trades above the EMA and only short trades below the EMA.
The Chande Momentum Oscillator is a technical momentum indicator and was designed specifically to track the movement and momentum of a security. The oscillator calculates the difference between the sum of both recent gains and recent losses, then dividing the result by the sum of all price movement over the same period. In this strategy it is used like the EMA to filter out bad trades that goes against the trend. The EMA is better at trading the overall trend but the Chande Momentum Oscillator is a lot better at identifying short term market conditions that are favorable for entering at divergences.
One of the most important aspects when creating a trading strategy is to know when to take profit and to make it as dynamic as possible so that it changes to the market conditions. This is what i have tried to do and the reason why this divergence trading strategy works well.
These are the 3 different exit conditions:
1) A dynamic take profit that will signal a short term trend reversal that is based on pivot points and moving averages.
2) Another dynamic take profit based on pivot points that like the previous take profit is used to determine and anticipate potential changes in market price and reversals.
3) A normal % fixed take profit
Photo of what the dynamic take profit looks like on the chart:
The pivot pointexit comes from this indicator that i have helped update and modify from the original script:
When you have found the right settings you can insert the messages from your automatic trading platform at the bottom of the inputs and then create an alert with your unique webhook address along with the alert message below:
{{strategy.order.alert_message}}
I hope this strategy will be useful to automate part of your trading or help you identify and backtest divergences for your manual trading.
Future updates to come.
Enjoy!
Versionsinformation:
Added the alert messages back in the inputs.
Versionsinformation:
Added input backtest range