Investing is risky, so be cautious when entering the market; this article is for educational purposes only and does not contain any investment advice!
Preface: I hope everyone will like and give more attention and support. More trading knowledge will be updated later.
This demonstration is based on Bitcoin!
First prepare a clean chart!
Let’s invite our MACD master again!
The advantages of MACD are:
Identify trend changes: Helps capture reversal points in market trends.
Adaptable to various markets: can be used in trending and volatile markets.
Momentum Measurement: Assess market momentum and indicate buy and sell signals.
Overbought and Oversold Signals: Identify market overextensions through histograms.
Next, we need to use the 'divergence' skill of the MACD master!
The above image helps everyone to understand what divergence is!
Adjust the parameters! Here you can modify it according to your preferred trading level; the parameters shown are suitable for the 15-minute level!
Let's bring out our BOLL master again!
The advantage of Bollinger Bands (BOLL) is:
Trend recognition: Helps identify the price fluctuation range through the upper and lower bands, providing trading signals when trends break.
Volatility analysis: The narrowing and expansion of the bandwidth can reflect changes in market volatility, helping to predict potential price breaks.
Overbought and oversold signals: When the price touches the upper band, it may be overbought; when it touches the lower band, it may be oversold, providing reversal signals.
Adapting to different markets: Suitable for both ranging and trending markets, able to help traders adjust their strategies.
Next, we need to use the 'upper and lower limits' and 'horizon' skills of the BOLL master!
Adjust the parameters! Here you can modify it according to your preferred trading level; the parameters shown are suitable for the 15-minute level!
The length of 60 here can be understood as the 60-period moving average, which is the middle band of BOLL, the horizon.
It is worth noting the standard deviation; under a normal distribution, three times the standard deviation (i.e., ±3 standard deviations) covers about 99.7% of the data. This means that approximately 99.7% of the data will fall within three times the standard deviation of the mean, with only about 0.3% of the data lying outside this range.
This means that the BOLL master has already defined the range of price fluctuations with high probability.
Next, we are going to start setting the entry and exit signals.
The buy signal is when MACD shows two consecutive bottom divergences and is above the lower BOLL band and below the middle band.
The sell signal is when MACD shows two consecutive top divergences and is below the upper BOLL band and above the middle band.
Each position is 10% of the total funds, with a maximum of three increases in position.
Let's see how the data looks? Testing the trading data of the past two years based on the 15-minute level of Bitcoin.
2023.02.20-2025.02.20
Loss of 6%! Win rate of 62%! Profit factor of 0.93!
The last step, set the stop loss!
Based on the price fluctuations at the 15-minute trading level of Bitcoin, this strategy suggests a stop loss range of 8%-12% (5-10 times leverage).
At this point, the strategy has been formulated, and everyone can follow this process to design their own trading strategy.