Bride of FrankenStrategy

Strategy Intent

Trading Criteria Details
Market Suitability Bull market when volatility is at its highest
Difficulty Advanced
Strategy Type Fading
Take Profit
DCA
Positive DCA
Pending Orders
Trailing Stop Loss
Published
Demo Server

Note:

  1. Click the cloud icon to view the demo server for this strategy;
  2. Note if the cloud icon is showing in red it means the demo server is not available right now;

Strategy Overview

  • This strategy does what is known in the trading community as “Fading”. You may have heard the term “Fading the market”.
  • Fading is a contrarian investment strategy where you sell when the price is rising and buy when it's falling. As such it is a high risk strategy. The risks are offset by the good returns that fading can provide.
  • It is based on Dow theory where the premise is that everything is already factored into the price action i.e. market news, FUD, FOMO, etc. It also assumes that prices will always return to their mean trading range.
  • The strategy attempts to “buy the dip”.
  • The intent is to sell directly out of the Pairs log and DCA and Pending Orders have been turned off. This requires good volatility in the market to achieve so the strategy is best suited to a Bull market.

Entry Criteria

  • The strategy entry criteria are specified by a buy formula.
  • It first looks for a breakdown on a prevailing trend, using PDHIGH, as a signal for a buying opportunity.
  • The strategy makes use of two Bollinger Bands offset from each other with custom lengths and deviations.
  • The Inner Band consists of a compressed timeframe Bollinger Band (10/1) and it uses the LOWBB with a buy formula to set the range where it will buy.
  • The strategy uses LOWBB on the Inner Band to attempt to buy the dip.
  • The strategy also makes use of RSI and STOCH and uses the strategy direction setting to ensure they only go true on the way down.
  • It uses trailing buy to ensure we buy as close to the bottom of the dip as possible.

Trade Management

  • DCA is enabled and implements a Fibonacci buy trigger sequence as well as a Buy Same number of coins mechanism to enable small trading budgets to go to deeper levels of DCA as required.
  • Pending Orders are turned off.
  • The strategy applies the 2% and 10% rules of trading.
  • Position size is limited to 2% of risk capital per trade.
  • Only 5 trading pairs are active at any time to ensure no more than 10% of total risk capital is employed in trading at any time.
  • A trailing stop loss is employed rather than a fixed stop loss.
  • Take profit is employed to prevent loss of profits.

Exit Criteria

  • The strategy exit criteria are defined by a sell formula to specify the exit conditions.
  • The Outer Band consists of a more standard timeframe Bollinger Band (20/2) and it uses a sell formula to set the range where it will sell.
  • This strategy checks to see if we have exceeded the HIGHBB bounds of the Outer Band as its main sell signal.
  • The exit criteria also makes use of GAIN to set a minimum profit to achieve. We don't care how much by, as there are no guarantees how much we can achieve, we just don't want to sell for a loss. We want the profit to be driven by the HIGHBB.
  • It makes use of RSI to confirm a strengthening uptrend and uses the strategy direction setting to ensure the RSI only goes true on the way up.

Strategy Tips

  • This strategy started life as a direct copy of the FrankenStrategy example trading strategy, hence the name.
  • The key to this strategy is patience, it takes time for it to find a suitable trading pair with the right entry conditions to fade.
  • Depending on market volatility you may need to adjust the take profit and trailing stop loss arm / fire settings to ensure no money is being left on the table.
  • ensure you do not overextend yourself by getting your max trading pairs and initial cost right to suit your trading budget.
  • Use the DCA calculator we provide to work these values out covering at least 4 levels of DCA for all your pairs. Once you have those values enter them into this strategy. The DCA calculator also ensures you have a 50/50 split on your trading budget to ensure you have sufficient budget for the sell side of this strategy.


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  • bride.txt
  • Last modified: 4 weeks ago
  • by armchairguru