ELLIPSE: Ultimate Bidirectional Swing Trading Strategy
Introduction
The eternal question that has occupied the humanity since its early existence is what is the meaning of life and why am I here? On a daily basis this quest for meaning is distilled into a somewhat simpler question: What is the reason for getting up every morning?
For many of us, these thoughts arise even more as autumn arrives and it gets dark, bleak and cold outside. I guess it is easier to forget about the meaning of your life, while swimming on a sandy beach, enjoying a cocktail. Than you are living you life and you don’t need to rationalize it. Everything makes perfect sense!
In winter however, you need to get more “creative”. I, for example, would always try to change my perspective of things by doing something that makes my heart beat faster, like drinking a bottle of Heineken on a Friday evening or having endless conversations with my mates about stupid things, or kicking a ball against BALLONTHEROOF 7 on a Saturday morning. During the week, I would take out my frustrations on the fitness equipment at the local gym.
But what if all of this is canceled by CORONA? All that’s left is to work for the boss and run your 10km lap twice a week. The question is, what do you do now, with this huge amount of ”free” time than any old person would give anything for. When you are young time is never ending, when you are older it is never enough. Time has reached a different dimension in these days.
However, you can still do 2 things. You can slowly let the walls come to you and give up or you can actually do something useful with your time and find something that you are good at.
For us this choice was easy. After the success of our positioning trading strategy the MATRIX, at the time of the corona lockdown, we started making a swing trading strategy for the 4H timeframe, called ELLIPSE. We have included all feedback and any improvements we received about the positioning strategy and integrated it into the 4H script.
The main requirements of the script that we had set ourselves were:
- Bidirectional (Long and short the market)
- Low max drawdown
- High profit factor
- Works on all main crypto coins
- Outperforms Buy&Hodl
By fully focusing ourselves on the script over the past few months, I can’t help but (unhumbly) say that we have not only succeeded in our mission, but that we have absolutely surpassed ourselves!
The only bright spot in this heavy corona time is, if a drug becomes available, there is extra money in the bank!
User Guidelines
ELLIPSE Ultimate Crypto Swing Trading Strategy should be used as follows:
- The trading strategy was designed and optimized for trading cryptocurrencies only; furthermore it works best on established cryptocurrencies that have a clear historical trend such as:
BTCUSD
ETHUSD
LTCUSD - The trading strategy is based on swing trading methodology. The script must therefore be used on 4h candles only.
- Use USD trading pairs only (e.g. use ETHUSD instead of the ETHBTC) since the individual trend is captured more effectively and therefore gives better results.
- The trading strategy is bidirectional, both long and short entries are generated.
Indicators
ELLIPSE Ultimate Crypto Swing Trading Strategy is based on the following indicators:
- Ichimoku Cloud; acts as the leading indicator.
- Volume; without strong volume , a market move is not valid.
- MACD and Vortex; both being used as confirmation indicators.
- Choppiness index; avoids trading in choppy markets.
- Simple and Exponential Moving Averages; prevents trading against the trend.
- Pivot points; to determine the overall trend over different timeframes and identify support and resistance levels
- Implementation of the MATRIX, when MATRIX is activated the background turns green
The trading strategy is easy to use, bidirectional, trend based and without repainting, meaning once a signal has been made it is permanent and that no future data is used in the decision making. It detects the trend and filters out market noise based on more than 10 technical indicators. ONLY when all indicators align with each other the algorithm prints a LONG or SHORT signal. The trading strategy provides high probability trading signals and minimizes risk! This script aims to capture the profit from short to medium trending moves and by doing so filters out non-substantial trends and avoids the associated risks with these trades.
Features
- NO Repaint once candle is closed.
- Stop loss feature; set your own stop loss to manage your risks.
- Customizable Display for the Ichimoku cloud indicator display.
- Bidirectional; both long and short trading positions can be enabled.
- Full backtest feature; Easily generate your own backtest results for each asset (Strategy Version Script).
- Alerts; Get notified via email / pop-up / sms / app once a signal is given! For more info on how to set up alerts click here.
- Automated Trading; For more info on how to set it up click here.
Backtest results
Below the backtesting results are displayed for the top 100 cryptocurrencies.
Backtest Settings:
-Long and short trading positions,
-Signal to signal trading (no multiple orders),
-commission fee 0.1%,
-period: start of chart until 17th July 2022
For the backtesting report spreadsheet click here.
Important metrics used in the backtest results are, percent profitable, profit factor and maximum drawdown. Investopedia.com states:
Percent Profitable: This metric is also known as the probability of winning. This metric is calculated by dividing the number of winning trades by the total number of trades for a specified period. The ideal value for the percent profitable metric will vary depending on the trader’s style. Traders who typically go for larger moves, with greater profits, only require a low percent profitable value to maintain a winning system, because the trades that do win — that are profitable, that is — are usually quite large. This typically happens with the strategy known as trend trading. Those that follow this approach often find that as few as 40% of trades might make money and still produce a very profitable system because the trades that do win follow the trend and typically achieve large gains. The trades that do not win are usually closed for a small loss.
Profit Factor: This metric is simply defined as gross profits divided by gross losses. That’s it in a nutshell, but sometimes the simplest things hold the most value A Profit Factor above 2 is outstanding. Obviously, the larger the number is, the better. For example: A Profit Factor of 3 means your net gains were 3 times greater than your net losses, and anything above 3 is unheard of.
Maximum drawdown: This metric refers to the “worst-case scenario” for a trading period. It measures the greatest distance, or loss, from a previous equity peak. This metric can help measure the amount of risk incurred by a system and determine if a system is practical, based on account size. If the largest amount of money that a trader is willing to risk is less than the maximum drawdown, the trading system is not suitable for the trader.
Contact
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We currently offer a 7-Day Free Trial for our swingtrading strategy ELLIPSE. To request access click here.
Reminder: Use this trading strategy at your own risk and trade responsibly. We are not responsible for any financial loss using this strategy.
