Trading is easy, however, consistently profitable trading is where the difficulty lies. Being a trader means not only deciding what strategy you wish to use, but also what assets you want to use it on. While several of our videos have spoken about the former in the past, in this article we will discuss a way to get around the latter. We discuss the different indicators, the settings used, and also go over the results. Read on to find out more.
The 3 main indicators used in this trading setup have been explained below in detail.
Squeeze Momentum Indicator
The squeeze momentum indicator is a volatility-based indicator that is used to identify when the market is flat and when the market is in a particular trend. For any time frame, over 80% of all price movements are just consolidations of a trend, and only 20% of movements are actually price movements in a particular direction. In this screener, we shall be using this volatility indicator to spot when assets are moving in a certain direction, and then pick those assets to implement trading strategies on.
The EMA is simply the exponential moving average of the stock’s closing price over a given number of trading sessions. It works in a very similar way to the SMA (Simple Moving Average), except it gives more priority to more recent data as this is considered to be more relevant than old data. The parameter that you have to enter for the EMA is the time period. Usually, traders only go long when the current price is above the EMA, and short when prices go below the EMA.
Average Directional Index
The ADX indicator is often called the ultimate trend indicator, as it helps traders to identify when prices are flowing strongly in one direction. It does this by using a moving average of a given number of bars and therefore helps to reduce the risk associated with trend-based strategies such as scalping. It is a line and gives a value between 0 and 100. The ADX gives the strength of a given trend irrespective of whether the trend is a bullish or bearish one. The higher this value, the stronger the trend.
The screener was built using the following method:
- First, a list of 20 coins were selected on which the analysis would be carried out for screening and selecting the coins which displayed the signs of a breakout from their consolidation phase.
- The EMAs and ADXs of each coin were calculated and added. Trades would only be made if the ADX level was above 25. In addition to this, long trades were only made when the price was above the 200 EMA and short trades only made when the price was below the 200 EMA.
- In addition to this, the numbers from the Squeeze Momentum Indicator were included, as these would be the final say in whether or not a particular coin would be chosen for implementing trading strategies.
There are several highly profitable trading strategies that you can use in order to trade the markets and profit, and the screener discussed above will help you choose the right coins from which you can profit easily. By implementing it even in its current form, you can make significant profits. You can also tweak the settings and alter the parameters on your own, resulting in a higher win rate and/or profitability.
- PUMP or DUMP Finder With The Best Trading Indicator – YouTube
- TradingView Indicator
- Squeeze Momentum Indicator – ATAS
- Exponential Moving Average – Investopedia
- ADX: The Trend Strength Indicator – Investopedia