IsAlgo - CandleWave Channel Strategy

20 Jun

► Overview:
The CandleWave Channel Strategy uses an exponential moving average (EMA) combined with a custom true range function to dynamically calculate a multi-level price channel, helping traders identify potential trend reversals and price pullbacks.

► Description:
The CandleWave Channel Strategy is built around an EMA designed to identify potential reversal points in the market. The channel’s main points are calculated using this EMA, which serves as the foundation for the strategy’s dynamic price channel. The channel edges are determined using a proprietary true range function that measures the distance between the highs and lows of price movements over a specific period. By factoring in the maximum distance between highs and lows and averaging these values over the period, the strategy creates a responsive channel that adapts to current market conditions. The channel consists of five levels, each representing different degrees of trend tension.

The strategy continuously monitors the price in relation to the channel edges. When a candle closes outside one of these edges, it indicates a potential price reversal. This outside-close candle acts as a signal for a possible trend change, prompting the strategy to prepare for a trade entry. Upon detecting an outside-close candle, the strategy triggers an entry. The logic behind this is that when the price moves outside the defined channel, it is likely to revert back within the channel and move towards the opposite edge. The strategy aims to capitalize on this reversion by entering trades based on these signals.

Traders can adjust the channel’s length, levels, and minimum distance to tailor it to different market conditions. They can also define the characteristics of the entry candle, such as its size, body, and relative position to previous candles, to ensure it meets specific conditions before triggering a trade. Additionally, the strategy permits the specification of trading hours and days, enabling traders to focus on preferred market periods. Exit can be configured based on profit/loss limits, trade duration, and band reversal signals or other criteria.

How it Works:

1. Channel Calculation: The strategy continuously updates the channel edges using the EMA and true range function.
   
2. Signal Detection: It waits for a candle to close outside the channel edges.
   
3. Trade Entry: When an outside-close candle is detected, the strategy enters a trade expecting the price to revert to the opposite channel edge.
   
4. Customization: Users can define the characteristics of the entry candle, such as its size relative to previous candles, to ensure it meets specific conditions before triggering a trade.
   
   ↑ Long Trade Example:
   The entry candle closes below the channel level, indicating a potential upward reversal. The strategy enters a long position expecting the price to move towards the upper levels.
   
   
   ↓ Short Trade Example:
   The entry candle closes above the channel level, signaling a potential downward reversal. The strategy enters a short position anticipating the price to revert towards the lower levels.
   ► Features and Settings:⚙︎ Channel: Adjust the channel’s length, levels, and minimum distance to suit different market conditions and trading styles.
   
   ⚙︎ Entry Candle: Customize entry criteria, including candle size, body, and relative position to previous candles for accurate signal generation.
   
   ⚙︎ Trading Session: Define specific trading hours during which the strategy operates, restricting trades to preferred market periods.
   
   ⚙︎ Trading Days: Specify active trading days to avoid certain days of the week.
   
   ⚙︎ Backtesting: backtesting for a selected period to evaluate strategy performance. This feature can be deactivated if not needed.
   
   ⚙︎ Trades: Configure trade direction (long, short, or both), position sizing (fixed or percentage-based), maximum number of open trades, and daily trade limits.
   
   ⚙︎ Trades Exit: Set profit/loss limits, specify trade duration, or exit based on band reversal signals.
   
   ⚙︎ Stop Loss: Choose from various stop-loss methods, including fixed pips, ATR-based, or highest/lowest price points within a specified number of candles. Trades can also be closed after a certain number of adverse candle movements.
   
   ⚙︎ Break Even: Adjust stop loss to break even once predefined profit levels are reached, protecting gains.
   
   ⚙︎ Trailing Stop: Implement a trailing stop to adjust the stop loss as the trade becomes profitable, securing gains and potentially capturing further upside.
   
   ⚙︎ Take Profit: Set up to three take-profit levels using methods such as fixed pips, ATR, or risk-to-reward ratios. Alternatively, specify a set number of candles moving in the trade’s direction.
   
   ⚙︎ Alerts: Comprehensive alert system to notify users of significant actions, including trade openings and closings. Supports dynamic placeholders for take-profit levels and stop-loss prices.
   
   ⚙︎ Dashboard: Visual display on the chart providing detailed information about ongoing and past trades, aiding users in monitoring strategy performance and making informed decisions.
   
   ► Backtesting Details:
   Timeframe: 30-minute GBPJPY chart
   Initial Balance: $10,000
   Order Size: 500 units
   Commission: 0.02%
   Slippage: 5 ticks

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Nota Keluaran

• Added Minimum Stop Loss Pips.
  
• Fixed issue with missing data in alerts.
  
• Updated styles and default colors.
  
• Included fixes for other bug issues.