IBS (Internal Bar Strength) Trading Strategy for SPY and NDQImplementation by AlgoTradeKit
Overview
The IBS Trading Strategy is a daily bars long-only trading system, based on the concept of Internal Bar Strength (IBS). The strategy aims to identify potential reversals by monitoring how the previous bar’s close positions itself within its high-low range. It is suitable for stock and US indices. The default parameters are optimized for SPY/SPX and NDQ/QQQ
Strategy Concept
The Internal Bar Strength (IBS) is calculated using the formula:
IBS = (Previous Close - Previous Low) / (Previous High - Previous Low)
This value always lies between 0 and 1. An IBS value below 0.2 is typically interpreted as an oversold condition, while a value above 0.9 suggests an overbought state.
Trading Rules
- Long Entry :
- Condition 1 : IBS is below the user-defined entry threshold (default is 0.2).
- Condition 2 : The current price is above an N-period Exponential Moving Average (EMA) (default period is 252).
- Note : You can disable the EMA condition by setting the EMA period to 0.
- Long Exit
- The position is closed when IBS rises above the user-defined exit threshold (default is 0.9).
Customization Options
- IBS Entry Threshold : Adjust to set the sensitivity for entering a long trade based on oversold conditions.
- IBS Exit Threshold : Customize to define the exit point when the market becomes overbought.
- EMA Period : Set the lookback period for the EMA to align with your trend bias; disable this condition by setting the period to 0.
Risk Management & Trading Considerations
- Designed for daily charts, the strategy captures higher timeframe trends and minimizes noise.
- The entry and exit conditions are straightforward, aiming to avoid over-trading while letting clear signals dictate trade management.
- Always use proper risk management techniques and test the strategy thoroughly on historical data and in a simulated environment before applying it in live markets.
Disclaimer
This strategy is for educational and informational purposes only and does not constitute financial advice. Trading involves risk, and past performance is not indicative of future results. Always conduct your own research and consider your risk tolerance before making any trades.
Candlesticksignals
3 Red / 3 Green Strategy with Volatility CheckStrategy Name: 3 Red / 3 Green Strategy with Volatility Check by AlgoTradeKit
Overview
This long-only strategy is designed for daily bars on NASDAQ (or similar instruments) and combines simple price action with a volatility filter. It “tells it like it is” – enter when the market shows weakness, but only in sufficiently volatile conditions, and exit either on signs of a reversal or after a set number of days.
Entry Conditions
- Price Action :
Enter a long position when there are 3 consecutive red days (each day's close is below its open).
- Volatility Filter :
The entry is allowed only if the current ATR (Average True Range) calculated over the specified ATR Period (default 12) is greater than its 30-day simple moving average. This ensures the market has enough volatility to justify the trade.
Exit Conditions
- Reversal Signal :
Exit the long position when 3 consecutive green days occur (each day's close is above its open), signaling a potential reversal.
- Time Limit :
Regardless of market conditions, any open trade is closed if it reaches the Maximum Trade Duration (default 22 days). This helps limit exposure during stagnant or unfavorable market conditions.
- You can toggle the three-green-day exit if you want to isolate the time-based exit.
Input Parameters
- Maximum Trade Duration (days): Default is 22 days.
- ATR Period: Default is 12.
- Use 3 Green Days Exit: Toggle to enable or disable the three-green-day exit condition.
How It Works
1. Entry: The strategy monitors daily price action for 3 consecutive down days. When this occurs and if the market is volatile enough (current ATR > 30-day ATR average), it opens a long position.
2. Exit: The position is closed if the price action reverses with 3 consecutive up days or if the trade has been open for the maximum allowed duration - i.e. use it on daily chart.
Risk Management
- The built-in maximum trade duration prevents trades from lingering too long in a non-trending or consolidating market.
- The volatility filter helps ensure that trades are only taken when there is sufficient price movement, potentially increasing the odds of a meaningful move.
Disclaimer
This strategy is provided “as is” without any warranties. It is essential to backtest and validate the performance on your specific instrument and market conditions before deploying live capital. Trading involves significant risk, and you should adjust parameters to match your risk tolerance.
Test and tweak this strategy to see if it fits your trading style and market conditions. Happy trading!
Candlestick Signals StrategyThis strategy allows you to pick from 9 different candlestick patterns, and test them against historical data from your chart. You can get a good idea what patterns work best for each chart by turning each pattern on and off in the settings.
Basic Hammer StrategyThis is a basic strategy that will buy after a hammer is printed, and sell when a predetermined risk or reward price is hit. You can change the risk and reward values in the settings. Risk and reward values are in increments of $0.01. Default values are 75 ($0.75) and 200 ($2.00). If the strategy is producing losses, try adding a zero to the end of the risk value and the reward value. Example: Higher valued stocks may do better with a Risk of 750 ($7.50) and a Reward of 2000 ($20.00). Maybe even a Risk of 750 ($7.50) and reward of 1000 ($10.00). Play around with these values to get the best result for different charts. Initial investment is set to $1000
