NotAnotherSMAOffSetStrategy_V2: Strategy Explained
1. What Does This Strategy Do?
Imagine you're at a supermarket — smart shoppers know prices go up and down. Today expensive, tomorrow cheap. How do you buy at the cheapest time?
This strategy is a trading bot that teaches you to "buy low, sell high." It doesn't chase rising prices or fear falling prices. Instead, it specifically watches for "discount" opportunities — when prices drop to a certain level, it auto-buys; when prices bounce back, it sells for profit.
The strategy name "NotAnotherSMAOffSetStrategy_V2" translates to "not just another simple MA offset strategy." Why? Because there are too many MA strategies out there, and this one is innovative — not the old "price crosses MA up to buy, crosses down to sell" routine.
2. Core Logic: Buy When Cheap, Sell When Expensive
Simply Put:
This strategy is like a smart shopper whose principles are:
When buying:
- Price must be a certain percentage below "fair price" (e.g., 2.5% cheaper)
- Can't just look at price; must also check "momentum" (RSI indicator) for oversold conditions
- Volume can't be too abnormal
- Several indicators must all say "buy"
When selling:
- Price has bounced back near or above the MA
- Momentum starts improving
- Got profit? Run!
3. Technical Indicators Explained in Plain English
3.1 Moving Average — Your "Fair Price" Reference Line
A moving average is simply the average price over a recent period, serving as the coin's "fair price level."
This strategy uses offset MAs — moving the MA down a bit. Like: normal MA at $100, but the strategy sets buy line at 97.5% of MA ($97.5). Only buys when price falls below $97.5, getting a better price!
The strategy has two buy offset values:
- 0.975 (normal buy): Buy when price drops to 97.5% of MA
- 0.95 (aggressive buy): Buy when price drops to 95% of MA, fishing for deeper bottoms
3.2 RSI — "Buying/Selling Pressure" Indicator
RSI is like aspring scale (spring scale), telling you if the market has "too much energy" or "not enough."
- RSI > 70: Market too excited, too many buyers, may pull back
- RSI < 30: Market too pessimistic, too many sellers, may rebound
The strategy uses three RSIs:
- Main RSI (14-period): See the big picture
- Fast RSI (4-period): Quick reaction, used to find entry timing
- Slow RSI (20-period): Slow reaction, used to judge trend
3.3 EWO — "Wave Emotion" Indicator
EWO (Elliott Wave Oscillator) judges market "emotion."
- Positive and large: Market rising, optimistic sentiment
- Negative and small: Market falling, pessimistic sentiment
The strategy uses it to judge: Is the market overall rising or falling? Only in an UPTREND's pullback are opportunities good!
3.4 Volume — "Market Heat" Indicator
Volume is like supermarket foot traffic:
- High (active): Market is active, price changes are meaningful
- Low (quiet): Market is dull, may be just minor fluctuations
The strategy has a special volume indicator "vol_base" that converts volume into a -100 to 0 value:
- Above -20: Very active volume
- -77 to -96: Moderate-low volume (strategy's favorite)
- Too low: Don't trade
3.5 HMA — "Fast Trend Line"
Hull Moving Average (HMA) is a special MA known for fast reaction and low noise. Strategy uses 50-period HMA to judge whether to sell.
4. Buy Signal Details
The strategy has four buy signals, each with its own trigger conditions:
4.1 EWO1 Signal — Main Signal
Most commonly used buy signal, conditions:
✓ Volume moderate (not too hot, not too cold)
✓ Fast RSI below 35 (short-term oversold)
✓ Price below MA offset position (e.g., 97.5%)
✓ EWO shows market overall still rising (just a temporary pullback)
✓ Main RSI not at overbought (hasn't exceeded 69)
✓ Volume > 0 (exclude abnormal data)
✓ Price not yet at sell line
Plain English: Market was rising, suddenly dropped hard, people scared, but overall trend isn't broken. This is a "bargain hunting" opportunity!
4.2 EWO2 Signal — Aggressive Bottom-Fishing
More aggressive than EWO1, requires deeper price drop:
✓ Volume moderate
✓ Fast RSI below 35
✓ Price below 95.5% of MA (deeper than EWO1)
✓ EWO > -2.327
✓ Main RSI must be below 25 (VERY oversold)
✓ Other basic conditions
Plain English: Market panicked, price dropped terribly, RSI below 25. Buyers at this point are either brave or smart — extreme panic often brings big rebounds!
4.3 EWO3 Signal — Active Volume Version
Targets high-volume scenarios:
✓ Volume very active (vol_base > -20)
✓ Fast RSI below 35
✓ Price below MA offset
✓ EWO shows upward momentum
✓ Other basic conditions
Plain English: Market is bustling, everyone trading, price suddenly drops. This dip may just be short-term fluctuation, buyers will come soon to bottom-fish — we buy too!
4.4 EWOLow Signal — Extreme Oversold Bottom-Fishing
Targets "crash-style drops":
✓ Volume moderate
✓ Fast RSI below 35
✓ EWO very low (below -20.988)
✓ Price below MA offset
Plain English: Market crashed, everyone selling, EWO fell below -20. But as they say, "Be greedy when others are fearful." Extreme oversold often brings revenge rebounds. Obviously, this signal carries the most risk.
5. Sell Signal Details
The strategy's sell logic is relatively simple — two scenarios:
5.1 Condition A: Rebound Complete, Take Profit
✓ Price above 9-day MA
✓ Price at sell channel upper edge
✓ RSI restored above 50 (momentum normal)
✓ Fast RSI above slow RSI (short-term momentum strengthening)
✓ Volume present
Plain English: Price rebounded, momentum restored, time to take profit and run.
5.2 Condition B: Trend May Reverse, Get Out
✓ Price broke below 50-day HMA (trend may weaken)
✓ But price still above sell channel
✓ Fast RSI above slow RSI
✓ Volume present
Plain English: Though still at relatively high price, trend may be turning bad. With some profit left, run!
5.3 Sell Confirmation — Don't Sell Too Early
There's a smart mechanism: even if sell signal triggers, one more check:
If: Short-term MA still above long-term MA (trend still intact)
And: RSI not overheated
Then: Don't sell! Continue holding, let profits run more
Plain English: Sell signal came, but trend still healthy. Don't rush to sell; waiting may bring more gains.
6. Risk Control Mechanisms
6.1 Hard Stop-Loss: Max 35% Loss
stoploss = -0.35
If judgment is wrong and price keeps falling, auto-sell after 35% loss. This stop-loss is relatively wide because mean reversion strategies need to tolerate some price fluctuation.
6.2 Trailing Stop — Profit Protection Tool
✓ After profit exceeds 2.5%, activate trailing stop
✓ Stop line follows highest price, maintaining 0.5% distance
✓ Price retraces over 0.5%, sell
Example:
- Bought at $100
- Rose to $102.50, profit 2.5%, trailing stop activates
- Rose to $110, stop line follows to $109.45 ($110 × 99.5%)
- Dropped to $109.45, triggers stop, you made 9.45%
The trailing stop's power — it "locks in" profits without "capping" them.
6.3 ROI Targets — Time is Money Too
The strategy sets tiered targets:
| Time | Target Return |
|---|---|
| Just bought | 21.5% (big goal) |
| After 40 min | 3.2% (lowered target) |
| After 87 min | 1.6% (lowered again) |
| After 201 min | 0% (accept any positive) |
Plain English: Bought in, expect a big rebound. Waited a while without big rise, lower expectations. Waited over 3 hours, sell if not losing — after all, time costs money too.
7. Parameter Details
7.1 Buy Parameters
| Parameter | Default | Adjustable Range | Purpose |
|---|---|---|---|
| base_nb_candles_buy | 14 | 5-80 | Buy MA period; smaller = faster reaction |
| low_offset | 0.975 | 0.9-0.99 | Buy discount; smaller = buy cheaper |
| low_offset_2 | 0.955 | 0.9-0.99 | Aggressive buy discount |
| ewo_high | 2.327 | 2.0-12.0 | EWO high threshold |
| ewo_low | -20.988 | -20.0 to -8.0 | EWO low threshold |
| rsi_buy | 69 | 30-70 | RSI buy threshold |
7.2 Sell Parameters
| Parameter | Default | Adjustable Range | Purpose |
|---|---|---|---|
| base_nb_candles_sell | 24 | 5-80 | Sell MA period |
| high_offset | 0.998 | 0.95-1.1 | Sell offset; larger = sell later |
| high_offset_2 | 1.0 | 0.99-1.5 | Aggressive sell offset |
8. Strategy Pros & Cons
8.1 Pros
1. Precise entry: Not buying the moment price drops; must drop below MA percentage before buying — gets better prices!
2. Multi-verification: Multiple "inspections" before buying: price position, momentum, volume, trend direction — all required. Fewer false signals.
3. Smart exits: Not selling at every rise; when trend is good, let profits run; when trend weakens, run.
4. Trailing stop protects profits: Whatever price rises, stop follows up — protects profits without limiting upside.
5. Highly adjustable: Lots of parameters to optimize — be aggressive or conservative, your choice!
8.2 Cons
1. Long only: Can only buy, can't short. In bear markets, just watch.
2. Wide stop-loss: 35% loss is painful when triggered.
3. Too many parameters: More parameters is good when tuned right, but a money-loser when tuned wrong.
4. Needs ranging markets: Doesn't perform well in strong trends (continuously rising or falling); prefers oscillating markets.
5. Time cost: Uses 5-minute candles, trading frequency may be high, fees add up.
9. How to Use This Strategy Well?
9.1 Market Selection
Good markets:
- Prices go up and down, oscillating
- Moderate volume, not too hot not too cold
- Not extreme one-sidedmarkets
Bad markets:
- Sustained falling bear market
- Low-liquidity small coins
- Extreme volatility (during major news)
9.2 Trading Pair Selection
Good choices:
- Major coins: BTC, ETH, etc.
- High volume
- Price fluctuations with patterns
Bad choices:
- Newly listed coins
- Coins with very low daily volume
- Coins with erratic price jumps
9.3 Risk Control Advice
- Don't go all-in: Each trade no more than 5-10% of total capital
- Diversify across coins: Run several trading pairs simultaneously, don't put all eggs in one basket
- Regular checks: Review strategy performance when it's not doing well, consider parameter adjustments
- Stop-loss discipline: Once stop is set, don't manually cancel
- Keep sufficient margin: Don't get liquidated due to insufficient margin
10. FAQ
Q1: Why is the stop-loss set so wide at 35%?
A: Mean reversion strategies need to tolerate some price fluctuation. Price might drop 20% first then bounce back; if you set 10% stop-loss, you'd get stopped out at the bottom. That said, 35% is wide for many people — adjust based on your risk tolerance.
Q2: Which of the four buy signals should I use?
A: No need to choose manually — the strategy auto-judges which to use. EWO1 is the main signal, most frequent; EWO2 and EWOLow are bottom-fishing signals, higher risk but potentially higher returns; EWO3 targets active markets.
Q3: How many trades per day?
A: Depends on market volatility. Heavily oscillating markets may see several trades per day; calm markets might go days without a signal.
Q4: Do I need to watch it constantly?
A: No — that's the robot's advantage. Set parameters and let it run on its own; check results regularly.
11. Summary
NotAnotherSMAOffSetStrategy_V2 is a well-designed mean reversion strategy. It's not simply looking at one indicator to trade; it makes decisions by synthesizing multiple dimensions:
- Is the price cheap enough? (MA offset)
- Is market sentiment right? (RSI oversold)
- Is the overall trend good? (EWO indicator)
- Is volume reasonable? (Volume baseline)
- Is the sell timing right? (Secondary confirmation mechanism)
Key to using this strategy well:
- Choose suitable markets and trading pairs
- Tune parameters and backtest thoroughly
- Execute risk control strictly
Remember, no perfect strategy exists, only suitable strategies. This strategy suits ranging markets, not extreme one-sidedmarkets. Understanding the strategy's principles and limitations is how you make money with it.
Final advice: Trading has risk, invest cautiously. No matter how good the strategy, trade within your means.
Hope this plain-English version helps you understand this strategy. Feel free to discuss!