NotAnotherSMAOffsetStrategyHO: Strategy Explained
1. What Does This Strategy Do?
1.1 One-Line Summary
This is a strategy specifically designed to find pullback buying opportunities in uptrends, like buying famous brands on sale — trend is good, just temporarily discounted, grab it!
1.2 What Does the Name Mean?
NotAnotherSMAOffsetStrategyHO broken down:
- NotAnother: Don't underestimate me, I'm not just any strategy
- SMA: Simple Moving Average (though actually uses EMA)
- Offset: Offset — not only looking at whether price reaches MA, but by how much it deviates
- HO: Likely "High Optimization" — heavily optimized version
Simply put, this is a "use MA to find bargains" strategy.
2. Core Principles in Plain English
2.1 Strategy's Core Idea
Imagine you're climbing a mountain. This strategy: wait for rest stops (price pullback), then you climb up to grab bargains.
It doesn't buy at the peak (too expensive), doesn't wait at the bottom (may catch a falling knife), but chooses to buy at the rest stop halfway up.
2.2 What is "Offset"?
This is the strategy's smartest feature!
Regular MA strategy: Buy when price crosses above MA
- Problem: By the time it crosses, price has already risen; you bought expensive
Offset strategy: Wait below MA to buy
- Set offset coefficient 0.966, meaning buy when price falls to 96.6% of MA
- Equivalent to 3.4% off — like buying pants at 96.6 yuan when tagged 100 yuan
2.3 Why Three Buy Signals?
Like exams have multiple choice, judgment, and fill-in — different question types test different knowledge.
Three signals:
- ewo1: Normal pullback, straightforward buy
- ewo2: Deep pullback, brave bottom-fishing
- ewolow: Market panic, contrarian
No matter how the market moves, there's a corresponding tactic.
2.4 What is EWO?
EWO (Elliott Wave Oscillator) is simply the difference between two MAs:
- A fast MA (quick)
- A slow MA (slow)
When fast MA is above slow MA: EWO is positive, market rising When fast MA is below slow MA: EWO is negative, market falling
The strategy uses EWO to judge: Is the major trend up or down
3. What Indicators Are Used?
3.1 Indicator Overview
| Indicator | Role | Analogy |
|---|---|---|
| EMA | Trend line, major direction | Highway center line |
| HMA | Fast-reacting trend line | Gas pedal, go when pressed |
| SMA | Short-term trend | Speedometer, shows speed |
| RSI | Overbought/oversold, sentiment | Thermometer, market fever or cold |
| EWO | Trend strength | Compass, direction finding |
| Volume | Trading volume | Fuel gauge, how much gas in tank |
3.2 Three RSI Periods
RSI is a 0-100 number showing if market is "overheated" or "too cold."
The strategy uses three RSIs:
- RSI_4 (fast): Like a stopwatch, reacts in seconds
- RSI_14 (standard): Like a clock, normal time-reading
- RSI_20 (slow): Like a calendar, sees long-term changes
Why three? Like weather — check current temperature (RSI_4), today's average (RSI_14), this week's trend (RSI_20).
3.3 EMA vs SMA
- SMA: Equal weight to all prices, arithmetic average
- EMA: Recent data weighted more, faster reaction
Strategy uses EMA as primary judgment because it's faster.
3.4 What is HMA?
HMA (Hull Moving Average) is both fast AND smooth.
Regular MAs are either fast but jittery, or smooth but slow. HMA is both. Strategy uses it to judge trend reversal because HMA reacts fast and catches problems early.
4. When to Buy?
4.1 Three Keys to Buy
| Signal | Market Situation | General Meaning |
|---|---|---|
| ewo1 | Bull normal pullback | Climbing, rest for a bit |
| ewo2 | Deep pullback | Dropped deep, bottom-fish |
| ewolow | Bear end | Fell to the bottom, wait for rebound |
4.2 Key 1: ewo1 (Main Buy Signal)
Scenario: Climbing a mountain, was steadily going up, suddenly tired and rested. ewo1 says: Now resting, will climb again later, buy now!
Conditions:
- Fast RSI < 35: Market panicked, everyone selling
- Price < MA's 96.6%: 3.4% cheaper
- EWO > 3.422: Major trend still up, just temporarily fell
- RSI < 52: Not overheated yet, okay to buy
- Volume > 0: Not a dead market
Win rate: Highest, because following the trend
Risk: Medium, pullback may continue
4.3 Key 2: ewo2 (Deep Pullback)
Scenario: This climb not only tired but slipped, fell pretty deep. ewo2 says: Fallen this much, near the bottom, go!
Conditions:
- Fast RSI < 35: Market panicked
- Price < MA's 95.1%: ~5% cheaper
- EWO > -4.58: Fell but not catastrophically
- RSI < 52: Not overheated
- RSI < 25: Extremely oversold
- Volume > 0
Win rate: Medium
Risk: Higher, bottom-fishing can fail
4.4 Key 3: ewolow (Reversal Signal)
Scenario: Not climbing anymore, fell to the valley bottom. ewolow says: Can't fall further, prepare for reversal!
Conditions:
- Fast RSI < 35: Market panicked
- Price < MA's 96.6%: Relatively cheap
- EWO < -8.562: Fell terribly
- Volume > 0
Win rate: Lower
Risk: Highest, catching a falling knife
4.5 Signal Comparison
| Signal | Win Rate | Expected Return | Risk | Best Scenario |
|---|---|---|---|---|
| ewo1 | High | Medium | Medium | Bull pullback |
| ewo2 | Medium | Higher | Higher | Deep pullback |
| ewolow | Low | Highest | Highest | Bear reversal |
Advice: Beginners use ewo1 more; experts can try ewo2 and ewolow.
5. When to Sell?
5.1 Two Sell Signals
| Signal | Meaning | Analogy |
|---|---|---|
| Condition 1 | Rose to target, time to sell | Arrived at stop |
| Condition 2 | Can't rise anymore, running away | Leaking, patch it fast |
5.2 Condition 1: Rose to Target, Sell
Conditions:
- Price > short-term MA (SMA_9): Short-term trend up
- Price > sell MA's 100.2%: Above baseline
- RSI > 50: Market still strong
- Fast RSI > Slow RSI: Momentum upward
- Volume > 0
Plain English: Rose to the planned position, although may rise more, strategy suggests taking the money and running, don't be greedy.
5.3 Condition 2: Trend May Reverse, Get Out
Conditions:
- Price < HMA (fast MA): Broke below fast trend line
- Price > sell MA's 101.4%: Still profitable
- Fast RSI > Slow RSI: Momentum still up (possibly fake)
Plain English: Rose to high ground but starting to fall, trend may change, protect your profits now.
5.4 Satisfy Either, Sell
The two conditions are OR — selling if either is met. Benefits:
- Condition 1 catches upwardmarkets
- Condition 2 catches reversal signals
- Hard to miss sell opportunities
6. How is Risk Controlled?
6.1 Stop-Loss: 35% Hard Bottom Line
stoploss = -0.35
Bought at $100, drops to $65 → forced sell.
Why 35%? Crypto swings 10% in a day normally. Too tight gets stopped by normal fluctuation. 35% is balanced.
Newbie advice: If 35% feels harsh, change to 25% or 30% yourself.
6.2 Trailing Stop: Follow Price, Lock Profits
How it works:
- After buying, don't rush
- Wait for price to rise 3%, trailing stop activates
- Stop line follows highest price, maintaining 0.5% distance
- Price retraces to stop line → auto-sell
Example:
- Bought at $100
- Rose to $103 (3% gain), trailing stop activates
- Rose to $110, stop line at $109.45 ($110 × 99.5%)
- Dropped to $109.45 → auto-sell, locked 9.45% profit
Benefit: Whatever it rises, locks in more.
6.3 Tiered Take-Profit
| Holding Time | Profit Target | Meaning |
|---|---|---|
| 0 min | 28.9% | Rose 28.9% immediately, sell now |
| 25 min | 10.5% | Held 25 min, 10.5% is fine |
| 80 min | 3.8% | Held 80 min, 3.8% is fine |
| 140 min | 0% | Held 140 min, sell even if breakeven |
Design logic:
- Just bought with a big bounce → run, don't be greedy
- Held longer → lower expectations
- Held over 140 min still not profitable → you're wrong, get out
6.4 Only Sell When Profitable
Strategy sets sell_profit_only = True — don't sell losing trades!
Unless triggered 35% stop-loss, sell signals don't execute in loss. Like: bought stock at $100, down $10, sell signal rang but strategy says "wait, that'd be cutting losses."
6.5 Risk Control Summary
| Measure | Trigger | Effect |
|---|---|---|
| Fixed stop-loss | Loss 35% | Survival bottom line |
| Trailing stop | Profit 3% activates | Locks profits |
| Tiered ROI | Time + profit ratio | Controls greed |
| Profit-only sell | Profit >1% | Avoid cutting losses |
| Slippage protection | Slip >2% reject | Controls costs |
7. What Do Parameters Mean?
7.1 Buy Parameters
| Parameter | Value | Meaning | Adjustment |
|---|---|---|---|
| base_nb_candles_buy | 16 | MA period for buying | Larger = smoother, smaller = more sensitive |
| low_offset | 0.966 | Main offset | Lower = need bigger discount, fewer signals |
| low_offset_2 | 0.951 | Backup offset | For bottom-fishing |
| ewo_high | 3.422 | ewo1 threshold | Positive means must be in uptrend |
| ewo_high_2 | -4.58 | ewo2 threshold | Expanded buy opportunities |
| ewo_low | -8.562 | ewolow threshold | For reversal signals |
| rsi_buy | 52 | RSI threshold | Lower = more conservative |
7.2 Sell Parameters
| Parameter | Value | Meaning |
|---|---|---|
| base_nb_candles_sell | 10 | Sell MA period (faster than buying) |
| high_offset | 1.014 | Price 1.4% above MA to consider selling |
| high_offset_2 | 1.002 | Price 0.2% above MA to consider selling |
Why sell faster than buy?
- Buy MA: 16 candles → slow, more observation
- Sell MA: 10 candles → fast, don't be greedy
8. Strategy Pros & Cons
8.1 Pros
1. Triple buy signals, many opportunities
- Bull has ewo1
- Deep pullback has ewo2
- Bear reversal has ewolow
- Whatever the market, there's a play
2. Offset design, better entry prices
- Not chasing buys, waiting for discounts
- 3-5% cheaper than crossing MA
3. Comprehensive risk control
- Stop-loss, trailing stop, tiered take-profit
- Slippage protection too
- Multiple insurance policies
4. Good for optimization
- Many adjustable parameters
- Can optimize for different coins and markets
5. Clear labels
- Every buy tagged (ewo1/ewo2/ewolow)
- Backtesting shows which signal makes the most money
8.2 Cons
1. Stop-loss too wide
- 35% loss for newbies is harsh
- One bad trade loses a third
2. Too many parameters
- Newcomers don't know how to adjust
- Wrong parameters = poor results
3. Ranging market losses
- If prices oscillate, MA useless
- Frequent buys/sells, eats fees
4. Long only, no shorting
- Makes money in bull, sits idle in bear
- Misses bear market opportunities
5. No volume change analysis
- Only checks volume > 0
- Doesn't analyze if volume increasing or decreasing
8.3 How to Maximize Strengths, Minimize Weaknesses
Handle wide stop-loss:
- Reduce stop-loss yourself, e.g., to 25%
- Or reduce position size, invest less per trade
Handle parameter overload:
- Start with default parameters in backtest
- Then optimize slowly, one parameter at a time
Handle ranging markets:
- Use strategy's built-in filters
- Or manually judge — don't run during ranging
Handle long-only limitation:
- Pair with another shorting strategy
- Or only run strategy when major trend is up
9. Who Is This For?
9.1 Ideal User Profile
Suitable if you:
- Have some quantitative trading basics
- Can handle moderate risk
- Have 2-4 hours daily to monitor
- Want short-to-medium term trades
- Interested in BTC, ETH, and major coins
Not suitable if you:
- Know nothing about quantitative trading
- Risk-averse (losing 10% keeps you up at night)
- Don't have time to monitor
- Want long-term investments
- Only play small coins
9.2 Newbie Advice
- Paper trade for one month first — use virtual money, watch performance, don't rush live
- Start with low-risk parameters — only use ewo1 signal, 10% position, 25% stop-loss
- Daily review — analyze every trade's entry/exit, why profit, why loss, find patterns
- Control emotions — strategy says buy → buy, strategy says sell → sell, don't manually intervene
9.3 Capital Allocation
| Capital | Suggested Per-Trade Position | Reason |
|---|---|---|
| < $5000 | Not recommended | Fee proportion too high |
| $5000-$20000 | 20% | Under 5 trades, controllable risk |
| $20000-$100000 | 15% | Diversify across 6-7 trades |
| > $100000 | 10% | Conservative priority |
10. Common Questions
Q1: Why called "NotAnother"?
A: Developer's little joke — means "this is not just another ordinary MA strategy." And indeed, this strategy is much more complex and refined than simple MA strategies.
Q2: Is 35% stop-loss too high?
A: For crypto, 35% isn't really high. Bitcoin swings 10% in a day normally. Too tight gets stopped out by normal fluctuation.
Advice: Adjust to 20-25% if you can't handle it.
Q3: Why 5-minute candles?
A: 5 minutes is the balance between short and medium:
- Shorter (1 min): Too noisy, too many false signals
- Longer (1 hr): Too few signals, miss too many opportunities
Advice: Newcomers can start with 15 minutes.
Q4: Which of the three buy signals should I use?
A: Suggested order:
- Newcomers: only ewo1
- After familiar: add ewo2
- Experts only: ewolow
Q5: Can this be used on stocks?
A: In theory, but note:
- Stocks less volatile than crypto
- Need parameter adjustments
- Stop-loss can be smaller (e.g., 10%)
Q6: How many trades per day?
A: Depends on volatility:
- High volatility: 3-5 per day possible
- Low volatility: may go all day without a signal
- Average: 1-2 per day
Q7: How are fees calculated?
A: Per trade:
- Buy: one fee
- Sell: one fee
- One round trip: two fees
Assuming 0.1% fee, buying $10,000:
- Buy fee: $10
- Sell fee: $10 (assuming still selling $10,000)
- Total cost: $20
Advice: Use maker orders (limit orders) for lower fees.
Q8: Backtest great, live bad — why?
A: Common issue, reasons:
- Backtest doesn't consider slippage
- Backtest fees may be set too low
- Past data, future may differ
Advice:
- Discount backtest results by 30%
- Verify with paper trading
- Test live with small money first
11. Practical Tips
11.1 Parameter Optimization Tips
Step 1: Run backtest with default parameters
freqtrade backtesting --strategy NotAnotherSMAOffsetStrategyHO
Step 2: Optimize optimizable parameters
freqtrade hyperopt --hyperopt-loss SharpeHyperOptLoss --epochs 500 --spaces buy sell
Step 3: Re-backtest with optimal parameters, compare results
Warning: Don't over-optimize! Perfect historical fit may perform worse going forward.
11.2 Market Judgment Tips
Before running strategy, judge market state:
| Market State | How to Judge | Strategy Adjustment |
|---|---|---|
| Bull | Price above long-term MA | Can increase position |
| Ranging | Oscillating, no clear direction | Reduce position or don't run |
| Bear | Price below long-term MA | Only use ewolow, reduce position |
11.3 Dynamic Stop-Loss Adjustment
Adjust stop-loss by market volatility:
- High volatility (wildmarkets): Widen stop to 40%
- Low volatility (quiet consolidation): Tighten stop to 25%
11.4 Multi-Coin Portfolio
Don't run just one coin — run multiple:
| Coin | Risk | Expected Return |
|---|---|---|
| BTC | Low | Steady |
| ETH | Medium | Medium |
| Other majors | High | Potentially high |
Recommendation: 60% BTC/ETH, 40% other majors.
12. Comparisons with Other Strategies
12.1 vs Regular MA Strategy
| Comparison | This Strategy | Regular MA Strategy |
|---|---|---|
| Entry timing | Offset entry, position early | Cross entry, chase |
| Signal count | Three signals, many opportunities | Usually one signal |
| Risk control | Multiple protections | Usually just stop-loss |
| Complexity | Relatively complex | Simple |
Conclusion: This strategy is more refined, but needs more understanding.
12.2 vs Grid Strategy
| Comparison | This Strategy | Grid Strategy |
|---|---|---|
| Suitable market | Trending | Ranging |
| Trading frequency | Medium | High |
| Fees | Medium | High |
| Risk control | Active | Passive |
Conclusion: Use this strategy in trends, use grid in ranging markets.
12.3 vs High-Frequency Strategy
| Comparison | This Strategy | High-Frequency |
|---|---|---|
| Time frame | 5 minutes | Seconds |
| Frequency | Low | Extremely high |
| Tech requirement | Medium | Extremely high |
| Capital threshold | Low | High |
Conclusion: Retail traders use this strategy; institutions use high-frequency.
13. Summary — One Line to Remember
"In an uptrend, wait for price to pull back below MA by a set percentage, buy in three batches, lock profits with trailing stop."
13.1 Key Points
- Only trade pullbacks: Not chasing, waiting for dips
- Triple signals: Different depths for different markets
- Offset entry: Find bargains below MA
- Multi-layer risk control: Stop-loss + trailing + ROI
- Adjustable parameters: Adapt to different markets
13.2 Pre-Launch Checklist
Before enabling strategy, confirm:
- Understand strategy principles
- Run backtest
- Exchange API set up
- Capital amount set
- Stop-loss set
- Notification methods set
- Time to monitor available
13.3 Final Thoughts
This strategy is a tool, not a holy grail. Even the best strategy needs:
- Understanding principles
- Strict execution
- Continuous learning
- Emotion control
Good luck trading!
Document Version: 1.0 For: Quantitative trading beginners to intermediate players