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NotAnotherSMAOffsetStrategyHOv3: Strategy Explained

1. What Does This Strategy Do?​

One-Line Summary​

Think of supermarket shopping — prices fluctuate around a "fair price." Buy when far below, sell when far above. The twist: it also checks "market mood" (EWO indicator) to confirm whether the "cheap" or "expensive" is real.

Strategy Name Meaning​

NotAnotherSMAOffsetStrategyHOv3 = "Not just another SMA Offset Strategy · Auto-Optimized · Version 3"

In plain terms: "A MA offset strategy that's been fine-tuned into a machine."

2. Core Indicators in Plain English​

2.1 MA — "Fair Price" Line​

Strategy uses several MAs:

  • ma_buy: EMA 8 candles → judges "is it cheap?"
  • ma_sell: EMA 16 candles → judges "is it expensive?"
  • ema_100: EMA 100 candles → major trend
  • sma_9: SMA 9 candles → short-term trend
  • hma_50: HMA 50 candles → mid-term trend, faster and smoother

2.2 EWO — "Market Momentum"​

EWO = difference between two EMAs, telling if the market is "energetic" or "exhausted":

  • Positive and large: Market rising vigorously
  • Negative and large: Market falling hard
  • Near zero: Momentum fading, may reverse

2.3 RSI — "Temperature Gauge"​

  • RSI > 70: Too hot, may cool down
  • RSI < 30: Too cold, may warm up

Three RSIs used:

  • RSI(14): Standard
  • RSI(4): Extra fast
  • RSI(20): Extra slow

3. When to Buy? Three Signals​

3.1 ewo1 — Strong Trend Pullback (Most Common)​

Trigger: Uptrend continuing, suddenly pulled back.

Conditions:

  1. Fast RSI < 35: Short-term price fell quickly
  2. Price < MA × 0.986: 1.4% below average
  3. EWO > 4.179: Still a strong uptrend
  4. RSI(14) < 58: Not overheated

Plain English: "Big trend still up, today suddenly dipped, go buy!"

3.2 ewo2 — Deep Pullback​

Trigger: Price fell even deeper.

Conditions:

  1. Fast RSI < 35
  2. Price < MA × 0.944: 5.6% below average (bigger discount!)
  3. EWO > -2.609: Momentum not completely dead
  4. RSI(14) < 58
  5. RSI(14) < 25: DOUBLE oversold confirmation

Plain English: "Price dropped hard, but hasn't collapsed completely — opportunity!"

3.3 ewolow — Market Panic​

Trigger: Everyone panicking and selling.

Conditions:

  1. Fast RSI < 35
  2. Price < MA × 0.986: 1.4% below
  3. EWO < -16.917: Extremely pessimistic

Plain English: "Everyone's scared, selling frantically — time to be greedy."

Signal Comparison​

SignalBest ScenarioRiskExpected Return
ewo1Strong trend normal pullbackLowStable
ewo2Deep pullbackMediumHigher
ewolowMarket panicHighCould be huge

4. When to Sell? Two Conditions​

4.1 Sell Set 1: Rose Enough, Get Out​

Conditions:

  1. Price > SMA 9
  2. Price > ma_sell × 1.018: Above average 1.8%
  3. RSI > 50
  4. Fast RSI > Slow RSI: Momentum still up

Plain English: "Rose to the target, still trending up but — take the money and run."

4.2 Sell Set 2: Trend Weakening, Run​

Conditions:

  1. Price < HMA 50: Broke below mid-term trend line
  2. Price > ma_sell × 1.054: Still above baseline
  3. Fast RSI > Slow RSI

Plain English: "Trend showing signs of weakness while still profitable — protect gains!"

4.3 Special: Cancel Sell?​

If sell signal triggered BUT:

  • HMA 50 still above EMA 100 (major trend intact)
  • Price fell below EMA 100's 95%

Strategy says: "NO! Don't sell — major trend fine, wait!"

5. Risk Control — Your Safety Net​

5.1 Fixed Stop-Loss: Max 30% Loss​

stoploss = -0.3

Bought $100 → drops to $70 → forced sell. This is slightly tighter than the first version (-35%).

5.2 Trailing Stop: Smart Profit Locker​

  • Activates at 2.5% profit
  • Stop follows price, 0.5% below peak
  • Example: Bought $100 → $102.50 activates → $110 peak → $109.45 stop → sell at $109.45, lock 9.45%

5.3 ROI Targets​

TimeTarget
Start10%
30 min5%
60 min2%

5.4 Slippage Protection​

If execution price is 2%+ worse than expected → reject and retry (up to 3 times).

6. Parameters​

6.1 Buy Parameters​

ParameterDefaultMeaning
base_nb_candles_buy8MA period for buying
low_offset0.986Buy when 1.4% below MA
low_offset_20.944Deep buy when 5.6% below MA
ewo_high4.179Must be above this to buy
ewo_low-16.917Must be below this for ewolow
rsi_buy58RSI must be below this

6.2 Sell Parameters​

ParameterDefaultMeaning
base_nb_candles_sell16MA period for selling
high_offset1.054Price 5.4% above MA to sell
high_offset_21.018Price 1.8% above MA to sell

7. Best & Worst Markets​

Good Markets​

  • Bull market: ewo1 triggers often, trailing stop catches big moves
  • Ranging market: Both ewo1 and ewo2 trigger, offset catches oscillations
  • Mild bear: ewolow catches oversold rebounds

Bad Markets​

  • One-sided rally: Strategy may sell too early, missing big gains
  • One-sided crash: ewolow may catch falling knives
  • Dead quiet: Price barely moves, no signals, fees eat profits

8. How to Use​

Step 1: Backtest​

freqtrade backtesting --strategy NotAnotherSMAOffsetStrategyHOv3 --timerange 20230101-20231231 --timeframe 5m

Step 2: Paper Trade​

freqtrade trade --strategy NotAnotherSMAOffsetStrategyHOv3 --dry-run

Run at least 2 weeks.

Step 3: Small Live​

Start with money you can afford to lose. Verify:

  • Signal frequency
  • Actual slippage
  • Performance vs backtest

Step 4: Monitor & Adjust​

  • Weekly: review performance
  • Monthly: re-optimize parameters if needed

9. Pros & Cons Summary​

Pros​

  • Clear logic: buy cheap, sell expensive
  • Three signals: covers different markets
  • Complete risk control
  • Many adjustable parameters

Cons​

  • Past-optimal parameters may not work in future
  • Ranging markets = losses
  • Designed to catch dips, not chase rallies
  • Requires active management

10. Key Takeaway​

"Buy when price is below MA by a set percentage in a confirmed trend, sell when price rises above MA by a set percentage, with complete stop-loss and trailing protection."

Remember: No strategy is perfect. Backtesting ≠ future results. Quant trading needs continuous learning, monitoring, and adjustment. Trade only with funds you can afford to lose.

Plain English guide. For detailed technical analysis, see the formal version.