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TechnicalExampleStrategy: The Simplest Beginner Strategy

Nickname: The Minimalist Representative
Occupation: Teaching Example / Introductory Material
Timeframe: 5 minutes

1. What is This Strategy?​

Simply put, TechnicalExampleStrategy is:

  • Only 40 lines of code
  • Uses only one indicator
  • Logic so simple even elementary schoolers can understand

It's like a "Strategy Writing 101 Tutorial" telling you how to write Freqtrade strategies 📚

2. Core Configuration: "Quick In, Quick Out"​

Take-profit Rules (ROI Table)​

0 minutes: Sell at 1% profit

Translation: Whenever you make 1%, sell immediately. Don't be greedy.

Stop-loss Rule​

Stop-loss: Accept defeat at 5% loss

Translation: If you lose 5%, cut your losses and leave. Don't fight it.

3. The 1 Buy Condition: Simple to the Extreme​

🎯 The Only Buy Condition: Buy When Money Flows Out​

Core Logic: Watch the CMF indicator

Plain English:

"Buy when money flows out (CMF < 0), sell when money flows in."

What is CMF?

CMF (Chaikin Money Flow) is called the "Chaikin Money Flow Indicator", simply put:

  • CMF > 0: Money flowing in (someone is buying)
  • CMF < 0: Money flowing out (someone is selling)

This strategy's logic:

"I buy when everyone is selling, and I sell when someone starts buying."

Sounds like "bottom fishing", but could also be "catching a falling knife" 😅

4. Sell Logic: Also Single-minded​

Sell Condition​

Sell when CMF > 0

Plain English:

"When money starts flowing in, hurry up and sell."

Other Exit Methods​

  • Sell at 1% profit (ROI take-profit)
  • Sell at 5% loss (stop-loss)

5. This Strategy's "Personality Traits"​

✅ Pros (Praise Time)​

  1. Insanely simple: Code short enough to understand at a glance
  2. Teaching gem: Perfect for learning Freqtrade strategy framework
  3. Low resource usage: Can run on potato computers

⚠️ Cons (Roast Time)​

  1. Too simple: Only one indicator, easily taught a lesson by the market
  2. Counter-trend bottom-fishing: Buying during money outflow may catch falling knives
  3. No protection: No trailing stop, profits may turn back into losses
  4. Suffers in ranging markets: CMF crossing zero line back and forth causes frequent trades

6. Applicable Scenarios: When to Use It?​

Market EnvironmentRecommendationReason
Learning Research✅ Highly recommendedExactly its purpose
Ranging Market⚠️ CautionMay trigger frequent stop-losses
One-way Downtrend❌ Don't useBottom-fishing halfway down
Reversal Market🤔 Worth a tryMoney outflow bottom may rebound

7. Summary: How Good is This Strategy?​

One-sentence Review​

"Teaching example, not a live trading weapon."

Who Should Use It?​

  • ✅ Freqtrade beginner learners
  • ✅ People wanting to understand CMF indicator
  • ✅ Developers needing strategy code templates
  • ✅ Researchers doing strategy experiments

Who Should NOT Use It?​

  • ❌ People wanting to make money directly in live trading
  • ❌ People pursuing high win rates
  • ❌ People who don't want to modify code

My Suggestions​

  1. Treat it as teaching material: Clear code structure, great example for learning
  2. Don't use it directly in live trading: Add some filter conditions first
  3. Can be improved: Add trend judgment, adjust CMF threshold

8. CMF Indicator in Plain English​

How is CMF Calculated?​

Simply put, it looks at "whether buying power or selling power is stronger":

Buying/Selling Power = ((Close - Low) - (High - Close)) / (High - Low)
CMF = Sum of (Buying/Selling Power × Volume) for all candles / Sum of Volume for all candles

Translated to human language:

  • Close near High → Buyers strong
  • Close near Low → Sellers strong
  • Multiplied by volume → Big money carries more weight

CMF Value Meaning​

CMF ValueMeaning
CMF > 0.1Strong money inflow, buyers dominate
CMF > 0Money inflow, buying bias
CMF = 0Buying and selling balanced
CMF < 0Money outflow, selling bias
CMF < -0.1Strong money outflow, sellers dominate

9. Want to Run This Strategy? Check These Configurations First​

9.1 Trading Pair Configuration​

Configuration ItemSuggested ValueComment
Number of pairs5-20More is pointless
Timeframe5 minutesOnly one timeframe
CMF Period21 (default)Can try 14

9.2 Hardware Requirements​

Number of PairsMinimum MemoryRecommended MemoryExperience
1-10 pairs1GB2GBSmooth
10-50 pairs2GB4GBAcceptable

Don't worry: Strategy is so simple, even old computers can run it 😂

10. Easter Egg: What Does the Strategy Name Tell Us?​

TechnicalExampleStrategy = "Technical Example Strategy"

From the name we know:

  1. Official example: This is a Freqtrade official or community teaching example
  2. Not for live trading: Real live strategies wouldn't be called "Example"
  3. Code template: Copy and modify it, faster than writing from scratch

11. If I Want to Improve It, How?​

Plan 1: Add Trend Filter​

# Add an EMA to judge trend
dataframe['ema'] = ta.EMA(dataframe, timeperiod=200)

# Only buy in uptrend
(dataframe['close'] > dataframe['ema']) & 
(dataframe['cmf'] < -0.1)  # Change CMF threshold to -0.1

Plan 2: Add Trailing Stop​

trailing_stop = True
trailing_stop_positive = 0.005  # Start trailing after 0.5% profit
trailing_stop_positive_offset = 0.01  # Trailing distance

Plan 3: Add Volume Filter​

# Only buy when volume is sufficient
(dataframe['volume'] > dataframe['volume'].rolling(20).mean())

12. The Very Last Word​

One-sentence Review​

"Great for beginners, needs improvement for live trading."

Who Should Use It?​

  • ✅ Beginner learning
  • ✅ Code template
  • ✅ CMF research

Who Should NOT Use It?​

  • ❌ Direct live trading
  • ❌ Pursuing stable returns

Suggestions for Manual Traders​

You can borrow this strategy's thinking:

  • Pay attention to money flow (can use other money flow indicators)
  • Buy in panic, sell in greed
  • But must combine with trend judgment, don't bottom-fish in downtrends

13. ⚠️ Risk Re-emphasis (Must Read)​

Backtesting Looks Good, Live Trading Be Careful​

TechnicalExampleStrategy's historical backtesting might be okay—but it has an obvious problem:

Only one indicator, no multi-dimensional validation, lots of false signals.

Simply put: Bottom-fishing halfway down happens often.

Hidden Risks of Minimalist Strategies​

In live trading, simple logic can lead to:

  • Ranging market losses: CMF frequently crosses zero line, back and forth slaps
  • Trending market trapped: Counter-trend buying, buying more as it drops
  • Slippage costs: Frequent trading, fees and slippage eat profits

My Suggestion (Honest Words)​

1. Use it as teaching material to learn
2. Improve before considering live trading
3. Add trend filters
4. Adjust CMF threshold (e.g., buy at -0.1, sell at 0.1)
5. Small position testing, survival is most important

Remember: No matter how simple the strategy, the market isn't simple. Light position testing, survival first! 🙏

Strategy Number: #407