Skip to main content

NotAnotherSMAOffsetStrategyHOv3 Strategy Analysis

1. Strategy Overview and Design Philosophy​

1.1 Strategy Background​

NotAnotherSMAOffsetStrategyHOv3 is a quantitative trading strategy based on SMA Offset technology, built for the Freqtrade framework. The core idea: when prices significantly deviate from their average, trading opportunities emerge. The name's "NotAnother" signals this breaks from conventional MA strategies — a carefully optimized version.

The design philosophy: "Seek opportunities in panic, lock profits in greed." It identifies extreme price offset positions from MAs, combined with EWO for market sentiment, buying when markets are overly pessimistic and selling when sentiment normalizes or becomes overly optimistic.

1.2 Strategy Positioning​

Medium-short term trading on 5-minute timeframe as primary chart, with 1-hour auxiliary data for reliability through multi-timeframe analysis.

1.3 Core Innovations​

  1. Dual offset mechanism: Buy offset (low_offset) and sell offset (high_offset) asymmetrically — aggressive on dips, conservative on rises
  2. Triple entry logic: Three buy conditions (ewo1, ewo2, ewolow) for different sentiment states
  3. Dynamic risk management: Fixed stop-loss + trailing stop + ROI goals

2. Technical Indicator System​

2.1 MA Family​

  • EMA for buy/sell: Periods base_nb_candles_buy (default 8) and base_nb_candles_sell (default 16)
  • EMA_100: Long-term trend reference
  • SMA_9: Short-term price trend
  • HMA_50: Mid-term trend, low lag

2.2 Elliott Wave Oscillator (EWO)​

def EWO(dataframe, ema_length=5, ema2_length=35):
    ema1 = ta.EMA(df, timeperiod=ema_length)
    ema2 = ta.EMA(df, timeperiod=ema2_length)
    emadif = (ema1 - ema2) / df['low'] * 100
    return emadif

Strategy uses slow parameters: fast=50, slow=200 to capture longer-term momentum.

2.3 RSI Multi-Period​

  • RSI(14): Standard overbought/oversold
  • RSI(4): Short-term fast response
  • RSI(20): Mid-term trend confirmation

3. Entry Signal Details​

3.1 Signal ewo1: Strong Momentum Pullback​

1. rsi_fast < 35
2. close < ma_buy * low_offset (default 0.986)
3. EWO > ewo_high (default 4.179)
4. rsi < rsi_buy (default 58)
5. volume > 0
6. close < ma_sell * high_offset

Interpretation: EWO > 4.179 shows strong uptrend; price pullback + RSI_fast < 35 = temporary dip, buy opportunity.

3.2 Signal ewo2: Deep Pullback​

1. rsi_fast < 35
2. close < ma_buy * low_offset_2 (default 0.944)
3. EWO > ewo_high_2 (default -2.609)
4. rsi < rsi_buy
5. volume > 0
6. close < ma_sell * high_offset
7. rsi < 25

Interpretation: Requires deeper discount (5.6% below MA), RSI < 25 = extreme oversold, potential rebound.

3.3 Signal ewolow: Extreme Panic​

1. rsi_fast < 35
2. close < ma_buy * low_offset
3. EWO < ewo_low (default -16.917)
4. volume > 0
5. close < ma_sell * high_offset

Interpretation: EWO < -16.917 = extreme market pessimism, potential reversal.

3.4 Parameter Summary​

ParameterDefaultMeaning
low_offset0.986Buy when price < EMA's 98.6%
low_offset_20.944Deep buy when price < EMA's 94.4%
high_offset1.054Sell when price > EMA's 105.4%
high_offset_21.018Sell when price > EMA's 101.8%

4. Exit Signal Details​

4.1 Exit Condition 1: Trend Reversal​

1. close > sma_9
2. close > ma_sell * high_offset_2
3. rsi > 50
4. volume > 0
5. rsi_fast > rsi_slow

4.2 Exit Condition 2: Trend Breakdown​

1. close < hma_50
2. close > ma_sell * high_offset
3. volume > 0
4. rsi_fast > rsi_slow

4.3 Exit Confirmation​

if (HMA_50 * 1.149 > EMA_100) and (close < EMA_100 * 0.951):
    return False  # Cancel exit

5. Risk Management​

5.1 Stop-Loss​

  • Fixed: -30% (slightly tighter than v1/v2)
  • Trailing: 0.5% distance, activates at 2.5% profit

5.2 ROI​

minimal_roi = {
    "0": 0.10,   # 10%
    "30": 0.05,  # 5%
    "60": 0.02   # 2%
}

5.3 Slippage Protection​

'max_slippage': -0.02  # 2%
'retries': 3

6. Parameter Optimization​

ParameterDefaultRange
base_nb_candles_buy82-20
low_offset0.9860.9-0.99
low_offset_20.9440.9-0.99
ewo_high4.1792.0-12.0
ewo_low-16.917-20.0--8.0
ewo_high_2-2.609-6.0-12.0
rsi_buy5830-70

7. Strategy Pros & Cons​

7.1 Pros​

  • Trend following + mean reversion combination
  • Three buy signals cover different states
  • Multi-layer risk control
  • High parameter flexibility

7.2 Cons​

  • Trend market risk: may exit too early in strong rallies
  • Ranging market risk: frequent false signals
  • Parameter overfitting risk
  • Timeframe limitations

8. Summary​

NotAnotherSMAOffsetStrategyHOv3 combines price offset + momentum indicators for a precise trading system. Suitable for experienced Freqtrade users who understand technical indicators and are willing to optimize parameters. Remember: backtesting ≠ future performance.

Document for learning and research only. Crypto trading involves risk.