Volume Flag: Volume, Simplicity, and Clarity
The Volume Flag strategy is characterized by its simplicity and clarity. When the volume significantly increases compared to the previous period, it indicates important market movements. As the name suggests, Volume Flag alerts users like a flag, enabling them to trade without missing key market moves.
Long & Short Flag Conditions
If the trading volume exceeds the user-defined volume threshold for a given period and the candle is bullish, a long position is entered. If the candle is bearish, a short position is entered. The period of the candle can be set according to the user's preference.
- Long Position
- When there is overwhelming trading volume that closes the candle in a bullish manner
- Short Position
- When there is overwhelming trading volume that closes the candle in a bearish manner
Anticipatory Avoidance of Overbought and Oversold Conditions
In this trading strategy, the risk of taking a short position at the bottom of an overbought condition is proactively avoided. Conversely, in an overbought condition, even with a sharp increase in trading volume, excessive long entry at the top is restrained. This approach goes beyond trading based solely on volume and offers a differentiated approach that seeks stability and minimizes investment risks.
- Short entry is taken when the RSI exits the overbought zone and the candle is bearish with overwhelming trading volume.
- Short entry in oversold conditions would be quite adventurous. Instead, the strategy exits the oversold zone and chooses to enter a long position.
Adjustable Trading Cycle
You can set the condition to enter a trade every time the volume increases by a user-defined multiplier. This setting helps reduce losses due to frequent trading and allows you to wait for the optimal moment with stable profits. By default, it is set to enter a trade when the volume doubles, but users can adjust it according to their preference.
Entry Filter: 1 Setting the entry filter to 1 allows quick entry with even a small increase in trading volume. This results in a higher frequency of trades.
Entry Filter: 2 On the other hand, setting the entry filter to 2 requires a much larger increase in trading volume, resulting in a lower frequency of trades. This implies entering trades at stable points and can be advantageous for capturing optimal positions.