PPO Bull/Bear Divergence Trading Strategy
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Overview
This strategy uses PPO divergence patterns for trend trading, and price high/low points for stop loss exits.
How it Works
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Calculate the PPO indicator.
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Identify PPO bull/bear divergences.
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Enter trades when price diverges from PPO.
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Stop loss exits at recent price highs/lows.
Advantages
- Captures PPO indicator's trendiness
- Divergence signals are strong
- Clear stop loss points
- Identifies medium/long term trends
Risks
- Moderate divergence recognition accuracy
- Unable to effectively control loss size
- Some lag, may misjudge trends
- Higher fees and slippage costs
Optimization Directions
- Optimize PPO parameters for sensitivity
- Add filters with other indicators
- Incorporate trailing stops for loss control
- Consider additional profit taking mechanisms
- Improve divergence pattern recognition logic
Conclusion
The strategy capitalizes on PPO's trending characteristics. Further improving parameters, logic and risk controls can enhance performance. But inherent risks need addressing. Overall a practical trend trading approach based on PPO divergences.
Source
Pine
/*backtest
start: 2022-09-14 00:00:00
end: 2023-03-11 00:00:00
period: 1d
basePeriod: 1h
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/
//@version=2
//Credit to https://www.tradingview.com/script/p3oqCa56-Pekipek-s-PPO-Divergence-BETA/ (I just changed the visuals a bit)
//A simple strategy that uses the divergences to open trades and the highs/lows to close them. Would love to see any variations! - @scarf
//FYI: I have alerts set up for the purple and orange circles on daily forex charts amd I get a lot of excellent trade entries.Strategy parameters
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