The "MACD_TRIPLE_MA" strategy is a trading strategy that uses the Moving Average Convergence Divergence (MACD) indicator along with three Simple Moving Averages (SMA) to generate buy and sell signals. Here's a breakdown of how the strategy works:
The strategy is designed to achieve a minimal Return on Investment (ROI), which can be adjusted based on market conditions. The stop-loss value is set at -0.03, indicating that if a trade goes against the strategy by 3%, it will be automatically closed.
A trailing stop is implemented, which means that if a trade goes in favor of the strategy, the stop-loss level will be adjusted dynamically to protect profits.
The strategy operates on a 5-minute timeframe and requires at least 26 candles of historical data before producing valid signals.
Indicator Calculation:
The MACD indicator is calculated using the "ta.MACD" function, and its three components (MACD line, signal line, and histogram) are stored in the dataframe. Three Simple Moving Averages (SMA) are calculated: SMA6, SMA14, and SMA26. These moving averages provide insights into the trend direction and act as support/resistance levels. Signal Generation:
Buy Signal: A buy signal is generated when the following conditions are met simultaneously:
The MACD line crosses above the signal line. The SMA6 crosses above the SMA14. The SMA26 is greater than the SMA6. Sell Signal: A sell signal is generated when the following conditions are met simultaneously:
The MACD line crosses below the signal line. The SMA6 crosses below the SMA14. The SMA26 is less than the SMA6 and SMA14. By using these signals, the strategy aims to identify potential entry points for buying and selling assets in the market.