The ADXMomentum strategy is a trading strategy that utilizes several technical indicators to identify buying and selling opportunities in the market. Here's a breakdown of how the strategy works:
Indicators used:
ADX (Average Directional Index): Measures the strength of a trend. PLUS_DI and MINUS_DI: Calculate the positive and negative directional indicators.
SAR (Stop and Reverse): Identifies potential reversal points in the price.
MOM (Momentum): Measures the rate of price change.
Strategy logic:
The strategy first populates these indicators using historical price data. For the buy signal:
ADX must be greater than 25 (indicating a strong trend). Momentum (MOM) must be negative. MINUS_DI must be greater than 25 (indicating a downward trend). PLUS_DI must be less than MINUS_DI (confirming a potential reversal). If these conditions are met, a "buy" signal is generated. For the sell signal:
ADX must be greater than 25. Momentum (MOM) must be positive. MINUS_DI must be greater than 25. PLUS_DI must be greater than MINUS_DI (confirming a potential reversal). If these conditions are met, a "sell" signal is generated. Additional details:
The strategy sets a minimal ROI (Return on Investment) of 0.01, which represents the minimum expected profit for each trade. It also has a stoploss of -0.25, which means that if the trade goes against the expected direction and reaches a 25% loss, it will be automatically closed. The ticker interval used for analyzing the market data is 1 hour. This strategy aims to capture trends in the market by combining the strength of the trend (ADX), momentum (MOM), and the direction of the trend (DI indicators). It generates buy and sell signals based on these indicators, with the goal of achieving a positive ROI while managing risk through the stoploss mechanism.