Strict Buy/Sell Strategy with Enhanced Signal Filtering
2024-09-23

In this TradingView idea, I introduce a robust buy and sell strategy that emphasizes strict exit rules and enhanced signal filtering to improve trading performance. The strategy is designed to prevent consecutive identical signals, ensuring that a new buy signal won't occur if the last signal was a buy, and similarly for sell signals. This approach helps in reducing false entries and overtrading, especially in volatile market conditions.

Key Features:

Heikin Ashi Candles Conversion:

Smooths out price fluctuations to better identify true market trends.
Trend Identification:

Utilizes short-term (SMA 18) and long-term (SMA 100) Simple Moving Averages to determine market direction.
A buy signal is considered only when the SMA 18 is above the SMA 100 and the price is above the SMA 100.
Momentum Confirmation:

Confirms momentum over a customizable lookback period to ensure alignment with the prevailing trend.
Volatility and Volume Filters:

Incorporates Average True Range (ATR) and volume-based filters to avoid low-volatility and low-volume trading periods.
Enhances the reliability of signals by ensuring sufficient market activity.
Doji Candlestick Avoidance:

Filters out potential reversal points by avoiding entries on Doji candles, which indicate market indecision.
Strict Signal Rules:

Implements a check to prevent generating a buy signal if the last signal was also a buy, and vice versa for sell signals.
Introduces a minimum bar gap between signals to prevent rapid re-entry after an exit.
Risk Management:

Sets take-profit levels and trailing stop losses based on ATR to protect gains and limit potential losses.
Adjusts the trailing stop dynamically as the trade progresses.
Visual Aids:

Plots important levels and signals directly on the chart, including moving averages, take-profit levels, and trailing stops.
Labels buy and sell points for easy reference.
How to Use This Strategy:

Entry Criteria:

Look for buy signals when all conditions are met, including trend alignment, momentum confirmation, volatility and volume thresholds, and absence of Doji candles.
Ensure that the last signal was not a buy to prevent consecutive buy entries.
Exit Criteria:

The strategy exits trades when the price reaches the take-profit level or hits the trailing stop loss.
Prevents consecutive sell signals to avoid over-exiting in fluctuating markets.
Customization:

While the parameters are fixed for this strategy, traders can adjust the lookback periods, ATR multipliers, and SMA lengths to suit different trading instruments or time frames.
Benefits:

Reduces Overtrading:

By filtering out consecutive identical signals and enforcing a minimum bar gap, the strategy helps prevent overtrading.
Enhances Signal Quality:

Multiple filters work together to improve the accuracy of buy and sell signals.
Adaptable to Different Markets:

Suitable for various financial instruments, including stocks, forex, and commodities.
Conclusion:

This strategy offers a disciplined approach to trading by combining trend-following techniques with strict entry and exit rules. By preventing consecutive identical signals and incorporating multiple filters, it aims to enhance trading performance and reduce the impact of market noise. 