NotAnotherSMAOffsetStrategyLite: Strategy Explained

1. What Does This Strategy Do?

One-Line Summary

"Buy falling prices in uptrends, sell when recovered."

Simply: Wait for price to be below average, buy. When price recovers, sell. Only buy when the big trend is up.

Named "NotAnotherSMAOffsetStrategyLite" = simplified version of the MA offset strategy, keeping core logic while reducing complexity.

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2. Core Logic

When to Buy?

The strategy has THREE conditions — ALL must be met:

1. Price cheap: Price must be 2.5% below the average price (EMA × 0.975)
2. Big trend up: EWO > 0 (market's "fast line" above "slow line")
3. Active trading: Volume > 0 (not a dead market)

Example:

• BTC price $49,000
• EMA (14 candles) = $50,000
• Discount price = $50,000 × 0.975 = $48,750
• Current price $48,000 < $48,750 ✓
• EWO > 0 ✓
• Volume active ✓
• BUY signal!

When to Sell?

EVEN simpler — only TWO conditions:

1. Price above EMA × 0.991
2. Volume > 0

Example (continuing):

• After buying at $48,000, price rose to $49,500
• Sell line = $50,000 × 0.991 = $49,550
• Current $49,500 < $49,550 → not yet
• Price rose to $49,600 > $49,550 ✓
• SELL signal!
• Profit: ($49,600 - $48,000) / $48,000 ≈ 3.3%

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3. Indicators Explained

EMA — "Average Price"

EMA (Exponential Moving Average) weights recent prices more heavily. Strategy uses:

• Buy EMA: 14 candles — faster, catches entry timing
• Sell EMA: 24 candles — slower, avoids early exits

EWO — "Big Trend Direction"

EWO compares fast and slow EMAs. Positive = uptrend, Negative = downtrend.

Only buy when EWO > 0. Don't catch "falling knives."

RSI — "Temperature"

Three RSIs for different purposes:

• RSI 4: Super fast — catches short-term oversold for entry
• RSI 14: Standard — overall state
• RSI 20: Slow — confirms long-term trend

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4. Stop-Loss — The Safety Valve

4.1 Fixed Stop: 10% Max Loss

stoploss = -0.1

Bought at $100 → drops to $90 → forced sell. 10% is relatively wide for 5-min trading, giving price room to fluctuate.

4.2 Dynamic Stop: Time-Based Tightening

if holding > 12 hours AND loss > 5%:
    tighten stop to -1%

Why?: If still losing 5%+ after 12 hours, your judgment was likely wrong. Tighten the stop to cut losses faster.

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5. Take-Profit

5.1 Fixed: 2.5% Minimum

minimal_roi = {'0': 0.025}

Price rises 2.5%+ → eligible to sell.

5.2 Sell Only When Profitable

sell_profit_only = True
sell_profit_offset = 0.01

Won't sell unless you're up 1%+. Prevents selling the moment you're slightly profitable.

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6. Parameters

Buy Parameters

Parameter	Default	Range	Effect
base_nb_candles_buy	14	5-80	MA period; smaller = faster
low_offset	0.975	0.9-0.99	Discount required; smaller = bigger discount needed

Sell Parameters

Parameter	Default	Range	Effect
base_nb_candles_sell	24	5-80	MA period; larger = more stable
high_offset	0.991	0.95-1.1	Price above MA to sell; smaller = sell earlier

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7. Pros & Cons

Pros

1. Simple logic: Three conditions to buy, two to sell
2. Follows trend: Only buys in uptrends (EWO > 0)
3. Buys at discount: Waits for price below average
4. Risk controlled: Stop-loss + dynamic stop + take-profit
5. Adjustable: Four parameters can be tuned

Cons

1. Long only: Can't profit from falling markets
2. Ranging market struggles: Back-and-forth = losses
3. Parameter sensitive: Different coins need different settings
4. Misses big moves: May sell early in powerful trends
5. Needs tuning: Not "set and forget"

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8. Best Markets

Market	Performance
Bull with pullbacks	★★★★★
Ranging up/down	★★★
One-sided crash	★
Dead quiet	★★

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9. Summary

This strategy is "buy the dip in an uptrend, sell when recovered, with stop-loss protection." Simple but effective. Best suited for short-term traders in trending markets who want clear logic and are willing to tune parameters.

Key rules:

1. Backtest before going live
2. Start small
3. Check and adjust regularly
4. Control risk
5. Keep learning

Most important: No strategy is perfect. Trade only what you can afford to lose!