Hermes

HERMES STRATEGY - TRADINGVIEW DESCRIPTION

OVERVIEW

Hermes is an adaptive trend-following strategy that uses dual ALMA (Arnaud Legoux Moving Average) filters to identify high-quality entry and exit points. It's designed for swing and position traders who want smooth, low-lag signals with minimal whipsaws.

Unlike traditional moving averages that operate on price, Hermes analyzes price returns (percentage changes) to create signals that work consistently across any asset class and price range.


HOW IT WORKS

DUAL ALMA SYSTEM

The strategy uses two ALMA lines applied to price returns:

• Fast ALMA (Blue Line): Short-term trend signal (default: 80 periods)
• Slow ALMA (Black Line): Long-term baseline trend (default: 250 periods)

ALMA is superior to simple or exponential moving averages because it provides:
• Smoother curves with less noise
• Significantly reduced lag
• Natural resistance to outliers and flash crashes

TRADING LOGIC

BUY SIGNAL:
• Fast ALMA crosses above Slow ALMA (bullish regime)
• Price makes new N-bar high (momentum confirmation)
• Optional: Price above 200 EMA (macro trend filter)
• Optional: ALMA lines sufficiently separated (strength filter)

SELL SIGNAL:
• Fast ALMA crosses below Slow ALMA (bearish regime)
• Optional: Price makes new N-bar low (momentum confirmation)

The strategy stays in position during the entire bullish regime, allowing you to ride trends for weeks or months.


VISUAL INDICATORS

LINES:
• Blue Line: Fast ALMA (short-term signal)
• Black Line: Slow ALMA (long-term baseline)

TRADE MARKERS:
• Green Triangle Up: Buy executed
• Red Triangle Down: Sell executed
• Orange "M": Buy blocked by momentum filter
• Purple "W": Buy blocked by weak crossover strength


KEY PARAMETERS

ALMA SETTINGS:
• Short Period (default: 30) - Fast signal responsiveness
• Long Period (default: 250) - Baseline stability
• ALMA Offset (default: 0.90) - Balance between lag and smoothness
• ALMA Sigma (default: 7.5) - Gaussian curve width

ENTRY/EXIT FILTERS:
• Buy Lookback (default: 7) - Bars for momentum confirmation (required)
• Sell Lookback (default: 0) - Exit momentum bars (0 = disabled for faster exits)
• Min Crossover Strength (default: 0.0) - Required ALMA separation (0 = disabled)
• Use Macro Filter (default: true) - Only enter above 200 EMA


BEST PRACTICES

RECOMMENDED ASSETS - Works well on:
• Cryptocurrencies (Bitcoin, Ethereum, etc.)
• Major indices (S&P 500, Nasdaq)
• Large-cap stocks
• Commodities (Gold, Oil)

RECOMMENDED TIMEFRAMES:
• Daily: Primary timeframe for swing trading
• 4-Hour: More active trading (increase trade frequency)
• Weekly: Long-term position trading

PARAMETER TUNING:
• More trades: Lower Short Period (60-80)
• Fewer trades: Raise Short Period (100-120)
• Faster exits: Set Sell Lookback = 0
• Safer entries: Enable Macro Filter (Use Macro Filter = true)

STRATEGY ADVANTAGES

1. Low Lag - ALMA provides faster signals than traditional moving averages
2. Smooth Signals - Minimal whipsaws compared to crossover strategies
3. Asset Agnostic - Same parameters work across different markets
4. Trend Capture - Stays positioned during entire bullish regimes
5. Risk Management - Multiple filters prevent poor entries
6. Visual Clarity - Easy to interpret regime and filter states

WHEN TO USE HERMES

BEST FOR:
• Trending markets (crypto bull runs, equity uptrends)
• Swing trading (hold days to weeks)
• Position trading (hold weeks to months)
• Clear trend identification
• Risk-managed exposure

NOT SUITABLE FOR:
• Ranging/sideways markets
• Scalping or day trading
• High-frequency trading
• Mean reversion strategies


RISK DISCLAIMER

This indicator is for educational purposes only. Past performance does not guarantee future results. Always use proper position sizing and risk management. Test thoroughly on historical data before live trading.

CREDITS

Inspired by Giovanni Santostasi's Power Law Volatility Indicator, generalized for universal application across all assets using adaptive ALMA filtering.

Strategy by Hermes Trading Systems

QUICK START

1. Add indicator to chart
2. Use on daily timeframe for best results
3. Look for green buy signals when blue line crosses above black line
4. Exit on red sell signals when blue line crosses below black line
5. Adjust parameters based on your trading style:
• Conservative: Enable Macro Filter, increase Buy Lookback to 10
• Aggressive: Disable Macro Filter, lower Short Period to 60
• Default settings work well for most assets