Momentum Long + Short Strategy (BTC 3H)

Momentum Long + Short Strategy (BTC 3H)

🔍 How It Works, Step by Step

Detect the Trend (📈/📉)

Calculate two moving averages (100-period and 500-period), either EMA or SMA.

For longs, we require MA100 > MA500 (uptrend).

For shorts, we block entries if MA100 exceeds MA500 by more than a set percentage (to avoid fading a powerful uptrend).

Apply Momentum Filters (⚡️)

RSI Filter: Measures recent strength—only allow longs when RSI crosses above its smoothed average, and shorts when RSI dips below the oversold threshold.

ADX Filter: Gauges trend strength—ensures we only enter when a meaningful trend exists (optional).

ATR Filter: Confirms volatility—avoids choppy, low-volatility conditions by requiring ATR to exceed its smoothed value (optional).

Confirm Entry Conditions (✅)

Long Entry:

Price is above both MAs

Trend alignment & optional filters pass ✅

Short Entry:

Price is below both MAs and below the lower Bollinger Band

RSI is sufficiently oversold

Trend-blocker & ATR filter pass ✅

Position Sizing & Risk (💰)

Each trade uses 100 % of account equity by default.

One pyramid addition allowed, so you can scale in if the move continues.

Commission and slippage assumptions built in for realistic backtests.

Stops & Exits (🛑)

Long Stop-Loss: e.g. 3 % below entry.

Long Auto-Exit: If price falls back under the 500-period MA.

Short Stop-Loss: e.g. 3 % above entry.

Short Take-Profit: e.g. 4 % below entry.

🎨 Why It’s Powerful & Customizable

Modular Filters: Turn on/off RSI, ADX, ATR filters to suit different market regimes.

Adjustable Thresholds: Fine-tune stop-loss %, take-profit %, RSI lengths, MA gaps and more.

Multi-Timeframe Potential: Although coded for 3 h BTC, you can adapt it to stocks, forex or other cryptos—just recalibrate!

Backtest Fine-Tuned: Default settings were optimized via backtesting on historical BTC data—but they’re not guarantees of future performance.

⚠️ Warning & Disclaimer

This strategy is for educational purposes only and designed for a toy fund. Crypto markets are highly volatile—you can lose 100 % of your capital. It is not a predictive “holy grail” but a rules-based framework using past data. The parameters have been fine-tuned on historical data and are not valid for future trades without fresh calibration. Always practice with paper-trading first, use proper risk management, and do your own research before risking real money. 🚨🔒

Good luck exploring and experimenting! 🚀📊