Momentum Alligator 4h Bitcoin Strategy

🟢Overview
The Momentum Alligator 4h Bitcoin Strategy is a trend-following trading system that operates on dual time frames. It utilizes the 1D Williams Alligator indicator to identify the prevailing major price trend and seeks trading opportunities on the 4-hour (4h) time frame when there is an upward momentum. The strategy is designed to close trades if the trend fails to develop, ensuring that it only capitalizes on significant market moves. Note that this strategy is specifically tailored for the 4-hour time frame.

🟢Unique Features

• Higher Time Frame Confirmation: Trades are only initiated in the direction of the 1D trend, determined by the Williams Alligator indicator. This higher time frame confirmation filters out minor trade signals, focusing on more substantial opportunities.
  
• Flexible Risk Management: The strategy exclusively opens long positions, resulting in fewer trades during bear markets. It incorporates a dynamic stop-loss mechanism, which can either follow the jaw line of the 4h Alligator or a user-defined fixed stop-loss. This flexibility helps manage risk and avoid non-trending markets.
  

🟢Methodology
The strategy initiates a long position when the histogram of the Awesome Oscillator crosses above its 5-period simple moving average (SMA) on the 4h time frame. To avoid overtrading in potentially choppy markets, it skips the next two trades following a winning trade, anticipating sideways movement after a significant price surge.
All entry signals are validated against the 1D Williams Alligator indicator. A trade is only opened if the price is above all three lines of the 1D Alligator, ensuring alignment with the major trend.
A trade is closed if the price hits the 4h jaw line of the Alligator or reaches the user-defined stop-loss level.

🟢Risk Management
The strategy employs a combined approach to risk management:

• It allows positions to ride the trend as long as the price continues to move favorably, aiming to capture significant price movements.
  
• It features a user-defined stop-loss parameter to mitigate risks based on individual risk tolerance. By default, this stop-loss is set to a 2% drop from the entry point, but it can be adjusted according to the trader's preferences.
  

🟢Justification of Methodology
This strategy leverages the Williams Alligator indicator on two different time frames to create a robust trend-following system. The 1D Alligator serves as a filter for identifying the primary trend, while the 4h Alligator provides signals for precise entry and exit points. This combination ensures that trades are only taken in the direction of the broader trend, enhancing the likelihood of success. The additional condition to skip trades after a winning one helps in avoiding market noise and reduces the chance of entering trades during non-trending phases.
By focusing on higher time frame confirmation and flexible risk management, the Momentum Alligator 4h Bitcoin Strategy offers a disciplined and strategic approach to trading, making it a valuable tool for traders seeking to capitalize on major market moves while managing risk effectively.

🟢Backtest Results:
Operating window: Date range of backtests is 2021.01.01 - 2024.05.01. It is chosen to let the strategy to close all opened positions.
Commission and Slippage: Includes a standard Binance commission of 0.1% and accounts for possible slippage over 5 ticks.
Initial capital: 10000 USDT
Percent of capital used in every trade: 50%
Maximum Single Position Loss: -2.2%
Maximum Single Profit: +32.53%
Net Profit: +8430.88 USDT (+84.31%)
Total Trades: 114 (23.68% win rate)
Profit Factor: 2.137
Maximum Accumulated Loss: 1260.51 USDT (-8.77%)
Average Profit per Trade: 73.96 USDT (+1.15%)
Average Trade Duration: 56 hours
These results are obtained with realistic parameters representing trading conditions observed at major exchanges such as Binance and with realistic trading portfolio usage parameters.

🟢How to Use:
Add the script to favorites for easy access.
Apply to the4h timeframe desired chart (optimal performance observed on the BTC/USDT).
Configure settings using the dropdown choice list in the built-in menu.
Set up alerts to automate strategy positions through web hook with the text: {{strategy.order.alert_message}}

🟢Disclaimer:
Educational and informational tool reflecting Skyrex commitment to informed trading. Past performance does not guarantee future results. Test strategies in a simulated environment before live implementation