Morning Star Breakout Strategy

This strategy trades bullish breakouts using the Morning Star candlestick pattern. Trading signals are generated when the Morning Star pattern breaks above the EMA60. The logic is: 1. Plot the 60-day exponential…

Pine ScriptBreakout Mean reversion Trend following RSI EMA ATR

Author: ChaoZhang
Complexity: Intermediate · 129 lines
Parameters: 11
Backtest bar: 45m · intraday
Tested on: BTC/USDT · futures

Jump to code View in vault Original on FMZ

Strategy Logic

This strategy trades bullish breakouts using the Morning Star candlestick pattern. Trading signals are generated when the Morning Star pattern breaks above the EMA60.

The logic is:

Plot the 60-day exponential moving average EMA60
Identify Morning Star patterns, consisting of a bearish candle, doji/spinning top, and bullish candle breaking the high of the first two candles
Long signals are breakouts above EMA60 after Morning Star patterns
Use either profit targets or trailing stops for exits
Stop loss set at lowest low of last 100 candles
Parameters like Morning Star tolerance configurable

The strategy capitalizes on the trend reversal nature of Morning Stars in the direction of the trend. Performs well in volatile markets.

Advantages

Morning Star effectively signals short-term reversals
Breakout entry and trailing stop follows through trends
Lookback window prevents excessive stop loss

Risks

Requires iterative testing and optimization
Stops too close may cause excessive stops
LONG only misses short opportunities

Summary

This strategy identifies Morning Star patterns and trades breakouts in alignment with the trend. Parameter tuning adapts it to varying market conditions. But LONG-only and stop loss needs prudent assessment.

Parameters

Name	Default	What it controls
v_input_float_1	0.09	(?DOJI SETTINGS)MDS Tolerance
v_input_float_2	0.05	DOJI Tolerance
v_input_float_3	9	(?EXIT LONG)Take Profit
v_input_bool_1	true	SL type Lowest Low
v_input_int_1	100	Stop Length
v_input_bool_3	false	SL type Percent
v_input_float_4	2	Stop Loss
v_input_bool_2	false	(?Filter)Max Loss Filter
v_input_int_2	10	Max Loss %
v_input_float_5	true	(?TRAILING STOP)Trailing theshold
v_input_float_6	0.5	Trailing offset

Source Pine Script

/*backtest
start: 2023-01-01 00:00:00
end: 2023-03-23 00:00:00
period: 45m
basePeriod: 5m
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/

// This source code is subject to the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0)
// © TheSocialCryptoClub
// Author: @devil_machine

//@version=5
strategy("PURE MORNING 2.0", overlay=true, pyramiding=1,
         initial_capital=10000, 
         default_qty_type=strategy.percent_of_equity, default_qty_value=10,
         slippage=1,backtest_fill_limits_assumption=1,use_bar_magnifier= true,
         commission_type=strategy.commission.percent, commission_value=0.075
         )

//------------------------------
// Indicators
//------------------------------

rma=ta.rma(close, 60)
mfi=ta.mfi(close, 10)
rsi=ta.rsi(close, 14)
atr7= ta.atr(7)
ema60=ta.ema(close,60)

plot(ema60,"EMA 60", color.new(color.aqua,0))

//------------------------------
// Doji settings 
//------------------------------
//-----------------------------------------------MORNING DOJI STAR CODE
range1= high - low
tolerance = input.float(defval=0.09, title="MDS Tolerance",group= "DOJI SETTINGS", minval=0.01, maxval=1, step=0.01)/100

candle1 = math.abs (close[2] - open[2]) /range1[2] > .6 and close[2] < open[2]
candle2 = ((open[1] > close[1] and open[1] < close[1]*(1+tolerance)) or (open[1] < close[1] and open[1] > close[1]*(1-tolerance)) and close [1]<close[2]+range1[2])
candle3 = close > open and close > (close[2]+range1[2])

MDS = candle1 and candle2 and candle3

plotshape (MDS and close > ema60, text="MD", textcolor=color.yellow, offset=-1, location=location.abovebar, color=color.green, style=shape.triangleup)
plotshape (MDS and close < ema60, text="MD", textcolor=color.olive, offset=-1, location=location.belowbar, color=color.red, style=shape.triangledown)

//------------------------------------------------DOJI CODE

tolerance1= input.float(defval=0.05, title="DOJI Tolerance",group= "DOJI SETTINGS", minval=0.01, maxval=1, step=0.01)/100
Is_OC_Equal= (open > close and open < close*(1+tolerance1)) or (open < close and open > close*(1-tolerance1))

plotshape(Is_OC_Equal and close < ema60, text="D", textcolor=color.red, location=location.belowbar, color=color.red)
plotshape(Is_OC_Equal and close > ema60, text="D", textcolor = color.green, location=location.abovebar, color=color.green)

//------------------------------
// Filter
//------------------------------

xl_tp_percent      = input.float(9,step=0.5, title="Take Profit", group="EXIT LONG") 

sl_type_ll         = input.bool(true, "SL type Lowest Low", group="EXIT LONG")
sl_len             = input.int(100, "Stop Length", group="EXIT LONG")

max_loss_filter    = input.bool(false,"Max Loss Filter", group ="Filter")
filter_percent     = input.int(10, "Max Loss %", group="Filter")

sl_type_percent    = input.bool(false, "SL type Percent", group="EXIT LONG")
xl_sl_percent      = input.float(2,step=.5, title="Stop Loss", group="EXIT LONG") 

filter_stop= max_loss_filter == true ? close - ta.lowest (low, sl_len) < (close*filter_percent)/100 : true

if sl_type_percent == true 
    sl_type_ll := false

//------------------------------
// Entry Long
//------------------------------

el_cond = Is_OC_Equal and close > ta.ema(close, 60) and filter_stop
el_cond_02 = MDS and close > ta.ema(close, 60) and filter_stop

mess = "!buy " + syminfo.ticker // Executor command to buy automatically 

if el_cond 
    strategy.entry ("EL", strategy.long, alert_message = mess,comment = "EL cond 1")

plotshape(el_cond and strategy.position_size == 0, "el_long", shape.circle, color=color.green)

if el_cond_02       
    strategy.entry ("EL", strategy.long, alert_message = mess,comment = "EL cond 2" )

plotshape(el_cond_02 and strategy.position_size == 0, "el_long_02", shape.circle, color=color.green)

//------------------------------
//Exit Long TP - SL
//------------------------------

xl_sl_price = strategy.position_avg_price * (1-xl_sl_percent/100)
xl_tp_price = strategy.position_avg_price * (1+xl_tp_percent/100)

if sl_type_ll == true
    xl_sl_price := ta.lowest (low, sl_len) 

//------------------------------
//Trailing stop 
//------------------------------

xl_ts_percent      = input.float(1,   step=0.5, title= "Trailing theshold", group="TRAILING STOP")
xl_to_percent      = input.float(0.5, step=0.5, title= "Trailing offset",   group="TRAILING STOP")

xl_ts_tick = xl_ts_percent * close/syminfo.mintick/100
xl_to_tick = xl_to_percent * close/syminfo.mintick/100

mess_sell = "!sell " + syminfo.ticker // Executor command to sell automatically 

strategy.exit("XL+SL/TP", "EL", stop=xl_sl_price, limit=xl_tp_price, trail_points=xl_ts_tick, trail_offset=xl_to_tick,comment_loss= "STOP", comment_profit = "PROFIT",comment_trailing = "TS", alert_message = mess_sell)

//------------------------------
// Conditional close on MFI
//------------------------------

xl_cond= ta.crossover(mfi, 90)

if xl_cond
    strategy.close("XL", alert_message = mess_sell)

plotshape(xl_cond, "xl_cond", shape.circle, color=color.red)

Published by ChaoZhang on the FMZ strategy square · last modified 2023-09-14. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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