T3 Moving Average Channel Breakout Strategy

This strategy uses a T3 moving average and its channels to identify trend direction, generating signals when price breaks the channel lines. The trading logic is: 1. Plot a T3 MA as the middle line 2. Calculate the…

Pine ScriptBreakout Trend following EMA

Author: ChaoZhang
Complexity: Starter · 69 lines
Parameters: 2
Backtest bar: 4d · position
Tested on: BTC/USDT · futures

Jump to code View in vault Original on FMZ

Strategy Logic

This strategy uses a T3 moving average and its channels to identify trend direction, generating signals when price breaks the channel lines.

The trading logic is:

Plot a T3 MA as the middle line
Calculate the channel range around the MA as upper and lower bands
Go long when price breaks above the upper band
Go short when price breaks below the lower band
Background color changes indicate trend shifts

The T3 MA has less lag and reacts faster to breakouts. The strategy also uses background color to aid long term trend judgement, combining factors for robust signals.

Advantages

T3 MA has less lag and faster reaction
Clear trade signals from channel breakouts
Background color avoids bad trades against the trend

Risks

Requires iterative testing to find optimal parameters
Breakout trades prone to traps need caution
Frequent signals, consider wider breakouts

Summary

This strategy capitalizes on the T3 MA's sensitivity by trading channel breakouts, with background color indicating the long-term trend. Parameter optimization can achieve a balance between efficiency and stability. But over-trading risks require prudence.

Parameters

Name	Default	What it controls
v_input_1	24	DTMA Lenth
v_input_2_close	0	DTMA Source: close \| high \| low \| open \| hl2 \| hlc3 \| hlcc4 \| ohlc4

Source Pine Script

/*backtest
start: 2022-09-07 00:00:00
end: 2023-04-15 00:00:00
period: 4d
basePeriod: 1d
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/

// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © Trader_7ye

//@version=4

strategy(title="T3MA_KC_7ye  Strategy", shorttitle="T3MA_KC_7ye  Strategy",max_bars_back=500,overlay=true,default_qty_type=strategy.percent_of_equity,default_qty_value=100,initial_capital=5000,currency=currency.USD)

t3(src,len)=>
    xe1 = ema(src, len)
    xe2 = ema(xe1, len)
    xe3 = ema(xe2, len)
    xe4 = ema(xe3, len)
    xe5 = ema(xe4, len)
    xe6 = ema(xe5, len)
    b = 0.7
    c1 = -b*b*b
    c2 = 3*b*b+3*b*b*b
    c3 = -6*b*b-3*b-3*b*b*b
    c4 = 1+3*b+b*b*b+3*b*b
    c1 * xe6 + c2 * xe5 + c3 * xe4 + c4 * xe3
    
 
Length = input(title="DTMA Lenth", type=input.integer, defval=24, minval=1)
xPrice = input(title="DTMA Source", type=input.source, defval=close)
T3ma=t3(xPrice,Length)

upCol = T3ma > T3ma[1] 
downCol = T3ma < T3ma[1]


range= high - low
rangema=t3(range,Length)

upper = T3ma + rangema
lower = T3ma - rangema

myColor = upCol ? color.lime : downCol ? color.red : na
plot(T3ma, color=myColor, title="T3 Slow")

c = color.blue
u = plot(upper, color=#0094FF, title="Upper")
l = plot(lower, color=#0094FF, title="Lower")
fill(u, l, color=#0094FF, transp=95, title="Background")
buySignal = upCol and ohlc4>upper
sellSignal= downCol and ohlc4<lower

//=======output======= 
//Long and short color judgment
direction=0
direction:=buySignal?1:sellSignal?-1:direction[1]
macolor=direction==1?color.green:color.red

//Process multiple signals as one signal
alertlong = direction!=direction[1] and direction== 1
alertshort= direction!=direction[1] and direction==-1
bgcolor(alertshort ? color.red : alertlong?color.lime:na, transp=20)

if (alertlong)
    strategy.entry("Long", strategy.long)
if (alertshort)
    strategy.entry("Short",strategy.short)

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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