Practical application: how and when to use it? - Hybrid Trends
Last updated
Last updated
The effectiveness of any technical indicator lies in its ability to be correctly applied in practical situations. In the case of the Hybrid Trends indicator, versatility is one of its strengths.
Here we break down how and when to implement this indicator in your trading decisions:
Bullish Trend: If you identify an uptrend through Hybrid Trends, consider adopting strategies that take advantage of the upward momentum, such as buying assets or entering long positions.
Bearish Trend: In the presence of a downtrend, you can contemplate selling assets, shorting trades, or waiting for the trend to change if you already have open positions.
It has several adjustable parameters on the TradingView platform. Let me explain each of them in a straightforward manner:
Enable strategy backtesting on chart: By enabling this option, you can conduct backtesting on the chart to assess how this strategy would have performed in the past. It's advisable to use the suggested settings and activate the 'Trailing Stop' control unless you're an expert.
Activate Trailing Stop Control: This option allows you to activate the Trailing Stop control, which is a tool for managing risk in your trades. Essentially, it automatically adjusts to protect your profits as the price moves in your favor.
Use Recommended Strategy for BTC/USD • [Timeframe]: By choosing one of these options, the indicator will automatically apply the optimal settings for the BTC/USD pair for the specified timeframe (15min, 30min, 1h, 4h, 1D).
Use Recommended Strategy for ETH/USD • [Timeframe]: By choosing one of these options, the indicator will automatically apply the optimal settings for the ETH/USD pair for the specified timeframe (15min, 30min, 1h, 4h, 1D).
Use Custom Strategy Parameters Settings: This option is for advanced users who wish to customize the strategy parameters. If you're not an expert, it's recommended not to enable this option.
"Show Baseline": This parameter allows you to show or hide the baseline on the chart. The baseline is a moving average used in the NNFX strategy.
"Show SSL1": This parameter allows you to show or hide SSL1 (Stop and Reverse Level 1) on the chart. SSL1 is a line indicating potential trend reversal points.
"Show ATR bands": This parameter allows you to show or hide ATR (Average True Range) bands on the chart. ATR bands are used to measure price volatility.
"ATR Period": This parameter sets the period used to calculate the Average True Range (ATR). Specifically, it determines the number of bars used in the calculation.
"ATR Multi": This parameter adjusts the multiplier applied to ATR to calculate upper and lower bands. It helps define the width of the bands.
"ATR Smoothing": This parameter allows you to select the type of smoothing used in the ATR calculation. You can choose from various options such as RMA, SMA, EMA, and WMA.
"SSL1 / Baseline Type": This parameter allows you to select the type of moving average used for SSL1 and the baseline. You can choose from several options such as SMA, EMA, DEMA, TEMA, LSMA, WMA, MF, VAMA, TMA, HMA, JMA, Kijun v2, EDSMA, and McGinley.
"SSL1 / Baseline Length": This parameter sets the length of SSL1 and the baseline. It determines the number of bars used in the moving average calculation.
"SSL2 / Continuation Type": This parameter allows you to select the type of moving average used for SSL2 (Stop and Reverse Level 2). You can choose from various options such as SMA, EMA, DEMA, TEMA, WMA, MF, VAMA, TMA, HMA, JMA, and McGinley.
"SSL 2 Length": This parameter sets the length of SSL2. It defines the number of bars used in the moving average calculation.
"EXIT Type": This parameter allows you to select the type of moving average used for trade exits. You can choose from various options such as DEMA, TEMA, LSMA, VAMA, TMA, HMA, JMA, Kijun v2, McGinley, and MF.
"EXIT Length": This parameter sets the length of the moving average used for trade exits. It defines the number of bars used in the moving average calculation.
"Source": This parameter allows you to select the data source used in the calculations. You can choose from options such as "Close," "High," "Low," or "Open."
"Kijun MOD Divider": This parameter is used when you select the "Kijun v2" type for SSL2. It determines the divisor applied to the length of Kijun to calculate Kijun v2.
*" Jurik (JMA) Only - Phase":*This parameter applies when you select the "JMA" type for SSL1 or SSL2. It defines the phase used in the Jurik Moving Average (JMA) calculation.
*" Jurik (JMA) Only - Power":*This parameter applies when you select the "JMA" type for SSL1 or SSL2. It determines the power used in the Jurik Moving Average (JMA) calculation.
*" Volatility Adjusted (VAMA) Only - Volatility lookback length":*This parameter applies when you select the "VAMA" type for SSL1 or SSL2. It sets the length used to calculate volatility adjusted in VAMA.
"Modular Filter, General Filter Only - Beta": This parameter is used when you select the "MF" type for SSL1 or SSL2. It adjusts the beta value used in the Modular Filter (MF) calculation.
"Modular Filter Only - Feedback": This parameter applies when you select the "MF" type for SSL1 or SSL2. If enabled, it enables feedback in the Modular Filter (MF) calculation.
Intraday Trading: For those who trade within the same day, Hybrid Trends can be used on 1-minute, 5-minute, or 15-minute charts to detect short-term movements and seize quick opportunities.
Short to Medium-Term Trading: On 1-hour or 4-hour charts, the indicator can help you identify trends that last for days or weeks.
Long-Term Trading: For trades spanning weeks or months, consider using Hybrid Trends on daily or weekly charts.
Entry Points: Once the indicator signals the beginning of a trend (whether bullish or bearish), it's essential to wait for additional confirmation (e.g., a second consecutive move in the same direction) before entering the market.
Exit Points: If Hybrid Trends begins to show signs of slowing down in a trend or indicates a possible change in direction, consider closing your position or adjusting your strategy.
While Hybrid Trends is robust, combining it with other indicators (such as RSI, MACD, or Bollinger Bands) can provide a clearer picture and confirm the signals you're seeing. For example, if Hybrid Trends indicates an uptrend and the RSI shows that the asset is not overbought, this can reinforce your decision to buy.
It's always essential to determine stop-loss and take-profit levels. Hybrid Trends can help you identify support and resistance areas where the price could bounce or reverse. These levels are excellent points to set your stops and profit targets.
Over time and with practice, you may discover that certain aspects of Hybrid Trends work better in specific markets or situations. Keep track of your trades, evaluate the indicator's performance in different circumstances, and adjust your approach accordingly.
