Practical application: how and when to use it? - Range Signals
Last updated
Last updated
The "Range Signals A.I." indicator from Smart Trading Indicators has been designed to provide traders with a tactical edge in today's volatile markets. Its effectiveness lies in its ability to adapt to different market scenarios and conditions. Below, we detail how and when to make the most of this innovative indicator.
Below we detail how and when to get the most out of this innovative indicator:
Chosen Asset: Although the indicator has been optimized for the BTCUSDC pair on a 5-minute chart, it can be applied to any cryptocurrency, stock, index, or currency. It's crucial to adjust the sampling period and range multiplier to align with the volatility and specific characteristics of the asset in question.
Adaptation to Timeframe: If you prefer trading on longer timeframes, such as daily or weekly, you may want to increase the sampling period to get less frequent but potentially more significant signals. Conversely, for scalping or day trading, a shorter sampling period may be more appropriate.
Let me explain the adjustable parameters you can find in this indicator 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.
Source: This parameter determines the data source to be used for the indicator. By default, it is set to "close," which means the closing price of each candle will be used. However, you can change it to other values like "open," "high," or "low" if you want to use a different type of price.
Sampling Period: This parameter sets the sampling period for the indicator calculation. By default, it is set to 100, meaning the last 100 time periods will be considered for calculations. You can adjust this value according to your preferences and timeframe.
Range Multiplier: This parameter determines the multiplier used to calculate the indicator's range. By default, it is set to 3.0, meaning the range will be multiplied by 3. You can adjust this value to make the indicator more or less sensitive to market changes.
Support and Resistance: By identifying historical support and resistance areas, you can use the "Range Signals A.I." indicator to confirm breakouts or bounces at these levels. For example, a buy signal generated right after a resistance breakout can provide additional confirmation of an uptrend.
Other Indicators: The "Range Signals A.I." can be complemented with momentum indicators like RSI or MACD. For instance, if you receive a buy signal and the RSI also indicates oversold conditions, that can reinforce the decision to enter a long position.
Stop-Loss Levels: Target bands can serve as reference points for setting stop-loss levels. For example, in a buy trade, consider placing the stop-loss slightly below the lower target band.
Taking Profits: Similarly, target bands can indicate areas to take profits. If the price quickly approaches the upper target band after a buy signal, consider partially or fully taking your profits.
Clear Trends vs. Sideways Markets: The indicator works best in markets with clear trends. In sideways or low-volatility markets, signals may not be as effective. In such scenarios, combining it with other indicators can help filter out false signals.
News Events: During significant news releases or market events, volatility can increase dramatically. At these times, it's essential to be cautious and consider waiting for the market to stabilize before fully relying on the indicator's signals.
