I made a trading indicator and it actually works after testing 100 times. In the last
video I taught my computer to trade on its own, and in that video, we created an indicator
called the beep boop indicator, I know. If you haven't watched that video, consider watching
it before this video, because in that video, Bill the computer actually made a profit with
the beep boop indicator. Since, bill the computer made money with the beep boop indicator, can
we make money with it as well? Well, why don't we find out after we test it 100 times! I
mean imagine if it works and gets popular and people start writing articles about it.
If you are watching the Trading Rush Channel for the first time, subscribe and ring that
notification bell, because we test trading strategies 100 times to find if they really
work or not and you don't want to miss that.
Since the last video, I have improved the beep boop indicator even more. This is how
the beep boop indicator looks like on TradingView. It is based on the MACD indicator and comes
with green and red bars. When a green bar appears on the beep boop indicator, it indicates
a buying pressure. When a red bar appears on the beep boop indicator, it indicates a
selling pressure. Furthermore, the beep boop indicator uses a 50 period exponential moving
average to calculate its values. If you watched the previous video, you probably noticed that
this beep boop indicator looks a little bit different. In the last video, the buy entry
signal was when two green bars appeared in a row, and the sell entry signal was when
two red bars appeared in a row. Exit signal was when two opposite bars appeared in a row.
Furthermore, the red and green bars only appeared in a short term uptrend. In other words, if
the price was above the 50 period moving average.
The new version of the beep boop indicator is better, because it gives buy and sell signals
at the same time. In the new version, the long entry signal is when the first green
bar appears, and the sell signal is when the first red bar appears. Furthermore, an exit
signal is when the white bar appears for the first time. Also in the new version of the
beep boop, price doesn't always have to be above or below the 50 period moving average,
you can change it anytime you want.
Since we have tested other trading strategies 100 times with a fixed reward to risk ratio,
I have tested this strategy with a fixed reward to risk ratio as well. Furthermore, I used
the 200 period exponential moving average to find the long term trend direction.
So here's how the complete beep boop trading strategy goes. If the beep boop indicator
gives a green bar, and if the price is above the 200 moving average, the long entry signal
is at the first green bar. Stoploss goes below the pullback.
Similarly, If the beep boop indicator gives a red bar, and if price is below the 200 period
moving average, the short entry signal is at the first red bar. Stoploss goes above
the pullback.
So I tested the beep boop indicator 100 times, here's what happened.
Number 1. At the beginning, the beep boop indicator gave 10 winning trades in a row,
and till the 28th trades, the profit on the profit graph was almost going straight up.
The beep boop gives a decent amount of entry signals in a short time period. It is heavily
based on the MACD indicator. MACD strategy had an excellent win rate, but one of the
reasons it worked so well, is because it didn't give many entry signals in a short time. At
the start when price was trending strongly, the beep boop indicator performed really well.
Most of the time, the entry was not too late, but was also not too early, so the stop loss
that was set near the pullback, was at a good enough distance from the entry, especially
in a trend.
Number 2. The win rate in the Trading Rush App was pretty high at one point even with
multiple trades, but when the trend started to change direction, the beep boop indicator
started to give false signals. The only time you should consider using the beep boop indicator,
is when the market is giving relatively smaller pullbacks in a one sided market. For example,
the MACD strategy had an excellent win rate of more than 60 percent, and in that strategy the
MACD crossover has to be below the zero line in a buy setup, and that does not happen if
the price does not give a relatively bigger pullback. Since the beep boop indicator is
based on the MACD indicator, it's like taking entry signals with the MACD strategy but with
few extra conditions and without following the zero line rule. When MACD or some other
strategy is not giving an entry signal in a strong trend, and you feel like you are
missing out on a big move, the beep boop indicator can be useful because it gives multiple entry
signals even in a strong trend.
Number 3. The beep boop indicator is excellent for finding the trend direction. If my computer
can learn to find the trend direction with it, it should be pretty easy for everyone.
You can even use it while doing multi timeframe analysis. For example, you can use the beep
boop indicator on a higher timeframe to find the trend direction. If the beep boop indicator
is forming green bars, the trend direction on the higher timeframe is up. So it is a
good idea to look for long trading opportunities only on the entry time frame.
So after testing the beep boop indicator 100 times, I got an approximate win rate of 48
percent with a reward risk ratio of 1.5 to 1 which is pretty good. It gave 10 winners
in a row when the price was trending in one direction for a long time. And it gave 7 losers
in a row when the price was changing the trend direction or was in a range. But as you can
see in the Trading Rush App, during the backtest, it managed to make a profit of 2000. The custom
indicator with a professional name that we created for Bill the Computer in the last
video, actually works.
Since this is a custom indicator, and if you want to try it yourself, here's how to install
it on TradingView. This is a free indicator but you won't find it on TradingView under
the public library, because I'm not publishing there for two reasons. Number 1, it will show
some of my account information and I don't want that in the long run. Number 2, not everyone uses
Trading View. So I will share the source of the Beep Boop indicator on the Patreon
Page or on the Official Trading Rush Website for free. This way people who use different
trading platforms can read and understand how the Indicator was written without signing
up for trading View. I have already shared the previous version of the beep boop indicator
on Patreon for free. To Install it on TradingView, just copy the source code from the Patreon
page, and paste it in the Pine Editor on TradingView. Click save and add it to your chart. It will
be available under the "My scripts" section.
Now, like I said before, the Indicator uses MACD and Exponential moving average to calculate
its values, and if you click on the indicator settings, you can change some of those values. For example,
by default, it gives a buy signal if there is a short term uptrend going on, and gives
a sell signal if there is a short term downtrend going on, and it uses a 50 period moving average
to find that short term trend. You can change that value if you want to experiment with
it on your own.
So that's all. The custom indicator we created actually works. Like the video if you liked
it. Subscribe and ring that notification bell to see other trading strategies tested 100
times, after all you don't want to use a strategy that does not work at all. Thanks to all fabulous
Patrons for supporting the Trading Rush channel on Patreon. Thanks a lot for watching.