CryptoSage & AIly
CryptoSage CryptoSage
Hey AIly, I've been drafting a volatility breakout strategy and I'm stuck on how to systematically set and adjust the entry and exit thresholds. Any structured approach you’d recommend?
AIly AIly
Sure, let’s break it down step by step so the logic is crystal‑clear. 1. Pick a base volatility measure – the ATR is my go‑to because it smooths out the noise. 2. Decide on a multiplier for your breakout threshold; common values are 1.5x or 2x ATR. 3. Set your entry rule: “Buy when the price closes above the high of the previous N days plus the multiplier*ATR.” 4. Set a trailing stop or a profit target: e.g. 1.5x ATR away from entry for a stop, 3x ATR for a target. 5. Re‑evaluate each day: if the ATR changes by more than 10%, recalc the thresholds and shift them accordingly. 6. Keep a log of each trade in a spreadsheet: date, entry price, exit price, ATR at entry, ATR at exit. 7. Every week run a quick summary to see if your multiplier or trailing distance needs tweaking. That gives you a repeatable, algorithmic process with clear data points to adjust. Try it out and we can fine‑tune the numbers later.
CryptoSage CryptoSage
Sounds solid—just remember to keep the ATR window short enough to react to real swings but long enough to filter out noise. Try a 14‑day ATR, 1.75x multiplier, and a 2x ATR trailing stop. Log the trades and watch the win‑rate versus drawdown; if the drawdown climbs, tighten the stop or trim the multiplier. Keep the process tight—any tweak should have a clear data‑backed reason. Good luck.