Can Dump be caught with Algo Trade

Discussion in 'Trading' started by algotraderxl, Sep 20, 2023.

  1. Hello friends, the event we call Dump in the market is inevitable and difficult to catch. For this reason, I will try to explain how to catch these dumps using the Traderlands algo-trading platform (free). In this example, we will create a rule on the ARBUSDT pair. Let's proceed step by step.


    Step 1:

    Let's look at the ARB chart on Tradingview.


    [​IMG]

    After September 10, there is a 15% drop.


    Step 2:

    Let's look at the ARB on the 1-hour chart.

    [​IMG]


    There is a drawdown starting at 07:00 and notice the volume at the bottom.

    Step 3:

    Let's look at the 5 min chart for more detailed data.

    [​IMG]


    The bearish bar that started at 07:20 had 47 times more volume than the average of the last 10 bars.


    Step 4:

    Formulating a strategy.

    If the instant candle average on the 5 min chart is 5 times more than the average volume of the last 10 bars AND

    If the candle's decline rate is even more than -0.5% on the 5 min chart

    Suppose you have caught a dump.

    It is very simple to set this up on Traderlands. This is how it works;[​IMG]



    Step 5:

    Let's calculate the exit point manually according to these conditions.

    Looking at the 30 sec chart, the 5 min rules for which we set up the strategy will be recalculated for every 5 min. When we add up the volumes of 30 secs each in the 07:20 candle, we can see that ~3.84 M ARB volume was made in 3 min. [​IMG]The 331k we set here is 5 times the average, well above the 1.6 M ARB volume. The exit price is estimated to be 0.8790.



    On a daily scale;


    [​IMG]


    As you can see, this strategy saved us from a loss of 0.8% instead of 15%. And Traderlands would have done it for us at 07:23 in the morning while we were sleeping.

    This point can also be considered as a possible SHORT buy point.
     
  2. SunTrader

    SunTrader

    AVWAP could have been used on Sept 8th 600am ET to get in:-

    ! ARBUSD.png
     
    algotraderxl likes this.