Overbought/Oversold Trading Strategy (Works on desktop & mobile) For ThinkOrSwim

jezzer47

Member
2019 Donor
Hey guys. I have been working on this strategy for the last few months. It's not perfect but it works for me. It takes advantage of overbought/oversold situations during a trend. This strategy will not be accurate when the trend is reversing or choppy. My goal was to find a way of entering and exiting trades fairly easy. I just want to look at a chart and make a trade (I know that's impossible but that was my goal)

When developing this strategy I was looking for something that will work on both mobile and desktop platforms so every indicator I use is built-in licensed thinkorswim indicators except one in which I found a suitable replacement for mobile.

Indicators used:

Exponential Deviation Bands, settings (simple moving average, 100 periods, -2,2 deviations)

Moving Average Cloud(platform) or MovAvgTwoLines: (I actually got the cloud from Hahn-tech. basic setup using 20/50 ema. Use same 20/50 for MovAvgTwoLine)

MacdHistogram: I only use the histogram as it is easier to read than traditional with lines. Settings: 200/400/9. This might seem a bit unusual to have such high periods using macd but I was using a MTF version of Macd and found these settings replicate higher time frames on both desktop and mobile.

Instruments traded: Any

Time frame any but the higher the time the better the results

The setup:

Buy: We take a buy when we have a strong uptrend noted by our MACD and Moving Average cloud both showing green. We enter right when we get a touch or trade through the bottom band.

Sell: We take a sell when we have a strong downtrend by the MACD and Moving Average Cloud both showing red. We enter right when we get a touch or trade through the top band.

I use the opposite band as a potential take profit or if I am trading options, an OTM trade target. In strong trends what usually happens is that when the price hits the opposite band it can ride it higher so sometimes sit in the trade longer.

*There is only so long you can ride a trend so the first two setups are usually the best, anything after, use more scrutiny.

That's it. Super simple and yet in the right conditions very powerful.

Here are 3 examples on different instruments on different time frames.

w81UYYc.png


y2IjK2Q.png


2019-11-21-TOS-CHARTS3.png


Once again this is not perfect I do get false signals in entries when trend changes. Also I get positive signals when the macd and cloud are not synched in color (green/red)

Hope this can help others and would love for any feedback. Remember this strategy also can be used on mobile with the same results just no cloud but two moving avgs.

Here is my workspace in case anyone wants to try it.
https://tos.mx/gjvTkPC
 
Last edited by a moderator:

BenTen

Administrative
Staff member
Staff
VIP
Lifetime
Thanks for sharing. I like how you kept mobile users in mind. A lot of people are definitely busy with their day job that they can't use ToS on their desktop. Glad to see such a simple strategy (y)
 

marine

New member
Lifetime
for the cloud use
plot ema20 = ExpAverage(close, 20);
plot ema50 = ExpAverage(close, 50);
AddCloud(ema20, ema50, Color.GREEN, Color.RED);

tos get
Exponential Deviation Bands, settings

for the bottom study look in tos for macdhistogram
 

fearnoone

New member
I saw something similar on twitter. This is awesome. I put this with the High Low indicator and it seems to give a great confirmation of plays and gives reassurance against the "false" signals you may be getting @jezzer47
 

camitos

Member
I saw something similar on twitter. This is awesome. I put this with the High Low indicator and it seems to give a great confirmation of plays and gives reassurance against the "false" signals you may be getting @jezzer47
I take it you still buy when it hits the bottom/upper band but an arrow has to be present?
 

fearnoone

New member
Same guidelines as stated in the OP's post. The only difference is adding the high low indicator gives a target area on what move to look at for the day off price in AH/PM
 

iAskQs

Member
Thank you for sharing. This is a great strat. I've been practicing in sim and wondering how you determine a stop loss. Pls let us know if you have a plan for that. Thus far, I've been using set number of points SL and take profit depending on the instrument (NQ, ES, and RTY).
 

jezzer46

Member
Thank you for sharing. This is a great strat. I've been practicing in sim and wondering how you determine a stop loss. Pls let us know if you have a plan for that. Thus far, I've been using set number of points SL and take profit depending on the instrument (NQ, ES, and RTY)
* i changed emails awhile back and now use this username (which is obviously similar)

I dont use this strategy anymore but anytime I enter the stop loss would be either the break of the low (for longs) or High (for shorts) of the entry bar, also I would add a little leeway as in for futures maybe a few .10s of a point on either side.
 

iAskQs

Member
* i changed emails awhile back and now use this username (which is obviously similar)

I dont use this strategy anymore but anytime I enter the stop loss would be either the break of the low (for longs) or High (for shorts) of the entry bar, also I would add a little leeway as in for futures maybe a few .10s of a point on either side.
Thank you for responding. Why did you stop using this strategy? Bad performance or you just preferred another method?
 

jezzer46

Member
Thank you for responding. Why did you stop using this strategy? Bad performance or you just preferred another method?
Performance was ok but ive changed in the way I trade. I like to ride momentum now so entering on pull backs is not something I actively do anymore. (Nothing wrong with it either)

* I trade on much larger time frames daily/weekly candles now. Before I used 1/5/15min
 

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