The FOMO signal
Introduction
The indicator’s ideological inspirer is a professional trader, CEO of Cryptorg, owner of Telegram channel about trading and investments @FOMOHOMO
Implementation — Cryptorg
It’s been a whole year of work on the indicator, its finalization and testing in the open mode. It contains many years of trading experience and accumulated trading ideas.
The idea of the indicator is to trade against the crowd during the day. Every day there are situations with local «overheating» of the market. When the crowd tends to sell or buy at all costs. Our indicator detects these abnormal zones and starts to give a signal to trade against the crowd.
The reference signal works on the pair BTC/USDT — Binance futures contract.
Indicator description
The indicator has two main zones — overbought and oversold.
At the moment when the market is overbought we sell. At the moment of oversold market — Buy.
Each zone has three borders: 1-2-3, following each other. Coming to the next boundary means a stronger dive into the abnormal zone and a higher probability of a market reversal.
The zones are marked from above (starting with the closest from the center):
- Small overbought
- Classic overbought
- Deep overbought
The zones are marked from the bottom (starting from the closest from the center):
- Small oversold
- Classic oversold
- Deep oversold
Anomalous price moves beyond the outer zone of the indicator
At the anomalous activity on the market (strong news or some other factor), the price leaves the outer zone of the indicator. The price in time returns to the limits of the zone. However, there should be enough margin and proper money management. All indicators stop working when the market is momentarily impulsively growing or falling. Please note that the indicator is not a panacea for break-even trading.
Specifics of work with different timeframes
The indicator signal for bots is available on three timeframes: 5 minutes, 15 minutes, 1 hour.
The smaller the time-frame, the earlier the anomalous zones begin, and the width between the zones is narrower on smaller time-frames.
Based on our practice, the best results were shown on m15, during flat periods and low volatility on m5. Thus, it is possible to choose different timeframes, depending on the market dynamics and different levels from which to begin a deal. If you need a deeper dive, then choose the latter zones.
Here is an example of how the indicator works on m5 over the last 36 hours.
Small overbought: 1 signals to short
Classic overbought: 2 signals to short
Deep overbought: a signal to short
Small oversold: 1 signal to go long.
Classic oversold: 1 signal to long
All signals were profitable.
Now let’s look at the m15 time frame. You can see that the anomalous zones are located further than on m5. Accordingly, we received 2 signals — 1 to short, 1 to long.
Configuring and running bots based on the signal
The signal is available for both futures and SPOT markets.
The reference signal comes from the pair BTC/USDT (Binance Futures).
You can also set up a separate signal source for the pair ETH/USDT (Binance Futures) and BNB/USDT (Binance Futures).
If you need to put a signal on any of the altcoins, such as LTC, SHIBA, DOGE or any other, you can choose any of the three presented above as a reference signal. If you think any of the altcoins is confidently going for BTC, then choose BTC as the signal source. If you think it responds better to ETH moves, then choose ETH as the main signal, etc.
To select the FOMO signal to work, go to the standard setting of the bot. Then select FOMO from the drop-down menu in the Indicators group. Then, in the Signal menu, select the desired type of anomalous zone to start the bot in the drop-down menu.
Note that in order to minimize the number of lines, overbought and oversold for each zone is shown in one line. Thus, it will be a long or short, you need to specify specifically in the settings of the bot.
As soon as the bot receives the necessary signal and enters a trade, it will lead it to the end. If new signals come in during an open trade, the bot will ignore them.
From the signal of the indicator to the start of the bot passes on average 1 second, so the reaction is very fast!
Example of the signal from the second classic overbought/oversold zone on m5 for the last five days. It can be seen that despite the fairly volatile market, the entry into transactions in most of them occurred at the extremes of the market and after that there was a reversal.
Comfortable work, based on experience
Most signals work out very well. But it is still recommended to stick to conservative money management, as quite a large number of orders may trigger on abnormal market movements. If many pairs are active at the same time, it will lead to investments if money management is violated. No bot or indicator will save you from such spills as in May 2021, so adhere to the MM, and if you feel that the market may experience an apocalypse, then just turn off the bots.
Using multiple trading pairs
If you decide to set the FOMO signal to multiple altcoins, try to spread out the altcoin pairs to start from different anomalous zones to avoid an instant entry on all trading pairs. You can also divide the pairs into different timeframes.
If there is no such division, bots on all pairs can start simultaneously and if they hit some strong anomalous market spill, they can all go into invest at once. By separating bots for starts from different levels and timeframes, you introduce an element of excellent diversification into your trading strategy.
Example: we set up bots for both long and short on FOMO signal
m5 — 3 bots in each zone, 9 bots for long and 9 for short = 18 bots
m15 — 3 bots in each zone, 9 bots in longs and 9 bots in shorts = 18 bots.
Thus, you can set up 36 bots with excellent diversification.
ATTENTION!!! With the FOMO signal on, any restrictions will be ignored (price restrictions, the number of cycles, etc.). Keep it in mind when working.
It is possible to work with this indicator without visualization on the chart in the trading terminal completely relying on the signal or with visualization.
To be able to see the indicator in the Cryptorg exchange trading terminal, you can do it in two ways:
— to pay for the Business tariff
— Make a purchase through the Marketplace and get into a closed community of traders
This option is interesting for traders that trade a lot with their hands, as well as for traders who actively add orders to work bots.