This Algotrading Bot Wins 94% Of Its Trades. That's The Problem. #freqtrade

Hello friends. Welcome back to day one of the 100 days of top 100 algo trading strategies. We will completely understand them. We will back test them and we will test them on a live market. So, let's get started. So, as you can see on the screen, currently we have running an army of algo trading bots. Almost 25 bots are running currently on the live market data. And you can see also these top 10 strategies and out of them today we will understand this NASOSV4. So, which performed very well on the back test and as you can see on the screen, currently even on the live market data, the win rate is 100% and the drawdown is 0%. So, it is taking very less trades, but those are very accurate. You can see we started this testing on 21st of August and today is 5th of September and it took almost 1 2 3 4 5 6 7 8 9 10 11 12 13 trades and all are, you know, a good trade. So, we will understand this strategy, how this works and if you need the complete source code of this strategy, you can just click on the classroom and here you will see this 100 days algo trading strategy and you will see this NASOSV4. You will find all the details here, the source code, how to run this like this. So, this is our own application, the Nexus Trading Bot Army. And this is a quick one-click installation. So, you will find it also here in the when you go to classroom and click on this Nexus Trading Dashboard. You can just download from here and just you need to run, you know, one script and and you will have this dashboard. Actually, on the back end it is running freqtrade, but you know, that is quite uh, difficult for the non-technical uh, members. So, for them we have made it very easy. Just need to run one script and you will have this dashboard. And on this, it's very easy. You can just go here, strategy files, and just search, let's say NASOS, and and you can click here backtest. It will start backtesting and if you want to run it live, just search here and click here dry run or live. And for now, I will not recommend to go live, right? So, just click on dry run, and you can uh start your own bot uh like this. And also, if you need to learn more, read more, you can just, you know, go to this ebook. So, click on NASOS. So, in this ebook also, we have multiple strategies based on the category like the moving average. We have 31 uh strategies. For the Elliott wave, we have three strategies. And for the hybrid, we have 52 strategies. So, you will find this like it's a very good uh resource to learn. So, when you click on NASOS, you will be able to download the strategy file. And also, you will get a detailed, you know, guide here. So, you can learn how this works, right? It's very easy. You can find all these resources uh here. Just click in uh classroom, and you will find everything is here. Even from the previous series, we have this ebook, and it will be very helpful if you are beginner for the for the Python trading, right? So, today is the plan of action is uh we have back tested almost 306 strategies, right? And we back tested them in all the time frame in both the modes, spot and futures. So, in this series, we will understand 100 top strategies. And you can see we have this detailed uh document here, right? So, what we will do now, uh we'll click on futures, and just search NASOS, right? So, today you will understand this one, NASOS V4 for the 5 minutes, right? So, you can see here. In the back testing, it took almost 2,299 trades. And the win percent was 94%, and the total P&L was 66.5%. And the max drawdown was 7.52%. And the Sharpe ratio was 3.48, and sortino was 5.49. The CAGR is 30.04%, and the average hold of each trade was almost 4 hours. And also, you can see that the back testing was for 2,533 days. So, you will see all these resources here. You can uh take from there. and if you don't find this, let me know directly in the school, so I'll be able to help you, right? So, let's start today's topic, which is to understand this NASOS completely and then also I'll keep posting the result of this NASOS right in the school. So, for now, let me show you this is running here. Let me open from this Boat Army. NASOS is, I think, here, right? So, when you click here, when you click on the detail analysis, and you will see here, right? All the trades. And when you click on each trade, you will be able to see the trades like how it performed. Right? And also it's very easy. You can open the freight trades UI from here also. And like you can close a trade also from here, all the trades. And you can even start and stop the Docker instance from here. So, it's very easy dashboard, right? So, okay, so let's start today's topic, which is the NASOS before. So, let's understand the strategy in a very simple story. So, I want you to meet a trader. Over 7 years, this trader placed 2,300 trades. It won 94% of them. 94% not for a month, for 7 years. If a person showed you that record, you would think one of two things, either they are the best trader you ever met or something about the way the count is wrong. This trader isn't a person, it's a strategy and today we take it apart. Every indicator it looks at, every rule it follows, and why that 94% might be the most misleading number in trading. So, for now, no code in this video, not even one line. But you will learn every indicator this thing uses, RSI, EMA, EWO, and the rest. Because once you know them, you will spot them in nearly every strategy you ever read. So, for now, if you need to check out the source code, you know where to look at, right? Just head to the school community and download from there. So, for now, you need to remember three things. The first is this trader has three different reasons to buy. Means this has three entry conditions. And one of them buys markets that are visibly falling apart. And the second is it has a profit target so far away, it may have never once been reached. I'll I'll explain you how this works. And the third is when a trade goes badly wrong, it has a rule that stops it from selling. It's not a bug, it's a rule someone wrote on purpose. So, let's first understand the core idea behind the strategy. So, everything this strategy does comes from one belief. Price has been drifting up then suddenly drops very hard. So, that belief is the drop was panic, not the damage. So, price got stretched away from where it had been sitting. And stretched rubber bands snap back. So, whenever we stretch a rubber band, it always comes back to its original position. So, it tries to buy this drop. So, whenever it falls, it waits for that moment. And second price is bounces even a little, it grabs the money and runs. Means So, let's say it will wait for this moment. So, once it is drops down, and whenever it tries to bounce back, it will take a trade from here and quickly take a very short profit and exit out. So, this is its real strategy. So, it tries to buy the sudden drop and quickly takes a profit and exit trade. And to make that process automatic, the computer needs to answer three questions. First, how far did it fall? How panicked is everyone? And is this market healthy right now? So, these three questions, if we are able to give the answers, it will take a trade. And And you can say these three are the different indicators we are using in this strategy. And now, we will understand them one by one later. So, the first indicator is the EMA, exponential moving average, or we can say the ruler. So, the first question was how far the prices did fall? So, to answer that it needs to know that what is normal. So, what we can do, the formula of this is the average of the last n candles. So, generally the common settings are 8 EMA, 16 EMA, 50, 100 or 200 EMA. And what it shows, it shows where price has been hanging out. So, generally So, generally the moving average shows us the average price. The exponential part just means today matters more than last week. Means it will take the recent prices into more consideration. And the second indicator is RSI, relative strength index. And it answers the second question, which is how panicked is everyone? So, EMA tells us the how far the price fall. And the second is RSI, which which tells us how panicked is everyone, right? If you learn one indicator in your life, learn this one. It is very important. So, we can say when the value is low, the sellers are winning. And when And when value is high, the buyers are winning. So, about RSI, it is a scale from 0 to 100. And the common settings are RSI 4, 14 and 20. And the third question is, is this market really healthy? So, to answer that question, we use EWO, Elliott Wave Oscillator. Or we can say it is a thermometer, right? It tells the health of the market. So, what happens? Like if we buy every dip, it would be kind of, you know, very risky. So, we need a health check. And for that, EWO is the perfect. So, generally, Elliott Wave Oscillator is the EMA 5 minus EMA 35. But in this strategy, we are using EMA 50 minus EMA 200. And the thresholds are, if the if the EWO is positive 2.4, then the market is bullish, right? If it is negative 5.6, then you can say it is neutral or we can say warning. And if the EW value is negative 14.4, means we are in the danger. So So generally we can say if the settings are these, then we can say it's a momentum indicator. But with these settings, we can say it is a long-term trend. And also we can say these are the three buy conditions, right? Every It will buy in every condition. Let's understand that how. So the first condition, or we can say the first door, is the sensible one. So in this condition, the settings are when the EWO is positive 2.4% and the EMA exponential moving average eight is under 2% and the RSI four values under 35 and and RSI 14 is under 72. Means no euphoria, right? If these values match, then it will go for a buy. So good market, small scar, and nobody is euphoric. Means it will quickly So means it will quickly try to take a trade when the market is in a very small dip. The second door is door is the panic buyer. The same shape, but the bigger wound, right? Price nearly 6% below EMA eight and RSI is down below 25. Below 25 isn't a bit oversold? That's where people close positions because they can't watch it anymore. When the strategy was tuned, that requirement got dragged down to minus 5.6. And the third door is the collapse. So EWO below -14.4 EMA 50 is 14% under EMA 200 and it has no euphoria guard at all. So it will still buy. So we can say it is the loosest door in the strategy and we can say when the market is, you know, worst condition, it will still buy. So ultimately we can say nothing says stay out. It will buy the dip. It will buy the panic and it will even buy the collapse, right? So So I have explained this completely. Like if you want to, you know, go more deeper in this, you can check out this explanation. It's very detailed. Like, you will be able to understand it completely. And you can even, you know, check this sliders like two It's an interactive slider, so you'll be able to understand more. And it explains everything. Like, all the buy and sell conditions and all the pros and cons, everything. And even tune the parameters according to you and you can back test. Right? Okay. Now, let's understand the exit conditions. So, the moment a trade is up about 1.6% a trap arms behind the price setting 1/10 of 1% away. One breath of selling and the trade is closed. Typical winner plus 1 and 1/2%. So, it is not trying to catch a move. It's grabbing bounce and leaving the building. So, average time in a trade around 4 hours. We have seen in the back testing. So, it tries to quickly take the profit and exit the trade. So, it will trap the small It will trap the small pullbacks and exit fast. But, the problem is the winners are 1.5% but the losers are up to -15%. The losers are far, but still you have to make sure that let's say your one loss will wipe around 10 winners. And these are the problems. The wins are tiny and the losses are huge. So, you have to make sure and you have to back test before, you know, deploying it live. But, in my back testing, it performed well. Or even you can say in the current live market, you can see you can even, you know, click on this link. It is like running live on the our cloud server. Or if you want, you can deploy it on your local server, also. Let's say Mac or your laptop Windows laptop. So, when you click here, you will see current Currently, it is like, you know, having a 100% win rate and running from 21st August to almost 5th of September. So, I like back test it more and I will tune the parameters if required and I will post the results in our school community. So, you can also back test this. And again, the warning, please do not go live without understanding and without backtesting it. Right? I'm just teaching you how this works, not promising you any profits over this, right? So, now the verdict is, the problem in this the razor-thin slivers means the profits are, you know, very, very tiny. So, it took almost 2,299 trades, and the losses are just 137.1%. And the win rate is 94.0 4% over 7 years. So, we can say break even is 90.9% means if the win rate was 90.9%, you will break even. So, you can say we can tune it a little bit more, and we can again backtest this. Right? So, I'll I'll I'll keep on posting the results in our school community. And if you have any doubt, or if you need any kind of help in this strategy, you can uh ask me directly in the school community or before that, you can, you know, go through these backtesting results, and this strategy guide, right? It It It It contains all the strategy in like detailed manner. So, I think this is it for this video, and I will see you in the next one. Until then, bye-bye. Take care. Have an awesome day.