One of the most tricky aspects of a trading strategy is to make sure the signal set to trigger a certain order is valid.
In some cases, the signal may be temporary, jumping too early into the trade. That result in getting stuck into a trade in loss.
Avoiding false signals of breakouts helps to improve the results of a trading system significantly. You can use the Wait operator to add a confirmation to send the order to the market.
How to Avoid false breakouts
If you have ever traded cryptocurrencies or any other freely exchanged asset, you know that price can be highly volatile, especially in anticipation of significant moves or trend reversal. In these cases, the best opportunities are presented.
However, high volatility could cause a temporary breach of a key level, only to retrace or bounce back right after. You may be waiting for that breakout for buying or selling, but unfortunately, remain trapped in a loss if the trend reverses immediately after.
For example, suppose you want to buy an asset when two moving averages cross. In that case, you can avoid buying when the trend is not strong enough by adding a confirmation that the signal is still valid after a certain period.
How the Wait Operator works on Coinrule
Other than confirmations of signals, you can use the Wait operator also to capture the change of conditions within a set period. For example, you may want to buy coins that experience early signs of a rebound after a sharp drop.
The best and most useful way to use the Wait operator is within the first condition block. You may also come up with other options where it would be suitable in other parts of the rule structure.
The system checks the condition after the Wait operator only once. Should the condition not being met, your rule does not keep waiting further. If the market conditions do not fit the setup of the condition, the rule skips the check and starts from the beginning.
You may not want to let an order to close a position to depend on the Wait operator. If the condition is not met immediately, the bot is not going to close the position.
In the example above, if the MA crossing does not happen exactly after 30 minutesfrom the buy order, the action is skipped and the bot will check again the first condition to buy again. The previous position will remain open.