Combining TMO Divergence, AMA Extremes, and Candle Expansion for Scalping
Summary
This intraday method combines a momentum oscillator’s divergence signals with an adaptive moving average’s upper or lower extremes. It seeks early moves after range-bound consolidation: bullish divergence and a lower-side AMA extreme support a long, while bearish divergence and an upper-side extreme support a short. It also requires the latest three candle bodies to grow successively. The published configuration lists a TMO length of 7, an AMA length of 50, and a swing stop period of 10 bars. Stops use recent lows for longs and recent highs for shorts; trades can also close on an opposing signal or a change in the AMA state.
The document describes the combination as a way to filter single-indicator noise, but provides no detailed performance statistics to substantiate that claim. Its backtest setup is BTC/USDT futures on a 10-minute period with a 1-minute base period over one week in November 2023. The stated risks include frequent trading costs, stops vulnerable to ordinary price noise, and difficulty selecting parameters. The short sample does not establish robustness across markets or timeframes.
Key ideas
- Long setups combine bullish TMO divergence, a lower AMA extreme, and successively larger candle bodies.
- Short setups combine bearish TMO divergence, an upper AMA extreme, and the same candle expansion condition.
- Stops are based on recent swing lows for longs and swing highs for shorts.
- Trades may exit on an opposing indicator signal or a change in the AMA state.
- Frequent trades, noise-sensitive stops, parameter selection, and the short backtest period limit confidence in the method.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.