CVD Divergence Signals with Trailing Stops and Pyramiding

Summary

This strategy compares cumulative volume delta (CVD) with price swings to identify regular and hidden bullish or bearish divergences. Regular divergence is framed as a possible reversal signal, while hidden divergence is presented as a possible continuation signal. When a divergence appears, the strategy enters in the corresponding direction and can add positions through pyramiding, up to the limit described in the document.

Risk controls combine a trailing stop with a fixed-percentage profit target; the source also shows percentage-based stop and target levels calculated from the average entry price. The document lists pivot lookback settings and describes a BTC/USDT futures backtest configuration, but it reports no performance statistics or conclusions from that test. Divergences can produce false signals, and results may depend on parameter choices. Slippage during volatile moves and costs from frequent trading may also reduce results. The proposed improvements include adaptive settings, additional indicators, and position sizing based on volatility or account equity.

Key ideas

• CVD is compared with price highs and lows to identify regular and hidden divergences.
• Regular divergence is used as a potential reversal signal, while hidden divergence can indicate trend continuation.
• The strategy uses long and short entries with trailing stops and fixed-percentage profit targets.
• Pyramiding allows multiple positions, subject to the limit described in the document.
• No backtest performance results are reported, and false signals, slippage, costs, and parameter sensitivity remain risks.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.