Relative Volume Entries with Volatility Filters and a Trailing Stop

Summary

This long-biased strategy combines rising relative volume with a volatility filter and price action. It compares current volume with a short moving average and assesses low volatility by comparing twice the average true range with the width of a Bollinger band. A bullish bar under those conditions can open or add to a long position. The stop trails below the lowest price by a volatility-based distance; a sufficiently large bearish engulfing bar under higher volatility can also trigger an exit.

The document presents the logic and adjustable ATR and volume lookbacks, with published settings for BTC/USDT futures using daily bars and hourly base data. It supplies no backtest performance results. Volume can lag, the engulfing-pattern exit may be unreliable, and a wide trailing stop can allow substantial losses. Because positions can be added, exposure may grow; the summary’s description of buying near lows is broader than the source’s stated entry rule. Parameter choices and execution conditions therefore need evaluation before drawing conclusions about effectiveness.

Key ideas

• The entry combines a bullish bar, volume above its recent average, and a low-volatility condition.
• The volatility filter compares twice the ATR with the Bollinger band width.
• A trailing stop follows the lowest price using an ATR-based buffer.
• A large bearish engulfing bar can close a position when the volatility filter is no longer met.
• The published settings provide no performance results, and adding to positions can increase exposure.

Tags

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