How to Create Strategy: Multiple Market Types
Multiple Market Types
After developing the strategy on datasets of the same market type, traders should be able to describe/classify the market type in the form of rules that are true if the strategy is profitable.
Various rules can be used to describe the right market for the strategy, for example some kind of repeating pattern such as higher highs and higher lows or above EMA with p = 200 and volatility or a count of bounces from EMA etc.
At this point, it is very helpful to introduce all other market types in order to be able to optimize the rules and exclude all the other markets where the strategy is not profitable.
Note, you test on specific market types and not on the real market, because it probably fails on each market type change.
The green rectangle represents an uptrend, red downtrend, blue sideways.