Welcome to our guide on using our FiBBy trading algorithm. In this guide we will first address firstly how to set the algorithm up and then secondly how to use it.
1) The first thing you want to do is sign up to our newsletter if you have not already. When you do so you will receive a welcome email which contains the code necessary to run FiBBy. You will need this code to continue further in the tutorial. Sign up below!
2) FiBBy is written in a proprietary language created by TradingView called Pinescript. TradingView provides access to hundreds of financial data sources for free with easy interaction with Pinescript so you will need to create an account on TradingView.
3) Once you create an account you will want to navigate to the charting page. Which can be found by clicking here.
4) Once that is done you want to look for the tab down the bottom labelled ‘Pine Editor’ and simply paste the code from the welcome email like so.
5) Then click save as and then add to chart. Both in the top right hand corner of the development environment.
Congrats! You’re all set-up. You should see something similar to the chart below.
How to Use FiBBy
FiBBy works by calculating the volume weighted moving average over a 200 candle period then adding and subtracting a variety of standard deviations. These are the orange and green lines you see on the chart.
The orange lines represent where you want to sell. While the green ones represent where you want to buy. That’s the very basics. However the trading system is slightly more complex than that and how you want to use it will depend on some other variables such as risk tolerance and time frame. In this guide we will cover the 2 main strategy’s we use however feel free to experiment with it to see if you can come up with better strategy’s.
One way in which FiBBy is effective is on short term basis. AKA Scalping. We found that scalping using FiBBy was done best using 15 minute candles. This strategy only works when there is low volatility.
Implementing the strategy is quite simple. You simply want to buy/sell when price hits the first band and then close your position when price hits the opposite band. Like the example below.
When using this strategy you want to as you always should use stringent risk management. We have an automated system which determines our risk limits. However simple stop losses also work fine.
One thing you want to watch for is price movement like the example below. As you can see price moves very sharply upwards hitting a number of the bands. If you had entered a position on the first band you would of lost money. This is why we recommend to stay away from periods of high volatility or expected periods of high volatility.
High Time Frame Swing Trading
FiBBy can also be used on high time frames using a similar strategy to the one above. The below chart is ETHUSD on 4 hour candles. As you can see ETH hit our first sell band before sharply retracing.
One thing worth mentioning is that if you are more risk averse you may want to consider not using the first band and instead use the second and third bands. Using these bands will present less trading opportunity’s however will have a higher strike rate.
Other Things to Note
- Like previously mentioned make sure you employ good risk management
- FiBBy is not guranteed to make money and you should use it with the expectation it won’t. In our experience it has been a valuable tool but markets are constantly evolving. What works today may not work tomorrow.
- Though this is a news site focused on cryptocurrency FiBBy can be used in other markets such as equity’s and commodities.
- It is possible to automate FiBBy however we recommend against it. Certain market edge cases could cause it to severely underperform. We always recommend some human element to trading with FiBBy.