CrazyGabey

Aggressio 2.0: A Modified Version of Consensio

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Consensio is a moving average trading system created by Tyler Jenks, host of the Hyperwave YouTube channel and President and Chief Investment Officer of Lucid Investment Strategies. Tyler designed Consensio to be used on the weekly timeframe , with the express purpose of allowing position investors to slowly scale in and out of positions in accordance with market trends. To paraphrase Tyler, "you can go out and live your life, and check your portfolio once every couple of weeks."

If you're unfamiliar with Consensio, read this post written by popular TradingView blogger and co-host of the Hyperwave YouTube channel, Sawcruhteez.

While Consensio can be used on any timeframe, its primary goal of capturing long-term trends while paying far less attention to short and intermediate-term noise makes it ideal for position traders. The trading system is truly a work of art. Its focus on the long-term trend has left me wondering though, if there might be a method of more actively trading Consensio while still maintaining the spirit of the system.

Enter Aggressio. 'Consensio' is Latin for 'agreement', which describes well the moving average consensus that is achieved when capturing long-term trends. It is in that same spirit that I offer up 'Aggressio' (Latin for 'aggressive') as a potential modified version of Consensio, specifically designed for those who enjoy a more active role in their trading. The goal is to exit the main trend at the beginning of a pullback, potentially enter a short-term position in the opposite direction (should at least 3/6 entry criteria be met), and reenter the main trend at a better price than one exited at.

It probably won't end up working out.

Or maybe it will.

Who knows?

ENTRY SIGNAL

The first entry signal is a Heikin Ashi reversal candle ( spinning top or doji candle). This alerts the trader to take notice, as a potential trade is forthcoming. The confirmation of the entry signal is a Heikin Ashi color flip. If the reversal candle and color flip happen on the same candle, a position may be entered upon the closing of that candle. If the candle only signals a reversal, but does not include a color flip, one must wait until the next candle closes with a color flip to confirm the reversal before entering a position.

POSITION SIZING

There are six criteria for both long and short positions. All positions should be entered and/or added to immediately upon the closing of the most recent candle.

  • 1/6: 0% entry
  • 2/6 0% entry
  • 3/6 25% entry
  • 4/6 50% entry
  • 5/6 75% entry
  • 6/6 100% entry

LONG ENTRY CRITERIA

  • Is the 10 EMA above the 50 EMA?
  • Is price above the 50 EMA?
  • Is the 10 EMA turned up?
  • Is the 50 EMA turned up?
  • Is the Parabolic SAR bullish?
  • Does the most recent Heikin Ashi candle suggest a bull trend?

SHORT ENTRY CRITERIA

  • Is the 10 EMA below the 50 EMA?
  • Is price below the 50 EMA?
  • Is the 10 EMA turned down?
  • Is the 50 EMA turned down?
  • Is the Parabolic SAR bearish?
  • Does the most recent Heikin Ashi candle suggest a bear trend?

EXIT SIGNAL

Rather than incrementally scaling out of a position, the position is exited 100% when a Heikin Ashi candle closes with a color flip. At that point, one must wait for another color flip to enter back into that position, or begin evaluating a position to the opposite side.

I'm going trade this system over the next few weeks. I'll report back once I've set my entire bankroll on fire.
Comment: After reading this system for the last five days on the 4-hour chart, I have a few thoughts.

1. I don’t think exiting 100% on a Heikin-Ashi color flip is a good strategy. The trend is often telling me I should have exposure, and there’s not always a good time to re-enter before price breaks out again. Possibly something like exiting 50% on a color flip would be better.

2. The Heikin-Ashi candles seem like an excellent indicator, but they don’t always catch significant movements in enough time for it to help one exit or enter their position before major damage is done. Essentially they’re not the tool for sucking in and out that I had hoped they might be.

3. This one should have been obvious, but never trade Bitcoin without a stop loss on the books. Price simply moves with too much velocity.
Comment: For now I think I’m going to put this idea back on the shelf. I’ll continue to back test and see if any changes will make the system better. Though it does seem that any Consensio-based system is simply incompatible with ducking and dodging in and out of the market, and playing counter-trend bounces.
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