AI-based Trading Strategy for Fast Profits using Volatile Assets

📈 Using highly volatile assets and technical analysis.

🤖 Creating a trading strategy using an AI-based indicator.

⚙️ Testing the strategy using the price of Ethereum on a three-minute timeframe.

📈 K Nearest Neighbors (KNN) is a classification algorithm used to predict stock price movements based on historical data.

📊 Technical indicators, such as moving averages, relative strength index, and momentum indicators, are used to create feature vectors for KNN classification.

🔵🔴 The KNN algorithm generates buy and sell signals based on the strength of the signals, with blue and pink labels indicating buy and sell respectively.

📉 The EMA ribbon, another trading indicator, is used in conjunction with KNN to filter out false signals and improve trading strategy.

📊 The video explains the concept of EMA ribbon, which is created by plotting multiple EMAs with different time periods on a price chart to identify the trend direction and strength.

🔍 The EMA ribbon indicator can be used to generate potential buy or sell signals based on the trend direction and price location relative to the moving averages.

💪 To confirm the signals, the video suggests using the relative strength index (RSI) as a secondary confirmation tool, which measures the strength of a security's price action on a chart ranging from 0 to 100.

⚙️ Adjusting the RSI to be more sensitive for valid trade entries.

📈 Entry conditions for a long trade: price above 200 EMA, ribbon above 200 EMA, pullback into ribbon without closing below long-term EMA, and blue label from machine learning strategy.

💰 Managing trades: setting stop loss, target profit, and adjusting stop loss to secure the trade.

📈 The strategy involves buying a security at a discounted price during an uptrend.

⬇️ For short trades, wait for the price and ribbon to fall below the 200 EMA and the ribbon to turn red.

📈 The trading strategy involves using the 200 EMA and RSI to identify entry points.

💰 Setting stop loss and target levels, and adjusting the stop loss once a quarter of the profit is made.

📊 The backtesting results showed a significant increase in the account balance.

📈 This trading strategy has a higher risk and involves a higher reward.

💯 Risking 5% of your account per trade is recommended for growing a small account quickly.

📝 Don't forget to test the strategy on a paper account before implementing it.