Cheat Sheet:

The order that VEMA's Bounce strategy conditions must be met is:

1. Expiry date not reached

2. Distance to Activate (Avoid getting frontrun)

3. Distance to Confirm (Confirm Rejection)

4. Operate on Candle Close (Stop Hunt Saviour / Avoid Wicks)

Conditions:

• Expiry Date

• Distance to Activate

• Distance to Confirm

• Operate on Candle Close

Expiry Date

By default, trigger trendlines have no expiry date.

So even though you may draw them to only encompass a certain period of time like this:


They will actually act as though you have the "extend left / right line" settings enabled on the trendline, meaning to VEMA they appear as:

To combat this, the Expiry Date condition can be used. This enables you to pick a date and time in the future that you consider this setup to be invalid, and instruct VEMA to stop monitoring the setup at this time.

Here we can see the Expiry Date condition has been added to the trade setup panel on the left, and VEMA will now stop monitoring this trade at midnight on the 27th of February.

Note: By default all VEMA logic, including expiry dates, currently runs in UTC. 

Distance to Activate

We like to think of Distance to Activate as the "Avoid getting front-run" condition. It essentially gives you a buffer zone on your trigger trendline, so that if price gets within the percentage you specify, VEMA will see this condition as being met.

In this scenario, Distance to Activate is set to 0%. For the entry conditions of this trade to be met, price would have to touch the Alpha trigger trendline.

This trade was again set up with no Distance to Activate. Unfortunately, price came close to the Alpha trendline, but was front-run and began to bounce before crossing Alpha, leading to a missed entry.

To remedy this, we could have used a Distance to Activate of 1.3%. This gives a buffer zone, meaning price doesn't need to hit our trendline exactly, but just needs to come "close enough" (within 1.3% of Alpha) for VEMA to enter, leading to fewer missed trades.

Distance to Confirm

Distance to Confirm is the "rejection confirmed" condition. It allows you to set a percentage that price must reach after bouncing from your Trigger trendline or Distance to Activate zone.

Similar to our earlier example, this trade would have entered when price hit the trendline, as the Distance to Confirm is set to zero, meaning no rejection is needed to satisfy the entry conditions.

Here VEMA would have waited until price touched alpha (0% distance to activate) then bounced our 2.2% Distance to Confirm before entering.

Operate on Candle Close

Operate on Candle Close is the "Don't get caught out by wicks" condition. It ensures VEMA will only enter a position if all other entry conditions are met when a candle closes.

Without the Distance to Activate or Confirm conditions set, a bounce with Operate on Candle Close will only enter a trade when the trendline is touched, and that candle close agrees with your direction - either a close above the trigger for longs, or below the trigger for shorts.

This is useful to avoid getting caught by big moves through levels.


In this scenario, we were looking for a long off the Alpha trendline. Because we used the Operate on Candle Close condition, VEMA would not have entered the trade due to price being below Alpha at the close. If price had bounced off Alpha and closed above, VEMA would have taken this position.

Distance to Invalidate

Distance to invalidate prevents trades from staying monitoring indefinitely when your trade setup has been invalidated.

It allows you to set a distance from your trigger in the opposite direction to your predicted price movement, that if price reaches (wick or close) VEMA will cancel the setup.

Here we can see this trade setup would be invalidated if price came 3% below Alpha, as it would confirm price is going against our setup (not bouncing from Alpha) and satisfy our distance to invalidate condition.

Note: Distance to Invalidate requires the Candle Close or Distance to Confirm condition to function properly, as without these the position will always have entered before price reaches your Distance to Invalidate level.

Combining these conditions:

Distance to activate & Operate on Candle Close

A trade setup with these conditions needs to move within the Distance to Activate zone, then close above the trigger for a long (below for short positions) before entering.

Distance to Confirm & Operate on Candle Close

A trade with these conditions must touch the trigger trendline, then reject beyond the Distance to Confirm percentage and close there.

Distance to Activate & Distance to Confirm

These conditions mean price must move into the Distance to Activate zone, then reject beyond the Distance to Confirm percentage before VEMA will enter. 

The whole kit and kaboodle



And here, we can see all four conditions at work. Price was within our expiry date, so VEMA was still monitoring this setup. Price then entered our Distance to Activate zone, rejected outside our Distance to Confirm, but did not close above on that candle. Due to not all entry conditions being satisfied, VEMA waited, and two candles later the close above Distance to Confirm came, all of our entry conditions were met and VEMA would have taken this position for us.

Troubleshooting:

Distance to Activate larger than Distance to Confirm

A Distance to Activate larger than Distance to Confirm will render your Distance to Confirm condition useless unless the Operate on Candle Close condition is also used.

This is due to your distance to both conditions being satisfied as soon as price enters your Distance to Activate zone.

With Operate on Candle Close enabled, it essentially just moves your trigger trendline to the Distance to Confirm percentage, as price needs to come into the activation zone, then close above the Distance to Confirm zone. This would behave identically to the same trade with no Distance to Confirm condition enabled but the trendline placed closer to the Distance to Activate.