Crypto Trading 101: Trading OP with the Ultimate Oscillator Is OP — Cryptohopper
Let’s see how you can make a profit by trading with the Ultimate Oscillator on Cryptohopper!
What is Optimism?
Optimism (OP) is a layer 2 scaling solution for Ethereum that aims to improve the speed and efficiency of transactions on the Ethereum network. It is a promising project that has gained significant attention from the cryptocurrency community, and many traders are looking for ways to profit from its growth.
What is the Ultimate Oscillator?
The Ultimate Oscillator is a technical analysis tool that is used to measure momentum. It is based on the theory that prices tend to close near the highs or lows of the recent trading range, so the Ultimate Oscillator attempts to capture this by taking into account price action over three different time periods.
The Ultimate Oscillator is considered to be a more reliable indicator than other momentum oscillators, such as the Relative Strength Index (RSI), because it is not as susceptible to false signals. For example, the RSI can generate false buy signals when prices are in a downtrend, but the Ultimate Oscillator will not.
The Ultimate Oscillator can be used to trade any market and timeframe. It can be used to identify overbought and oversold conditions, as well as divergence and convergences. The Ultimate Oscillator can also be used to generate buy and sell signals.
How easy is the Ultimate Oscillator to use?
While the Ultimate Oscillator may look complex at first glance, it is actually quite easy to use. Simply compare the current readings of the oscillators to their historical levels. If the current reading is higher than the historical level, then the stock may be overbought. Conversely, if the current reading is lower than the historical level, then the crypto may be oversold.
Trading Optimism (OP) with the Ultimate Oscillator
The classical way to trade with the Ultimate Oscillator (OP) with the UO, is to look for oversold conditions in the market. When the UO dips below 30, it is considered oversold, indicating a potential buying opportunity for Optimism (OP). We will then look for overbought conditions in the market using. When the UO rises above 70, it is considered overbought, indicating a potential selling opportunity for Optimism (OP).
At Cryptohopper, we have tested multiple settings for trading Optimism (OP) with the UO in order to find the best ones. In our backtest, we took into account a 0.1% fee per trade, each position was taken with the entire account, and no slippage was taken into account. We used all the data available on Binance until the present day.
The best settings (from what we tested) were the following:
This strategy brought in a profit of 608%, significantly more than the 90% of the buy and hold. Additionally, the drawdown was 39%, which is also less than the 80% of the buy and hold.
Disclaimer: However, it’s important to remember that past performance does not guarantee future success, and traders should always be prepared that the market can change and that a strategy that used to work very well before suddenly doesn’t work anymore.