Investing & Trading

HACOLT Strategy

By Samantha Baltodano


TL;DR:

The HACOLT (Heikin Ashi Candles Oscillator Long Term) strategy is a trading strategy that helps identify long-term trends. It's made for investors who prefer a more hands-off approach to trading. 


The HACOLT is an oscillator that shows three levels: 0, 50, and 100. When it reaches 100, it's time to buy, and when it falls to zero, it's time to sell. 


Traders use the HACOLT oscillator to identify potential buy and sell signals, and can use it alongside other tools like moving averages or trend lines to generate more accurate signals.


You can access this indicator here.



What Is The HACOLT Strategy?

The HACOLT (Heikin Ashi Candles Oscillator Long Term) strategy is a trading strategy used in trading to identify long-term trends. It's a modified version of the HACO (Heikin-Ashi Candles Oscillator) created by Sylvain Vervoort, designed to give traders clear buy and sell signals.


One of the benefits of the HACOLT strategy is that it’s made for long-term trading, which makes it useful for investors who prefer a more hands-off approach to trading.


HACOLT is an oscillator that shows three levels: 0, 50, and 100. When the oscillator reaches 100, it means it is time to buy, and when it falls to zero, it means it is time to sell.



Formula and Calculation

To calculate the HACOLT values, the formula first calculates the modified Heikin Ashi Close prices, which are then smoothed using the TEMA. The resulting smoothed data is then compared to the TEMA of the High and Low of the Heikin Ashi Candles to generate buy and sell signals.


Here's the formula and calculation broken down into steps:


Step 1: Calculate the modified Heikin Ashi Close (MHAC) price for each candle. 


The MHAC is calculated as follows:

  • MHAC = (Open + High + Low + Close) / 4


Where: 

  • Open, High, Low, and Close are the respective prices of the Heikin Ashi Candle.


Step 2: Calculate the TEMA of the MHAC values. 


The TEMA is a triple exponential moving average, which is calculated by smoothing the data three times. The TEMA is used to provide a smooth representation of the price trend.


Step 3: Calculate the TEMA of the High and Low of the Heikin Ashi Candle. This helps to identify the strength of the trend and potential reversal points.


Step 4: Compare the smoothed MHAC data to the TEMA of the High and Low. 


  • If the smoothed MHAC data is higher than the TEMA of the High, it's a sell signal. 
  • If it's lower than the TEMA of the Low, it's a buy signal.


Step 5: Once the buy or sell signal is generated, the oscillator level is updated. 


  • If the oscillator level is 0, it suggests an open short position. 
  • If it's 50, there's no open position. 
  • If it's 100, it indicates an open long position.



Trade Signals using the HACOLT Strategy

Traders use the HACOLT oscillator to identify potential buy and sell signals. 


The main plot of the HACOLT oscillator oscillates between 0 and 100. The levels of 0, 50, and 100 indicate "an open short position", "no open position", and "an open long position", respectively.


Passing from one level to another is viewed as a trading signal:


  • Rising from 0 or 50 to 100 suggests a Long Entry and Short exit.
  • Falling from 100 to 50 or zero suggests a Long Exit.
  • Falling from 100 or 50 to zero indicates a Short Entry.


Traders can use the HACOLT oscillator alongside other technical analysis tools, like moving averages or trend lines, to generate more accurate signals.



Test The HACOLT Strategy

Great news! 


You can back test this exact strategy on historical data for any of your favorite symbols using TradingView. 


This strategy has already been built and all you have to do is log in and take it for a spin. You can access this indicator here.


If you’re ready to try more strategies there are many more variations of HACOLT ready to test right now. You can find those here.


If you’re new to back testing and to TradingView, don’t worry. I created a step-by-step guide you can follow to begin testing the HACOLT Strategy.



Summary

  • The HACOLT strategy identifies long-term trends in trading and provides clear buy and sell signals.
  • HACOLT is an oscillator that shows three levels: 0, 50, and 100, and when it reaches 100, it means it's time to buy, and when it falls to zero, it's time to sell.
  • The formula calculates the modified Heikin Ashi Close prices, smoothed using TEMA, and compared to the TEMA of the High and Low of the Heikin Ashi Candles to generate buy and sell signals.
  • Passing from one level to another is a trading signal: Rising from 0 or 50 to 100 suggests a Long Entry and Short exit, and falling from 100 or 50 to zero indicates a Short Entry.


HACOLT is just one of many strategies that Archaide automates. For a full list of strategies and studies available click here.


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