RWI-WAE Displacement Explosion System

Family: trend_following · Regime: trending · Complexity: high · Asset classes: FX, Equities, Commodities · Timeframes: H1, H4

Thesis

Trend following is most effective when price movement is statistically non-random (RWI > 1) and accompanied by an 'explosion' in volatility (WAE). This strategy assumes that DI-crossovers are only valid signals when they occur during these persistent, high-momentum regimes, filtered by triple-smoothed momentum (TRIX) to reduce noise. Stop-loss placement at Fibonacci 1.0 levels provides a structural anchor to the origin of the trend segment.

Components

• Random Walk Index (RWI BTF) (regime) — Acts as the primary regime filter to ensure the market is in a non-random trending state (> 1.0) before considering signals.
• ADX Crossing INGM (direction) — Identifies the directional bias via DI crossovers, providing the 'intent' of the move.
• Ichimoku Kinko Hyo (entry) — Uses the Tenkan/Kijun relationship as the final execution trigger once other filters are met.
• Bears Power (exit) — Provides an early warning of trend exhaustion when the 'Low' fails to maintain distance from the EMA, signaling rising selling pressure in an uptrend.
• Auto Fibonacci (risk) — Provides structural support/resistance levels for objective stop-loss placement at the 100% retracement level.
• TRIX (confirmation) — Filters out high-frequency noise through triple-smoothing to confirm the momentum of the DI crossover.
• Waddah Attar Explosion (WAE) (volatility_filter) — Ensures entries only occur during high-volatility momentum bursts, preventing 'death by a thousand cuts' in low-volatility ranges.

Known failure conditions

• RWI remains below 1.0 for extended periods while ADX generates frequent crosses (indicates high-noise ranging).
• Significant slippage at WAE explosion points rendering the momentum-based entry unprofitable.
• Price action consistently invalidates Fibonacci 1.0 levels before reaching a 1:1 reward-to-risk ratio.

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