How to Setup CTA Strategy?

Welcome to the Otrading tutorial! Today, I will guide you step by step on how to setup the Futures CTA bot.

The CTA is a powerful trading assistant that integrates well-known trading algorithms, is fully open to traders, and can customize strategies and performance backtesting. Traders can either copy tradings or set their own parameters and indicator combinations to capture target market trends.

You can follow the steps below to set the parameters and start the CTA bot:

1

Open the Otrading app and go to the "Trades" page. Select the "Futures CTA".

2

Choose the asset you want to trade.

For beginners, it is recommended selecting assets with higher trading volumes, such as BTC, ETH, XRP, DOGE, SHIB, PEPE, SOL, and so on. Today, I will use BTC as an example.

3

Your investment should be based on your personal financial situation.

To minimize risk, it is recommended setting each bot’s position to $20 and using more than 20 bot combinations. Be sure that the total margin used by all your futures CTA bots doesn’t exceed half of your available margin.

4

To avoid frequent trades, it is suggested selecting a 2-hour or 4-hour “Timeframe”.

However, you should adjust the timeframe based on market conditions.

5

“Leverage” refers to the ratio of bot positions to the actual margin invested.

We recommend setting leverage to 5. Note that while the CTA bots usually set stop-losses to prevent liquidation, excessive leverage can result in early margin depletion.

6

If you want the bot to execute only one trade, select "Single."

Otherwise, by default, the bot will run continuously on the cloud.

7

“Max Orders” refers to the maximum number of orders the bot is allowed to execute.

You can adjust this number based on open factors and backtest data. The default setting is 1.

8

The default setting for opening direction is "Auto,"

meaning the bot will use the open indicators to automatically calculate and decide whether to go long or short.

9

Click the "+" button to add an open indicator.

For this tutorial, I will use the "Pivot Point" indicator.

It is a pattern-matching indicator that captures reversal signals in real-time. When the left and right candles match the specified number, it triggers a signal when the last candle closes. Compared to moving average-based indicators, it is more real-time.

Here’s a detailed explanation of the parameters.

The “Equivalence” relation is typically set to "Auto," meaning the algorithm will determine the direction.

If you select "Long," the bot will only accept long signals.

and if you select "Short," it will only accept short signals.

Setting the “Left Candles” to 4 means there will be 4 candles including the middle and left candles.

while setting the “Right Candles” to 3 means there must be 3 candles on the right.

If the middle candle is the lowest one, a long signal will be triggered when the last candle closes, and if it’s the highest point, a short signal will be triggered.

For this tutorial, we use the "Parabolic SAR" as the close indicator. This is a very useful real-time stop-loss tool that can intelligently adjust the best stop-loss price regardless of whether the position is long or short. The position will be automatically closed when the market price breaks through or falls below this price.

The “Acceleration” and the “Acceleration Limit” determine the width of the stop-loss channel.

Smaller values result in a wider stop-loss channel, and larger values result in a narrower channel. If you want to leave more room for profit during large market fluctuations, avoid frequent closures or premature stop loss, you can choose a relatively smaller value to follow the strong trend. If you focus more on risk control, choose a larger value to tighten the stop-loss channel and close quickly.

10

Once you’ve set up everything, you can click the “Backtest” function at the bottom left to evaluate the performance of your strategy combination and parameters using historical data.

11

Here are some key backtest metrics.

“Net Profit”, the actual return over the backtest period, for example, the past 359 days and 16 hours, minus trading fees. The return rate is shown in parentheses.

“Max Drawdown”,the maximum loss the strategy could experience during the backtest period, including realized losses and floating losses. Generally, the net profit to maximum drawdown ratio should be at least 3:1.

“Win Rate”,the ratio of profitable closed orders to total closed orders, typically over 40%.

“Average Profit”, the average profit per order. The larger this number, the better. It is recommended to be no less than 0.5%. An average profit above 0.5% usually covers slippage costs.

“Closed Trades”, the total number of closed orders during the backtest period. Aiming for 1 closed order per day, or 1 every two days, can help reduce transaction fees and slippage costs.

“Max Serial Loss Trades”, the number of consecutive losing orders. The smaller this number, the better, ideally no more than 7. This metric will reset once a profitable order appears. Continuous losses can lead to significant psychological pressure, making it essential to keep this number low.

12

Once all settings are complete, return to the bot parameters page and click the "Launch" button at the bottom of the page.

Switch to the bot running list page, and you will see the newly started bot labeled as "New."

That’s all for today’s tutorial. If you have any questions, feel free to join our Telegram community for further discussion. Wishing you all learn more and earn more—use your trading tools wisely and enjoy a prosperous wealth!