As a preface to the blog I thought its best to highlight what will be covered in this guide,
When explaining this section, its imperative to understand and absorb what the belt levels stand for in relation to market context.
The belt itself can be broken down into 3 levels - what does this mean?
We must first break down the basics to cover all bases: Price Action.
NOTE: This guide will NOT explore Price Action in depth but simply look at the basics to understand what to look out for when taking trades.
Detecting potential trend changes can be done with Market Structure Breaks (MSBs). We do this by determining the recent high that led to a new low being broken, and vice versa for the opposing trend.
Below is an example of a high that led to a new low, being reclaimed by price. This does not guarantee a trend change – did you think it was that easy?
However, it can give us some indication that the market has potentially shifted to an uptrend.
Continuing with the assumption of an Uptrend with the 4H price action, we then begin to look at the belt.
Lets include a screenshot and break it down.
First lets acknowledge the belt timeframe and MSB timeframe. Both on the 1HR to keep things consistent.
"3 Levels that represent an acceptance of strength".
The 3 levels in the context of an Uptrend.
In this case, the Top Belt is a sign of a strong trend. When the price is above the Top Belt, the trend is the strongest.
Mid Belt is a sign of an average strength trend and Bottom Belt is the sign of an existing trend.
This is key.
Going into the belt/tapping the bottom of the belt DOES NOT mean the trend is over.
Why is this important? If we are looking to play the uptrend that we identified "may exist" with the market structure break on the 4HR, then we must acknowledge the trend is still ripe to take trades on at the bottom of the belt.
Any trend weak or strong will respect the belt levels, especially the bottom belt as it signifies there is still an existing trend.
In the case of a green arrow, knowing the bottom of the belt is the last respect to trend any and all trends should respect this logic, the absolute minimum for a trend continuation would be to respect the lowest level of the belt.
This shows that anyone wishing to play the trend in the safest way only, they will wait for the bottom of the belt in the case of an uptrend.
The reason for this is as follows: playing the Top Belt for strong trends is fine but, we can still lose this level and be trending. Playing the Middle Belt is fine but, we can lose this level and be trending. Any play off the bottom belt is fine but if we lose this level, we are not trending.
The diagram below will show the risk at hand for trying to play trend with relevant stops in place in case of trend end. (Tick being trade entered, red being stop loss hit)
We can see how entering at different points of the belt can change the risk associated; the difference being those who waited for option 3 may have taken less trades but ultimately risk less in trying to trade the trend.
Those who entered at the top of the belt risk 4% in the case of a trend end. Those who entered at the bottom of the belt are entering where the trend must respect and therefore can be proven wrong for minimal downside.
An example of Asteroids Belt top belt being the minimum respected period to contain price towards the downside. (Top belt for trend down, bottom belt for uptrend.)
This is not the only way to trade the belt but will explain what the belt means in relation to trend acceptance.
To note, once closing into the belt, the previous belt levels become resistance. Even though we are still potentially trending, it can highlight a failure of price action to reclaim a strong trend. This can show tapering into a potential trend change or range bound conditions.
Thus when playing the belt, placing take profits at belt levels and leaving some for potential runners makes sense, as the failure of price to resume the previous trend strength can be an indication for a change in context in relation to the market trend.
Keeping this in mind, we can use the loss of trend strength in relation to the belt as a potential to take the opposite side, closing inside the belt at key inflection points e.g. resistance on an uptrend, we can expect a pull back as momentum weakens losing the upmost belt as an indication to a reversal.
Asteroids Belt requires a lot of data to determine the real levels regarding acceptance. As a result there's some set up needed to ensure you are using it to its fullest potential.
To truly excel with the belt, it is advantageous to go through the examples/templates below for consistency and improve trading performance.
Auto Aggregator vs. Aggregator: What are they?
Aggregator represents the denominations for data ingestion, the lower the better as this means the belt is able to absorb more data in increments.
This may make it seem like a no brainer to include increments of "0.0000000001" for all coins but there's 2 reasons against this.
1). Data limits on TV is the obvious software limitation.
Noise? The difference in increments as a percentage for different coins, a btc price chart at the $40,000 range looking at data ingestion for such a small value is illogical and would be wasteful for data load as that level, the difference in belt would be negligible as it would be for BTC traders.
An Examples: a better value would be 15 for BTC because it is low enough for BTC to get more data whilst being relevant. Sol 0.1, ETH 1.
Auto Aggregator aims to do this for you and determine what price works best, however it can only make one estimation per load based off of early data due to TV Limitations, as a result it is better to work this value out manually.
Two key factors to note:
Price and Time frame.
The lower the price, the smaller the aggregator.
The lower the timeframe the smaller the aggregator.
Price was explained above in relation to noise, the same can be extended for timeframe. Users trading the 1m chart will be more attentive to smaller increments of price changes VS users who are looking at the 1D chart.
Time frame isn't a large determining factor but it is a factor to consider, 1m on BTC 10 will work fine, 1HR we can use 15.
There's a video explanation on dialling in your aggregator:
TIP: Set aggregator templates on TV for each increment that's common e.g. 15, 1, 0.1, 0.01. On each coin load the template relevant for your coin to save time.
Asteroids Belt comes with 3 responsive settings that will be used to determine speed of detection - which should you use?
Default Load: "Slow", this was done to teach the new traders patience and show how often the belt will respect price levels as the slow belt will give levels more likely to cause a reaction but less frequently.
Normal: Ideal for trend changes on all time frames, made with normal in mind to show real changes in trend with minimal noise.
Fast: Useful for parabolic trends, especially HTF e.g. a strong trend on the 4HR but you cannot catch a dip buying opportunity waiting for a pull back and want to ride momentum, load the Fast, buy the belt touches and sell early for quick momentum following. But otherwise not recommended.
Recommended: Slow or Normal for structure, keep all templates consistent for Asteroid Belt line up trades (explained below). You can use different responses on the same TF as shown below to give an identification of what's happening with multiple at once, but whichever you use for structure be it Normal or Slow, keep it consistent and do not flick through responsiveness to match your bias.
Displaying Benefits of using 2 different responsive belt settings in combination.
Below you can see the chart with Fast and Slow enabled, it highlights the shift in structure with the slow belt at the top left (Normal or Slow for structural bias). And how the Fast belt is being respected, providing useful early trend direction detection.
When viewing the 2 together we can see potentials for reversion trades back to the structure belt (Slow) / momentum plays respecting the Fast How to Use the Belt for Tradingbelt.
Let’s start with templates; there’s a few things to understand before trading using Asteroids Belt:
Time frame is important. Ensure you are clear which chart timeframe you are looking to trade for targets and expected trade duration. Then establish which timeframes you will use for executions and confluence.
In this example I will use the 4H chart for targets and larger positions, and the LTF 15/5m for entry and confluence.
Lets start breaking down the template. All 4 timeframes are included as they all support my trade decisions. You can use this strategy as a general method of execution when trading.
Starting with the general price action; the below screenshot shows the 4H chart with no indicators to simply highlight the MSB and potential reversion. In this example, the 4H chart may show an upward trend. This is our HTF bias so we will look for trades to the upside.
Using the 1H chart for additional context, due to the LTF we can expect some more noise but just adding to the view that we have cleared the swing, to form an MSB and forming what looks to be support for a retest before a trend upwards.
Now that we have price action context we add Asteroids Belt.
On the 4H chart, we look for belt entries to confirm that we may see a trend reversal. As mentioned in Chapter 1: Understanding the Belt, at key inflection points, closing in the belt can lead to a trend change as well as highlighting the strength of the previous trend weakening overtime. We use the 4H as we mentioned this is our timeframe we use for targets and general structure. If the 15 minute Asteroids belt is bullish but we reject the 4H there is no acceptance of trend in the TF we want to trade.
Why is this a key inflection point?
1D chart shows we are at support can therefore we can expect a relief bounce.
4H MSB, with the 1H support previously highlighted shows the potential for the relief bounce.
So why do we look for entry at the belt at the white circle (above 4H Belt) and not to the left where we can see rejection?
The belt is closer to the 1H Support zone, so we expect to see 1HR Support potentially hold and therefore, we look for entry near support for low risk.
Then as the belt is closer to the 1H Support, 4H belt reclaim is more likely to hold with the LTF Confluence.
Entry away from 1H support (first lower belt revisit) is higher risk and less likely to hold without the LTF support.
The 1H Belt chart, now we look there to see for LTF confluence.
With the white circle in the same place as the 4H belt chart, we can see as we approach support we are inside the belt.
With uptrend potential price action on the 4H chart, with support of the 1H price action and at the safest point of entry covered earlier, being the bottom of the belt.
For lowest risk we now have multiple confluences of the HTF, 1H Support and Asteroids Belt understanding that this lowest belt must hold for a trending move upwards to be valid, therefore we can position at either entry of the lower belt tap and position for potential upside with minimal risk and obvious invalidation.
We continue this pattern for as much confluence as we need, dialling in to the 15m and the 5m charts to find entries and trend acceptance.
This shows how the belt line ups can be useful in the system, why does this work? Below I've included the 4HR Bottom belt but this time the 15min Belt as well, and it will elaborate on dialling it in further.
The yellow highlight represents the 4H Bottom Belt., copied and pasted to be exactly the same on the 15min chart, knowing that the trend acceptance is to the upside, and both bottom belts align which represent a point of absolute hold for the uptrend to continue.
This is confluence that not only do we agree for trend existence but in both instances the Asteroids Belt lower belt is confirming on 2 timeframes that for trend to hold the bottom must be in, the LTF and HTF.
This means we can expect a continuation is more likely than not in this instance.
Loss of the belt would show a clear shift in the 15m trend and give a safe LTF invalidation for your trade.
This is why I use the 4 Chart layout, spotting line ups at once. I will usually start with an empty chart for general price action mapping and shift towards the 4 belt layout, typically focus on 4H, 1H and 15m/5m for some additional information.
Asteroids Belt represents trend strength and weakness, the levels will respect their trend before failure.
Configure Asteroids belt for consistency, consistency in trading is everything.
Price Action Context is a must, key inflection points matter, never trade the middle, easiest way to get chopped out in the market.
Multiple Timeframe confluences on the belt show the shift in trend as the belt is programmed to create line-ups as a display of true trend.
The same concepts can be applied to range, playing the asteroids belt level to level. Will add range trading to this guide soon.