How to use "Auto Trendline and Breakout Alert" IndicatorIn this tutorial, we will learn how to use the "Auto Trendline & Breakout Alert (Linear / Log)" indicator.
Note: You can find it in the scripts section of my profile
Auto Trendline & Breakout Alert(Linear / Log) Full-Version by BobRivera990
Overall Introduction
This indicator is the best tool for breakout traders.
Drawing and evaluating the trend lines of multiple charts in different time frames is a very time-consuming and tedious task. In addition, being aware of breakouts in the shortest possible time requires constant monitoring.
With this tool, you can draw and classify trend lines in a fraction of a second and by placing an alert on any chart, you can receive notifications about breakouts, wherever you are.
The classification of trend lines is done based on the reaction of the price chart to the trend lines and the analysis of the trading volume .
This indicator is designed to reclassify trend lines with each reaction of the price chart. These lines are classified into 6 levels and these levels are distinguished by different colors. Thus, any touching or crossing of the price chart can make a difference.
Features
This indicator is designed for use on both linear and logarithmic scales. It works linearly by default. If you are using a logarithmic chart, enter the settings menu and set the chart scale parameter to “Log”.
The indicator is equipped with the volume status tool to identify and avoid false breakouts. Note that you can't completely avoid false breakouts, but you can minimize risk and loss. I have already published volume status as a separate script.
Several filters are provided to customize alerts. You can limit alerts based on the level and strength of broken trend lines , volume status, and type of breakout (Cross-Over, Cross-Under, or both).
The last breakouts panel gives an overview of the current market situation. You can activate it in the settings menu. the figure below shows the panel:
How to setup
There are many parameters in the settings menu, but two are more important. One is “Chart Scale” and the other is the “Max Operational Range Length".
Set the “chart scale” parameter according to the chart, otherwise the trend lines drawn by the indicator do not match the price chart.
If you are using a linear chart, select the "Linear" option or if you are using a logarithmic chart, select the "Log" option.
Max Operational Range Length Limits the range of the price chart that is processed by the indicator.
By increasing this parameter:
The strength and durability of the trend lines increases.
The number of breakout signals decreases.
The importance of breakout signals increases.
The indicator processing load increases.
The best range for "Max Operational Range" is from 300 to 1200,Change it until you get the best view possible.
Also by changing the "Filter" parameter from 1X to 5X, you can reduce the clutter in the chart.
The following figure shows the results of correct and incorrect settings:
Use it well...
Linear
Log Vs Linear TradingAsk a hundred traders whether you should be using Log charts or Linear charts and you will get as many answers. The real answer seems to boil down to - Look at both and find what works.
On the lower time frames there is often not a big difference. Log is often considered best for longer-term charting, but that is not an absolute.
Badrosha on twitter writes: twitter.com
You can test the difference between Linear and Log for yourself. Try these ideas to see if you notice any differences:
->First, use " Magnet Mode " (symbol of a magnet on low left of options on left side of your chart) and pick your two points of a trend using a "Ray" (continuous line). On magnet mode the ray will stick to the top of a candle body or wick for you.
>Second, start to shuffle between the log and linear to find the story they are telling.
-LOG charts are generally considered to be better in a parabolic rally.
-Linear is often considered best for ENTRIES because it can potentially show Down Trend breakouts, short swing trade set ups, and pattern breakouts before the log chart will.
-Log is often considered best for EXITS and long term charting. Log shows - Up Trend breakouts, long swing expiration, or short entries sooner than linear.
>With Linear you can see classic entries on breakouts, which is the confirmation on a broken trend. While with log, you rarely find a good one - if price action starts to return on a breakout the percentage change (log) will can give false signals - unless in "parabola."
The bottom line: there is not a "right" answer. What matters is if it works, not whether one is right philosophically or intellectually. Look at the history of a chart and look at what has worked, because one of the tenants of Technical Analysis is "History Repeats Itself."
On the daily chart of BTC 0.00% right now, there is a potentially important difference between Log and Linear charts. Follow the instructions above for Magnet mode and a Ray and switch between Log and Linear. Also shown in the charts here. This difference is why a lot of traders disagree right now on whether we are in a continuation of the bearish trend , or the start of a new, potentially bullish , trend.
Ari-Wald, C.F.A, C.M.T Analyst Wolfe Research @AriWald
For me, I’m a Log-always analyst. While the differences are many times negligible, there are times that Log scaling provides a considerably stronger view of the stock’s trend vs. Arithmetic scaling, but I’ve never found the opposite to be true. The advantage of Log is clearly seen at long-term horizons or during big price moves at lower prices.
As an extreme example, drawing a trendline on an arithmetic chart of the S&P 500 0.05% from 1930-current is not an accurate depiction of the index’s trend during that period in my view. We realize that a 10 point move from 20 to 30 (50%) is not the same as a 10 point move from 30 to 40 (33%). A line on a log chart would look like a curve plotted on an arithmetic scale in this example – but consider that the price on this arithmetic scale gives an inaccurate view of price, in my opinion, and therefore the curved trendline is justified.
So overall, if I’m going to use a Log chart in this situation I should maintain my defaults on Log because I won’t encounter a time when I’m at a disadvantage, only times when Log is preferred.
Pete-L-Brandt – C.E.O. 2 Factor LLC @PeterLBrandt
As a trader I do not use log charts. However, I can see some advantages to log charts for analysts who exam very very long-term trends.
The reason I do not use log charts is that they are irrelevant to me as a futures trader. The value of a $15 move in the S&P 0.05% was the same to me when S&Ps traded $150 as it is today when the S&Ps are at 1700 or so, even though on a percentage basis the $15 change was 10% of the price in 1983 and less than 1% of the index today.
Log vs Linear Crypto Trading Ask a hundred traders whether you should be using Log charts or Linear charts and you will get as many answers. The real answer seems to boil down to - Look at both and find what works.
On the lower time frames there is often not a big difference. Log is often considered best for longer-term charting, but that is not an absolute.
@Badrosha on twitter writes: twitter.com
You can test the difference between Linear and Log for yourself. Try these ideas to see if you notice any differences:
->First, you got to use " Magnet Mode " (symbol of a magnet on low left of options on left side of your chart) picking your two or three points of a trend using a " Ray" (a straight line). On magnet mode the line will go to the top of a candle body or wick for you.
>Second, start to shuffle between the log and linear to find the story they are telling.
-LOG charts are generally considered to be better in a parabolic rally. It will be easier to see whether its Bullish or Bearish
-Linear is often considered best for ENTRIES because it can potentially show Down Trend breakouts, short swing trade set ups, and pattern breakouts before the log chart will.
-Log is often considered best EXITs and long term charting. Log shows Up Trend breakouts, long swing expiration = short entry, higher and prior to linear.
>With Linear you can see classic entries in breakouts, which is the confirmation on a broken trend. While with log, you rarely find one and actually if price action starts to return on a breakout, the breakout will likely invalidate and go deeper - unless in "parabola."
The bottom line: there is not a "right" answer. What matters is not whether one is right philosophically or intellectually, it matters what Works. Look at the history of a chart and look at what has worked, because one of the tenants of Technical Analysis is "History Repeats Itself."
On the daily chart of BTC right now, there is a potentially important difference between Log and Linear charts. The red resistance is the Log resistance for the current bearish trend, while the blue resistance is the linear resistance for the current bearish trend. This difference is why a lot of traders disagree right now on whether we are in a continuation of the bearish trend, or the start of a new, potentially bullish, trend.
Ari Wald, CFA, CMT Analyst Wolfe Research @AriWald
For me, I’m a Log-always analyst. While the differences are many times negligible, there are times that Log scaling provides a considerably stronger view of the stock’s trend vs. Arithmetic scaling, but I’ve never found the opposite to be true. The advantage of Log is clearly seen at long-term horizons or during big price moves at lower prices.
As an extreme example, drawing a trendline on an arithmetic chart of the S&P 500 from 1930-current is not an accurate depiction of the index’s trend during that period in my view. We realize that a 10 point move from 20 to 30 (50%) is not the same as a 10 point move from 30 to 40 (33%). A line on a log chart would look like a curve plotted on an arithmetic scale in this example – but consider that the price on this arithmetic scale gives an inaccurate view of price, in my opinion, and therefore the curved trendline is justified.
So overall, if I’m going to use a Log chart in this situation I should maintain my defaults on Log because I won’t encounter a time when I’m at a disadvantage, only times when Log is preferred.
Peter L Brandt – CEO Factor LLC @PeterLBrandt
As a trader I do not use log charts. However, I can see some advantages to log charts for analysts who exam very very long-term trends.
The reason I do not use log charts is that they are irrelevant to me as a futures trader. The value of a $15 move in the S&P was the same to me when S&Ps traded $150 as it is today when the S&Ps are at 1700 or so, even though on a percentage basis the $15 change was 10% of the price in 1983 and less than 1% of the index today.
Perspective is everything!Looking at the BTCUSD logarithmic scale changes the perspective quite a bit. This view explains why it turned downwards when we all thought it already broke through the channel. Which it did... in the linear view. When doing a technical analysis, it's a good idea to sometimes take a step back and make sure you've looked at it from all angles. And that's my lesson learned for today.
