OPEN-SOURCE SCRIPT
Bollinger Bands Heatmap (BBH)
Updated
The Bollinger Bands Heatmap (BBH) Indicator provides a unique visualization of Bollinger Bands by displaying the full distribution of prices as a heatmap overlaying your price chart. Unlike traditional Bollinger Bands, which plot the mean and standard deviation as lines, BBH illustrates the entire statistical distribution of prices based on a normal distribution model.
This heatmap indicator offers traders a visually appealing way to understand the probabilities associated with different price levels. The lower the weight of a certain level, the more transparent it appears on the heatmap, making it easier to identify key areas of interest at a glance.
Key Features
Dynamic Heatmap: Changes in real-time as new price data comes in.
Fully Customizable: Adjust the scale, offset, alpha, and other parameters to suit your trading style.
Visually Engaging: Uses gradients of colors to distinguish between high and low probabilities.
Settings
Scale
Tooltip: Scale the size of the heatmap.
Purpose: The 'Scale' setting allows you to adjust the dimensions of each heatmap box. A higher value will result in larger boxes and a more generalized view, while a lower value will make the boxes smaller, offering a more detailed look at price distributions.
Values: You can set this from a minimum of 0.125, stepping up by increments of 0.125.
Scale ATR Length
Tooltip: The ATR used to scale the heatmap boxes.
Purpose: This setting is designed to adapt the heatmap to the instrument's volatility. It determines the length of the Average True Range (ATR) used to size the heatmap boxes.
Values: Minimum allowable value is 5. You can increase this to capture more bars in the ATR calculation for greater smoothing.
Offset
Tooltip: Offset mean by ATR.
Purpose: The 'Offset' setting allows you to shift the mean value by a specified ATR. This could be useful for strategies that aim to capitalize on extreme price movements.
Values: The value can be any floating-point number. Positive values shift the mean upward, while negative values shift it downward.
Multiplier
Tooltip: Bollinger Bands Multiplier.
Purpose: The 'Multiplier' setting determines how wide the Bollinger Bands are around the mean. A higher value will result in a wider heatmap, capturing more extreme price movements. A lower value will tighten the heatmap around the mean price.
Values: The minimum is 0, and you can increase this in steps of 0.2.
Length
Tooltip: Length of Simple Moving Average (SMA).
Purpose: This setting specifies the period for the Simple Moving Average that serves as the basis for the Bollinger Bands. A higher value will produce a smoother average, while a lower value will make it more responsive to price changes.
Values: Can be set to any integer value.
Heat Map Alpha
Tooltip: Opacity level of the heatmap.
Purpose: This controls the transparency of the heatmap. A lower value will make the heatmap more transparent, allowing you to see the price action more clearly. A higher value will make the heatmap more opaque, emphasizing the bands.
Values: Ranges from 0 (completely transparent) to 100 (completely opaque).
Color Settings
High Color & Low Color: These settings allow you to customize the gradient colors of the heatmap.
Purpose: Use contrasting colors for better visibility or colors that you prefer. The 'High Color' is used for areas with high density (high probability), while the 'Low Color' is for low-density areas (low probability).
Usage Scenarios for Settings
For Volatile Markets: Increase 'Scale ATR Length' for better smoothing and set a higher 'Multiplier' to capture wider price movements.
For Trend Following: You might want to set a larger 'Length' for the SMA and adjust 'Scale' and 'Offset' to focus on more probable price zones.
These are just recommendations; feel free to experiment with these settings to suit your specific trading requirements.
How To Interpret
The heatmap gives a visual representation of the range within which prices are likely to move. Areas with high density (brighter color) indicate a higher probability of the price being in that range, whereas areas with low density (more transparent) indicate a lower probability.
Bright Areas: Considered high-probability zones where the price is more likely to be.
Transparent Areas: Considered low-probability zones where the price is less likely to be.
Tips For Use
Trend Confirmation: Use the heatmap along with other trend indicators to confirm the strength and direction of a trend.
Volatility: Use the density and spread of the heatmap as an indication of market volatility.
Entry and Exit: High-density areas could be potential support and resistance levels, aiding in entry and exit decisions.
Caution
The Bollinger Bands Heatmap assumes a normal distribution of prices. While this is a standard assumption in statistics, it is crucial to understand that real-world price movements may not always adhere to a normal distribution.
Conclusion
The Bollinger Bands Heatmap Indicator offers traders a fresh perspective on Bollinger Bands by transforming them into a visual, real-time heatmap. With its customizable settings and visually engaging display, BBH can be a useful tool for traders looking to understand price probabilities in a dynamic way.
Feel free to explore its features and adjust the settings to suit your trading strategy. Happy trading!
This heatmap indicator offers traders a visually appealing way to understand the probabilities associated with different price levels. The lower the weight of a certain level, the more transparent it appears on the heatmap, making it easier to identify key areas of interest at a glance.
Key Features
Dynamic Heatmap: Changes in real-time as new price data comes in.
Fully Customizable: Adjust the scale, offset, alpha, and other parameters to suit your trading style.
Visually Engaging: Uses gradients of colors to distinguish between high and low probabilities.
Settings
Scale
Tooltip: Scale the size of the heatmap.
Purpose: The 'Scale' setting allows you to adjust the dimensions of each heatmap box. A higher value will result in larger boxes and a more generalized view, while a lower value will make the boxes smaller, offering a more detailed look at price distributions.
Values: You can set this from a minimum of 0.125, stepping up by increments of 0.125.
Scale ATR Length
Tooltip: The ATR used to scale the heatmap boxes.
Purpose: This setting is designed to adapt the heatmap to the instrument's volatility. It determines the length of the Average True Range (ATR) used to size the heatmap boxes.
Values: Minimum allowable value is 5. You can increase this to capture more bars in the ATR calculation for greater smoothing.
Offset
Tooltip: Offset mean by ATR.
Purpose: The 'Offset' setting allows you to shift the mean value by a specified ATR. This could be useful for strategies that aim to capitalize on extreme price movements.
Values: The value can be any floating-point number. Positive values shift the mean upward, while negative values shift it downward.
Multiplier
Tooltip: Bollinger Bands Multiplier.
Purpose: The 'Multiplier' setting determines how wide the Bollinger Bands are around the mean. A higher value will result in a wider heatmap, capturing more extreme price movements. A lower value will tighten the heatmap around the mean price.
Values: The minimum is 0, and you can increase this in steps of 0.2.
Length
Tooltip: Length of Simple Moving Average (SMA).
Purpose: This setting specifies the period for the Simple Moving Average that serves as the basis for the Bollinger Bands. A higher value will produce a smoother average, while a lower value will make it more responsive to price changes.
Values: Can be set to any integer value.
Heat Map Alpha
Tooltip: Opacity level of the heatmap.
Purpose: This controls the transparency of the heatmap. A lower value will make the heatmap more transparent, allowing you to see the price action more clearly. A higher value will make the heatmap more opaque, emphasizing the bands.
Values: Ranges from 0 (completely transparent) to 100 (completely opaque).
Color Settings
High Color & Low Color: These settings allow you to customize the gradient colors of the heatmap.
Purpose: Use contrasting colors for better visibility or colors that you prefer. The 'High Color' is used for areas with high density (high probability), while the 'Low Color' is for low-density areas (low probability).
Usage Scenarios for Settings
For Volatile Markets: Increase 'Scale ATR Length' for better smoothing and set a higher 'Multiplier' to capture wider price movements.
For Trend Following: You might want to set a larger 'Length' for the SMA and adjust 'Scale' and 'Offset' to focus on more probable price zones.
These are just recommendations; feel free to experiment with these settings to suit your specific trading requirements.
How To Interpret
The heatmap gives a visual representation of the range within which prices are likely to move. Areas with high density (brighter color) indicate a higher probability of the price being in that range, whereas areas with low density (more transparent) indicate a lower probability.
Bright Areas: Considered high-probability zones where the price is more likely to be.
Transparent Areas: Considered low-probability zones where the price is less likely to be.
Tips For Use
Trend Confirmation: Use the heatmap along with other trend indicators to confirm the strength and direction of a trend.
Volatility: Use the density and spread of the heatmap as an indication of market volatility.
Entry and Exit: High-density areas could be potential support and resistance levels, aiding in entry and exit decisions.
Caution
The Bollinger Bands Heatmap assumes a normal distribution of prices. While this is a standard assumption in statistics, it is crucial to understand that real-world price movements may not always adhere to a normal distribution.
Conclusion
The Bollinger Bands Heatmap Indicator offers traders a fresh perspective on Bollinger Bands by transforming them into a visual, real-time heatmap. With its customizable settings and visually engaging display, BBH can be a useful tool for traders looking to understand price probabilities in a dynamic way.
Feel free to explore its features and adjust the settings to suit your trading strategy. Happy trading!
Release Notes
lmao I didnt need the arraysOpen-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
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