OPEN-SOURCE SCRIPT
ATR Bands
Updated
In many strategies, it's quite common to use a scaled ATR to help define a stop-loss, and it's not uncommon to use it for take-profit targets as well. While it's possible to use the built-in ATR indicator and manually calculate the offset value, we felt this wasn't particularly intuitive or efficient, and could lead to the potential for miscalculations. And while there are quite a few indicators that plot ATR bands in some form or another already on TV, we could not find one that actually performed the exact way that we wanted. They all had at least one of the following gaps:
To that end, we took to making this enhanced version to meet all of the above requirements. While we were doing so, we decided to take this opportunity to also make some non-functional enhancements as well:
Food for thought: When looking at some of the behaviors of these ATR bands, you can see that when price first levels out, you can draw a "consolidation zone" from the first peak of the upper ATR band to the first valley of the lower ATR band that price will generally respect. Look for price to break and close outside of that zone. When that happens, price will usually (but not always) make a notable move in that direction, which can be used as either a potential trigger or as an additional confluence with other indicators/price action.
Finally, while we have made what we feel are some noteworthy updates and enhancements to this indicator, and have every intention of continuing to do so as we find worthy opportunities for enhancement, credit is still due to the original author: AlexanderTeaH
- * The ATR offset was not configurable (usually hard-coded to be based off the high or low, while we generally prefer to use close)
* It would only print a single band (either the upper or lower), which would require the same indicator to be added twice
* The ATR scaling factor was either not configurable or only stepped in whole numbers (often time fractional factors like 1.5 yield better results)
To that end, we took to making this enhanced version to meet all of the above requirements. While we were doing so, we decided to take this opportunity to also make some non-functional enhancements as well:
- * Updated the indicator to the most recent version of Pine
* Updated the indicator definition to allow alternate (non-chart) timeframe usage
* Made the input types explicitly defined to improve consistency
* Updated the inputs with appropriate minimum values and step sizes where appropriate
* Separated settings into logical groups
* Added helptext to the indicator settings noting usage and common settings values
* Explicitly titled the on-chart plots of the ATR bands so that they can more easily be identified and referenced in other indicators/scripts, as well as the Data Window
Food for thought: When looking at some of the behaviors of these ATR bands, you can see that when price first levels out, you can draw a "consolidation zone" from the first peak of the upper ATR band to the first valley of the lower ATR band that price will generally respect. Look for price to break and close outside of that zone. When that happens, price will usually (but not always) make a notable move in that direction, which can be used as either a potential trigger or as an additional confluence with other indicators/price action.
Finally, while we have made what we feel are some noteworthy updates and enhancements to this indicator, and have every intention of continuing to do so as we find worthy opportunities for enhancement, credit is still due to the original author: AlexanderTeaH
Release Notes
Some basic configuration defaults tweaks based on user feedback:- Updated default value for ATR Period (changed from 14 to 3)
- Updated default values for ATR Upper and Lower Band Scaling Factor (changed from 2 to 2.5)
- Updated helptext for ATR Scale Factor to reflect the updated defaults
Release Notes
This update comprises of a few notable enhancements...- Added the ability to print a repositionable table on-chart giving exact values for the ATR bands in terms of both price and distance from close.
- Added 2 additional (optional) bands to depict take-profit levels. The scaling factor for these bands is configurable and also used by the new table for take-profit calculations noted above.
- Simplified the ATR Bands settings. While it originally seemed like a good idea to have the upper and lower bands independently configurable, we have yet to find any practical application where this would have been of any value.
- Added default settings notes to indicator tool-tips.
Open-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.
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