Chaos CypherOverview
Technically a smooth linear rate transformation, the "Chaos Cypher" drew some inspiration from the principles of Markov and chaos. Aside from price action, this combination provides a different lens through which to observe and interpret market movements. Markov models are based on the principle that future states depend only on the current state, not on the sequence of events that preceded it. Chaos theory deals with systems that are highly sensitive to initial conditions, a concept popularly referred to as the butterfly effect.
Efficient with Minimal Data: Designed to perform efficiently, the CC indicator is particularly useful in situations regardless of extensive historical data, except for obvious back testing, while still providing strength at identifying potential overbought/oversold zones and critical divergences.
Simplified Momentum Analysis: With further inspiration from the triple smoothed exponential rate, the CC actually uses linear regression for its calculations. This approach allows for a clear and more straightforward identification of deviations in momentum. The smoothing helps allow it to provide details while still operating at a fast pace due to the regression speed.
Adaptable to Various Timeframes: The transformation calculation then employed effectively narrows its scope in relation to the pace, enhancing its applicability across multiple timeframes and periods. This flexibility makes it a versatile tool suitable for various strategies and market conditions.
Fisher Transform Style Presentation: The indicator is presented in a style reminiscent of the Fisher Transform. However, this method of the script recalculates based on every individual dataset. To maintain efficiency, the adjustable length only applies to the regression rate.
The Chaos Cypher when compared to the Fisher Transform
Inversion Option for Leads: Lastly, an intriguing find when testing this script is the potential of the inversion option. This aspect proved particularly useful when searching for pullbacks on a trending market.
Conclusion
This indicator is designed to be forward-thinking and attempts to combine theoretical concepts with practicality. It has the ability to work with minimal data, adapt to various timeframes, and provide clear views of market movements. It back tested very well even when unrealistically used as a sole instrument.
"Two states differing by imperceptible amounts may eventually evolve into two considerably different states ... If, then, there is any error whatever in observing the present state—and in any real system such errors seem inevitable—an acceptable prediction of an instantaneous state in the distant future may well be impossible....In view of the inevitable inaccuracy and incompleteness of weather observations, precise very-long-range forecasting would seem to be nonexistent." -Edward Norton Lorenz
Centered Oscillators
Dynamic Volume-Volatility Adjusted MomentumThis Indicator in a refinement of my earlier script PC*VC Moving average Old with easier to follow color codes, overbought and oversold zones. This script has converted the previous script into a standardized measure by converting it into Z-scores and also incorporated a volatility based dynamic length option. Below is a detailed Explanation.
The "Dynamic Volume-Volatility Adjusted Momentum" or "Nasan Momentum Oscillator" is designed to capture market momentum while accounting for volume and volatility fluctuations. It leverages the Typical Price (TP), calculated as the average of high, low, and close prices, and introduces the Price Coefficient (PC) based on deviations from the simple moving average (SMA) across various time frames. Additionally, the Volume Coefficient (VC) compares current volume to SMA, and calculates Intraday Volatility (IDV) which gauges the daily price range relative to the close. Then intraday volatility ratio is calculated ( IDV Ratio) as the ratio of current Intraday Volatility (IDV) to the average of IDV for three different length periods, which provides a relative measure of current intraday volatility compared to its recent historical average. An inter-day ATR based Relative Volatility (RV) is calculated to adjusts for changing market volatility based on which the dynamic length adjustment adapts the moving average (standard length is 14). The PC *VC/IDV Ratio integrates price, volume, and volatility information which provides a volume and volatility adjusted momentum. This volume and volatility adjusted momentum is converted into a standardized Z-Score. The Z-Score measures deviations from the mean. Color-coded plots visually represent momentum, and thresholds aid in identifying overbought or oversold conditions.
The indicator incorporates a nuanced approach to emphasize the joint impact of price and volume while considering the stabilizing effect of lower intraday volatility. Placing the volume ratio (VC) in the numerator means that higher volume positively contributes to the overall ratio, aligning with the observation that increased volumes often accompany robust price movements. Simultaneously, the decision to include the inverse of intraday volatility (1/IDV) in the denominator acts as a dampener, reducing the impact of extreme intraday volatility on the momentum indicator. This design choice aims to filter out noise, giving more weight to significant price changes supported by substantial trading activity. In essence, the indicator's design seeks to provide a more robust momentum measure that balances the influence of price, volume, and volatility in the analysis of market dynamics.
OneThingToRuleThemAll [v1.4]This script was created because I wanted to be able to display a contextual chart of commonly used indicators for scalping and swing traders, with the ability to control the visual representation on the charts as their cross-overs, cross-unders, or changes of state happen in real time. Additionally, I wanted the ability to control how or when they are displayed. While looking through other community projects, I found they lacked the ability to full customize the output controls and values used for these indicators.
The script leverages standard RSI/MACD/VWAP/MVWAP/EMA calculations to help a trader visually make more informed decisions on entering or exiting a trade, depending on their understanding on what the indicators represent. Paired with a table directly on the chart, it allows a trader to quickly reference values to make more informed decisions without having to look away from the price action or look through multiple indicator outputs.
The main functionality of the indicator is controlled within the settings directly on the chart. There a user can enable the visual representations, or disable, and configure how they are displayed on the charts by altering their values or style types.
Users have the ability to enable/disable visual representations of:
The indicator chart
RSI Cross-over and RSI Reversals
MACD Uptrends and Downtrends
VWAP Cross-overs and Cross-unders
VWAP Line
MVWAP Cross-overs and Cross-unders
MVWAP Line
EMA Cross-overs and Cross-unders
EMA Line
Some traders like to use these visual indications as thresholds to enter or exit trades. Its best to find out which ones work the best with the security you are trying to trade. Personally, I use the table as a reference in conjunction with the RSI chart indicators to help me decide a logical trailing stop if I am scalping. Some users might like the track EMA200 crossovers, and have visual representations on the chart for when that happens. However, users may use the other indicators in other methods, and this script provides the ability to be able to configure those both visually and by value.
The pine script code is open source and itself is fairly straightforward, it is mostly written to provide the ultimate level of control the the user of the various indicators. Please reach out to me directly if you would like a further understanding of the code and an explanation on anything that may be unclear.
Enjoy :)
-dead1.
MACD of Relative Strenght StrategyMACD Relative Strenght Strategy :
INTRODUCTION :
This strategy is based on two well-known indicators: MACD and Relative Strenght (RS). By coupling them, we obtain powerful buy signals. In fact, the special feature of this strategy is that it creates an indicator from an indicator. Thus, we construct a MACD whose source is the value of the RS. The strategy only takes buy signals, ignoring SHORT signals as they are mostly losers. There's also a money management method enabling us to reinvest part of the profits or reduce the size of orders in the event of substantial losses.
RELATIVE STRENGHT :
RS is an indicator that measures the anomaly between momentum and the assumption of market efficiency. It is used by professionals and is one of the most robust indicators. The idea is to own assets that do better than average, based on their past performance. We calculate RS using this formula :
RS = close/highest_high(RS_Length)
Where highest_high(RS_Length) = highest value of the high over a user-defined time period (which is the RS_Length).
We can thus situate the current price in relation to its highest price over this user-defined period.
MACD (Moving Average Convergence - Divergence) :
This is one of the best-known indicators, measuring the distance between two exponential moving averages : one fast and one slower. A wide distance indicates fast momentum and vice versa. We'll plot the value of this distance and call this line macdline. The MACD uses a third moving average with a lower period than the first two. This last moving average will give a signal when it crosses the macdline. It is therefore constructed using the values of the macdline as its source.
It's important to note that the first two MAs are constructed using RS values as their source. So we've just built an indicator of an indicator. This kind of method is very powerful because it is rarely used and brings value to the strategy.
PARAMETERS :
RS Length : Relative Strength length i.e. the number of candles back to find the highest high and compare the current price with this high. Default is 300.
MACD Fast Length : Relative Strength fast EMA length used to plot the MACD. Default is 14.
MACD Slow Length : Relative Strength slow EMA length used to plot the MACD. Default is 26.
MACD Signal Smoothing : Macdline SMA length used to plot the MACD. Default is 10.
Max risk per trade (in %) : The maximum loss a trade can incur (in percentage of the trade value). Default is 8%.
Fixed Ratio : This is the amount of gain or loss at which the order quantity is changed. Default is 400, meaning that for each $400 gain or loss, the order size is increased or decreased by a user-selected amount.
Increasing Order Amount : This is the amount to be added to or subtracted from orders when the fixed ratio is reached. The default is $200, which means that for every $400 gain, $200 is reinvested in the strategy. On the other hand, for every $400 loss, the order size is reduced by $200.
Initial capital : $1000
Fees : Interactive Broker fees apply to this strategy. They are set at 0.18% of the trade value.
Slippage : 3 ticks or $0.03 per trade. Corresponds to the latency time between the moment the signal is received and the moment the order is executed by the broker.
Important : A bot has been used to test the different parameters and determine which ones maximize return while limiting drawdown. This strategy is the most optimal on BITSTAMP:ETHUSD in 8h timeframe with the parameters set by default.
ENTER RULES :
The entry rules are very simple : we open a long position when the MACD value turns positive. You are therefore LONG when the MACD is green.
EXIT RULES :
We exit a position (whether losing or winning) when the MACD becomes negative, i.e. turns red.
RISK MANAGEMENT :
This strategy can incur losses, so it's important to manage our risks well. If the position is losing and has incurred a loss of -8%, our stop loss is activated to limit losses.
MONEY MANAGEMENT :
The fixed ratio method was used to manage our gains and losses. For each gain of an amount equal to the value of the fixed ratio, we increase the order size by a value defined by the user in the "Increasing order amount" parameter. Similarly, each time we lose an amount equal to the value of the fixed ratio, we decrease the order size by the same user-defined value. This strategy increases both performance and drawdown.
Enjoy the strategy and don't forget to take the trade :)
TSI Market Timer + Volatility MeterThis is the TSI Market Timer. It is years in the making and it is comprised of four indicators in one. The stock (or source) is run through an indicator called the True Strength Indicator with settings(5,15) , then the TSI is run on both the Index(SPY) by default and what I call a Trigger line which is basically the TSI applied to the DXY (US Dollar Index).
Midline Volatility Indicator:
Lastly, we have a volatility indicator on the midline. The colors of the midline indicate levels of volatility. For the lowest volatility in the last 100 days, the dot turns dark blue. For the lowest volatility in 30 days, the dot turns aqua. For regular volatility, it remains orange. And last, for higher volatility of the last 100 days, it turns red. These are more or less arbitrary but they do come in handy.
Settings for Green/Red Shading:
Next on the indicator are the settings. You can toggle a color change between the stock/source and the index(spy). If the stock/source is greater than the index, it will color the area in between a green and if it is below the index, it will be red.
There is also a toggle for the stock/source and the trigger/DXY. This will also show green when the stock is above the trigger and red if it is below the trigger.
By turning on both of these, you get light green and dark green areas as well as red and darker red areas. The lighter green represent when the stock is above both the index and the trigger and conversely for the red areas.
Settings for vertical line crossings:
When the stock crosses the trigger/dxy line, it shows a green vertical line signal. When the stock crosses below the trigger/dxy, a red vertical line is shown.
You can turn these off by toggling them in the settings.
Stacked Condition:
Lastly, we have a "stacked condition" which shows up as a white triangle at the bottom when the condition of the stock being above the index and the trigger below the zero line.
New Highs:
If you see the stock line turn lime green, this indicates a new high was reached for the last 255 days/periods. This is like a new 52 week high signal.
Note:
This indicator is made mostly for the stock market. It may work ok during the week for crypto but using the trigger/dxy and index lines on the weekends doesn't work too well as they will be flat.
Also note that this indicator is not a recommendation to buy or sell any stock/instrument. It is only a study of market conditions. Any analysis should be followed up with volume analysis or other confirming indicators.
Fisher Transform RevisitedFisher Transform developped by Ehlers is used mostly to detect peaks and troughs, which it does with little lag, but there are many false signals. Looking at its formula and construction, we can revisit it for the purpose of detecting trends and flat market.
How do we want to do that? There are 3 different actions:
Increase the default value from usual 9 or 10 to 30
Show the indicator as seen from upper time frame with synthetic rolling candles
Change the weights in first formula in order to saturate the input signal, push the trend data to the limits, so therefore leaving a good view when market is flat
As can be seen from the chart above, the revisited Fisher is above 2 for uptrend markets, below -2 for downtrending markets and in-between when the market is flat.
Notes
Weights for Fisher transform formula can be changed as parameters. Recommended valeus are 0.6 and 0.6 to saturate signal. You may come back to original formula by setting 0.33 and 0.66.
Parameter n allows view from upper time, a multiple of current time frame. n = 1 for current chart, n = 5 for 5 minutes view on the 1 min chart
Usage
Of course, it should be not be used in standalone mode. Indicator is for trend traders who can stay away when market is flat. Trend start when indicator goes above 2 but like all trade indicators, it will be late; it is therefore a good idea to change n back to 1 to get a timely entry, to be confirmed of course with other elements of technical analysis.
Supertrend Advance Pullback StrategyHandbook for the Supertrend Advance Strategy
1. Introduction
Purpose of the Handbook:
The main purpose of this handbook is to serve as a comprehensive guide for traders and investors who are looking to explore and harness the potential of the Supertrend Advance Strategy. In the rapidly changing financial market, having the right tools and strategies at one's disposal is crucial. Whether you're a beginner hoping to dive into the world of trading or a seasoned investor aiming to optimize and diversify your portfolio, this handbook offers the insights and methodologies you need. By the end of this guide, readers should have a clear understanding of how the Supertrend Advance Strategy works, its benefits, potential pitfalls, and practical application in various trading scenarios.
Overview of the Supertrend Advance Pullback Strategy:
At its core, the Supertrend Advance Strategy is an evolution of the popular Supertrend Indicator. Designed to generate buy and sell signals in trending markets, the Supertrend Indicator has been a favorite tool for many traders around the world. The Advance Strategy, however, builds upon this foundation by introducing enhanced mechanisms, filters, and methodologies to increase precision and reduce false signals.
1. Basic Concept:
The Supertrend Advance Strategy relies on a combination of price action and volatility to determine the potential trend direction. By assessing the average true range (ATR) in conjunction with specific price points, this strategy aims to highlight the potential starting and ending points of market trends.
2. Methodology:
Unlike the traditional Supertrend Indicator, which primarily focuses on closing prices and ATR, the Advance Strategy integrates other critical market variables, such as volume, momentum oscillators, and perhaps even fundamental data, to validate its signals. This multidimensional approach ensures that the generated signals are more reliable and are less prone to market noise.
3. Benefits:
One of the main benefits of the Supertrend Advance Strategy is its ability to filter out false breakouts and minor price fluctuations, which can often lead to premature exits or entries in the market. By waiting for a confluence of factors to align, traders using this advanced strategy can increase their chances of entering or exiting trades at optimal points.
4. Practical Applications:
The Supertrend Advance Strategy can be applied across various timeframes, from intraday trading to swing trading and even long-term investment scenarios. Furthermore, its flexible nature allows it to be tailored to different asset classes, be it stocks, commodities, forex, or cryptocurrencies.
In the subsequent sections of this handbook, we will delve deeper into the intricacies of this strategy, offering step-by-step guidelines on its application, case studies, and tips for maximizing its efficacy in the volatile world of trading.
As you journey through this handbook, we encourage you to approach the Supertrend Advance Strategy with an open mind, testing and tweaking it as per your personal trading style and risk appetite. The ultimate goal is not just to provide you with a new tool but to empower you with a holistic strategy that can enhance your trading endeavors.
2. Getting Started
Navigating the financial markets can be a daunting task without the right tools. This section is dedicated to helping you set up the Supertrend Advance Strategy on one of the most popular charting platforms, TradingView. By following the steps below, you'll be able to integrate this strategy into your charts and start leveraging its insights in no time.
Setting up on TradingView:
TradingView is a web-based platform that offers a wide range of charting tools, social networking, and market data. Before you can apply the Supertrend Advance Strategy, you'll first need a TradingView account. If you haven't set one up yet, here's how:
1. Account Creation:
• Visit TradingView's official website.
• Click on the "Join for free" or "Sign up" button.
• Follow the registration process, providing the necessary details and setting up your login credentials.
2. Navigating the Dashboard:
• Once logged in, you'll be taken to your dashboard. Here, you'll see a variety of tools, including watchlists, alerts, and the main charting window.
• To begin charting, type in the name or ticker of the asset you're interested in the search bar at the top.
3. Configuring Chart Settings:
• Before integrating the Supertrend Advance Strategy, familiarize yourself with the chart settings. This can be accessed by clicking the 'gear' icon on the top right of the chart window.
• Adjust the chart type, time intervals, and other display settings to your preference.
Integrating the Strategy into a Chart:
Now that you're set up on TradingView, it's time to integrate the Supertrend Advance Strategy.
1. Accessing the Pine Script Editor:
• Located at the top-center of your screen, you'll find the "Pine Editor" tab. Click on it.
• This is where custom strategies and indicators are scripted or imported.
2. Loading the Supertrend Advance Strategy Script:
• Depending on whether you have the script or need to find it, there are two paths:
• If you have the script: Copy the Supertrend Advance Strategy script, and then paste it into the Pine Editor.
• If searching for the script: Click on the “Indicators” icon (looks like a flame) at the top of your screen, and then type “Supertrend Advance Strategy” in the search bar. If available, it will show up in the list. Simply click to add it to your chart.
3. Applying the Strategy:
• After pasting or selecting the Supertrend Advance Strategy in the Pine Editor, click on the “Add to Chart” button located at the top of the editor. This will overlay the strategy onto your main chart window.
4. Configuring Strategy Settings:
• Once the strategy is on your chart, you'll notice a small settings ('gear') icon next to its name in the top-left of the chart window. Click on this to access settings.
• Here, you can adjust various parameters of the Supertrend Advance Strategy to better fit your trading style or the specific asset you're analyzing.
5. Interpreting Signals:
• With the strategy applied, you'll now see buy/sell signals represented on your chart. Take time to familiarize yourself with how these look and behave over various timeframes and market conditions.
3. Strategy Overview
What is the Supertrend Advance Strategy?
The Supertrend Advance Strategy is a refined version of the classic Supertrend Indicator, which was developed to aid traders in spotting market trends. The strategy utilizes a combination of data points, including average true range (ATR) and price momentum, to generate buy and sell signals.
In essence, the Supertrend Advance Strategy can be visualized as a line that moves with the price. When the price is above the Supertrend line, it indicates an uptrend and suggests a potential buy position. Conversely, when the price is below the Supertrend line, it hints at a downtrend, suggesting a potential selling point.
Strategy Goals and Objectives:
1. Trend Identification: At the core of the Supertrend Advance Strategy is the goal to efficiently and consistently identify prevailing market trends. By recognizing these trends, traders can position themselves to capitalize on price movements in their favor.
2. Reducing Noise: Financial markets are often inundated with 'noise' - short-term price fluctuations that can mislead traders. The Supertrend Advance Strategy aims to filter out this noise, allowing for clearer decision-making.
3. Enhancing Risk Management: With clear buy and sell signals, traders can set more precise stop-loss and take-profit points. This leads to better risk management and potentially improved profitability.
4. Versatility: While primarily used for trend identification, the strategy can be integrated with other technical tools and indicators to create a comprehensive trading system.
Type of Assets/Markets to Apply the Strategy:
1. Equities: The Supertrend Advance Strategy is highly popular among stock traders. Its ability to capture long-term trends makes it particularly useful for those trading individual stocks or equity indices.
2. Forex: Given the 24-hour nature of the Forex market and its propensity for trends, the Supertrend Advance Strategy is a valuable tool for currency traders.
3. Commodities: Whether it's gold, oil, or agricultural products, commodities often move in extended trends. The strategy can help in identifying and capitalizing on these movements.
4. Cryptocurrencies: The volatile nature of cryptocurrencies means they can have pronounced trends. The Supertrend Advance Strategy can aid crypto traders in navigating these often tumultuous waters.
5. Futures & Options: Traders and investors in derivative markets can utilize the strategy to make more informed decisions about contract entries and exits.
It's important to note that while the Supertrend Advance Strategy can be applied across various assets and markets, its effectiveness might vary based on market conditions, timeframe, and the specific characteristics of the asset in question. As always, it's recommended to use the strategy in conjunction with other analytical tools and to backtest its effectiveness in specific scenarios before committing to trades.
4. Input Settings
Understanding and correctly configuring input settings is crucial for optimizing the Supertrend Advance Strategy for any specific market or asset. These settings, when tweaked correctly, can drastically impact the strategy's performance.
Grouping Inputs:
Before diving into individual input settings, it's important to group similar inputs. Grouping can simplify the user interface, making it easier to adjust settings related to a specific function or indicator.
Strategy Choice:
This input allows traders to select from various strategies that incorporate the Supertrend indicator. Options might include "Supertrend with RSI," "Supertrend with MACD," etc. By choosing a strategy, the associated input settings for that strategy become available.
Supertrend Settings:
1. Multiplier: Typically, a default value of 3 is used. This multiplier is used in the ATR calculation. Increasing it makes the Supertrend line further from prices, while decreasing it brings the line closer.
2. Period: The number of bars used in the ATR calculation. A common default is 7.
EMA Settings (Exponential Moving Average):
1. Period: Defines the number of previous bars used to calculate the EMA. Common periods are 9, 21, 50, and 200.
2. Source: Allows traders to choose which price (Open, Close, High, Low) to use in the EMA calculation.
RSI Settings (Relative Strength Index):
1. Length: Determines how many periods are used for RSI calculation. The standard setting is 14.
2. Overbought Level: The threshold at which the asset is considered overbought, typically set at 70.
3. Oversold Level: The threshold at which the asset is considered oversold, often at 30.
MACD Settings (Moving Average Convergence Divergence):
1. Short Period: The shorter EMA, usually set to 12.
2. Long Period: The longer EMA, commonly set to 26.
3. Signal Period: Defines the EMA of the MACD line, typically set at 9.
CCI Settings (Commodity Channel Index):
1. Period: The number of bars used in the CCI calculation, often set to 20.
2. Overbought Level: Typically set at +100, denoting overbought conditions.
3. Oversold Level: Usually set at -100, indicating oversold conditions.
SL/TP Settings (Stop Loss/Take Profit):
1. SL Multiplier: Defines the multiplier for the average true range (ATR) to set the stop loss.
2. TP Multiplier: Defines the multiplier for the average true range (ATR) to set the take profit.
Filtering Conditions:
This section allows traders to set conditions to filter out certain signals. For example, one might only want to take buy signals when the RSI is below 30, ensuring they buy during oversold conditions.
Trade Direction and Backtest Period:
1. Trade Direction: Allows traders to specify whether they want to take long trades, short trades, or both.
2. Backtest Period: Specifies the time range for backtesting the strategy. Traders can choose from options like 'Last 6 months,' 'Last 1 year,' etc.
It's essential to remember that while default settings are provided for many of these tools, optimal settings can vary based on the market, timeframe, and trading style. Always backtest new settings on historical data to gauge their potential efficacy.
5. Understanding Strategy Conditions
Developing an understanding of the conditions set within a trading strategy is essential for traders to maximize its potential. Here, we delve deep into the logic behind these conditions, using the Supertrend Advance Strategy as our focal point.
Basic Logic Behind Conditions:
Every strategy is built around a set of conditions that provide buy or sell signals. The conditions are based on mathematical or statistical methods and are rooted in the study of historical price data. The fundamental idea is to recognize patterns or behaviors that have been profitable in the past and might be profitable in the future.
Buy and Sell Conditions:
1. Buy Conditions: Usually formulated around bullish signals or indicators suggesting upward price momentum.
2. Sell Conditions: Centered on bearish signals or indicators indicating downward price momentum.
Simple Strategy:
The simple strategy could involve using just the Supertrend indicator. Here:
• Buy: When price closes above the Supertrend line.
• Sell: When price closes below the Supertrend line.
Pullback Strategy:
This strategy capitalizes on price retracements:
• Buy: When the price retraces to the Supertrend line after a bullish signal and is supported by another bullish indicator.
• Sell: When the price retraces to the Supertrend line after a bearish signal and is confirmed by another bearish indicator.
Indicators Used:
EMA (Exponential Moving Average):
• Logic: EMA gives more weight to recent prices, making it more responsive to current price movements. A shorter-period EMA crossing above a longer-period EMA can be a bullish sign, while the opposite is bearish.
RSI (Relative Strength Index):
• Logic: RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. Values above 70 are typically considered overbought, and values below 30 are considered oversold.
MACD (Moving Average Convergence Divergence):
• Logic: MACD assesses the relationship between two EMAs of a security’s price. The MACD line crossing above the signal line can be a bullish signal, while crossing below can be bearish.
CCI (Commodity Channel Index):
• Logic: CCI compares a security's average price change with its average price variation. A CCI value above +100 may mean the price is overbought, while below -100 might signify an oversold condition.
And others...
As the strategy expands or contracts, more indicators might be added or removed. The crucial point is to understand the core logic behind each, ensuring they align with the strategy's objectives.
Logic Behind Each Indicator:
1. EMA: Emphasizes recent price movements; provides dynamic support and resistance levels.
2. RSI: Indicates overbought and oversold conditions based on recent price changes.
3. MACD: Showcases momentum and direction of a trend by comparing two EMAs.
4. CCI: Measures the difference between a security's price change and its average price change.
Understanding strategy conditions is not just about knowing when to buy or sell but also about comprehending the underlying market dynamics that those conditions represent. As you familiarize yourself with each condition and indicator, you'll be better prepared to adapt and evolve with the ever-changing financial markets.
6. Trade Execution and Management
Trade execution and management are crucial aspects of any trading strategy. Efficient execution can significantly impact profitability, while effective management can preserve capital during adverse market conditions. In this section, we'll explore the nuances of position entry, exit strategies, and various Stop Loss (SL) and Take Profit (TP) methodologies within the Supertrend Advance Strategy.
Position Entry:
Effective trade entry revolves around:
1. Timing: Enter at a point where the risk-reward ratio is favorable. This often corresponds to confirmatory signals from multiple indicators.
2. Volume Analysis: Ensure there's adequate volume to support the movement. Volume can validate the strength of a signal.
3. Confirmation: Use multiple indicators or chart patterns to confirm the entry point. For instance, a buy signal from the Supertrend indicator can be confirmed with a bullish MACD crossover.
Position Exit Strategies:
A successful exit strategy will lock in profits and minimize losses. Here are some strategies:
1. Fixed Time Exit: Exiting after a predetermined period.
2. Percentage-based Profit Target: Exiting after a certain percentage gain.
3. Indicator-based Exit: Exiting when an indicator gives an opposing signal.
Percentage-based SL/TP:
• Stop Loss (SL): Set a fixed percentage below the entry price to limit potential losses.
• Example: A 2% SL on an entry at $100 would trigger a sell at $98.
• Take Profit (TP): Set a fixed percentage above the entry price to lock in gains.
• Example: A 5% TP on an entry at $100 would trigger a sell at $105.
Supertrend-based SL/TP:
• Stop Loss (SL): Position the SL at the Supertrend line. If the price breaches this line, it could indicate a trend reversal.
• Take Profit (TP): One could set the TP at a point where the Supertrend line flattens or turns, indicating a possible slowdown in momentum.
Swing high/low-based SL/TP:
• Stop Loss (SL): For a long position, set the SL just below the recent swing low. For a short position, set it just above the recent swing high.
• Take Profit (TP): For a long position, set the TP near a recent swing high or resistance. For a short position, near a swing low or support.
And other methods...
1. Trailing Stop Loss: This dynamic SL adjusts with the price movement, locking in profits as the trade moves in your favor.
2. Multiple Take Profits: Divide the position into segments and set multiple TP levels, securing profits in stages.
3. Opposite Signal Exit: Exit when another reliable indicator gives an opposite signal.
Trade execution and management are as much an art as they are a science. They require a blend of analytical skill, discipline, and intuition. Regularly reviewing and refining your strategies, especially in light of changing market conditions, is crucial to maintaining consistent trading performance.
7. Visual Representations
Visual tools are essential for traders, as they simplify complex data into an easily interpretable format. Properly analyzing and understanding the plots on a chart can provide actionable insights and a more intuitive grasp of market conditions. In this section, we’ll delve into various visual representations used in the Supertrend Advance Strategy and their significance.
Understanding Plots on the Chart:
Charts are the primary visual aids for traders. The arrangement of data points, lines, and colors on them tell a story about the market's past, present, and potential future moves.
1. Data Points: These represent individual price actions over a specific timeframe. For instance, a daily chart will have data points showing the opening, closing, high, and low prices for each day.
2. Colors: Used to indicate the nature of price movement. Commonly, green is used for bullish (upward) moves and red for bearish (downward) moves.
Trend Lines:
Trend lines are straight lines drawn on a chart that connect a series of price points. Their significance:
1. Uptrend Line: Drawn along the lows, representing support. A break below might indicate a trend reversal.
2. Downtrend Line: Drawn along the highs, indicating resistance. A break above might suggest the start of a bullish trend.
Filled Areas:
These represent a range between two values on a chart, usually shaded or colored. For instance:
1. Bollinger Bands: The area between the upper and lower band is filled, giving a visual representation of volatility.
2. Volume Profile: Can show a filled area representing the amount of trading activity at different price levels.
Stop Loss and Take Profit Lines:
These are horizontal lines representing pre-determined exit points for trades.
1. Stop Loss Line: Indicates the level at which a trade will be automatically closed to limit losses. Positioned according to the trader's risk tolerance.
2. Take Profit Line: Denotes the target level to lock in profits. Set according to potential resistance (for long trades) or support (for short trades) or other technical factors.
Trailing Stop Lines:
A trailing stop is a dynamic form of stop loss that moves with the price. On a chart:
1. For Long Trades: Starts below the entry price and moves up with the price but remains static if the price falls, ensuring profits are locked in.
2. For Short Trades: Starts above the entry price and moves down with the price but remains static if the price rises.
Visual representations offer traders a clear, organized view of market dynamics. Familiarity with these tools ensures that traders can quickly and accurately interpret chart data, leading to more informed decision-making. Always ensure that the visual aids used resonate with your trading style and strategy for the best results.
8. Backtesting
Backtesting is a fundamental process in strategy development, enabling traders to evaluate the efficacy of their strategy using historical data. It provides a snapshot of how the strategy would have performed in past market conditions, offering insights into its potential strengths and vulnerabilities. In this section, we'll explore the intricacies of setting up and analyzing backtest results and the caveats one must be aware of.
Setting Up Backtest Period:
1. Duration: Determine the timeframe for the backtest. It should be long enough to capture various market conditions (bullish, bearish, sideways). For instance, if you're testing a daily strategy, consider a period of several years.
2. Data Quality: Ensure the data source is reliable, offering high-resolution and clean data. This is vital to get accurate backtest results.
3. Segmentation: Instead of a continuous period, sometimes it's helpful to backtest over distinct market phases, like a particular bear or bull market, to see how the strategy holds up in different environments.
Analyzing Backtest Results:
1. Performance Metrics: Examine metrics like the total return, annualized return, maximum drawdown, Sharpe ratio, and others to gauge the strategy's efficiency.
2. Win Rate: It's the ratio of winning trades to total trades. A high win rate doesn't always signify a good strategy; it should be evaluated in conjunction with other metrics.
3. Risk/Reward: Understand the average profit versus the average loss per trade. A strategy might have a low win rate but still be profitable if the average gain far exceeds the average loss.
4. Drawdown Analysis: Review the periods of losses the strategy could incur and how long it takes, on average, to recover.
9. Tips and Best Practices
Successful trading requires more than just knowing how a strategy works. It necessitates an understanding of when to apply it, how to adjust it to varying market conditions, and the wisdom to recognize and avoid common pitfalls. This section offers insightful tips and best practices to enhance the application of the Supertrend Advance Strategy.
When to Use the Strategy:
1. Market Conditions: Ideally, employ the Supertrend Advance Strategy during trending market conditions. This strategy thrives when there are clear upward or downward trends. It might be less effective during consolidative or sideways markets.
2. News Events: Be cautious around significant news events, as they can cause extreme volatility. It might be wise to avoid trading immediately before and after high-impact news.
3. Liquidity: Ensure you are trading in assets/markets with sufficient liquidity. High liquidity ensures that the price movements are more reflective of genuine market sentiment and not due to thin volume.
Adjusting Settings for Different Markets/Timeframes:
1. Markets: Each market (stocks, forex, commodities) has its own characteristics. It's essential to adjust the strategy's parameters to align with the market's volatility and liquidity.
2. Timeframes: Shorter timeframes (like 1-minute or 5-minute charts) tend to have more noise. You might need to adjust the settings to filter out false signals. Conversely, for longer timeframes (like daily or weekly charts), you might need to be more responsive to genuine trend changes.
3. Customization: Regularly review and tweak the strategy's settings. Periodic adjustments can ensure the strategy remains optimized for the current market conditions.
10. Frequently Asked Questions (FAQs)
Given the complexities and nuances of the Supertrend Advance Strategy, it's only natural for traders, both new and seasoned, to have questions. This section addresses some of the most commonly asked questions regarding the strategy.
1. What exactly is the Supertrend Advance Strategy?
The Supertrend Advance Strategy is an evolved version of the traditional Supertrend indicator. It's designed to provide clearer buy and sell signals by incorporating additional indicators like EMA, RSI, MACD, CCI, etc. The strategy aims to capitalize on market trends while minimizing false signals.
2. Can I use the Supertrend Advance Strategy for all asset types?
Yes, the strategy can be applied to various asset types like stocks, forex, commodities, and cryptocurrencies. However, it's crucial to adjust the settings accordingly to suit the specific characteristics and volatility of each asset type.
3. Is this strategy suitable for day trading?
Absolutely! The Supertrend Advance Strategy can be adjusted to suit various timeframes, making it versatile for both day trading and long-term trading. Remember to fine-tune the settings to align with the timeframe you're trading on.
4. How do I deal with false signals?
No strategy is immune to false signals. However, by combining the Supertrend with other indicators and adhering to strict risk management protocols, you can minimize the impact of false signals. Always use stop-loss orders and consider filtering trades with additional confirmation signals.
5. Do I need any prior trading experience to use this strategy?
While the Supertrend Advance Strategy is designed to be user-friendly, having a foundational understanding of trading and market analysis can greatly enhance your ability to employ the strategy effectively. If you're a beginner, consider pairing the strategy with further education and practice on demo accounts.
6. How often should I review and adjust the strategy settings?
There's no one-size-fits-all answer. Some traders adjust settings weekly, while others might do it monthly. The key is to remain responsive to changing market conditions. Regular backtesting can give insights into potential required adjustments.
7. Can the Supertrend Advance Strategy be automated?
Yes, many traders use algorithmic trading platforms to automate their strategies, including the Supertrend Advance Strategy. However, always monitor automated systems regularly to ensure they're operating as intended.
8. Are there any markets or conditions where the strategy shouldn't be used?
The strategy might generate more false signals in markets that are consolidative or range-bound. During significant news events or times of unexpected high volatility, it's advisable to tread with caution or stay out of the market.
9. How important is backtesting with this strategy?
Backtesting is crucial as it allows traders to understand how the strategy would have performed in the past, offering insights into potential profitability and areas of improvement. Always backtest any new setting or tweak before applying it to live trades.
10. What if the strategy isn't working for me?
No strategy guarantees consistent profits. If it's not working for you, consider reviewing your settings, seeking expert advice, or complementing the Supertrend Advance Strategy with other analysis methods. Remember, continuous learning and adaptation are the keys to trading success.
Other comments
Value of combining several indicators in this script and how they work together
Diversification of Signals: Just as diversifying an investment portfolio can reduce risk, using multiple indicators can offer varied perspectives on potential price movements. Each indicator can capture a different facet of the market, ensuring that traders are not overly reliant on a single data point.
Confirmation & Reduced False Signals: A common challenge with many indicators is the potential for false signals. By requiring confirmation from multiple indicators before acting, the chances of acting on a false signal can be significantly reduced.
Flexibility Across Market Conditions: Different indicators might perform better under different market conditions. For example, while moving averages might excel in trending markets, oscillators like RSI might be more useful during sideways or range-bound conditions. A mashup strategy can potentially adapt better to varying market scenarios.
Comprehensive Analysis: With multiple indicators, traders can gauge trend strength, momentum, volatility, and potential market reversals all at once, providing a holistic view of the market.
How do the different indicators in the Supertrend Advance Strategy work together?
Supertrend: This is primarily a trend-following indicator. It provides traders with buy and sell signals based on the volatility of the price. When combined with other indicators, it can filter out noise and give more weight to strong, confirmed trends.
EMA (Exponential Moving Average): EMA gives more weight to recent price data. It can be used to identify the direction and strength of a trend. When the price is above the EMA, it's generally considered bullish, and vice versa.
RSI (Relative Strength Index): An oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. By cross-referencing with other indicators like EMA or MACD, traders can spot potential reversals or confirmations of a trend.
MACD (Moving Average Convergence Divergence): This indicator identifies changes in the strength, direction, momentum, and duration of a trend in a stock's price. When the MACD line crosses above the signal line, it can be a bullish sign, and when it crosses below, it can be bearish. Pairing MACD with Supertrend can provide dual confirmation of a trend.
CCI (Commodity Channel Index): Initially developed for commodities, CCI can indicate overbought or oversold conditions. It can be used in conjunction with other indicators to determine entry and exit points.
In essence, the synergy of these indicators provides a balanced, comprehensive approach to trading. Each indicator offers its unique lens into market conditions, and when they align, it can be a powerful indication of a trading opportunity. This combination not only reduces the potential drawbacks of each individual indicator but leverages their strengths, aiming for more consistent and informed trading decisions.
Backtesting and Default Settings
• This indicator has been optimized to be applied for 1 hour-charts. However, the underlying principles of this strategy are supply and demand in the financial markets and the strategy can be applied to all timeframes. Daytraders can use the 1min- or 5min charts, swing-traders can use the daily charts.
• This strategy has been designed to identify the most promising, highest probability entries and trades for each stock or other financial security.
• The combination of the qualifiers results in a highly selective strategy which only considers the most promising swing-trading entries. As a result, you will normally only find a low number of trades for each stock or other financial security per year in case you apply this strategy for the daily charts. Shorter timeframes will result in a higher number of trades / year.
• Consequently, traders need to apply this strategy for a full watchlist rather than just one financial security.
• Default properties: RSI on (length 14, RSI buy level 50, sell level 50), EMA, RSI, MACD on, type of strategy pullback, SL/TP type: ATR (length 10, factor 3), trade direction both, quantity 5, take profit swing hl 5.1, highest / lowest lookback 2, enable ATR trail (ATR length 10, SL ATR multiplier 1.4, TP multiplier 2.1, lookback = 4, trade direction = both).
Dynamic Trend Fusion (DTF)The "Dynamic Trend Fusion" (DTF) indicator is a powerful technical analysis tool for traders. It stands out from other indicators due to its adaptability and ability to provide insights into different trading styles. Users can choose from various trading options such as "Short-term Trading," "Long-term Trading," "Aggressive Short-term," "Conservative Long-term," "Balanced Approach," "High Sensitivity," "Low Sensitivity," "Day Trading," and "Swing Trading." These options allow traders to customize the indicator to suit their specific trading strategies.
DTF combines the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) indicators, normalizing them to a similar scale for a comprehensive view of market conditions. It then calculates a combined value and smoothes it using a moving average.
One of its standout features is the ability to identify bullish and bearish states, which is represented visually on the chart. When the indicator detects a transition from a bullish to a bearish state or vice versa, the color of the line changes.
Additionally, DTF offers alert conditions, notifying users when the market shifts into a bullish or bearish state, allowing for timely decision-making.
In summary, the DTF indicator sets itself apart by providing traders with a versatile tool that can be tailored to various trading styles and offers clear visual signals for trend changes, enhancing trading precision and efficiency.
Multi-data oscillatorThe multi-data oscillator is a tool created to help traders visualize clearly how an oscillator works and moves considering different input parameters.
In this tool, you can choose to visualize the script as the RSI, the CCI, the LOC indicator, a custom-created formula that simply shows the location of the data considering X past values, or the average of all of these three indicators.
In the settings, you can choose both the length of the indicator and the smoothing factor.
Additionally, the indicator has a gradient color that changes considering the deviation and the variance of the different lines used to calculate the average line, displayed with more thickness.
[KVA]nRSIThe nRSI stands as a groundbreaking enhancement of the traditional Relative Strength Index (RSI), specifically engineered for traders seeking a more refined and accurate tool in fast-moving markets.
Customizable Price Change Period (n): Unlike the traditional RSI which solely relies on a fixed period for average gains and losses, the nRSI introduces an additional parameter, n, to calculate price changes.
This adaptation focuses on minimizing market noise, sharpening the indicator's sensitivity to genuine trends and patterns.
Enhanced Signal Precision : By reducing the influence of short-term price spikes and fluctuations, the nRSI delivers a more precise signal. This precision is particularly crucial in volatile market conditions, where traditional indicators may be swayed by transient movements.
Ideal Usage
Strategic Trading Decisions : Ideal for traders who need to filter out insignificant price movements to make more strategic, informed trading decisions.
Reliable Divergence Spotting : Enhanced noise reduction aids in identifying more reliable divergences, key for predicting potential market reversals.
Trend Confirmation : The smoothed RSI, assisted by the moving average, becomes an invaluable tool for confirming the validity of market trends, minimizing false signals.
Detrended Price Rate of ChangeThe Detrended Price Rate of Change is an oscillator developed to help traders identify potential conditions of overbought and oversold markets.
The formula of the oscillator includes both the Detrended price formula, useful to spot divergences, and the Rate of change simplified formula, which helps in identifying overextended markets and gives useful information on price momentum.
Enhanced McClellan Summation Index
The Enhanced McClellan Summation Index (MSI) is a comprehensive tool that transforms the MSI indicator with Heikin-Ashi visualization, offering improved trend analysis and momentum insights. This indicator includes MACD and it's histogram calculations to refine trend signals, minimize false positives and offer additional momentum analysis.
Methodology:
McClellan Summation Index (MSI) -
The MSI begins by calculating the ratio between advancing and declining issues in the specified index.
float decl = 𝘐𝘯𝘥𝘪𝘤𝘦 𝘥𝘦𝘤𝘭𝘪𝘯𝘪𝘯𝘨 𝘪𝘴𝘴𝘶𝘦𝘴
float adv = 𝘐𝘯𝘥𝘪𝘤𝘦 𝘢𝘥𝘷𝘢𝘯𝘤𝘪𝘯𝘨 𝘪𝘴𝘴𝘶𝘦𝘴
float ratio = (adv - decl) / (adv + decl)
It then computes a cumulative sum of the MACD (the difference between a 19-period EMA and a 39-period EMA) of this ratio. The result is a smoothed indicator reflecting market breadth and momentum.
macd(float r) =>
ta.ema(r, 19) - ta.ema(r, 39)
float msi = ta.cum(macd(ratio))
Heikin-Ashi Transformation -
Heikin-Ashi is a technique that uses a modified candlestick formula to create a smoother representation of price action. It averages the open, close, high, and low prices of the current and previous periods. This transformation reduces noise and provides a clearer view of trends.
type bar
float o = open
float h = high
float l = low
float c = close
bar b = bar.new()
float ha_close = math.avg(b.o, b.h, b.l, b.c)
MACD and Histogram -
The Enhanced MSI incorporates MACD and histogram calculations to provide additional momentum analysis and refine trend signals. The MACD represents the difference between the 12-period EMA and the 26-period EMA of the MSI. The histogram is the visual representation of the difference between the MACD and its signal line.
Options:
Index Selection - Choose from TVC:NYA , NASDAQ:NDX , or TVC:XAX to tailor the MSI-HA to the desired market index.
MACD Settings - Adjust the parameters for the MACD calculation to fine-tune the indicator's responsiveness.
Ratio Multiplier - Apply scaling to the MSI to suit different market conditions and indices.
Benefits of Heikin-Ashi -
Smoothed Trends - Heikin-Ashi reduces market noise, providing a more apparent and smoothed representation of trends.
Clearer Patterns - Candlestick patterns are more distinct, aiding in the identification of trend reversals and continuations.
Utility and Use Cases:
Trend & Momentum Analysis - Utilize the tool's Heikin-Ashi visualization for clearer trend identification in confluence with it's MACD and histogram to gain additional insights into the strength and direction of trends, while filtering out potential false positives.
Breadth Analysis - Explore market breadth through the MSI's cumulative breadth indicator, gauging the overall health and strength of the underlying market.
- Alerts Setup Guide -
The Enhanced MSI is a robust indicator that combines the breadth analysis of the McClellan Summation Index with the clarity of Heikin-Ashi visualization and additional momentum insights from MACD and histogram calculations. Its customization options make it adaptable to various indices and market conditions, offering traders a comprehensive tool for trend and momentum analysis.
MACD Pulse CheckThis custom script, titled " MACD Pulse Check ," is a modified and enhanced version of the traditional Moving Average Convergence Divergence (MACD) indicator, commonly used in trading for trend-following and momentum strategies. Here's a breakdown of its features and benefits over the traditional MACD:
Multiple MACD Lines with Different Parameters:
The script calculates six different MACD lines using various combinations of fast, slow, and signal lengths. This diverse range allows for a more comprehensive analysis of the market momentum and trend across different time scales and sensitivities.
Average of MACD Lines:
By averaging these six MACD lines, the script creates a more smoothed and potentially less noisy signal. This can help in reducing false signals and improving the reliability of trend indications.
Sideways Market Detection:
A unique feature of this script is its ability to identify sideways or range-bound markets using a user-defined threshold. This is calculated by comparing the current price to the price five candles ago and seeing if the change is within a certain percentage threshold. Identifying sideways markets is crucial as trend-following strategies like MACD typically perform poorly in these conditions.
Visual and Color-Coded Signals:
The script plots shapes (circles) on the chart, where the color (green for bullish, red for bearish, sideways price action will display as either a dull green or a dull red) quickly indicates the market condition. This visual representation makes it easier to interpret the signals at a glance, and spot sideways price action while still having a general idea of trend.
Benefits for Traders:
Versatility: By averaging multiple MACD lines, traders get a more nuanced view of the market momentum, potentially leading to more informed trading decisions.
Reduced False Signals:
The averaging process and sideways market detection can help in filtering out false or weak signals, which is a common issue with the traditional MACD.
Ease of Use:
The color-coded visual signals simplify the process of identifying market trends and conditions, making the tool accessible even for less experienced traders.
In summary, "MACD Pulse Check" enhances the traditional MACD by providing a more comprehensive, and visually intuitive tool, potentially leading to better trading decisions in varying market conditions. However, it's important to note that no indicator is foolproof and should always be used in conjunction with other analysis methods and sound risk management practices.
MACD_RSI_trend_followingINFO:
This indicator can be used to build-up a strategy for trading of assets which are currently in trending phase.
My preference is to use it on slowly moving assets like GOLD and on higher timeframes, but practice may show that we find more usefull cases.
This script uses two indicators - MACD and RSI, as the timeframe that those are extracted for is configurable (defaults with the Chart TF, but can be any other selected by the user).
The strategy has the following simple idea - buy if any if the conditions below is true:
The selected TF MACD line crosses above the signal line and the TF RSI is above the user selected trigger value
The selected TF MACD line is above the signal line and the TF RSI crosses above the user selected trigger value
Once we're in position we wait for the selected TF MACD line to cross below the signal line, and then we set a SL at the low of that bar
DETAILS and USAGE:
In the current implementation I find two possible use cases for the indicator:
as a stand-alone indicator on the chart which can also fire alerts that can help to determine if we want to manually enter/exit trades based on them
can be used to connect to the Signal input of the TTS (TempalteTradingStrategy) by jason5480 in order to backtest it, thus effectively turning it into a strategy (instructions below in TTS CONNECTIVITY section)
In the example below we see a position opened at the bar after the buy indicator from the script has been triggered, and then later after the SL indicator from the script has been triggered a SL has been set on the lower wick of the closing candle, and the position eventually got closed once the price hit that level. Note that most of the drawing on the example snapshot below are from the TTS indicator following the buy/sell/SL conditions themseves:
Trading period can be selected from the indicator itself to limit to more interesting periods.
Arrow indications are drawn on the chart to indicate the trading conditions met in the script - green arrow for a buy signal indication and orange for LTF crossunder to indicate setting of SL.
SETTINGS:
Leaving all of the settings as in vanilla use case, as both the MACD and RSI indicator's settings follow the default ones for the stand-alone indicators themselves.
The start-end date is a time filter that can be extermely usefull when backtesting different time periods.
Pesonal preference is using the script on a D/W timeframe, while the indicator is configured to use Monthly chart.
The default value of the RSI filter is left to 50, which can be changed. I.e. if the RSI is above 50 we have a regime filter based on the MACD criteria.
EXTERNAL LIBRARIES:
The script uses a couple of external libraries:
HeWhoMustNotBeNamed/enhanced_ta/14 - collection of TA indicators
jason5480/tts_convention/3 - more details about the Template Trading Strategy below
I would like to highly appreciate and credit the work of both HeWhoMustNotBeNamed and jason5480 for providing them to the community.
TTS SETTINGS (NEEDED IF USED TO BACKTEST WITH TTS):
The TempalteTradingStrategy is a strategy script developed in Pine by jason5480, which I recommend for quick turn-around of testing different ideas on a proven and tested framework
I cannot give enough credit to the developer for the efforts put in building of the infrastructure, so I advice everyone that wants to use it first to get familiar with the concept and by checking
by checking jason5480's profile www.tradingview.com
The TTS itself is extremely functional and have a lot of properties, so its functionality is beyond the scope of the current script -
Again, I strongly recommend to be thoroughly epxlored by everyone that plans on using it.
In the nutshell it is a script that can be feed with buy/sell signals from an external indicator script and based on many configuration options it can determine how to execute the trades.
The TTS has many settings that can be applied, so below I will cover only the ones that differ from the default ones, at least according to my testing - do your own research, you may find something even better :)
The current/latest version that I've been using as of writing and testing this script is TTSv48
Settings which differ from the default ones:
from - False (time filter is from the indicator script itself)
Deal Conditions Mode - External (take enter/exit conditions from an external script)
🔌Signal 🛈➡ - MACD_RSI_trend_following: 🔌Signal to TTSv48 (this is the output from the indicator script, according to the TTS convention)
Sat/Sun - true (for crypto, in order to trade 24/7)
Order Type - STOP (perform stop order)
Distance Method - HHLL (HigherHighLowerLow - in order to set the SL according to the strategy definition from above)
The next are just personal preferenes, you can feel free to experiment according to your trading style
Take Profit Targets - 0 (either 100% in or out, no incremental stepping in or out of positions)
Dist Mul|Len Long/Short- 10 (make sure that we don't close on profitable trades by any reason)
Quantity Method - EQUITY (personal backtesting preference is to consider each backtest as a separate portfolio, so determine the position size by 100% of the allocated equity size)
Equity % - 100 (note above)
Dual_MACD_trendingINFO:
This indicator is useful for trending assets, as my preference is for low-frequency trading, thus using BTCUSD on 1D/1W chart
In the current implementation I find two possible use cases for the indicator:
- as a stand-alone indicator on the chart which can also fire alerts that can help to determine if we want to manually enter/exit trades based on the signals from it (1D/1W is good for non-automated trading)
- can be used to connect to the Signal input of the TTS (TempalteTradingStrategy) by jason5480 in order to backtest it, thus effectively turning it into a strategy (instructions below in TTS CONNECTIVITY section)
Trading period can be selected from the indicator itself to limit to more interesting periods.
Arrow indications are drawn on the chart to indicate the trading conditions met in the script - light green for HTF crossover, dark green for LTF crossover and orange for LTF crossunder.
Note that the indicator performs best in trending assets and markets, and it is advisable to use additional indicators to filter the trading conditions when market/asset is expected to move sideways.
DETAILS:
It uses a couple of MACD indicators - one from the current timeframe and one from a higher timeframe, as the crossover/crossunder cases of the MACD line and the signal line indicate the potential entry/exit points.
The strategy has the following flow:
- If the weekly MACD is positive (MACD line is over the signal line) we have a trading window.
- If we have a trading window, we buy when the daily macd line crosses AND closes above the signal line.
- If we are in a position, we await the daily MACD to cross AND close under the signal line, and only then place a stop loss under the wick of that closing candle.
The user can select both the higher (HTF) and lower (LTF) timeframes. Preferably the lower timeframe should be the one that the Chart is on for better visualization.
If one to decide to use the indicator as a strategy, it implements the following buy and sell criterias, which are feed to the TTS, but can be also manually managed via adding alerts from this indicator.
Since usually the LTF is preceeding the crossover compared to the HTF, then my interpretation of the strategy and flow that it follows is allowing two different ways to enter a trade:
- crossover (and bar close) of the macd over the signal line in the HIGH TIMEFRAME (no need to look at the LOWER TIMEFRMAE)
- crossover (and bar close) of the macd over the signal line in the LOW TIMEFRAME, as in this case we need to check also that the macd line is over the signal line for the HIGH TIMEFRAME as well (like a regime filter)
The exit of the trade is based on the lower timeframe MACD only, as we create a stop loss equal to the lower wick of the bar, once the macd line crosses below the signal line on that timeframe
SETTINGS:
All of the indicator's settings are for the vanilla/general case.
User can set all of the MACD parameters for both the higher and lower (current) timeframes, currently left to default of the MACD stand-alone indicator itself.
The start-end date is a time filter that can be extermely usefull when backtesting different time periods.
TTS SETTINGS (NEEDED IF USED TO BACKTEST WITH TTS)
The TempalteTradingStrategy is a strategy script developed in Pine by jason5480, which I recommend for quick turn-around of testing different ideas on a proven and tested framework
I cannot give enough credit to the developer for the efforts put in building of the infrastructure, so I advice everyone that wants to use it first to get familiar with the concept and by checking
by checking jason5480's profile www.tradingview.com
The TTS itself is extremely functional and have a lot of properties, so its functionality is beyond the scope of the current script -
Again, I strongly recommend to be thoroughly epxlored by everyone that plans on using it.
In the nutshell it is a script that can be feed with buy/sell signals from an external indicator script and based on many configuration options it can determine how to execute the trades.
The TTS has many settings that can be applied, so below I will cover only the ones that differ from the default ones, at least according to my testing - do your own research, you may find something even better :)
The current/latest version that I've been using as of writing and testing this script is TTSv48
Settings which differ from the default ones:
- from - False (time filter is from the indicator script itself)
- Deal Conditions Mode - External (take enter/exit conditions from an external script)
- 🔌Signal 🛈➡ - Dual_MACD: 🔌Signal to TTSv48 (this is the output from the indicator script, according to the TTS convention)
- Sat/Sun - true (for crypto, in order to trade 24/7)
- Order Type - STOP (perform stop order)
- Distance Method - HHLL (HigherHighLowerLow - in order to set the SL according to the strategy definition from above)
The next are just personal preferenes, you can feel free to experiment according to your trading style
- Take Profit Targets - 0 (either 100% in or out, no incremental stepping in or out of positions)
- Dist Mul|Len Long/Short- 10 (make sure that we don't close on profitable trades by any reason)
- Quantity Method - EQUITY (personal backtesting preference is to consider each backtest as a separate portfolio, so determine the position size by 100% of the allocated equity size)
- Equity % - 100 (note above)
EXAMPLES:
If used as a stand-alone indicator, the green arrows on the bottom will represent:
- light green - MACD line crossover signal line in the HTF
- darker green - MACD line crossover signal line in the LTF
- orange - MACD line crossunder signal line in the LTF
I recommend enabling the alerts from the script to cover those cases.
If used as an input to the TTS, we'll get more decorations on the chart from the TTS itself.
In the example below we open a trade on the next day of LTF crossover, then a few days later a crossunder in the LTF occurs, so we set a SL at the low of the wick of this day. Few days later the price doesn't recover and hits that SL, so the position is closed.
EUR/USD 45 MIN Strategy - FinexBOTThis strategy uses three indicators:
RSI (Relative Strength Index) - It indicates if a stock is potentially overbought or oversold.
CCI (Commodity Channel Index) - It measures the current price level relative to an average price level over a certain period of time.
Williams %R - It is a momentum indicator that shows whether a stock is at the high or low end of its trading range.
Long (Buy) Trades Open:
When all three indicators suggest that the stock is oversold (RSI is below 25, CCI is below -130, and Williams %R is below -85), the strategy will open a buy position, assuming there is no current open trade.
Short (Sell) Trades Open:
When all three indicators suggest the stock is overbought (RSI is above 75, CCI is above 130, and Williams %R is above -15), the strategy will open a sell position, assuming there is no current open trade.
SL (Stop Loss) and TP (Take Profit):
SL (Stop Loss) is 0.45%.
TP (Take Profit) is 1.2%.
The strategy automatically sets these exit points as a percentage of the entry price for both long and short positions to manage risks and secure profits. You can easily adopt these inputs according to your strategy. However, default settings are recommended.
K`s Extreme DurationExtreme duration uses a special combination of the RSI and its relative position to deliver a reversal signal.
The following are the conditions to generate signals:
* Bullish signal: The current 8-period RSI is below 50 and above 35 while the previous 5 RSI's are below 35.
* Bearish signal: The current 8-period RSI is above 50 and below 65 while the previous 5 RSI's are above 65.
MACD_base_and_reference_TF//====================================================================================================================
The "MACD_with_reference" indicator aims to illustrate the MACD (Moving Average Convergence Divergence) on two distinct timeframes: the base timeframe (typically the chart's timeframe, e.g., 1D) and the reference timeframe (defaulted to 1W). This tool provides a means to determine momentum shifts within the stock, potentially guiding traders in adjusting or trimming positions.
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Key Features of the Indicator:
- Dual Timeframe MACD: Displays MACD on both the primary (base) and higher (reference) timeframes - transparent.
- Momentum Analysis: indication of MACD crossdown of the signal line on the refenence TF to indicate momentum loss on the higher timeframe, guiding decisions to manage positions.
- MACD Line Status: Beneath the chart, a red/green bar line signifies the MACD line's position relative to the signal line on the higher timeframe.
- Alert Creation: Allows for alerts on the MACD and signal line crossdown on the higher timeframe, aiding in planning stop-loss settings for owned stocks.
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The "MACD_with_reference" indicator finds optimal usage in several scenarios:
- Chart Analysis: Replacing the MACD indicator during chart reviews.
- Alert Setup: Setting alerts for owned stocks to plan ahead for stop-loss placements or position closures.
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// Continue the script code...
Fisher+ [OSC]The Fisher Transform Indicator is classified as an oscillator, meaning that its value swings above and below a central point. This characteristic allows traders to identify overbought and oversold conditions, providing potential clues about market reversals. As mentioned previously, it is an oscillator so the strength of the move is displayed by how long the fisher line stays above/below zero. Indicator can be used to aid in confluence near supply/demand zones.
White Line = Fisher
Red/Blue Line = Moving Average
--Changes color whether fisher line is above/below the MA
Red/Blue Shaded Line = Moving Average
--Changes color based on a smoothing factor
Red/Blue Shaded Fill = Asset in Overbought/Oversold Conditions
Red/Blue Circles = Asset in Extreme Overbought/Oversold Conditions
Red/Blue Triangles = MACD Signals Below/Above "0"
Divergence Labels = Asset Signaling Divergence
The moving average line will turn red/blue as long as the fisher line is below/above the moving average. The shaded MA line will switch colors based on if it is moving in an up/down trend. The MA can also be used as a signal and treated similar to an oscillator. Market trending conditions will either keep the MA below/above the dashed zero line.
MACD code credited to LazyBear's MACD Leader indicator. It is used to filter out/confirm any signals such as divergences. As long as the MACD Leader line is above both the MACD line and signal lines then it'll signal with with a triangle. MACD divergences will be added at a later time.
Spot-Vol CorrelationSpot-Vol Correlation Script Guide
Purpose:
This TradingView script measures the correlation between percentage changes in the spot price (e.g., for SPY, an ETF that tracks the S&P 500 index) and the changes in volatility (e.g., as indicated by the VIX, the Volatility Index). Its primary objective is to discern whether the relationship between spot price and volatility behaves as expected ("normal" condition) or diverges from the expected pattern ("abnormal" condition).
Normal vs. Abnormal Correlation:
Normal Correlation: Historically, the VIX (or volatility) and the spot price of major indices like the S&P 500 have an inverse relationship. When the spot price of the index goes up, the VIX tends to go down, indicating lower volatility. Conversely, when the index drops, the VIX generally rises, signaling increased volatility.
Abnormal Correlation: There are instances when this inverse relationship doesn't hold, and both the spot price and the VIX move in the same direction. This is considered an "abnormal" condition and might indicate unusual market dynamics, potential uncertainty, or impending shifts in market sentiment.
Using the Script:
Inputs:
First Symbol: This is set by default to VIX, representing volatility. However, users can input any other volatility metric they prefer.
Second Symbol: This is set to SPY by default, representing the spot price of the S&P 500 index. Like the first symbol, users can substitute SPY with any other asset or index of their choice.
Length of Calculation Period: Users can define the lookback period for the correlation calculation. By default, it's set to 10 periods (e.g., days for a daily chart).
Upper & Lower Bounds of Normal Zone: These parameters define the range of correlation values that are considered "normal" or expected. By default, this is set between -0.60 and -1.00.
Visuals:
Correlation Line: The main line plot shows the correlation coefficient between the two input symbols. When this line is within the "normal zone", it indicates that the spot price and volatility are inversely correlated. If it's outside this zone, the correlation is considered "abnormal".
Green Color: Indicates a period when the spot price and VIX are behaving as traditionally expected (i.e., one rises while the other falls).
Red Color: Denotes a period when the spot price and VIX are both moving in the same direction, which is an abnormal condition.
Shaded Area (Normal Zone): The area between the user-defined upper and lower bounds is shaded in green, highlighting the range of "normal" correlation values.
Interpretation:
Monitor the color and position of the correlation line relative to the shaded area:
If the line is green and within the shaded area, the market dynamics are as traditionally expected.
If the line is red or outside the shaded area, users should exercise caution as this indicates a divergence from typical behavior, which can precede significant market moves or heightened uncertainty.
S/R and Reversal BarsToday I'm proposing an idea to form S/R with a slightly different basic idea. This is a combination of CCI and candlestick study, and we will use this to mark possible reversal candles and possible S/R lines.
This is nothing complicated, I've used a basic CCI indicator with certain rules/system to mark S/R levels on the chart. (Have loaded traditional CCI indicator on bottom for comparison)
S/R levels are market as followed
Cross -
Lime = Support
Red = Resistance
Zero/Balance line - Yellow circles
The idea is to use this indicator to trade sideways market more successfully, in trending market this can be futile if you are not waiting for the break-out or breakdowns with confirmation.
Since this is based on CCI, it will give static result only when bar is closed, till then it will be susceptible for repaint. This is inherited nature from CCI readings on current bar. I could change this to only making reading on closed bar (historical bar), but that takes away from the uniqueness of this indicator in giving early indications.
This is a great tool for intraday scalping, but it does work on all timeframes, it's not bound by granularity.
This is for education purpose only.
Past success or seemingly positive results on published posts are not indication of future success.
TASC 2023.11 VAcc█ OVERVIEW
The November 2023 edition of TASC's Traders' Tips features an article titled "VAcc: A Momentum Indicator Based On Velocity And Acceleration" by Scott Cong. This script implements the author's momentum indicator based on simple physics concepts.
█ CONCEPTS
The indicator is named VAcc as it is derived from the average velocity (V) and acceleration (Acc) over a specified lookback period. Consequently, its readings reflect two valuable characteristics of price data: rate (indicating the speed at which the price is moving) and rate of change (indicating whether the price is speeding up or slowing down).
In the article, the author reports that for longer periods, VAcc behaves similarly to the MACD , albeit with a more responsive nature. For shorter periods, VAcc exhibits characteristics reminiscent of the stochastic oscillator , but it trends more prominently and is less prone to overbought/oversold saturation.
To incorporate VAcc into trading strategies, the author suggests considering the following two permutations for the velocity and acceleration data series:
Strong upward condition: Velocity is rising, and acceleration is rising above zero.
Strong downward condition: Velocity is falling, and acceleration is falling.
In the current implementation, the chart displays the average velocity as a line, while the average acceleration is presented as a histogram.
█ CALCULATIONS
The calculation of VAcc involves the following steps:
For the current closing price, C , and for each bar C (i) within a specified lookback period from the current bar, the script calculates velocities, V (i) = ( C - C (i))/i. These velocities are then subjected to an exponential moving average to obtain the smoothed average velocity.
Similarly, for each bar within the lookback period, accelerations are calculated as Acc (i) = ( V - V (i))/i and then averaged without smoothing.
VAcc (Velocity & Acceleration)VAcc (Velocity & Acceleration) is a momentum indicator published by Scott Cong in Stocks & Commodities V. 41:09 (8–15). It applies concepts from physics, namely velocity and acceleration, to financial markets. VAcc functions similarly to the popular MACD (Moving Average Convergence Divergence) indicator when using a longer lookback period, but produces more responsive results. With shorter periods, VAcc exhibits characteristics reminiscent of the stochastic oscillator.
🟠 Algorithm
The average velocity over the past n periods is defined as
((C - C_n) / n + (C - C_{n-1}) / (n - 1) + … + (C - C_i) / i + (C - C_1) / 1) / n
At its core, the velocity is a weighted average of the rate of change over the past n periods.
The calculation of the acceleration follows a similar process, where it’s defined as
((V - V_n) / n + (V - V_{n - 1}) / (n - 1) + … + (V - V_i) / i + (V - V_1) / 1) / n
🟠 Comparison with MACD
A comparison of VAcc and MACD on the daily Nasdaq 100 (NDX) chart from August 2022 helps demonstrate VAcc's improved sensitivity. Both indicators utilized a lookback period of 26 days and smoothing of 9 periods.
The VAcc histogram clearly shows a divergence forming, with momentum weakening as prices reached new highs. In contrast, the corresponding MACD histogram significantly lagged in confirming the divergence, highlighting VAcc's ability to identify subtle shifts in trend momentum more immediately than the traditional MACD.
