HOW-TO use Adaptive Sideways FilterMy ASF (Adaptive Sideways Filter) is a sophisticated indicator used to identify sideways markets. Its goal is to filter market noise and false signals, accurately identifying the sideways phase of the market.
ASF uses an intelligent method to determine sideways markets. It adjusts its parameters based on market volatility and trends to adapt to different market conditions. When market volatility is low, ASF reduces its sensitivity to avoid mistaking it for a sideways market. On the other hand, when there is high market volatility, ASF increases its sensitivity to capture market trends more effectively.
ASF calculates based on market price fluctuations and trends. It uses a series of Average True Range (ATR) values to measure market volatility and adjust its parameters accordingly. ASF also relies on an indicator called "Directional Index" to measure the trend of the market and adjust its parameters based on changes in the Directional Index.
By using this adaptive approach, ASF can provide more accurate signals for sideways markets under different conditions. It helps traders avoid trading during sideways periods, reducing ineffective trades and losses. At the same time, ASF can also help traders capture better trading opportunities when there are trending movements in the market.
However, please remember that ASF is just an indicator and cannot guarantee 100% accuracy or success. Traders still need to combine other technical analysis tools with their own trading strategies for comprehensive judgment and decision-making when using ASF.
Here's how you can use this indicator: The purpose of ASF is to identify horizontal price fluctuation cycles and plot them on charts. This tool is valuable for traders looking for range-trading opportunities. The code of this indicator was written by me using TradingView's proprietary programming language Pine Script version 5 which provides enhanced functionality and flexibility compared with previous versions like Pine Script 4 or lower versions like Pine Script 3 or below versions like Pine Script 2 or earlier versions like Pine Script 1 etc.. However, it is not supported by software like Tongda Xian, Thun Hua Shun etc. Many friends have messaged me saying that the code I posted doesn't work in Tongda Xian or Thun Hua Shun, which makes me feel frustrated. Well, all I can say is: The revolution has not yet succeeded; comrades still need to work hard.
Firstly, several user-defined input parameters are defined. These parameters include the moving average length used to calculate thresholds, the threshold value that determines the width of sideways ranges, and the smoothing length applied to source data. By adjusting these parameters, traders can fine-tune the sensitivity of the indicator to suit their own trading strategies. One key feature of this indicator is incorporating Average True Range (ATR) concept into it to determine the width of sideways ranges. ATR is a widely used technical indicator for measuring market volatility. By multiplying ATR values by a user-specified threshold, this indicator calculates upper and lower channels defining price sideways movements. This indicator is used on main charts and overlaps with closing prices while indicating upward movement with green coloration and downward movement with red coloration as well as sideways movement with blue coloration through line colors,K-line colors,and background colors.The chart's colors and K-lines dynamically change based on closing prices' relative positions compared with upper and lower channels.If price lies above upper channel,the color will be green indicating potential overbought condition.If price lies below lower channel,the color will be red indicating potential oversold condition.When price lies within channels,the color will be blue indicating sideways movement.In addition,this indicator provides visual cues through coloring K-lines and adding background colors further highlighting periods of horizontal price fluctuations.
By using ASF indicators,traders can gain valuable insights into market behavior and make wise trading decisions helping identify potential range-trading opportunitiesand adjust strategies accordingly.In summary,"Adaptive Sideways Filter"indicatoris a powerful tool understood by those who understand it,used to identify horizontal price fluctuations and discover potential range-trading opportunities.Through its customizable parameters,integrated average smoothing data,and utilization of ATR,this indicator provides traders with a comprehensive view of market dynamics,enabling them to make wiser trading decisions.
As I believe this value is very valuable for my personal trading system,it is currently released in the TradingView community and can be used for free,but the code is not open source. Anyway, as a code blogger,I will still explain the logic of this indicator. Friends with sufficient comprehension can create it themselves.
One key feature of this indicator is integrating smoothed Heikin-Ashi (HA) candlestick chart data.The code includes a function called "heikinashi_tv" which generates smoothed OHLC (Open, High, Low, Close) data from traditional candlestick chart data.Smoothed charts reduce market noise and provide clearer views of price trends.By combining smoothed data,the ASF indicator aims to improve stability and accuracy in its analysis.
The code also includes a function called "cumavg" to calculate the cumulative average of given source data over a specified length. This function is used to calculate the source data for the indicator.
The main logic implemented by this indicator is as follows:
1. Use the "heikinashi_tv" function to generate smoothed OHLC data from traditional candlestick chart data. This ensures that the indicator is more stable under smoothed data.
2. Apply the "cumavg" function to the smoothed closing price with the specified smoothing length to calculate the source data.
3. Calculate Average True Range (ATR) based on the specified length.
4. Calculate upper and lower bands by adding and subtracting threshold multiplied by ATR value from moving average line of source data.
5. Determine colors for plotting and histogram based on position of closing price relative to upper and lower bands. If price is above upper band, color is green indicating potential overbought condition; if price is below lower band, color is red indicating potential oversold condition; if price moves between bands, color is blue indicating sideways movement.
6. Dynamically plot closing prices on chart using line style.
7. Color K-line based on same color scheme.
8. Add background color to further highlight periods of sideways movement in prices
