Cheat Setup

//version=5
indicator("Cheat Setup", overlay=true)

// === User inputs ===
adr_period = input.int(20, title="ADR Window (days)")
lookback = input.int(100, title="Historical Lookback (bars)")
sensitivity = input.float(1.5, minval=0.5, step=0.1, title="Sensitivity (Multiplier of Avg ADR%)")
show_threshold_lines = input.bool(true, title="Show ADR% / Threshold Lines")

// === ADR% Calculation ===
// ADR% = (20-day high - 20-day low) / 20-day low × 100
adr_percent = (ta.highest(high, adr_period) - ta.lowest(low, adr_period)) / ta.lowest(low, adr_period) * 100

// Average ADR% over lookback period
avg_adr_percent = ta.sma(adr_percent, lookback)

// Adaptive threshold
adaptive_threshold = avg_adr_percent * sensitivity

// Detection condition
cheat_setup_signal = adr_percent > adaptive_threshold

// === Plotting ===
bgcolor(cheat_setup_signal ? color.new(color.green, 80) : na, title="Cheat Setup Background")

// Optional: Visual aid lines
plot(show_threshold_lines ? adr_percent : na, title="ADR(20)%", color=color.orange)
plot(show_threshold_lines ? avg_adr_percent : na, title="Average ADR%", color=color.gray)
plot(show_threshold_lines ? adaptive_threshold : na, title="Adaptive Threshold", color=color.red)


// ## What This Script Is For
// This script helps detect potential breakout zones — often called a "Cheat Setup" — before they happen.
// It's useful for identifying periods where a stock's volatility starts expanding after consolidation, which often leads to a breakout.

// ## What Is a Cheat Setup?
// A Cheat Setup is a technical setup where:
// > The price has been consolidating within a narrow range.
// > When volatility suddenly increases, it may indicate a breakout is about to occur.
// This script alerts you when that volatility expansion begins, using an adaptive threshold.

// ## How the Script Works (Step by Step)
// 1. Calculates ADR%:
// Measures how much the price has moved over the past N days (default: 20),
// using the formula: (20-day high - 20-day low) ÷ 20-day low × 100
// 2. Calculates the average ADR% over a longer lookback period (default: 100 bars).
// 3. Sets an adaptive threshold:
// The average ADR% multiplied by a user-defined sensitivity factor (e.g. 1.5×).
// 4. Triggers a cheat setup signal if the current ADR% exceeds the threshold.
// 5. Displays a green background on the chart during the signal to visually highlight the cheat area.
// 6. Optionally draws 3 reference lines:
// - Current ADR% (orange line)
// - Average ADR% (gray line)
// - Adaptive threshold (red line)

// ## How to Use the Script
// 1. Apply the script on a TradingView chart (daily timeframe is recommended).
// 2. Select a stock (e.g. AAPL, TSLA, 0700, 9988).
// 3. Monitor for periods when the background turns green.
// 4. These green zones signal that volatility has increased — the stock may be preparing for a breakout.

// ## What to Do When You See a Green Background
// - Add the stock to your watchlist.
// - Wait for confirmation — such as a breakout above the recent consolidation range.
// - Use other indicators like RSI, volume, or moving averages to filter signals.
// - Avoid chasing; instead, use the green zone as early warning and plan your entry.

// ## Recommended Parameter Settings
// Parameter | Purpose
// ---------------------- | ---------------------------------------------------------------
// `adr_period` | Number of days to calculate ADR%, e.g. 20
// `lookback` | Number of bars to average ADR%, e.g. 100
// `sensitivity` | Multiplier for adaptive threshold. 1.5 = moderate, 2.0 = strict
// `show_threshold_lines` | Toggle visibility of the ADR%, average, and threshold lines
// If the signal appears too frequently, increase the `sensitivity`. If too few, lower it slightly.

// ## Summary
// This script identifies stocks that are showing early signs of a breakout based on abnormal volatility expansion.
// It's especially useful for traders who want to get ahead of the move — before a breakout occurs — rather than reacting to it afterward.

// If you'd like, I can extend this script to also include:
// - Volume filters
// - Consolidation zone detection
// - Alert setup
// - Breakout confirmation (e.g. close > recent high)
// Let me know if you want to take it further.