Gaussian Filter [BigBeluga]

9 Sep 2024

The Gaussian Filter - BigBeluga indicator is a trend-following tool that uses a Gaussian filter to smooth price data and identify directional shifts in the market. It provides dynamic signals for entering and exiting trades based on trend changes, helping traders stay aligned with the market's momentum. What sets this indicator apart is its ability to display precise entry and exit points with real-time tracking of percentage price changes, making it ideal for trend-based strategies.

SP500:


NIFTY50:


🔵 KEY FEATURES & USAGE

◉Gaussian Filter Trend Line:

//@function GaussianFilter is used for smoothing, reducing noise, and computing derivatives of data.
//@param src (float) The source data (e.g., close price) to be smoothed.
//@param params (GaussianFilterParams) Gaussian filter parameters that include length and sigma.
//@returns (float) The smoothed value from the Gaussian filter.
gaussian_filter(float src, params) =>
    var float[] weights = array.new_float(params.length)  // Array to store Gaussian weights
    total = 0.0
    pi = math.pi
    for i = 0 to params.length - 1
        weight = math.exp(-0.5 * math.pow((i - params.length / 2) / params.sigma, 2.0))
                                         / math.sqrt(params.sigma * 2.0 * pi)
        weights.set(i, weight)
        total := total + weight

    for i = 0 to params.length - 1
        weights.set(i, weights.get(i) / total)

    sum = 0.0
    for i = 0 to params.length - 1
        sum := sum + src * weights.get(i)
    sum

The core functionality of the Gaussian Filter line is to show trend direction. When the trend line increases four times consecutively, it indicates an uptrend signal. Similarly, if it decreases four times in a row, it signals a downtrend. The smoothness of the filter helps traders stay on the right side of the market by filtering out noise and emphasizing the dominant trend direction.


◉Entry and Exit Levels with Real-Time Price and Performance Data:

Each time the indicator detects a trend change, it plots an entry or exit level on the chart. For an uptrend, an entry level is marked, and for a downtrend, an exit level is plotted. These levels display the price at the time of the signal.


While the trend is ongoing, the indicator tracks the percentage change in price from the initial entry or exit signal to the current bar, updating in real-time. When a trend concludes, it displays the total percentage change from the entry or exit point to the trend's end. This feature provides valuable insights into how much the price has moved during each trend phase and allows traders to monitor the performance of each trade.


◉Color-Coded Candlestick Representation with Trend Shift Alerts:

In addition to coloring the candlesticks based on the trend direction, the indicator also uses gray candles to highlight potential early trend shifts. For example, if the Gaussian Filter detects a downtrend but the price moves above the filter line, the candles turn gray, signaling a possible reversal or shift in momentum. Similarly, in an uptrend, if the price moves below the Gaussian Filter line, the candles turn gray as an early indication of potential bearish momentum. This visual cue helps traders stay alert to possible faster shifts in market direction, allowing for quicker decision-making.



🔵 CUSTOMIZATION

• Length and Sigma for Gaussian Filter:
  Adjust the length and sigma parameters to control how the Gaussian Filter smooths the price data. A longer length provides smoother trend lines, while adjusting sigma can fine-tune the level of smoothing applied.
  
• Levels Display and Candle Coloring:
  You can toggle the visibility of entry and exit levels as well as enable or disable the dynamic coloring of candlesticks based on the trend direction. The additional gray color setting provides an extra layer of information, allowing you to spot potential trend reversals early.
  

🔵 CONCLUSION

The Gaussian Filter [BigBeluga] indicator is a powerful tool for identifying and following market trends. By providing clear entry and exit signals, along with real-time tracking of price changes, it gives traders a structured way to manage trades and monitor performance. The color-coded candles, including gray to highlight possible trend shifts, add another dimension to visualizing market dynamics. The added flexibility of customizing colors and trend levels makes it a versatile indicator suitable for both trend-following and reversal strategies.

10 Sep 2024

Nota Keluaran

- Updated Labels