INVITE-ONLY SCRIPT
LT Pulse 2.1
This indicator has multiple purposes and functions: (1) it can show transitions from low to high volatility, the momentum direction, and potential big moves in price; (2) it can measure early shifts in momentum and the first indications of a possible breakout, as indicated by the “early signals”, (3) it measures the risk of possible failure by displaying on the indicator the key risk level, which if breached by the price, it can indicate that the momentum can suddenly dissipate (and thus end the momentum signal), (4) when the force of the momentum likely ends, (5) it can identify potentially more volatile or explosive moves and (6) the indicator can also show the likelihood of potential extended moves in price.
In regards the first function, when the red dots are forming (i.e. a “pulse” forming), this indicates a period of likely low volatility – often correlating with consolidating, sideways or rangebound market conditions. It can also indicate that a potentially big or volatile move could be setting up. Usually when the red dots turn to blue/cyan dots (i.e. a “pulse” triggers) this indicates that we could be about to see a transition from low to high volatility. The volatility could result in the price often moving very fast in a specific direction (as shown by the momentum histogram).
The momentum histogram bars on the dots indicate the likely momentum direction: green histogram bars show when momentum is positive (above zero) and red histogram bars show when the momentum is negative (below zero). Bright green momentum bars indicate that the probable direction could be to the upside and the bright red momentum bars indicate that the probable direction be to the downside.
Once the momentum histogram turns from bright green to dark green (or bright red to dark red) this indicates that momentum could be weakening or dissipating. When the histogram colour turns to grey this indicates that the pulse has likely ended or dissipated.
After a pulse “fires” and then the momentum on the pulse dissipates, meaning when bright green histogram bars turn to dark green and then grey - or when bright red histogram bars turn to dark red and then grey - this indicates that there is a higher risk that price could reverse from its original direction, since the momentum is weakening. So for example, if after a pulse signal fires to the upside (positive) and then the green histogram bars turn dark green and then grey – this shows that there is a high probability that the upward momentum has ended and thus downside risk has increased (the reverse applies for red histogram bars when the pulse fires to the downside).
There is the possibility that the price can continue to move in its original direction, despite the momentum weakening or dissipating. Sometimes the pulse may fire in one direction, and then the price may quickly reverse direction (and momentum may reverse very quickly) – this is often due to the volatile, uncertain and probability nature of price action.
The indicator measures the risk of failure by incorporating and displaying a risk parameter box near the histogram – we call this the “risk box”. By “failure” we mean the risk of either a false signal (or a false breakout) or a loss in momentum which could result in a reversal in price – both scenarios would increase risk. The risk box is calculated by measuring the distance from the closing price of the previous bar to its velocity position and then dividing this by 2. The idea behind the risk box is to quickly know when risk of failure (or a false signal) has likely increased. For example, if a pulse signal fires to the upside (with bullish or positive momentum), a risk box near the histogram usually shows the risk level for the price (which is usually below the price). Therefore, if price were to suddenly drop below this risk level, the odds may have increased for a false signal (or false breakout) or the probability that the momentum may be about to dissipate and price could potentially reverse. In such a situation, chartists need to be aware that the probability of that original bullish or positive signal may have dropped significantly. The opposite applies in situations where a pulse fires to the downside with negative or bearish momentum – if price were to suddenly move above the risk price level, this indicates that the odds of any further downside have likely reduced and the probability of a false signal, false breakout or dissipation of momentum has likely increased.
We have also included a risk box for the “early signals” too. This means that if an early signal appears, price needs to remain above that risk level (as shown in the risk box) in order for the early signal to remain valid. If price were to breach the risk box level, it could increase the risk of a possible false signal (or a false breakout).
The indicator also colours the histogram bar yellow when risk has suddenly increased (based on the risk parameter in the risk box, explained above) – this is called a “risk increase”. So for example, if the momentum is bullish and the pulse has fired to the upside, as soon as price drops and falls below the risk parameter (the price mentioned in the risk box), the histogram bar turns yellow. This indicates that the probability of continuing upward momentum has decreased significantly – and that the odds of a reversal in price have increased. The reverse applies in cases of downward momentum. It should be noted that if the yellow “risk increase” signal occurs very soon after a pulse signal fires, this could mean that it was very likely a false signal (or a false breakout). Risk protection is therefore important.
The indicator includes a “potentially volatile move” signal – which colours the dots purple. This occurs when a pulse signal is forming at the same time as the ADX (average directional index) is below 20. These types of environments are usually associated with LOW volatility. So when the ADX is below 20 at the same time as a pulse signal forming (i.e. a low volatility period) this indicates that when the transition from low to high volatility eventually occurs, that the transition could be more “explosive” or volatile than usual. These types of signals can be more potent i.e. potentially stronger than normal – often resulting in bigger moves than one would usually expect, on balance of probabilities.
The “early signals” in the indicator is simply a CCI based signal that can be enabled (optional). Early signals often show a blue or magenta colour spike on the red dots before the pulse “fires” (blue being “bullish” and magenta being “bearish”). The idea behind the “early signals” is to show the probable direction the pulse may fire based on the momentum. The “bullish” early signals (blue) are based on CCI going above zero and crossing above its 20 SMA. The bearish early signals (magenta) are the opposite i.e. CCI going below zero and crossing below its 20 SMA.
The early signals are prone to the risks of false signals or “whipsaws” – mainly due to the unpredictable nature of sideways or rangebound markets whilst a pulse is forming. For this reason, we prefer to combine the “early signals” with other trend-based indicators (such as gamma confirmation or higher timeframe momentum) to potentially minimise the risks of whipsaws (although the risks of whipsaws can never be totally eliminated for any indicator). For example, if the trend is stronger in the upside direction (or if gamma confirmation is blue), and if price is above its key averages (e.g. the 21 EMA), then we prefer to mainly focus on the blue (or bullish) early signals instead of the magenta ones, due to the directional bias, the risks and probabilities. Vice versa applies for when trend is stronger in the downside direction (or if gamma confirmation is red), and if price is below its 21 EMA, then the probabilities usually tend to favour the magenta (or bearish) early signal.
Early signals should NOT be used by new or beginner chartists as this is an advanced strategy. For higher probability chart setups, it is better to wait for the pulse to actually fire first (i.e. wait for the red dots to turn to blue dots) – to have a better idea of the momentum direction and to reduce the risk of too many whipsaws and false signals.
As a general rule, when price is in an uptrend and is holding above the 21 EMA (or above LT Velocity), and usually when the momentum on the higher timeframe is also positive (e.g. rising bright green bars), there is a slightly higher probability for the pulse to fire to the upside. LT Gamma confirmation can also be used to increase the odds (as a blue gamma confirmation can indicate that the strongest trend and the path of least resistance is to the upside). Vice versa applies for when price is in a downtrend and below the 21 EMA (or below LT Velocity) and when higher timeframe is also in a downtrend, and gamma confirmation is red. Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.
The indicator also incorporates a signal that can show that there is a high probability of an “extended move” – in other words, the odds of significantly further follow-thru in its original direction. This signal is ideally better suited for higher timeframe charts such as daily or weekly charts – specially after price has bounced off a key support (or resistance) level. The extended move setting is based on the price closing above (or below) its 5 SMA seven times consecutively, after a significant drop (or rise) in price. For example, in the bullish example, after a significant drop in price which causes the MACD to drop below zero (and specially in a downtrend), if the price then closes above its 5 SMA seven times consecutively – we get an orange vertical bar on the indicator. If the price closes above its 5 SMA only six times consecutively, we get a yellow bar. This principle works in reverse for bearish signals too: so for example, if the price is in an uptrend and MACD is above zero, if price were to close below its 5 SMA seven times consecutively, then we see a dark blue vertical bar (but if it is only six consecutive closes, we get a light blue bar).
The best way to apply the “extended move” setting in chart analysis is to wait for a pullback or retracement in the price after the signal appears. Then once the price has taken out the recent high (or low) that the price made before its pullback, this increases the likelihood of a move in the original direction. For example, if price is moving up and a yellow/orange vertical bar appears, we would first wait for a pullback in the price (e.g. a pullback to the averages). Then once price rallies again and takes out the most recent high made before its pullback (i.e. by closing above it), then this increases the probability of the potential “extended move” or continuation of the upward move. The same principle applies in reverse for downward moves: if a blue/dark-blue vertical bar appears, we would first wait for a pullback to the averages (i.e. a brief rally in price) – then if the price takes out the most recent low formed before the pullback (by closing below it) then this increases the odds of further follow-thru lower. As mentioned, the extended move signal is best used on higher timeframes such as the daily and weekly charts – and ideally only after price has bounced off or held a key support/resistance level. This could help minimise the risks of multiple false signals which this signal could generate.
The pulse signal was inspired by the “squeeze” as described by John Carter in his book, Mastering the Trade – which describes the idea of using bollinger bands and keltner channels (i.e. when bollinger bands enter and then exit the keltner channels). However, this indicator expands this concept much further by including the measurement of risk and possible failure (the “risk box”), the first indications of when a pulse could likely fire by showing an early shift in momentum (as shown by the “early signals”), the idea of potentially explosive or volatile breakouts (with ADX below 20), when the pulse signal ends (grey histogram bar), when risk increases (yellow histogram bar), the likelihood of an “extended move” (vertical bars) and alerts to accompany the majority of these signals.
The indicator also includes the option to increase the frequency of pulse signals. For example, on a chart which has relatively few pulse signals, the chartist can tweak the “Pulse frequency” setting to see if there are any “hidden” pulse signals. By toggling the drop-down menu which ranges from 1 to 6, the user can increase the number of pulse signals seen on the chart: the higher the number the higher the frequency of signals. This setting is optional and caution should be exercised when using this setting because the higher the frequency of signals can also mean more “false” signals as well. This is specially the case with settings of 5 and 6 – as they can show many signals, a lot of which could end up being false signals. Therefore, we prefer to mainly use a setting of 1 by default in the majority of circumstances, and only occasionally increase the setting to 3 or 4 as required or as when necessary.
Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.
The indicator can be used on the charts of the majority of markets (e.g. stocks, indices, ETFs, currencies, cryptocurrencies, precious metals, commodities etc.) and any timeframe. It should be noted that the degree of noise and randomness increases significantly on lower timeframes. So the lower the timeframe that is chosen (e.g. 15-min or lower) the greater the degree of noise and randomness and therefore the higher the frequency of false signals or whipsaws. The indicator can be applied to candlesticks, bar charts and line charts.
If you would like access, please send me a PM on Tradingview.
In regards the first function, when the red dots are forming (i.e. a “pulse” forming), this indicates a period of likely low volatility – often correlating with consolidating, sideways or rangebound market conditions. It can also indicate that a potentially big or volatile move could be setting up. Usually when the red dots turn to blue/cyan dots (i.e. a “pulse” triggers) this indicates that we could be about to see a transition from low to high volatility. The volatility could result in the price often moving very fast in a specific direction (as shown by the momentum histogram).
The momentum histogram bars on the dots indicate the likely momentum direction: green histogram bars show when momentum is positive (above zero) and red histogram bars show when the momentum is negative (below zero). Bright green momentum bars indicate that the probable direction could be to the upside and the bright red momentum bars indicate that the probable direction be to the downside.
Once the momentum histogram turns from bright green to dark green (or bright red to dark red) this indicates that momentum could be weakening or dissipating. When the histogram colour turns to grey this indicates that the pulse has likely ended or dissipated.
After a pulse “fires” and then the momentum on the pulse dissipates, meaning when bright green histogram bars turn to dark green and then grey - or when bright red histogram bars turn to dark red and then grey - this indicates that there is a higher risk that price could reverse from its original direction, since the momentum is weakening. So for example, if after a pulse signal fires to the upside (positive) and then the green histogram bars turn dark green and then grey – this shows that there is a high probability that the upward momentum has ended and thus downside risk has increased (the reverse applies for red histogram bars when the pulse fires to the downside).
There is the possibility that the price can continue to move in its original direction, despite the momentum weakening or dissipating. Sometimes the pulse may fire in one direction, and then the price may quickly reverse direction (and momentum may reverse very quickly) – this is often due to the volatile, uncertain and probability nature of price action.
The indicator measures the risk of failure by incorporating and displaying a risk parameter box near the histogram – we call this the “risk box”. By “failure” we mean the risk of either a false signal (or a false breakout) or a loss in momentum which could result in a reversal in price – both scenarios would increase risk. The risk box is calculated by measuring the distance from the closing price of the previous bar to its velocity position and then dividing this by 2. The idea behind the risk box is to quickly know when risk of failure (or a false signal) has likely increased. For example, if a pulse signal fires to the upside (with bullish or positive momentum), a risk box near the histogram usually shows the risk level for the price (which is usually below the price). Therefore, if price were to suddenly drop below this risk level, the odds may have increased for a false signal (or false breakout) or the probability that the momentum may be about to dissipate and price could potentially reverse. In such a situation, chartists need to be aware that the probability of that original bullish or positive signal may have dropped significantly. The opposite applies in situations where a pulse fires to the downside with negative or bearish momentum – if price were to suddenly move above the risk price level, this indicates that the odds of any further downside have likely reduced and the probability of a false signal, false breakout or dissipation of momentum has likely increased.
We have also included a risk box for the “early signals” too. This means that if an early signal appears, price needs to remain above that risk level (as shown in the risk box) in order for the early signal to remain valid. If price were to breach the risk box level, it could increase the risk of a possible false signal (or a false breakout).
The indicator also colours the histogram bar yellow when risk has suddenly increased (based on the risk parameter in the risk box, explained above) – this is called a “risk increase”. So for example, if the momentum is bullish and the pulse has fired to the upside, as soon as price drops and falls below the risk parameter (the price mentioned in the risk box), the histogram bar turns yellow. This indicates that the probability of continuing upward momentum has decreased significantly – and that the odds of a reversal in price have increased. The reverse applies in cases of downward momentum. It should be noted that if the yellow “risk increase” signal occurs very soon after a pulse signal fires, this could mean that it was very likely a false signal (or a false breakout). Risk protection is therefore important.
The indicator includes a “potentially volatile move” signal – which colours the dots purple. This occurs when a pulse signal is forming at the same time as the ADX (average directional index) is below 20. These types of environments are usually associated with LOW volatility. So when the ADX is below 20 at the same time as a pulse signal forming (i.e. a low volatility period) this indicates that when the transition from low to high volatility eventually occurs, that the transition could be more “explosive” or volatile than usual. These types of signals can be more potent i.e. potentially stronger than normal – often resulting in bigger moves than one would usually expect, on balance of probabilities.
The “early signals” in the indicator is simply a CCI based signal that can be enabled (optional). Early signals often show a blue or magenta colour spike on the red dots before the pulse “fires” (blue being “bullish” and magenta being “bearish”). The idea behind the “early signals” is to show the probable direction the pulse may fire based on the momentum. The “bullish” early signals (blue) are based on CCI going above zero and crossing above its 20 SMA. The bearish early signals (magenta) are the opposite i.e. CCI going below zero and crossing below its 20 SMA.
The early signals are prone to the risks of false signals or “whipsaws” – mainly due to the unpredictable nature of sideways or rangebound markets whilst a pulse is forming. For this reason, we prefer to combine the “early signals” with other trend-based indicators (such as gamma confirmation or higher timeframe momentum) to potentially minimise the risks of whipsaws (although the risks of whipsaws can never be totally eliminated for any indicator). For example, if the trend is stronger in the upside direction (or if gamma confirmation is blue), and if price is above its key averages (e.g. the 21 EMA), then we prefer to mainly focus on the blue (or bullish) early signals instead of the magenta ones, due to the directional bias, the risks and probabilities. Vice versa applies for when trend is stronger in the downside direction (or if gamma confirmation is red), and if price is below its 21 EMA, then the probabilities usually tend to favour the magenta (or bearish) early signal.
Early signals should NOT be used by new or beginner chartists as this is an advanced strategy. For higher probability chart setups, it is better to wait for the pulse to actually fire first (i.e. wait for the red dots to turn to blue dots) – to have a better idea of the momentum direction and to reduce the risk of too many whipsaws and false signals.
As a general rule, when price is in an uptrend and is holding above the 21 EMA (or above LT Velocity), and usually when the momentum on the higher timeframe is also positive (e.g. rising bright green bars), there is a slightly higher probability for the pulse to fire to the upside. LT Gamma confirmation can also be used to increase the odds (as a blue gamma confirmation can indicate that the strongest trend and the path of least resistance is to the upside). Vice versa applies for when price is in a downtrend and below the 21 EMA (or below LT Velocity) and when higher timeframe is also in a downtrend, and gamma confirmation is red. Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.
The indicator also incorporates a signal that can show that there is a high probability of an “extended move” – in other words, the odds of significantly further follow-thru in its original direction. This signal is ideally better suited for higher timeframe charts such as daily or weekly charts – specially after price has bounced off a key support (or resistance) level. The extended move setting is based on the price closing above (or below) its 5 SMA seven times consecutively, after a significant drop (or rise) in price. For example, in the bullish example, after a significant drop in price which causes the MACD to drop below zero (and specially in a downtrend), if the price then closes above its 5 SMA seven times consecutively – we get an orange vertical bar on the indicator. If the price closes above its 5 SMA only six times consecutively, we get a yellow bar. This principle works in reverse for bearish signals too: so for example, if the price is in an uptrend and MACD is above zero, if price were to close below its 5 SMA seven times consecutively, then we see a dark blue vertical bar (but if it is only six consecutive closes, we get a light blue bar).
The best way to apply the “extended move” setting in chart analysis is to wait for a pullback or retracement in the price after the signal appears. Then once the price has taken out the recent high (or low) that the price made before its pullback, this increases the likelihood of a move in the original direction. For example, if price is moving up and a yellow/orange vertical bar appears, we would first wait for a pullback in the price (e.g. a pullback to the averages). Then once price rallies again and takes out the most recent high made before its pullback (i.e. by closing above it), then this increases the probability of the potential “extended move” or continuation of the upward move. The same principle applies in reverse for downward moves: if a blue/dark-blue vertical bar appears, we would first wait for a pullback to the averages (i.e. a brief rally in price) – then if the price takes out the most recent low formed before the pullback (by closing below it) then this increases the odds of further follow-thru lower. As mentioned, the extended move signal is best used on higher timeframes such as the daily and weekly charts – and ideally only after price has bounced off or held a key support/resistance level. This could help minimise the risks of multiple false signals which this signal could generate.
The pulse signal was inspired by the “squeeze” as described by John Carter in his book, Mastering the Trade – which describes the idea of using bollinger bands and keltner channels (i.e. when bollinger bands enter and then exit the keltner channels). However, this indicator expands this concept much further by including the measurement of risk and possible failure (the “risk box”), the first indications of when a pulse could likely fire by showing an early shift in momentum (as shown by the “early signals”), the idea of potentially explosive or volatile breakouts (with ADX below 20), when the pulse signal ends (grey histogram bar), when risk increases (yellow histogram bar), the likelihood of an “extended move” (vertical bars) and alerts to accompany the majority of these signals.
The indicator also includes the option to increase the frequency of pulse signals. For example, on a chart which has relatively few pulse signals, the chartist can tweak the “Pulse frequency” setting to see if there are any “hidden” pulse signals. By toggling the drop-down menu which ranges from 1 to 6, the user can increase the number of pulse signals seen on the chart: the higher the number the higher the frequency of signals. This setting is optional and caution should be exercised when using this setting because the higher the frequency of signals can also mean more “false” signals as well. This is specially the case with settings of 5 and 6 – as they can show many signals, a lot of which could end up being false signals. Therefore, we prefer to mainly use a setting of 1 by default in the majority of circumstances, and only occasionally increase the setting to 3 or 4 as required or as when necessary.
Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.
The indicator can be used on the charts of the majority of markets (e.g. stocks, indices, ETFs, currencies, cryptocurrencies, precious metals, commodities etc.) and any timeframe. It should be noted that the degree of noise and randomness increases significantly on lower timeframes. So the lower the timeframe that is chosen (e.g. 15-min or lower) the greater the degree of noise and randomness and therefore the higher the frequency of false signals or whipsaws. The indicator can be applied to candlesticks, bar charts and line charts.
If you would like access, please send me a PM on Tradingview.
Skrip jemputan sahaja
Akses ke skrip ini adalah terhad kepada pengguna yang diberikan akses oleh penulis dan kebiasaannya memerlukan pembayaran. Anda boleh menambahkannya kepada senarai kegemaran anda, tetapi anda hanya dapat menggunakannya setelah meminta izin dan mendapatkannya dari penulis. Sila hubungi LeadingTrader untuk lebih maklumat atau rujuk arahan penulis seperti di bawah.
TradingView tidak mencadangkan anda membayar untuk skrip dan menggunakannya kecuali anda mempercayai penulisnya 100% dan memahami bagaimana skrip itu berfungsi. Juga, anda boleh mencari alternatif sumber terbuka yang bagus secara percuma dalam Skrip Komuniti kami.
Ingin menggunakan skrip ini pada carta?
Amaran: sila baca sebelum memohon akses.
Follow this link to obtain access: leadingtrader.com
You may also email: support@leadingtrader.com
You may also email: support@leadingtrader.com
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.