Market Cycle Phases IndicatorOverview
The Market Cycle Phases Indicator is a powerful tool designed to help traders identify and visualize the different phases of market cycles. By distinguishing between Accumulation, Uptrend, Distribution, and Downtrend phases, this indicator provides a clear and color-coded representation of market conditions, aiding in better decision-making and strategy development. It is especially useful for long-term investors to observe and understand market cycles over extended periods. The phases are color-coded for easy identification: Green for Accumulation, Blue for Uptrend, Yellow for Distribution, and Red for Downtrend.
Key Features
Identifies four key market phases: Accumulation, Uptrend, Distribution, and Downtrend
Uses a combination of moving averages and volatility measures
Color-coded background for easy visualization of market phases
Adjustable parameters for moving average length, volatility length, and volatility threshold
Plots the moving average and Average True Range (ATR) for reference
Suitable for both short-term trading and long-term investing
Concepts Underlying the Calculations
The calculations behind the Market Cycle Phases Indicator are straightforward, combining the principles of moving averages and volatility measures:
Moving Average (MA): A simple moving average is used to determine the overall trend direction.
Average True Range (ATR): This measures market volatility over a specified period.
Volatility Threshold: A multiplier is applied to the ATR to distinguish between high and low volatility conditions.
How It Works
The indicator first calculates a moving average (MA) of the closing prices and the Average True Range (ATR) to measure market volatility. Based on the position of the price relative to the MA and the current volatility level, the indicator determines the current market phase:
Accumulation Phase: Price is below the MA, and volatility is low (Green background). This phase often indicates a period of consolidation and potential buying interest before an uptrend.
Uptrend Phase: Price is above the MA, and volatility is high (Blue background). This phase represents a strong upward movement in price, often driven by increased buying activity.
Distribution Phase: Price is above the MA, and volatility is low (Yellow background). This phase suggests a period of consolidation at the top of an uptrend, where selling interest may start to increase.
Downtrend Phase: Price is below the MA, and volatility is high (Red background). This phase indicates a strong downward movement in price, often driven by increased selling activity.
How Traders Can Use It
Traders can use the Market Cycle Phases Indicator to:
Identify potential entry and exit points based on market phase transitions.
Confirm trends and avoid false signals by considering both trend direction and volatility.
Develop and refine trading strategies tailored to specific market conditions.
Enhance risk management by recognizing periods of high and low volatility.
Observe long-term market cycles to make informed investment decisions.
Example Usage Instructions
Add the Market Cycle Phases Indicator to your chart.
Adjust the input parameters as needed:
Base Length: Default is 50.
Volatility Length: Default is 14.
Volatility Threshold: Default is 1.5.
Observe the color-coded background to identify the current market phase
Use the identified phases to inform your trading decisions:
Consider buying during the Accumulation or Uptrend phases.
Consider selling or shorting during the Distribution or Downtrend phases.
Combine with other indicators and analysis techniques for comprehensive market insights.
By incorporating the Market Cycle Phases Indicator into your trading toolkit, you can gain a clearer understanding of market dynamics and enhance your ability to navigate different market conditions, making it a valuable asset for long-term investing.
Kitaran
Entropy Volatility Index [CHE]I Entropy Volatility Index (EVI)
II An Experimental Script for Measuring Market Volatility
III Introduction
The Entropy Volatility Index (EVI) is an experimental indicator based on concepts from thermodynamics and information theory. The goal of the EVI is to quantify market uncertainty and volatility by calculating the entropy of price changes.
IV Basic Concepts
Entropy in Thermodynamics
Entropy is a measure of disorder or randomness in a system.
The second law of thermodynamics states that entropy in a closed system tends to increase over time.
Entropy in Information Theory
In information theory, entropy measures the uncertainty or information content of a random variable.
The entropy H of a random variable X with probability distribution P(x) is calculated as:
H(X) = -∑ P(x) log P(x)
V Derivation of the EVI
Calculation of Price Changes
Absolute price changes are calculated to serve as the basis for probability calculations.
Creation of the Histogram
A histogram is created and initialized to count the frequency of price changes.
Updating the Histogram
The histogram is updated by counting the frequency of each price change.
Calculation of Probabilities
The probabilities of the price changes are calculated based on their frequencies in the histogram.
Calculation of Entropy
Entropy is calculated using the probabilities of price changes. Higher entropy indicates higher uncertainty or disorder in the market.
Plotting the Indicator
The EVI is plotted to visually represent market volatility and uncertainty.
VI Interpretation of the EVI
High EVI Values
High Volatility: Strong and irregular price movements.
High Uncertainty: Increased market uncertainty.
Possible Market Turning Points: Indicators of potential trend changes.
Low EVI Values
Low Volatility: More consistent and predictable price movements.
Stability: More stable market phases.
Trend Consistency: Indicators of stable trends or sideways movements.
VII Conclusion
The Entropy Volatility Index (EVI) is an experimental script that applies concepts from thermodynamics and information theory to measure market volatility. It offers a new perspective on market uncertainty and can be used as an additional tool for traders.
VIII Example Use Cases
Identifying Volatile Phases: Use the EVI to identify periods of high volatility and prepare for potential rapid price movements.
Risk Management: Adjust your risk management strategy based on the EVI. During high EVI periods, consider hedging positions or adjusting position sizes.
Complementing Other Indicators: Combine the EVI with other technical indicators (e.g., RSI, MACD) for a more comprehensive view of market conditions.
I hope this experimental script provides valuable insights. Thank you for your feedback and suggestions for improvement.
Best regards,
Chervolino
Auto Fib GOLDEN TARGET Golden Target Auto Fib Indicator
Unlock the power of automatic Fibonacci analysis with the Golden Target Auto Fib Indicator. Designed for traders who want to effortlessly incorporate Fibonacci retracement levels into their strategy, this indicator dynamically calculates and plots key Fibonacci levels based on recent price action.
Key Features:
Automatic Fibonacci Levels: Automatically determines the critical Fibonacci retracement levels using the most recent high and low over a user-defined period.
Customizable Length: Adjust the period over which the Fibonacci levels are calculated to match your trading style and market conditions.
Dynamic Plotting: Fibonacci levels are plotted in real-time, reflecting current market conditions and potential support and resistance areas.
Color-Coded Levels: Distinguishes between different Fibonacci levels with distinct colors, making it easy to identify significant price points at a glance.
Target Labels (Optional): Optionally display labels next to the Fibonacci levels to help identify potential target zones and better visualize the key levels.
How It Works:
The Golden Target Auto Fib Indicator calculates Fibonacci retracement levels based on the highest high and lowest low over a specified length. The levels plotted include key Fibonacci ratios: 23.6%, 38.2%, 61.8%, and the 100% extension, providing valuable insights into potential support and resistance areas as well as price targets.
Usage:
Adjust Settings: Set the Length parameter to define the period over which Fibonacci levels are calculated.
Analyze Levels: Observe the plotted Fibonacci levels and their color-coded lines to identify potential price retracement zones and target areas.
Incorporate Into Strategy: Use these levels in conjunction with your trading strategy to make more informed decisions on entry and exit points.
Whether you're a day trader or a swing trader, the Golden Target Auto Fib Indicator simplifies Fibonacci analysis and integrates seamlessly into your TradingView charts, helping you make more precise trading decisions.
Get started today and enhance your technical analysis with the Golden Target Auto Fib Indicator!
Feel free to adjust the description according to the specific features or customization options of your indicator.
MACD with SAR Indicator [CHE] MACD with SAR Indicator
Introduction
"The whole is greater than the sum of its parts. " The "MACD with SAR Indicator" is an innovative technical analysis tool that combines the strengths of the Moving Average Convergence Divergence (MACD) indicator with the Parabolic Stop and Reverse (SAR) indicator. This indicator provides traders with an enhanced method to detect trend changes and determine optimal entry and exit points in the market by using the SAR based on the MACD line to better identify reversal points. The combination generates clear trend reversal signals, which are visually represented through long (L) and short (S) signals on the chart.
Originality and Usefulness
This indicator differs from traditional MACD or SAR indicators by combining the trend-following calculations of the SAR with the trend strength and momentum calculations of the MACD. This enables a more precise identification of trend changes and provides clear buy and sell signals, which is particularly useful for manual traders.
Key Features and Functionality
1. Combination of MACD and SAR
- Why this Combination?: The MACD is known for its ability to measure the strength and direction of a trend, while the SAR is specifically designed to identify reversal points. By combining these two indicators, traders can better understand both the trend strength and potential turning points in the market.
- How Components Work Together: The MACD measures the difference between fast and slow moving averages, indicating market momentum. The SAR follows the MACD line instead of the price and marks potential reversal points more accurately. When the MACD signals a new trend and the SAR confirms it, the indicator provides reliable trading opportunities.
2. Adjustable Parameters
- MACD Settings: Users can adjust the lengths of the fast and slow moving averages (default: 28 and 38 periods) and the signal smoothing (default: 9 periods) to tailor the indicator to different market conditions.
- SAR Settings: Users can adjust the start value (default: 0.01), increment (default: 0.01), and maximum value (default: 0.18) of the SAR to control sensitivity and responsiveness.
3. Visual Representation and Signals
- Color-Coded Histograms: The histogram shows the difference between the MACD and signal line and is color-coded to highlight the direction of the trend.
- Signal Labels: The indicator automatically adds "L" (Long) and "S" (Short) labels on the chart to show the current positions to traders.
4. Alert Settings
- Custom Alerts: Alerts can be set to notify traders when the MACD and SAR experience significant state changes, such as when the histogram switches from rising to falling or vice versa.
5. Toggle Display
- Display Mode: Users can toggle the display of the MACD_SAR oscillator and MACD to focus on the information most relevant to their trading strategy.
Application and Benefits
- Versatility: This indicator can be used in various market conditions and for different trading strategies, including trend following and reversal trading.
- Ease of Interpretation: The clear visual representation and automatic signals make it easier for traders to identify trading opportunities and track trends.
- Customizability: With numerous settings options, the indicator can be tailored to individual preferences and specific market conditions.
Conclusion
The "MACD with SAR Indicator" is a valuable tool for traders seeking precise and reliable signals to identify market trends and make profitable trading decisions. With its extensive customization options, powerful features, and the ability to toggle displays, this indicator provides excellent support for technical analysis.
By emphasizing the synergy between the MACD and SAR indicators, highlighting the default settings, and clarifying that the SAR is based on the MACD line and generates clear trend reversal signals through long and short labels, this revised description should help users understand the functionalities and advantages of your indicator while meeting TradingView's publication requirements.
Best regards Chervolino
10-2 Treasury Yield SpreadThe 10-2 Year Treasury Yield Spread is a crucial indicator in the financial realm. Here’s the lowdown:
What Is It?
The 10-2 Treasury Yield Spread represents the difference between the 10-year Treasury rate and the 2-year Treasury rate.
Essentially, it captures the gap between long-term and short-term interest rates.
Why Does It Matter?
A flattening yield curve occurs when the 10-2 spread approaches zero. This suggests that long-term and short-term rates are converging.
A negative 10-2 yield spread has historically been a red flag. It often precedes recessionary periods.
Conversely, a widening yield curve (positive spread) indicates optimism about future economic growth.
Gaussian Weighted Moving Average with Forecast [CHE]Presentation for TradingView: Gaussian Weighted Moving Average with Forecast
Introduction
Welcome to our presentation on the "Gaussian Weighted Moving Average with Forecast" (GWMA). This script, written in Pine Script™, offers an enhanced method for analyzing and predicting price movements on TradingView. The script combines Gaussian Weighted Moving Averages and polynomial regression to provide accurate and customizable forecasts.
Overview
Title: Gaussian Weighted Moving Average with Forecast
Author: chervolino
License: Mozilla Public License 2.0
Main Features
1. Gaussian Weighted Moving Average (GWMA):
- Calculates a weighted moving average using a Gaussian weighting function.
- Parameters for length and standard deviation allow fine-tuning of the smoothing effect.
2. Polynomial Regression with Forecast:
- Creates a model to predict future price movements.
- Adjustable length and degree of polynomial regression.
- Option to extrapolate predictions and visualize them.
3. Visual Representation:
- Uses lines and colors to depict trend changes.
- Customizable colors for upward and downward trends.
Input Parameters
Length: Length of the moving average (default: 50)
Standard Deviation: Standard deviation for Gaussian weighting (default: 10.0)
Width: Width of the plotted lines (default: 1)
Colors: Customizable colors for upward and downward trends
Forecast Length: Length of the forecast period (default: 20)
Extrapolate Length: Length of the extrapolation (default: 50)
Polynomial Degree: Degree of the polynomial regression (default: 3)
Lock Forecast: Option to lock and stabilize the forecast
Core Algorithms
1. Gaussian Weight Calculation:
gaussian_weight(x, std_dev) =>
1 / (std_dev * math.sqrt(2 * math.pi)) * math.exp(-0.5 * math.pow(x / std_dev, 2))
2. GWMA Calculation:
calculate_gwma(length, std_dev) =>
// Algorithm to calculate the weighted moving average
3. Initialize Lines for Polynomial Regression:
initialize_lines_array(extrapolate, length) =>
// Initialize array lines
4. Create Design Matrix for Polynomial Regression:
get_design_matrix(length, degree) =>
// Create the design matrix
5. Calculate and Plot Polynomial Regression:
calculate_polynomial_regression(src, length, degree, extrapolate, lines_arr, lock, width, upward_color, downward_color) =>
// Algorithm to calculate polynomial regression and plot the forecast
Combining Indicators: Originality and Usefulness
The combination of Gaussian Weighted Moving Average and polynomial regression provides traders with a robust tool for trend analysis and prediction. The GWMA smooths out price data while emphasizing recent prices, making it sensitive to short-term trends. Polynomial regression, on the other hand, offers a mathematical approach to model and forecast future prices based on historical data. By integrating these two methodologies, traders can achieve a more comprehensive view of market trends and potential future movements, making the tool highly valuable for decision-making.
Explanation for Users
Most TradingView users are not familiar with Pine Script, so a clear description is essential for understanding how to use the script.
Gaussian Weighted Moving Average (GWMA): This indicator calculates a moving average using Gaussian weights, which gives more importance to recent prices. The length and standard deviation parameters allow users to control the sensitivity and smoothness of the average.
Polynomial Regression with Forecast: This feature uses polynomial regression to model the price trend and predict future movements. Users can adjust the length of the historical data used, the degree of the polynomial, and the length of the forecast. The script plots these predictions, making it easier for traders to visualize potential future price paths.
Visualization of Results
1. GWMA Plotting:
plot(gaussian_ma_result, title="GWMA", color=line_color, linewidth=width_input)
2. Forecast Extrapolation:
plot(forecast_val, 'Extrapolation', offset=extrapolate_setting, linewidth=width_input, style=plot.style_circles)
Conclusion
The "Gaussian Weighted Moving Average with Forecast" script provides a powerful tool for analyzing and predicting price movements on TradingView. By combining Gaussian weighting and polynomial regression, it offers a precise and customizable method for trend analysis and forecasting.
Thank you for your attention! For any questions or further information, please feel free to reach out.
Stef's Money Supply IndicatorI have been fascinated by the growth in the Money Supply. Well, I think we ALL have been fascinated by this and the corresponding inflation that followed. That's why I created my Money Supply Indicator because I always wanted to chart and analyze my symbols based on the Money Supply. This indicator gives you that capability in a way that no other indicator in this field currently offers. Let me explain:
How does the indicator work?
Chart any symbol, turn on this indicator, and instantly it will factor in the M2 money supply on the asset's underlying price. Essentially, you are seeing the price of the asset normalized for the corresponding rise in the money supply. In some ways, this is a rather unique inflation-adjusted view of a symbol's price.
More importantly, you can compare and contrast the symbol's price adjusted for the rise in the Money Supply vs. the symbol's price without that adjustment by indexing all lines to 100. This is essential for understanding if the asset is at all-time highs, lows, or possibly undervalued or overvalued based on the current money supply situation.
Why does this matter?
This tool provides a deeper understanding of how the overall money supply influences the value of assets over time. By adjusting asset prices for changes in the money supply, traders can see the true value of assets relative to the amount of money in circulation.
What features can you access with this indicator?
The ability to normalize all lines to a starting point of 100 allows traders to compare the performance of the Money Supply, the symbol price, and the symbol price adjusted for the money supply all on one readable chart. This feature is particularly useful for spotting divergences and understanding relative performance over time with a rising or falling Money Supply.
What else can you do?
This is just version 1, and so I'll be adding more features rather soon, but there are two other important features in the settings menu including the following:
• Get the capability to quickly spot the highest and lowest points on the Money Supply adjusted price of your asset.
• Get the capability to change the gradient colors of the line when going up or down.
• Turn on the Brrrrrrr printer text as a reminder of our Fed Overlord Jerome Powell... lol
• Drag this indicator onto your main chart to combine it with your candlesticks or other charting techniques.
Stef's Money Supply Indicator! I look forward to hearing your feedback.
Buffett Valuation Indicator [TradeDots]The Buffett Valuation Indicator (also known as the Buffett Index or Buffett Ratio) measures the ratio of the total United States stock market to GDP.
This indicator helps determine whether the valuation changes in US stocks are justified by the GDP level.
For example, the ratio is calculated based on the standard deviations from the historical trend line. If the value exceeds +2 standard deviations, it suggests that the stock market is overvalued relative to GDP, and vice versa.
This "Buffett Valuation Indicator" is an enhanced version of the original indicator. It applies a Bollinger Band over the Valuation/GDP ratio to identify overvaluation and undervaluation across different timeframes, making it efficient for use in smaller timeframes, e.g. daily or even hourly intervals.
HOW DOES IT WORK
The Buffett Valuation Indicator measures the ratio between US stock valuation and US GDP, evaluating whether stock valuations are overvalued or undervalued in GDP terms.
In this version, the total valuation of the US stock market is represented by considering the top 10 market capitalization stocks.
Users can customize this list to include other stocks for a more balanced valuation ratio. Alternatively, users may use S&P 500 ETFs, such as SPY or VOO, as inputs.
The ratio is plotted as a line chart in a separate panel below the main chart. A Bollinger Band with a default 100-period and multiples of 1 and 2 is used to identify overvaluation and undervaluation.
For instance, if the ratio line moves above the +2 standard deviation line, it indicates that stocks are overvalued, signaling a potential selling opportunity.
APPLICATION
When the indicator is applied to a chart, we observe the ratio line's movements relative to the standard deviation lines. The further the line deviates from the standard deviation lines, the more extreme the overvaluation or undervaluation.
We look for buying opportunities when the Buffett Index moves below the first and second standard deviation lines and sell opportunities when it moves above these lines. This indicator is used as a microeconomic confirmation tool, in combination with other indicators, to achieve higher win-rate setups.
RISK DISCLAIMER
Trading entails substantial risk, and most day traders incur losses. All content, tools, scripts, articles, and education provided by TradeDots serve purely informational and educational purposes. Past performances are not definitive predictors of future results.
CRT Hourly/15m dividers and opensRange Separator is a unique tool designed to help traders visualize critical price levels and ranges on their charts. This script employs the innovative concepts of "Candles Are Ranges" and the "Power of 3 (PO3)" to enhance trading strategies by marking key time intervals and price levels.
What the Script Does:
Hourly Lines:
Automatically draws vertical lines at the start of each hour.
Provides an option to display only the current hour's line for a cleaner visual.
Allows customization of line color, width, and style.
15-Minute Lines:
Adds vertical lines at 15-minute intervals to highlight smaller time ranges.
Includes an option to draw horizontal lines at the 15-minute interval prices.
Offers customization for line color, width, and style.
Horizontal Lines:
Draws horizontal lines based on the opening, high, or low price of the selected timeframe.
Customizable options for line color, width, and style.
How the Script Works:
Candles Are Ranges: Each candle represents a price range (OHLC) on any timeframe. The script visually emphasizes these ranges, helping traders understand price action better.
Power of 3 (PO3): This concept divides price delivery into three stages: formation, turtle soup (stop hunting), and distribution/expansion. The script marks these intervals, aiding in identifying potential key levels for entries and exits.
How to Use the Script:
Adding the Script:
Apply the script to your chart and adjust the settings in the input menu.
Customize the appearance of hourly and 15-minute lines to suit your preference.
Analyzing the Chart:
Observe the hourly lines to determine higher timeframe biases.
Use 15-minute lines to identify more granular price movements.
Pay attention to horizontal lines that mark significant price levels based on your chosen criteria (open, high, low).
Trading Strategy:
Combine the script's visual aids with your understanding of the "Candles Are Ranges" and "Power of 3" concepts.
Use these visual cues to make informed decisions about potential entry and exit points.
What Makes it Original:
Integration of Candles Are Ranges and PO3 Concepts: Unlike traditional scripts that merely plot lines, this script uniquely integrates two powerful trading theories to provide a comprehensive view of price action.
Customizable Visual Aids: Offers extensive customization options for line colors, widths, and styles, allowing traders to tailor the script to their specific needs.
Enhanced Timeframe Analysis: By marking both hourly and 15-minute intervals, the script provides a detailed view of price ranges across multiple timeframes, enhancing the trader's ability to make informed decisions.
- Key script Parameters
Show Hourly Lines: Toggles the display of vertical lines marking each hour.
Hourly Lines Color: Sets the color of the hourly vertical lines.
Hourly Lines Width: Chooses the width of the hourly vertical lines (1, 2, or 3).
Hourly Lines Style: Selects the style of the hourly lines (Solid, Dashed, or Dotted).
Horizontal Line Color: Defines the color of the horizontal lines drawn at hourly intervals.
Horizontal Line Width: Determines the width of the horizontal lines (1, 2, or 3).
Horizontal Line Style: Sets the style of the horizontal lines (Solid, Dashed, or Dotted).
Horizontal Line Start Price: Specifies which price (Open, High, Low) the horizontal lines will start from.
Show Current Hour Only: Limits the display to only the current hour's horizontal line.
Show 15-Minute Lines: Toggles the display of vertical lines marking each 15-minute interval.
15-Minute Lines Color: Sets the color of the 15-minute vertical lines.
15-Minute Lines Width: Chooses the width of the 15-minute vertical lines (1, 2, or 3).
15-Minute Lines Style: Selects the style of the 15-minute lines (Solid, Dashed, or Dotted).
Show 15-Minute Horizontal Lines: Toggles the display of horizontal lines at 15-minute intervals.
15-Minute Horizontal Lines Color: Defines the color of the horizontal lines drawn at 15-minute intervals.
15-Minute Horizontal Lines Width: Determines the width of the horizontal lines (1, 2, or 3).
15-Minute Horizontal Lines Style: Sets the style of the horizontal lines (Solid, Dashed, or Dotted).
Important Notes:
- Credit to @Yazdanian and his basic "Hourly separators" indicator that plots a simple vertical line every hour which provided the idea for this version and expanded on
- This script is designed to complement your trading strategy by providing visual aids and should be used alongside other technical analysis tools.
It is not intended to issue buy or sell signals but to help you understand price ranges and potential key levels.
Disclaimer: The script is provided as-is, and the authors are not responsible for any trading losses incurred using this script. Always perform your own analysis and use proper risk management.
Multi-Timeframe Period Separator [CHE]Multi-Timeframe Period Separator
Introduction
- Purpose: This TradingView script is designed to help traders by automatically drawing period separators on the chart based on various timeframes.
- Benefits: Enhances chart readability, provides better visualization of time periods, and supports multiple timeframe types.
Features
1. Timeframe Selection:
- Auto Timeframe
- Multiplier
- Manual
2. Customization Options:
- Separator color
- Separator style
- Separator width
3. Display Options:
- Time period information box
- Customizable size and position of the info box
Code Breakdown
1. Timeframe Type Selection
- Options: Users can choose between "Auto Timeframe," "Multiplier," and "Manual." A multiplier can be set for the alternate resolution.
2. Resolution Calculation
- Automatic, Multiplier, and Manual Resolution Calculation: The resolution is calculated based on the selected timeframe type.
3. Automatic Timeframe Function
- Dynamic Timeframe Calculation: A function for automatically calculating the appropriate timeframe based on the current chart resolution.
4. Drawing the Separators
- Drawing Separators on the Chart: Separators are drawn based on the selected timeframe and the user's customization options.
5. Display of the Time Period
- Information Box Settings: Users can enable the display of an information box showing the current timeframe. The size, position, and colors of the box can be customized.
- Displaying the Time Period in the Information Box: If enabled, the information box shows the current time period.
Usage
1. Loading the Script: Add the script to your TradingView chart.
2. Setting Timeframe Type: Choose from Auto, Multiplier, or Manual.
3. Customizing Separators: Adjust the color, style, and width of the separators to your preference.
4. Displaying the Time Period: Enable the information box to show the current timeframe.
Conclusion
- Summary: This script provides a robust solution for traders who need clear visual separation of different time periods on their charts.
- Customization: Flexible options allow you to tailor the appearance and functionality to suit your trading style.
R-Squared Trend Strength and Direction [CHE] Introduction
TradingView is a web-based platform that allows traders and investors to conduct comprehensive technical analyses, develop trading strategies, and track market movements in real-time. One of the many features TradingView offers is the ability to create custom indicators using Pine Script. In this presentation, we will focus on the implementation and application of an R-Squared indicator for analyzing trend strength and direction, as well as using the T3 indicator for trend direction confirmation.
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What is R-Squared?
R-Squared (R²), also known as the coefficient of determination, is a statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable(s). In technical analysis, R-Squared is used to quantify the clarity of a trend. A higher R-Squared indicates a clearer trend, less affected by random price fluctuations.
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Pine Script: Implementing the R-Squared Indicator
Inputs:
- Source: The data source to be analyzed, such as the average of high and low prices.
- Period: The period length for calculating sums and R-Squared values.
Sum Calculations:
- Sum X and Sum XX: These sums relate to the indices of the selected period.
- Sum XY and Sum YY: These sums relate to the products of the indices and their respective price values.
- Sum Y: The sum of price values over the chosen period.
Q-Values Calculation:
- Q-values are used to calculate the R-Squared value, which indicates trend clarity.
Trend State:
- Based on the R-Squared value, a trend state is determined, indicating whether a clear trend is present. Specific threshold values are used to identify trend changes.
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Using the T3 Indicator
The T3 indicator is used exclusively for confirming the trend direction in this strategy. It helps verify the direction of the trend identified by the R-Squared indicator.
T3 Indicator Calculation:
- The T3 indicator uses a series of exponential smoothings to smooth price movements and provide a clearer view of the trend direction.
- The T3 indicator confirms the trend direction indicated by the R-Squared indicator.
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Functioning of the R-Squared and T3 Combination
1. Input Parameters:
- Define the data source and period length for calculating sums and R-Squared values.
2. Sum Calculations:
- Calculate various sums over the defined period needed to derive Q-values.
3. Q-Values Calculation:
- Derive Q1, Q2, and Q3 from the sums to calculate the R-Squared value.
4. Trend State:
- Use the R-Squared value to determine if a clear trend is present, utilizing threshold values to recognize trend changes.
5. Trend Direction Confirmation with T3:
- Calculate the T3 indicator to confirm the trend direction. The T3 is used solely for direction confirmation, not for clarity.
6. Long and Short Conditions:
- Define long and short entry conditions based on the combination of R-Squared and T3 indicators, and visualize them on the chart.
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Conclusion
The R-Squared indicator is a powerful tool for analyzing the clarity of a trend. By integrating it into TradingView using Pine Script, traders can make informed decisions and optimize their trading strategies. The T3 indicator is used exclusively in this strategy to confirm the trend direction, enhancing the accuracy of trading signals.
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Questions and Discussion
Are there any questions about the implementation or application of the R-Squared indicator in TradingView? How can we further improve this indicator or integrate it into existing strategies?
Best regards
Chervolino
Vlad Waves█ CONCEPT
Acceleration Line (Blue)
The Acceleration Line is calculated as the difference between the 8-period SMA and the 20-period SMA.
This line helps to identify the momentum and potential turning points in the market.
Signal Line (Red)
The Signal Line is an 8-period SMA of the Acceleration Line.
This line smooths out the Acceleration Line to generate clearer signals.
Long-Term Average (Green)
The Long-Term Average is a 200-period SMA of the Acceleration Line.
This line provides a broader context of the market trend, helping to distinguish between long-term and short-term movements.
█ SIGNALS
Buy Mode
A buy signal occurs when the Acceleration Line crosses above the Signal Line while below the Long-Term Average. This indicates a potential bullish reversal in the market.
When the Signal Line crosses the Acceleration Line above the Long-Term Average, consider placing a stop rather than reversing the position to protect gains from potential pullbacks.
Sell Mode
A sell signal occurs when the Acceleration Line crosses below the Signal Line while above the Long-Term Average. This indicates a potential bearish reversal in the market.
When the Signal Line crosses the Acceleration Line below the Long-Term Average, consider placing a stop rather than reversing the position to protect gains from potential pullbacks.
█ UTILITY
This indicator is not recommended for standalone buy or sell signals. Instead, it is designed to identify market cycles and turning points, aiding in the decision-making process.
Entry signals are most effective when they occur away from the Long-Term Average, as this helps to avoid sideways movements.
Use larger timeframes, such as daily or weekly charts, for better accuracy and reliability of the signals.
█ CREDITS
The idea for this indicator came from Fabio Figueiredo (Vlad).
Edufx's Power of ThreeIndicator Overview
Name: Edufx's Power of Three
Purpose:
To highlight the high and low price ranges of specific hourly candles on a chart.
To visualize these ranges using rectangles.
Features
Visibility Toggle:
Users can enable or disable the visibility of the rectangles highlighting the high and low price ranges of the specified candles.
Customizable Rectangle Length:
Users can adjust the length of the rectangles that extend from the specified candle's high and low prices.
Price Range Tracking:
The high and low prices of the specified candles are tracked and stored.
Rectangle Drawing:
Rectangles are drawn from 5 bars before the end of the specified hour, highlighting the high and low price ranges.
How It Works
Price Range Tracking:
During each specified hour, the high and low prices are updated with the highest and lowest prices observed.
Rectangle Drawing:
At the end of each specified hour, the high and low prices are used to draw rectangles extending 5 bars backward from the end of the hour.
Rectangles are color-coded (red, green, and blue) for easy identification.
Usage
This indicator is useful for traders who want to monitor and react to key price levels at specific times of the day.
The visual rectangles help in identifying potential trading opportunities based on price action relative to these key levels.
Example
If the price moves above the high of the specified candle but fails to close above it, a visual rectangle will highlight this price range.
Similarly, if the price moves below the low of the specified candle but fails to close below it, the rectangle will indicate this range.
This indicator provides visual aids to assist traders in making informed decisions based on the behavior of price at specific key levels.
Stocks Above 5-Day Average (FOMO)Overview
Inspired by Matt Carusos's FOMO indicator, this breadth indicator is designed to provide a visual representation of the percentage of stocks within major indices that are trading above their 5-day moving average.
Functionality
The indicator plots the percentage of stocks trading above their 5-day moving average for the following indices:
S&P 500
Nasdaq
Russell 2000
Dow Jones
All Markets (MMFD)
The indicator includes two horizontal lines:
Upper Threshold: Default at 85%
Lower Threshold: Default at 15%
These lines are used to identify potential overbought (above upper threshold) or oversold (below lower threshold) conditions.
Plot Shapes:
Small circles are plotted at the points where the percentage of stocks crosses the upper or lower thresholds, with colors matching the respective index.
Table:
The current percentage of stocks above the 5-day average for each index.
A warning sign (⚠️) is shown in the table if the percentage crosses the upper or lower threshold, regardless of whether the index plot is enabled or not.
Rafi's Trend Finder
This custom TradingView indicator measures the relative position of the current closing price within a specified lookback period, providing insights into overbought and oversold market conditions.
Key Features:
Period Input:
Users can define the lookback period for the calculation, with a default value of 250 periods.
Relative Position Calculation:
The indicator computes the difference between the current closing price and the lowest low over the lookback period.
It also calculates the difference between the highest high and the lowest low during the same period.
The resulting value is scaled to a range from 0 to 100.
Dynamic Levels:
Users can customize up to ten pairs of overbought and oversold levels.
Each pair consists of an upper level (default 90) and a lower level (default 10).
Horizontal lines are drawn at these levels on the chart for easy visual reference.
Color-Coded Plot:
The indicator’s plot color changes based on the calculated value’s position relative to the primary overbought and oversold levels:
Green if the value is above the primary upper level.
Red if the value is below the primary lower level.
Gray if the value is between the primary upper and lower levels.
Usage:
This indicator helps traders identify potential reversal points by highlighting when the market is potentially overbought or oversold. The customizable levels allow for fine-tuning based on different trading strategies or market conditions. The visual cues provided by the color-coded plot enhance the interpretability of the indicator, making it a valuable tool for technical analysis.
Risk Management Calculator with Fees and Take Profit [CHE]Risk Management Calculator with Fees and Take Profit
Welcome to the Risk Management Calculator with Fees and Take Profit script! This powerful tool is designed to help traders manage their risk effectively, calculate leverage, and set take profit targets. The script is inspired by and builds upon the ideas from the following TradingView script: ().
This script is inspired by and builds upon the ideas from the following TradingView script:
Features
1. Portfolio Size Input: Enter the size of your portfolio to accurately calculate your risk and leverage.
2. Max Loss Percent Input: Specify the maximum percentage of your portfolio that you are willing to risk on a single trade.
3. Max Leverage Input: Set the maximum leverage you are comfortable using.
4. Trading Fee Input: Include trading fees in your calculations to get a more realistic view of your potential losses and gains.
5. ATR Settings: Configure the ATR period and multiplier to calculate your stop loss and take profit levels.
6. RSI Settings: Adjust the RSI period for trend analysis.
How to Use
Portfolio Size
- Description: This is the total value of your trading account.
- Input: `portfolioSize`
- Default Value: 100
- Minimum Value: 0.001
Max Loss Percent
- Description: The maximum percentage of your portfolio you are willing to lose on a single trade.
- Input: `maxLossPercent`
- Default Value: 3%
- Range: 0.1% to 100%
Max Leverage
- Description: The maximum leverage you wish to use.
- Input: `maxLeverage`
- Default Value: 125
- Range: 1 to 125
Trading Fee
- Description: The fee percentage you pay per trade.
- Input: `feeRate`
- Default Value: 1%
- Range: 0% to 10%
ATR Settings
- ATR Period: Number of bars used to calculate the Average True Range.
- Input: `atrPeriod`
- Default Value: 5
- ATR Multiplier: Multiplier for ATR to set stop loss levels.
- Input: `atrMultiplier`
- Default Value: 2.0
Take Profit Multiplier
- Description: Multiplier for ATR to set take profit levels.
- Input: `takeProfitMultiplier`
- Default Value: 2.0
RSI Settings
- RSI Period: Period for the RSI calculation.
- Input: `rsiPeriod`
- Default Value: 14
Dashboard
The script includes a customizable dashboard that displays the following information:
- Portfolio Size
- Maximum Loss Amount
- Entry Price
- Stop Loss Price
- Stop Loss Percentage
- Calculated Leverage
- Order Value
- Order Quantity
- Trend Direction
- Adjusted Maximum Loss Percentage
- Take Profit Price
Dashboard Settings
- Location: Choose the position of the dashboard on the chart.
- Options: 'Top Right', 'Bottom Right', 'Top Left', 'Bottom Left'
- Size: Adjust the size of the dashboard text.
- Options: 'Tiny', 'Small', 'Normal', 'Large'
- Text/Frame Color: Set the color for the text and frame of the dashboard.
Underlying Principles and Assumptions
Leverage Calculation
The leverage calculation is fundamental to risk management in trading. It ensures that the risk per trade does not exceed a specified percentage of the portfolio. This calculation takes into account the potential loss from the entry price to the stop loss level, adjusted for trading fees. By dividing the maximum acceptable loss by the total potential loss (including fees), we derive a leverage that limits the exposure per trade. This approach helps traders avoid over-leveraging, which can lead to significant losses.
ATR and Stop Loss
The Average True Range (ATR) is used to set stop loss levels because it measures market volatility. A higher ATR indicates more volatility, which means wider stop losses are needed to avoid being prematurely stopped out by normal market fluctuations. By using an ATR multiplier, the stop loss is dynamically adjusted based on current market conditions, providing a more robust risk management strategy.
Take Profit Calculation
The take profit level is calculated as a multiple of the ATR, ensuring that it is set at a realistic level relative to market volatility. This method aims to capture significant price movements while avoiding the noise of smaller fluctuations. Setting take profit targets this way helps in locking in profits when the market moves favorably.
RSI for Trend Confirmation
The Relative Strength Index (RSI) is used to confirm the trend direction. An RSI above 50 typically indicates a bullish trend, while an RSI below 50 indicates a bearish trend. By aligning trades with the prevailing trend, the script increases the probability of successful trades. This trend confirmation helps in making informed decisions about leverage and position sizing.
Risk Color Coding
The script uses color coding to visually indicate the risk level and trend direction. Green indicates a favorable condition for long trades, red for short trades, and gray for neutral conditions. This intuitive color coding aids in quickly assessing the market conditions and making timely trading decisions.
Conclusion
This script aims to provide a comprehensive risk management tool for traders. By integrating portfolio size, leverage, fees, ATR, and RSI, it helps in making informed trading decisions. We hope you find this tool useful in your trading journey.
Happy Trading!
