Scalpius Trend & Decreasing Volatility

22 Mar 2021

Scalpius Trend & Decreasing Volatility


Identify trends and 'decreasing volatility' trends (strong trends)

Can be used on any market
Setup usually used for 3 timeframes e.g. 2 min, 5 min, 10 min


Contains 2 parts:
I) Trend Indicator
Trends can be defined in several ways,
this indicator defines a trend that uses statistally significant price behaviour that includes the use of the Bollinger Bands
II) Decreasing Volatility Indicator
Trends that are accompanied by decreasing volatility are statistically more likely to go further and longer,
this indicator shows you when 'Decreasing Volalitility Mode' is on and when it turns off using 'pivot highs' and Average True Range

Using this indicator you can filter your trades to 2 types of trades: trend trades and mean reversion trades

I) Trend indicator
-----------------------
Trend Mode ON:
1) A candle touching the Bollinger Band (default settings: length=20, standard deviation=2) (the Bollinger Candle)
2a) (uptrend) A follow-up candle with a higher high and a higher close than the Bollinger Candle
2b) (downtrend) A follow-up candle with a lower low and a lower close than the low of the Bollinger Candle

Examples Trend Mode ON:

Uptrend

Downtrend

Trend Mode OFF when:
1) Price touches the opposite Bollinger Band
2) 20 candles without new high or low
3a) (uptrend) price closes consecutively below 2 EMA's (8 EMA & 21 EMA), above and below again, without making new trend highs
3b) (downternd) price closes consecutively above 2 EMA's (8 EMA & 21 EMA), below and above again, without making new trend lows

Examples Trend Mode OFF:

Uptrend ends because of opposite Bollinger Band touch:

Uptrend ends because of 20 candles without new high:

Uptrend ends because of price consecutively close below, above, below EMA 8 and EMA 21:

Downtrend ends because of opposite Bollinger Band touch:

Downtrend ends because of 20 candles without new low:

Downtrend ends because of price consecutively close above, below, above EMA 8 and EMA 21:


II) Decreasing Volatility Indicator

Decreasing Volatility Mode ON:
1) Trend Mode must be ON
2) Highest or lowest close in the trend must happen on a DOWNTICK in ATR (Average True Range, default setting=14)

Decreasing Volatility Mode OFF:
1) New ATR high in the trend
2) Breaking the pattern of lower lows and lower highs in ATR, aka 'pivot high' or '2 pivot high'


Examples DV Mode ON:
In an uptrend:

In a downtremd:


Examples DV Mode OFF:
In an uptrend:

In a downtremd:


If trend stops, DV Mode stays ON until DV OFF signal comes