VN Stock Risk + RS Combined

22 Ara 2025

Description

This script is a cycle-based risk and relative strength indicator designed for the Vietnam stock market.

It combines:

Market Risk (long-term cycle & trend extension)

Relative Strength (RS) versus VN-Index

The goal is to identify stocks that are not overheated and are outperforming the broader market.

How it works

The indicator calculates:

Risk score (0–1) using:

Deviation from long-term cycle SMA

Price distance from 40-week MA

Medium-term flow (20W / 40W MA)

Relative Strength (RS):

Stock price divided by VN-Index price

Compared to RS 40-week MA

How to use

Timeframe: Weekly only

Green zone: Low risk + RS above MA → accumulate / hold

Yellow zone: Mixed signals → wait

Red zone: High risk or weak RS → avoid / reduce exposure

Rule of thumb:

Buy stocks with lower risk than VN-Index and RS above its 40-week MA.

Intended use

Mid-to-long-term investing

Portfolio allocation

Avoiding market tops

❌ Not for day trading or scalping

3 Oca

Sürüm Notları

Overview

VN Stock Risk + RS Combined is a cycle-based risk indicator designed to help investors identify:

Low-risk accumulation zones

Neutral trend continuation phases

High-risk market tops and distribution areas

The indicator combines:

Cycle deviation risk (distance from long-term trend)

Trend extension & acceleration

Relative Strength (RS) versus a benchmark index (VNINDEX)

It is optimized for weekly timeframes and medium- to long-term investors.

Indicator Components
1. Cycle Risk (Primary Signal)

Risk is calculated using three normalized factors:

Deviation from 200-week SMA
Measures how extended price is relative to the long-term cycle.

Distance from 40-week trend
Captures medium-term overextension.

Trend acceleration (20W / 40W SMA)
Detects late-cycle momentum surges.

These components are weighted, with cycle deviation having the highest influence.

2. Market Context (Index Risk)

The indicator also calculates market risk using the benchmark index (VNINDEX):

When stock risk < index risk, the stock is relatively safer.

When stock risk > index risk, risk is elevated even if price is rising.

This prevents buying aggressively when the entire market is overheated.

3. Relative Strength (RS)

Relative Strength compares the asset to the benchmark:

RS above its 40-week average → Asset is outperforming the market

RS below its 40-week average → Asset is underperforming

RS is used as a filter, not as a standalone buy signal.

Color & Zone Interpretation
🟢 Green – Low Risk (Accumulation Zone)

Conditions:

Risk is low

Stock risk < market risk

RS is strong (outperforming)

How to act:

Ideal zone for DCA (Dollar Cost Averaging)

Suitable for building core positions

High risk-reward asymmetry

🟡 Yellow – Neutral Risk (Trend Continuation)

Conditions:

Risk is rising but still below high-risk threshold

Trend remains intact

How to act:

Hold existing positions

Add selectively on pullbacks

Avoid aggressive leverage

🔴 Red – High Risk (Distribution / Top Zone)

Conditions:

Risk ≥ High Risk threshold (default 0.8)

Market is overextended relative to long-term cycle

How to act:

Stop DCA

Reduce position size

Avoid new long-term entries

Focus on capital preservation

⚠️ Red does not mean “price must crash immediately”
It signals poor long-term risk-reward.

Best Practices
Recommended Settings

Timeframe: Weekly (W)

Cycle SMA: 200 weeks

High Risk Threshold: 0.8

Low Risk Threshold: 0.3

Ideal Use Cases

Long-term investing

Cycle-based asset allocation

Portfolio risk management

Market top / bottom context (not timing exact highs/lows)

What This Indicator Is NOT

❌ Not a short-term trading indicator

❌ Not a precise top or bottom timer

❌ Not meant for intraday use

It is a risk thermometer, not a price prediction tool.

Key Principle

Buy when risk is low.
Reduce exposure when risk is high.
Let price fluctuate — manage risk, not emotions.