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Pivot Liquidity Sweep + SignalsCore Functionalities: Sweep Signals: The indicator identifies sweeps of liquidity by detecting when price exceeds recent pivot highs (swing highs) or pivot lows (swing lows) and then reverses direction. It draws attention to these scenarios by labeling them on the chart. For bullish sweep signals, the entry point is the closing price of the sweep candle, with the stop loss placed at the highest point between the sweep candle and the previous candle. For bearish sweeps, the entry point is similarly identified, with the stop loss being the lowest price of the sweep candle and the candle before it. The profit target is dynamically set to the low or high of the closest valid pivot depending on the direction of the trade. Rejection Signals: Rejection signals are identified when price attempts to break a pivot high or low but fails, causing a rejection. Bullish rejections involve price trying to break a pivot low but closing back above it, indicating potential for a bounce. Bearish rejections follow a similar pattern, with price attempting to break a pivot high but failing to hold above it, signaling a potential bearish move. High-Precision Intrabar Data: The "Intrabar Precision" feature allows the indicator to use lower timeframe data to accurately plot sweeps and rejections, providing traders with precise entry and exit points. The intrabar settings are particularly useful for traders looking for high-precision trades, such as scalpers who want to capture small yet consistent moves. ATR and Percentage-Based Filters: The indicator allows for customizable filters to ensure signals meet certain thresholds before being validated. Traders can use ATR (Average True Range) or percentage-based conditions to filter out low-quality signals, ensuring that the trades captured have enough volatility or price movement potential. Dashboard: The built-in dashboard provides a quick overview of trades executed using the indicator, displaying metrics such as the total number of sweep and rejection trades, their success rates, and total profit in points. The dashboard is color-coded for easy reading and offers traders insights into the overall performance of their strategy, helping with ongoing evaluation and optimization. Labeling and Alerts: Every time a sweep or rejection signal is detected, the indicator automatically labels the chart to help traders quickly identify the trading opportunities. Alerts are also generated for each trading signal, providing the trader with real-time notifications, which can be useful for those who are not constantly monitoring their charts. Stop Loss and Target Adaptation: The stop loss levels are adjusted dynamically based on the recent pivot points, and the target profit is derived from valid subsequent pivot levels to ensure realistic and efficient trade exits.
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mindyourbuisness tarafından
1
Custom Opening Price Levels (PO3)This indicator is designed to assist the trader in identifying the Power of Three through the opens of the candles. ------------------------- The PO3 is a concept introduced by ICT. First, you need to have a directional bias for the month or the specific candle in question. It should be of high time frame (HTF BIAS). At the open of the specific candle, the market will generate interest in the direction opposite to the HTF BIAS, accumulating positions. It will then manipulate the positions of less informed traders to generate the necessary liquidity to fill informed operators positions. Finally, positions are distributed in favor of the bias. ------------------------- The PO3 is a phenomenon that repeats across all timeframes. This indicator is highly customizable and allows the user to choose from a range of timeframes: 3 months, 1 month, 1 week, 1 day, and 3 hours. The indicator displays the last 3 opens for the selected period. ------------------------- The script is open-source, so feel free to add more timeframes or open levels if you have coding skills.
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NarcotikT tarafından
3
Market Structure Volume Distribution [LuxAlgo]The Market Structure Volume Distribution tool allows traders to identify the strength behind breaks of market structure at defined price ranges to measure de correlation of forces between bulls and bears visually and easily. 🔶 USAGE This tool has three main features: market structure highlighting, grid levels, and volume profile. Each feature is covered more in depth below: 🔹 Market Structure The basic unit of market structure is a swing point, the period of the swing point is user-defined, so traders can identify longer-term market structures. Price breaking a prior swing point will confirm the occurrence of a market structure. The tool will plot a line after a market structure is confirmed, by default the lines on bullish MS will be green (indicative of an uptrend), and red in case of bearish MS (indicative of a downtrend). 🔹 Grid Levels The Grid visually divides the price range contained inside the tool execution window, into equal size rows, the number of rows is user-defined so users can divide the full price range up to 100 rows. The main objective of this feature is to help identify the execution window and the limits of each row in the volume profile so traders can know in a simple look what BoMS belongs to each row. There is however another use for the grid, by dividing the range into equal-sized parts, this feature provides automatic support and resistance levels as good as any other. Grid provides a visual help to know what our execution window is and to associate MS with their rows in the profile. It can provide S/R levels too. 🔹 Volume Profile The volume profile feature shows in a visually easy way the volume behind each MS aggregated by rows and divided into buy and sell volume to spot the differences in a simple look. This tool allows users to spot the liquidity associated with the event of a market structure in a specific price range, allowing users to know which price areas where associated with the most trading activity during the occurrence of a market structutre. 🔶 SETTINGS 🔹 Data Gathering Execute on all visible range: Activate this to use all visible bars on the calculations. This disables the use of the next parameter "Execute on the last N bars". Default false. Execute on the last N bars: Use last N bars on the calculations. To use this parameter "Execute on all visible range" must be disabled. Values from 20 to 5000, default 500. Pivot Length: How many bars will be used to confirm a pivot. The bigger this parameter is the fewer breaks of structure will detect. Values from 1, default 2 🔹 Profile Profile Rows: Number of rows in the volume profile. Values from 2 to 100, default 10. Profile Width: Maximum width of the volume profile. Values from 25 to 500, default 200. Profile Mode: How the volume will be displayed on each row. "TOTAL VOLUME" will aggregate buy & sell volume per row, "BUY&SELL VOLUME" will separate the buy volume from the sell volume on each row. Default BUY&SELL VOLUME. 🔹 Style Buy Color: This is the color for the buy volume on the profile when the "BUY&SELL VOLUME" mode is activated. Default green. Sell Color: This is the color for the sell volume on the profile when the "BUY&SELL VOLUME" mode is activated. Default red. Show dotted grid levels: Show dotted inner grid levels. Default true.
Pine Script® göstergesi
LuxAlgo tarafından
19
Dynamic Liquidity Map [Kioseff Trading]Hello! Just a quick/fun project here: "Dynamic Heatmap". This script draws a volume delta or open interest delta heatmap for the asset on your chart. The adjective "Dynamic" is used for two reasons (: 1: Self-Adjusting Lower Timeframe Data The script requests ~10 lower timeframe volume and open interest data sets. When using the fixed range feature the script will, beginning at the start time, check the ~10 requested lower timeframes to see which of the lower timeframes has available data. The script will always use the lowest timeframe available during the calculation period. As time continues, the script will continue to check if new lower timeframe data (lower than the currently used lowest timeframe) is available. This process repeats until bar time is close enough to the current time that 1-minute data can be retrieved. The image above exemplifies the process. Incrementally lower timeframe data will be used as it becomes available. 1: Fixed range capabilities The script features a "fixed range" tool, where you can manually set a start time (or drag & drop a bar on the chart) to determine the interval the heatmap covers. From the start date, the script will calculate the calculate the sub-intervals necessary to draw a rows x columns heatmap. Consequently, setting the start time further back will draw a heat map with larger rows x columns, whereas, a start time closer to the current bar time will draw a more "precise" heatmap with smaller rows x columns. Additionally, the heatmap can be calculated using open interest data. The image above shows the heatmap displaying open interest delta. The image above shows alternative settings for the heatmap. Delta values have been hidden alongside grid border colors. These settings can be replicated to achieve a more "traditional" feel for the heatmap. Thanks for checking this out!
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KioseffTrading tarafından
17
HTF Liquidity Dashboard [TFO]The purpose of this indicator is to server as a multi-symbol scanner that indicates when user-defined symbols have exceeded their previous Day/Week/Month highs and lows. By default, the dashboard will use a compact view where the green ✔ means that price has swept and is currently exceeding the level of interest, the red ❌ implies that price swept the level but reversed back into the original range, and - indicates that the level hasn't been reached. However, the dashboard text can be toggled to show the numerical values of the highs and lows instead of these compact strings, as shown in the following image. These levels may be shown and customized on the current chart as well via the Show Levels option. By default, levels from the selected timeframes will initially be plotted as black, and will change to red once traded through. Users can optionally increase the Session Limit parameter to show more than one previous high/low on their chart, for each selected timeframe. Optionally, we can also plot labels to show when any of the user-defined symbols have exceeded their respective highs and lows, for any of the selected timeframes. Alerts can be created for these events as well; simply select the desired symbols and timeframes, create a new alert using this indicator, and you should be alerted when highs and lows are traded through. Note: if you encounter any issues with duplicate alerts, try deleting the alert, navigating to a lower timeframe such as the 1m, and making a new alert.
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tradeforopp tarafından
26
Nexus Blast Trading Strategy [Kaspricci]Nexus Blast Trading Strategy - Kaspricci This indicator shows the different sessions during the day (London session, New York AM session, New York PM session and Asian session) by adding vertical lines and draws horizontal lines for the high and low during each session. Furthermore those lines turn red once the price has taken this high or low. Blue lines indicate liquidity not yet taken. On top the indicator draws boxes of different color to indicate bullish and bearish Fair Value Gaps (FVG). Happy to receive your feedback. Please leave a comment for bugs as well as ideas for improvement. General Settings Time Zone - used for marking sessions and end of day. Sessions Sessions - start and end time for each session based on set time zone Number of Days back - for how many days in the past the startegy will draw strategy highs and lows. Theres is a maximum of 50 days defined. FVG Settings Threshold in Ticks - you can hide very small FVGs by increasing this threshold FVG Colors - colors used for the bearish and bullish FVG box This script is for educational purposes only! It is not meant to be a financial advice. PS: The former strategy script was removed by TV, as it would violate several rules according to them.
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Best-Algo-Trader tarafından
26
Market Structure and Liquidity IndicatorThis indicator tracks the market structure by identifying the highest high and lowest low. It then calculates the area of interest by taking the average of these levels. Additionally, it calculates liquidity by dividing the volume by the range between the highest high and lowest low. Please note that this is a basic example, and you can modify and enhance it according to your specific requirements and trading strategy. Remember to thoroughly backtest and validate any trading strategy or indicator before using it in live trading.
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slycustoms tarafından
1
ICT Index Futures Session LinesICT Index Futures Session Lines Description: The script is based on one of ICT's concepts on trading Index Futures. The script lays out the daily range from an intraday basis. Range: 00:00 - New York Midnight 08:30 – New York Open (News events come out) 12:00/13:00 - New York Lunch (No trade time period) 13:30 - (Algorithm) 16:30 - Close * The open, high and low lines are plotted from 00:00 to 08:30 How To Use: You will need to check the daily bias. Prior to 8:30 you are to look for previous swing points where liquidity may exist. During the open you want to see if a high or low is taken out, and then wait for an energetic break/displacement for a potential FVG/imbalance retracement entry. Strategy is for LTF (1 to 15m) Default time zone is set to America/New_York (UTC New York), so lines will be plotted correctly regardless of user’s local UTC chart setting.
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geneclash tarafından
6
Ticker SummaryTicker Summary provides at-a-glance summary information about a ticker near the current bar on the chart: P/E ratio Fwd P/E ratio PEG ratio Floating shares vs. total shares outstanding % of trading volume that was short over the last 3 days Average True Range (ATR) over last 14 days There are a few less common items of information: How many ATR multiples the ATR is extended over the last 10 bars. This gives an idea of how far the stock is currently extended. "R-frequency", explained below. An optional "ATR Reticule" is shown near the price. This is useful for traders that use ATR as a guideline for price targets and stop losses. On the left is the # of ATRs the stock is currently above the session open. On the right is the # of ATRs the stock is extended above the 10-bar moving average. R-frequency: a measure of liquidity relevant to your own trading size. It is the frequency at which 1-R of your trading account is traded for a stock. Formula: (1-R worth of shares) / (average dollar value traded per second), where: "1-R worth of shares" is how many shares you would buy for a stop loss of -1 ATR, with max risk dollar value based on the Balance and Max Risk % indicator options. "Average dollar value traded per second" is the 14-day average of (avg(high, low and close) * daily volume) R-frequency of a second or less is very liquid. If the value is higher (for example, over 60 seconds) the stock is less liquid and you may have some trouble filling limit orders quickly.
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apxsfo tarafından
2
Volumetric colored candles with matching pivot point linesCandles are split into 10 categories based on their volume, and can be changed in the options. By default and in the images, white is very high volume, reds are high volume, yellows are medium volume, greens are low and dark-grey is very low. Adjustments for scale are included in the options. The Magnitude option is a 10x multiplier, so 1=10, 2=100, 3=1000, etc., up to 9. There is also a Multiplier selection option where 1=1, 2=2, 3=3, 4=4, etc. To attenuate for a given chart, these multipliers will need to be changed. In general, all white means you need to increase the Magnitude and all dark-grey means you need to decrease the magnitude. Somewhere between those two, the Multiplier can be used for further calibration. All this color coating is relational, like a spectrum. As you adjust you will see them maintaining their proportions as the candles switch color (ex. green become yellow while yellow becomes red). I have also included pivot lines that follow the same logic for color coding. Two options exist for adjusting the pivot high and pivot low points respectively. They do not always correspond to the exact color of the candle producing them, but they should be a rough average (ie. red and green bars making yellow lines). They make for good indicators of how much liquidity may be at a certain support/resistance level. The lines can also be turned off altogether. If your candles aren't looking right, go to settings of both regular candles and heikin-ashi, and uncheck both border and wick. I still have some code to clean up and I plan on expanding upon this study. If you like my work consider tipping!
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mellowmichellehe tarafından
14
TQ's Support & Resistance(My goal creating this indicator): Provide a way to categorize and label key structures on multiple different levels so I can create a plan based on those observable facts. The Underlying Concept / What is Momentum? Momentum indicates transaction pressure. If the algorithm detects price is going up, that would be considered positive momentum. If the algorithm detects price is going down negative momentum would be detected. The Momentum shown is derived from a price action pattern. Unlike my previous Support & Resistance indicator that used Super Trend, this indicator uses a unique pattern I created. On the first bar bearish momentum is detected a resistance Level is made at the highest point of the previous bullish condition. On the first bar bullish momentum is detected a support Level is made at the lowest point of the previous bearish condition. This happens on 5 different Momentum Levels, (short-term to long-term). I currently use this pattern to trade so the source code is protected. What is Severity? Severity is How we differentiate the importance of different Highs and Lows. If Momentum is detected on a higher level the Supply or Demand Level is updated. The Color and Size representing that Level will be shown. Demand and Supply Levels made by higher levels are more SEVERE than a demand level made by a lower level. Technical Inputs - to ensure the correct calculation of Support and Resistance levels change BAR_INDEX. BAR_INDEX creates a buffer at the start of the chart. For example: If you set BAR_INDEX to 300. The script will wait for 300 bars to elapse on the current chart before running. This allows the script more time to gather data. Which is needed in order for our dynamic lookback length to never return an error (Dynamic lookback length can't be negative or zero). The lower the timeframe the greater the number of bars need. For Example, if I open up a 1min chart I would enter 5000 as my BAR_INDEX since that will provide enough data to ensure the correct calculation of Support and Resistance levels. If I was on a daily chart, I would enter a lower number such as 800. Don't be afraid to play around with this. - Toggle options (Close) or (High & Low) creates Support and Resistance Levels using the Lowest close and Highest close or using the Lowest low and Highest high. Level Inputs - The indicator has 5 Different Levels indicating SEVEREITY of a Supply and Demand Levels. The higher the Level the more SEVERE the Level. Display Inputs - You have the option to customize the Length, Width, Line Style, and Colors of all 5 different - This indicator includes a Trend Chart. To Easily verify the current trend of any displayed by this indicator toggle on Chart On/Off. You also get the option to change the Chart Position and the size of the Trend Chart How Trend Is being Determined? (Close > Current Supply Level) if this statement is true technically price made a HH, so the trend is bullish. (Close < Current Demand Level) if this statement is true technically price made a LL, so the trend is bearish. - Fully customize how you display Market Structure on different levels. Line Length, Line Width, Line Style, and Line color can all be customized. How it can be used? (Examples of Different ways you can use this indicator): Easily categorize the severity of each and every Supply or Demand Level in the market (The higher Level the stronger the level) : Quickly Determine the trend of any Level. : Get a consistent view of a market and how different Levels are behaving but just use one chart. : Take the discretion from hand drawing support and resistance lines out of your trading. : Find and categorize strong levels for potential breakouts. : Trend Analysis, use Levels to create a narrative based on observable facts from these Levels. : Different Targets to take money off the table. : Use Severity to differentiate between different trend line setups. : Find Great places to move your stop loss too.
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Who7is7Like7God tarafından
3
Visible Range Support and Resistance [AlgoAlpha]🌟 Introducing the Visible Range Support and Resistance 🌟 Discover key support and resistance levels with the innovative "Visible Range Support and Resistance" indicator by AlgoAlpha! 🚀📈 This advanced tool dynamically identifies significant price zones based on the visible range of your chart, providing traders with crucial insights for making informed decisions. Key Features: Dynamic support and resistance levels based on visible chart range 📏 User-defined resolution for tailored analysis 🎯 Clear visual representation of significant key zones 🖼️ Easy integration with any trading strategy 💼 How to Use: 🛠 Add the Indicator : Add the indicator to favourites. Adjust settings like resolution and horizontal extension to suit your trading style. 📊 Market Analysis : Identify key support and resistance zones based on the highlighted areas. These zones indicate significant price levels where the market may react. How it Works: The indicator segments the price range into user-defined resolutions, analyzing the highest and lowest points to establish boundaries. It calculates the frequency of price action within these segments, highlighting key levels where price movements are least concentrated (areas where price tends to pivot). Customizable settings like resolution and horizontal extension allow for tailored analysis, while the intuitive visual representation makes it easy to spot potential support and resistance zones directly on your chart. By leveraging this indicator, you can gain deeper insights into market dynamics and improve your trading strategy with data driven support and resistance analysis. Happy trading! 💹✨
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AlgoAlpha tarafından
5
Liquidity Levels [LuxAlgo]The Peak Activity Levels indicator displays support and resistance levels from prices accompanied by significant volume. The indicator includes a histogram returning the frequency of closing prices falling between two parallel levels, each bin shows the number of bullish candles within the levels. 1. Settings Length: Lookback for the detection of volume peaks. Number Of Levels: Determines the number of levels to display. Levels Color Mode: Determines how the levels should be colored. "Relative" will color the levels based on their location relative to the current price. "Random" will apply a random color to each level. "Fixed" will use a single color for each level. Levels Style: Style of the displayed levels. Styles include solid, dashed, and dotted. 1.1 Histogram Show Histogram: Determines whether to display the histogram or not. Histogram Window: Lookback period of the histogram calculation. Bins Colors: Control the color of the histogram bins. 2. Usage The indicator can be used to display ready-to-use support and resistance. These are constructed from peaks in volume. When a peak occurs, we take the price where this peak occurred and use it as the value for our level. If one of the levels was previously tested, we can hypothesize that the level might be used as support/resistance in the future. Additional analysis using volume can be done in order to confirm a potential bounce. The histogram can return various information to the user. It can show if the price stayed within two levels for a long time and if the price within two levels was mostly made of bullish or bearish candles. In the chart above, we can see that over the most recent 200 bars (determined by Histogram Window) 68 closing prices fall between levels A and B, with 27 bars being bullish. Additionally, the width of a bin and its length can sometimes give information about the volatility of a specific price variation. If a bin is very wide but short (a low number of closing prices fallen within the levels) then we can conclude a most of the movement was done on a short amount of time.
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LuxAlgo tarafından
26
RSI Analysis with Statistical Summary Scientific Analysis of the Script "RSI Analysis with Statistical Summary" Introduction I observed that there are outliers in the price movement liquidity, and I wanted to understand the RSI value at those points and whether there are any notable patterns. I aimed to analyze this statistically, and this script is the result. Explanation of Key Terms 1. Outliers in Price Movement Liquidity: An outlier is a data point that significantly deviates from other values. In this context, an outlier refers to an unusually high or low liquidity of price movement, which is the ratio of trading volume to the price difference between the open and close prices. These outliers can signal important market changes or unusual trading activities. 2. RSI (Relative Strength Index): The RSI is a technical indicator that measures the speed and change of price movements. It ranges from 0 to 100 and helps identify overbought or oversold conditions of a trading instrument. An RSI value above 70 indicates an overbought condition, while a value below 30 suggests an oversold condition. 3. Mean: The mean is a measure of the average of a dataset. It is calculated by dividing the sum of all values by the number of values. In this script, the mean of the RSI values is calculated to provide a central tendency of the RSI distribution. 4. Standard Deviation (stdev): The standard deviation is a measure of the dispersion or variation of a dataset. It shows how much the values deviate from the mean. A high standard deviation indicates that the values are widely spread, while a low standard deviation indicates that the values are close to the mean. 5. 68% Confidence Interval: A confidence interval indicates the range within which a certain percentage of values of a dataset lies. The 68% confidence interval corresponds to a range of plus/minus one standard deviation around the mean. It indicates that about 68% of the data points lie within this range, providing insight into the distribution of values. Overview This Pine Script™, written in Pine version 5, is designed to analyze the Relative Strength Index (RSI) of a stock or other trading instrument and create statistical summaries of the distribution of RSI values. The script identifies outliers in price movement liquidity and uses this information to calculate the frequency of RSI values. At the end, it displays a statistical summary in the form of a table. Structure and Functionality of the Script 1. Input Parameters - `rsi_len`: An integer input parameter that defines the length of the RSI (default: 14). - `outlierThreshold`: An integer input parameter that defines the length of the outlier threshold (default: 10). 2. Calculating Price Movement Liquidity - `priceMovementLiquidity`: The volume is divided by the absolute difference between the close and open prices to calculate the liquidity of the price movement. 3. Determining the Boundary for Liquidity and Identifying Outliers - `liquidityBoundary`: The boundary is calculated using the Exponential Moving Average (EMA) of the price movement liquidity and its standard deviation. - `outlier`: A boolean value that indicates whether the price movement liquidity exceeds the set boundary. 4. Calculating the RSI - `rsi`: The RSI is calculated with a period length of 14, using various moving averages (e.g., SMA, EMA) depending on the settings. 5. Storing and Limiting RSI Values - An array `rsiFrequency` stores the frequency of RSI values from 0 to 100. - The function `f_limit_rsi` limits the RSI values between 0 and 100. 6. Updating RSI Frequency on Outlier Occurrence - On an outlier occurrence, the limited and rounded RSI value is updated in the `rsiFrequency` array. 7. Statistical Summary - Various variables (`mostFrequentRsi`, `leastFrequentRsi`, `maxCount`, `minCount`, `sum`, `sumSq`, `count`, `upper_interval`, `lower_interval`) are initialized to perform statistical analysis. - At the last bar (`bar_index == last_bar_index`), a loop is run to determine the most and least frequent RSI values and their frequencies. Sum and sum of squares of RSI values are also updated for calculating mean and standard deviation. - The mean (`mean`) and standard deviation (`stddev`) are calculated. Additionally, a 68% confidence interval is determined. 8. Creating a Table for Result Display - A table `resultsTable` is created and filled with the results of the statistical analysis. The table includes the most and least frequent RSI values, the standard deviation, and the 68% confidence interval. 9. Graphical Representation - The script draws horizontal lines and fills to indicate overbought and oversold regions of the RSI. Interpretation of the Results The script provides a detailed analysis of RSI values based on specific liquidity outliers. By calculating the most and least frequent RSI values, standard deviation, and confidence interval, it offers a comprehensive statistical summary that can help traders identify patterns and anomalies in the RSI. This can be particularly useful for identifying overbought or oversold conditions of a trading instrument and making informed trading decisions. Critical Evaluation 1. Robustness of Outlier Identification: The method of identifying outliers is solely based on the liquidity of price movement. It would be interesting to examine whether other methods or additional criteria for outlier identification would lead to similar or improved results. 2. Flexibility of RSI Settings: The ability to select various moving averages and period lengths for the RSI enhances the adaptability of the script, allowing users to tailor it to their specific trading strategies. 3. Visualization of Results: While the tabular representation is useful, additional graphical visualizations, such as histograms of RSI distribution, could further facilitate the interpretation of the results. In conclusion, this script provides a solid foundation for analyzing RSI values by considering liquidity outliers and enables detailed statistical evaluation that can be beneficial for various trading strategies.
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chervolino tarafından
3
Supertrend Advance Pullback StrategyHandbook for the Supertrend Advance Strategy 1. Introduction Purpose of the Handbook: The main purpose of this handbook is to serve as a comprehensive guide for traders and investors who are looking to explore and harness the potential of the Supertrend Advance Strategy. In the rapidly changing financial market, having the right tools and strategies at one's disposal is crucial. Whether you're a beginner hoping to dive into the world of trading or a seasoned investor aiming to optimize and diversify your portfolio, this handbook offers the insights and methodologies you need. By the end of this guide, readers should have a clear understanding of how the Supertrend Advance Strategy works, its benefits, potential pitfalls, and practical application in various trading scenarios. Overview of the Supertrend Advance Pullback Strategy: At its core, the Supertrend Advance Strategy is an evolution of the popular Supertrend Indicator. Designed to generate buy and sell signals in trending markets, the Supertrend Indicator has been a favorite tool for many traders around the world. The Advance Strategy, however, builds upon this foundation by introducing enhanced mechanisms, filters, and methodologies to increase precision and reduce false signals. 1. Basic Concept: The Supertrend Advance Strategy relies on a combination of price action and volatility to determine the potential trend direction. By assessing the average true range (ATR) in conjunction with specific price points, this strategy aims to highlight the potential starting and ending points of market trends. 2. Methodology: Unlike the traditional Supertrend Indicator, which primarily focuses on closing prices and ATR, the Advance Strategy integrates other critical market variables, such as volume, momentum oscillators, and perhaps even fundamental data, to validate its signals. This multidimensional approach ensures that the generated signals are more reliable and are less prone to market noise. 3. Benefits: One of the main benefits of the Supertrend Advance Strategy is its ability to filter out false breakouts and minor price fluctuations, which can often lead to premature exits or entries in the market. By waiting for a confluence of factors to align, traders using this advanced strategy can increase their chances of entering or exiting trades at optimal points. 4. Practical Applications: The Supertrend Advance Strategy can be applied across various timeframes, from intraday trading to swing trading and even long-term investment scenarios. Furthermore, its flexible nature allows it to be tailored to different asset classes, be it stocks, commodities, forex, or cryptocurrencies. In the subsequent sections of this handbook, we will delve deeper into the intricacies of this strategy, offering step-by-step guidelines on its application, case studies, and tips for maximizing its efficacy in the volatile world of trading. As you journey through this handbook, we encourage you to approach the Supertrend Advance Strategy with an open mind, testing and tweaking it as per your personal trading style and risk appetite. The ultimate goal is not just to provide you with a new tool but to empower you with a holistic strategy that can enhance your trading endeavors. 2. Getting Started Navigating the financial markets can be a daunting task without the right tools. This section is dedicated to helping you set up the Supertrend Advance Strategy on one of the most popular charting platforms, TradingView. By following the steps below, you'll be able to integrate this strategy into your charts and start leveraging its insights in no time. Setting up on TradingView: TradingView is a web-based platform that offers a wide range of charting tools, social networking, and market data. Before you can apply the Supertrend Advance Strategy, you'll first need a TradingView account. If you haven't set one up yet, here's how: 1. Account Creation: • Visit TradingView's official website. • Click on the "Join for free" or "Sign up" button. • Follow the registration process, providing the necessary details and setting up your login credentials. 2. Navigating the Dashboard: • Once logged in, you'll be taken to your dashboard. Here, you'll see a variety of tools, including watchlists, alerts, and the main charting window. • To begin charting, type in the name or ticker of the asset you're interested in the search bar at the top. 3. Configuring Chart Settings: • Before integrating the Supertrend Advance Strategy, familiarize yourself with the chart settings. This can be accessed by clicking the 'gear' icon on the top right of the chart window. • Adjust the chart type, time intervals, and other display settings to your preference. Integrating the Strategy into a Chart: Now that you're set up on TradingView, it's time to integrate the Supertrend Advance Strategy. 1. Accessing the Pine Script Editor: • Located at the top-center of your screen, you'll find the "Pine Editor" tab. Click on it. • This is where custom strategies and indicators are scripted or imported. 2. Loading the Supertrend Advance Strategy Script: • Depending on whether you have the script or need to find it, there are two paths: • If you have the script: Copy the Supertrend Advance Strategy script, and then paste it into the Pine Editor. • If searching for the script: Click on the “Indicators” icon (looks like a flame) at the top of your screen, and then type “Supertrend Advance Strategy” in the search bar. If available, it will show up in the list. Simply click to add it to your chart. 3. Applying the Strategy: • After pasting or selecting the Supertrend Advance Strategy in the Pine Editor, click on the “Add to Chart” button located at the top of the editor. This will overlay the strategy onto your main chart window. 4. Configuring Strategy Settings: • Once the strategy is on your chart, you'll notice a small settings ('gear') icon next to its name in the top-left of the chart window. Click on this to access settings. • Here, you can adjust various parameters of the Supertrend Advance Strategy to better fit your trading style or the specific asset you're analyzing. 5. Interpreting Signals: • With the strategy applied, you'll now see buy/sell signals represented on your chart. Take time to familiarize yourself with how these look and behave over various timeframes and market conditions. 3. Strategy Overview What is the Supertrend Advance Strategy? The Supertrend Advance Strategy is a refined version of the classic Supertrend Indicator, which was developed to aid traders in spotting market trends. The strategy utilizes a combination of data points, including average true range (ATR) and price momentum, to generate buy and sell signals. In essence, the Supertrend Advance Strategy can be visualized as a line that moves with the price. When the price is above the Supertrend line, it indicates an uptrend and suggests a potential buy position. Conversely, when the price is below the Supertrend line, it hints at a downtrend, suggesting a potential selling point. Strategy Goals and Objectives: 1. Trend Identification: At the core of the Supertrend Advance Strategy is the goal to efficiently and consistently identify prevailing market trends. By recognizing these trends, traders can position themselves to capitalize on price movements in their favor. 2. Reducing Noise: Financial markets are often inundated with 'noise' - short-term price fluctuations that can mislead traders. The Supertrend Advance Strategy aims to filter out this noise, allowing for clearer decision-making. 3. Enhancing Risk Management: With clear buy and sell signals, traders can set more precise stop-loss and take-profit points. This leads to better risk management and potentially improved profitability. 4. Versatility: While primarily used for trend identification, the strategy can be integrated with other technical tools and indicators to create a comprehensive trading system. Type of Assets/Markets to Apply the Strategy: 1. Equities: The Supertrend Advance Strategy is highly popular among stock traders. Its ability to capture long-term trends makes it particularly useful for those trading individual stocks or equity indices. 2. Forex: Given the 24-hour nature of the Forex market and its propensity for trends, the Supertrend Advance Strategy is a valuable tool for currency traders. 3. Commodities: Whether it's gold, oil, or agricultural products, commodities often move in extended trends. The strategy can help in identifying and capitalizing on these movements. 4. Cryptocurrencies: The volatile nature of cryptocurrencies means they can have pronounced trends. The Supertrend Advance Strategy can aid crypto traders in navigating these often tumultuous waters. 5. Futures & Options: Traders and investors in derivative markets can utilize the strategy to make more informed decisions about contract entries and exits. It's important to note that while the Supertrend Advance Strategy can be applied across various assets and markets, its effectiveness might vary based on market conditions, timeframe, and the specific characteristics of the asset in question. As always, it's recommended to use the strategy in conjunction with other analytical tools and to backtest its effectiveness in specific scenarios before committing to trades. 4. Input Settings Understanding and correctly configuring input settings is crucial for optimizing the Supertrend Advance Strategy for any specific market or asset. These settings, when tweaked correctly, can drastically impact the strategy's performance. Grouping Inputs: Before diving into individual input settings, it's important to group similar inputs. Grouping can simplify the user interface, making it easier to adjust settings related to a specific function or indicator. Strategy Choice: This input allows traders to select from various strategies that incorporate the Supertrend indicator. Options might include "Supertrend with RSI," "Supertrend with MACD," etc. By choosing a strategy, the associated input settings for that strategy become available. Supertrend Settings: 1. Multiplier: Typically, a default value of 3 is used. This multiplier is used in the ATR calculation. Increasing it makes the Supertrend line further from prices, while decreasing it brings the line closer. 2. Period: The number of bars used in the ATR calculation. A common default is 7. EMA Settings (Exponential Moving Average): 1. Period: Defines the number of previous bars used to calculate the EMA. Common periods are 9, 21, 50, and 200. 2. Source: Allows traders to choose which price (Open, Close, High, Low) to use in the EMA calculation. RSI Settings (Relative Strength Index): 1. Length: Determines how many periods are used for RSI calculation. The standard setting is 14. 2. Overbought Level: The threshold at which the asset is considered overbought, typically set at 70. 3. Oversold Level: The threshold at which the asset is considered oversold, often at 30. MACD Settings (Moving Average Convergence Divergence): 1. Short Period: The shorter EMA, usually set to 12. 2. Long Period: The longer EMA, commonly set to 26. 3. Signal Period: Defines the EMA of the MACD line, typically set at 9. CCI Settings (Commodity Channel Index): 1. Period: The number of bars used in the CCI calculation, often set to 20. 2. Overbought Level: Typically set at +100, denoting overbought conditions. 3. Oversold Level: Usually set at -100, indicating oversold conditions. SL/TP Settings (Stop Loss/Take Profit): 1. SL Multiplier: Defines the multiplier for the average true range (ATR) to set the stop loss. 2. TP Multiplier: Defines the multiplier for the average true range (ATR) to set the take profit. Filtering Conditions: This section allows traders to set conditions to filter out certain signals. For example, one might only want to take buy signals when the RSI is below 30, ensuring they buy during oversold conditions. Trade Direction and Backtest Period: 1. Trade Direction: Allows traders to specify whether they want to take long trades, short trades, or both. 2. Backtest Period: Specifies the time range for backtesting the strategy. Traders can choose from options like 'Last 6 months,' 'Last 1 year,' etc. It's essential to remember that while default settings are provided for many of these tools, optimal settings can vary based on the market, timeframe, and trading style. Always backtest new settings on historical data to gauge their potential efficacy. 5. Understanding Strategy Conditions Developing an understanding of the conditions set within a trading strategy is essential for traders to maximize its potential. Here, we delve deep into the logic behind these conditions, using the Supertrend Advance Strategy as our focal point. Basic Logic Behind Conditions: Every strategy is built around a set of conditions that provide buy or sell signals. The conditions are based on mathematical or statistical methods and are rooted in the study of historical price data. The fundamental idea is to recognize patterns or behaviors that have been profitable in the past and might be profitable in the future. Buy and Sell Conditions: 1. Buy Conditions: Usually formulated around bullish signals or indicators suggesting upward price momentum. 2. Sell Conditions: Centered on bearish signals or indicators indicating downward price momentum. Simple Strategy: The simple strategy could involve using just the Supertrend indicator. Here: • Buy: When price closes above the Supertrend line. • Sell: When price closes below the Supertrend line. Pullback Strategy: This strategy capitalizes on price retracements: • Buy: When the price retraces to the Supertrend line after a bullish signal and is supported by another bullish indicator. • Sell: When the price retraces to the Supertrend line after a bearish signal and is confirmed by another bearish indicator. Indicators Used: EMA (Exponential Moving Average): • Logic: EMA gives more weight to recent prices, making it more responsive to current price movements. A shorter-period EMA crossing above a longer-period EMA can be a bullish sign, while the opposite is bearish. RSI (Relative Strength Index): • Logic: RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. Values above 70 are typically considered overbought, and values below 30 are considered oversold. MACD (Moving Average Convergence Divergence): • Logic: MACD assesses the relationship between two EMAs of a security’s price. The MACD line crossing above the signal line can be a bullish signal, while crossing below can be bearish. CCI (Commodity Channel Index): • Logic: CCI compares a security's average price change with its average price variation. A CCI value above +100 may mean the price is overbought, while below -100 might signify an oversold condition. And others... As the strategy expands or contracts, more indicators might be added or removed. The crucial point is to understand the core logic behind each, ensuring they align with the strategy's objectives. Logic Behind Each Indicator: 1. EMA: Emphasizes recent price movements; provides dynamic support and resistance levels. 2. RSI: Indicates overbought and oversold conditions based on recent price changes. 3. MACD: Showcases momentum and direction of a trend by comparing two EMAs. 4. CCI: Measures the difference between a security's price change and its average price change. Understanding strategy conditions is not just about knowing when to buy or sell but also about comprehending the underlying market dynamics that those conditions represent. As you familiarize yourself with each condition and indicator, you'll be better prepared to adapt and evolve with the ever-changing financial markets. 6. Trade Execution and Management Trade execution and management are crucial aspects of any trading strategy. Efficient execution can significantly impact profitability, while effective management can preserve capital during adverse market conditions. In this section, we'll explore the nuances of position entry, exit strategies, and various Stop Loss (SL) and Take Profit (TP) methodologies within the Supertrend Advance Strategy. Position Entry: Effective trade entry revolves around: 1. Timing: Enter at a point where the risk-reward ratio is favorable. This often corresponds to confirmatory signals from multiple indicators. 2. Volume Analysis: Ensure there's adequate volume to support the movement. Volume can validate the strength of a signal. 3. Confirmation: Use multiple indicators or chart patterns to confirm the entry point. For instance, a buy signal from the Supertrend indicator can be confirmed with a bullish MACD crossover. Position Exit Strategies: A successful exit strategy will lock in profits and minimize losses. Here are some strategies: 1. Fixed Time Exit: Exiting after a predetermined period. 2. Percentage-based Profit Target: Exiting after a certain percentage gain. 3. Indicator-based Exit: Exiting when an indicator gives an opposing signal. Percentage-based SL/TP: • Stop Loss (SL): Set a fixed percentage below the entry price to limit potential losses. • Example: A 2% SL on an entry at $100 would trigger a sell at $98. • Take Profit (TP): Set a fixed percentage above the entry price to lock in gains. • Example: A 5% TP on an entry at $100 would trigger a sell at $105. Supertrend-based SL/TP: • Stop Loss (SL): Position the SL at the Supertrend line. If the price breaches this line, it could indicate a trend reversal. • Take Profit (TP): One could set the TP at a point where the Supertrend line flattens or turns, indicating a possible slowdown in momentum. Swing high/low-based SL/TP: • Stop Loss (SL): For a long position, set the SL just below the recent swing low. For a short position, set it just above the recent swing high. • Take Profit (TP): For a long position, set the TP near a recent swing high or resistance. For a short position, near a swing low or support. And other methods... 1. Trailing Stop Loss: This dynamic SL adjusts with the price movement, locking in profits as the trade moves in your favor. 2. Multiple Take Profits: Divide the position into segments and set multiple TP levels, securing profits in stages. 3. Opposite Signal Exit: Exit when another reliable indicator gives an opposite signal. Trade execution and management are as much an art as they are a science. They require a blend of analytical skill, discipline, and intuition. Regularly reviewing and refining your strategies, especially in light of changing market conditions, is crucial to maintaining consistent trading performance. 7. Visual Representations Visual tools are essential for traders, as they simplify complex data into an easily interpretable format. Properly analyzing and understanding the plots on a chart can provide actionable insights and a more intuitive grasp of market conditions. In this section, we’ll delve into various visual representations used in the Supertrend Advance Strategy and their significance. Understanding Plots on the Chart: Charts are the primary visual aids for traders. The arrangement of data points, lines, and colors on them tell a story about the market's past, present, and potential future moves. 1. Data Points: These represent individual price actions over a specific timeframe. For instance, a daily chart will have data points showing the opening, closing, high, and low prices for each day. 2. Colors: Used to indicate the nature of price movement. Commonly, green is used for bullish (upward) moves and red for bearish (downward) moves. Trend Lines: Trend lines are straight lines drawn on a chart that connect a series of price points. Their significance: 1. Uptrend Line: Drawn along the lows, representing support. A break below might indicate a trend reversal. 2. Downtrend Line: Drawn along the highs, indicating resistance. A break above might suggest the start of a bullish trend. Filled Areas: These represent a range between two values on a chart, usually shaded or colored. For instance: 1. Bollinger Bands: The area between the upper and lower band is filled, giving a visual representation of volatility. 2. Volume Profile: Can show a filled area representing the amount of trading activity at different price levels. Stop Loss and Take Profit Lines: These are horizontal lines representing pre-determined exit points for trades. 1. Stop Loss Line: Indicates the level at which a trade will be automatically closed to limit losses. Positioned according to the trader's risk tolerance. 2. Take Profit Line: Denotes the target level to lock in profits. Set according to potential resistance (for long trades) or support (for short trades) or other technical factors. Trailing Stop Lines: A trailing stop is a dynamic form of stop loss that moves with the price. On a chart: 1. For Long Trades: Starts below the entry price and moves up with the price but remains static if the price falls, ensuring profits are locked in. 2. For Short Trades: Starts above the entry price and moves down with the price but remains static if the price rises. Visual representations offer traders a clear, organized view of market dynamics. Familiarity with these tools ensures that traders can quickly and accurately interpret chart data, leading to more informed decision-making. Always ensure that the visual aids used resonate with your trading style and strategy for the best results. 8. Backtesting Backtesting is a fundamental process in strategy development, enabling traders to evaluate the efficacy of their strategy using historical data. It provides a snapshot of how the strategy would have performed in past market conditions, offering insights into its potential strengths and vulnerabilities. In this section, we'll explore the intricacies of setting up and analyzing backtest results and the caveats one must be aware of. Setting Up Backtest Period: 1. Duration: Determine the timeframe for the backtest. It should be long enough to capture various market conditions (bullish, bearish, sideways). For instance, if you're testing a daily strategy, consider a period of several years. 2. Data Quality: Ensure the data source is reliable, offering high-resolution and clean data. This is vital to get accurate backtest results. 3. Segmentation: Instead of a continuous period, sometimes it's helpful to backtest over distinct market phases, like a particular bear or bull market, to see how the strategy holds up in different environments. Analyzing Backtest Results: 1. Performance Metrics: Examine metrics like the total return, annualized return, maximum drawdown, Sharpe ratio, and others to gauge the strategy's efficiency. 2. Win Rate: It's the ratio of winning trades to total trades. A high win rate doesn't always signify a good strategy; it should be evaluated in conjunction with other metrics. 3. Risk/Reward: Understand the average profit versus the average loss per trade. A strategy might have a low win rate but still be profitable if the average gain far exceeds the average loss. 4. Drawdown Analysis: Review the periods of losses the strategy could incur and how long it takes, on average, to recover. 9. Tips and Best Practices Successful trading requires more than just knowing how a strategy works. It necessitates an understanding of when to apply it, how to adjust it to varying market conditions, and the wisdom to recognize and avoid common pitfalls. This section offers insightful tips and best practices to enhance the application of the Supertrend Advance Strategy. When to Use the Strategy: 1. Market Conditions: Ideally, employ the Supertrend Advance Strategy during trending market conditions. This strategy thrives when there are clear upward or downward trends. It might be less effective during consolidative or sideways markets. 2. News Events: Be cautious around significant news events, as they can cause extreme volatility. It might be wise to avoid trading immediately before and after high-impact news. 3. Liquidity: Ensure you are trading in assets/markets with sufficient liquidity. High liquidity ensures that the price movements are more reflective of genuine market sentiment and not due to thin volume. Adjusting Settings for Different Markets/Timeframes: 1. Markets: Each market (stocks, forex, commodities) has its own characteristics. It's essential to adjust the strategy's parameters to align with the market's volatility and liquidity. 2. Timeframes: Shorter timeframes (like 1-minute or 5-minute charts) tend to have more noise. You might need to adjust the settings to filter out false signals. Conversely, for longer timeframes (like daily or weekly charts), you might need to be more responsive to genuine trend changes. 3. Customization: Regularly review and tweak the strategy's settings. Periodic adjustments can ensure the strategy remains optimized for the current market conditions. 10. Frequently Asked Questions (FAQs) Given the complexities and nuances of the Supertrend Advance Strategy, it's only natural for traders, both new and seasoned, to have questions. This section addresses some of the most commonly asked questions regarding the strategy. 1. What exactly is the Supertrend Advance Strategy? The Supertrend Advance Strategy is an evolved version of the traditional Supertrend indicator. It's designed to provide clearer buy and sell signals by incorporating additional indicators like EMA, RSI, MACD, CCI, etc. The strategy aims to capitalize on market trends while minimizing false signals. 2. Can I use the Supertrend Advance Strategy for all asset types? Yes, the strategy can be applied to various asset types like stocks, forex, commodities, and cryptocurrencies. However, it's crucial to adjust the settings accordingly to suit the specific characteristics and volatility of each asset type. 3. Is this strategy suitable for day trading? Absolutely! The Supertrend Advance Strategy can be adjusted to suit various timeframes, making it versatile for both day trading and long-term trading. Remember to fine-tune the settings to align with the timeframe you're trading on. 4. How do I deal with false signals? No strategy is immune to false signals. However, by combining the Supertrend with other indicators and adhering to strict risk management protocols, you can minimize the impact of false signals. Always use stop-loss orders and consider filtering trades with additional confirmation signals. 5. Do I need any prior trading experience to use this strategy? While the Supertrend Advance Strategy is designed to be user-friendly, having a foundational understanding of trading and market analysis can greatly enhance your ability to employ the strategy effectively. If you're a beginner, consider pairing the strategy with further education and practice on demo accounts. 6. How often should I review and adjust the strategy settings? There's no one-size-fits-all answer. Some traders adjust settings weekly, while others might do it monthly. The key is to remain responsive to changing market conditions. Regular backtesting can give insights into potential required adjustments. 7. Can the Supertrend Advance Strategy be automated? Yes, many traders use algorithmic trading platforms to automate their strategies, including the Supertrend Advance Strategy. However, always monitor automated systems regularly to ensure they're operating as intended. 8. Are there any markets or conditions where the strategy shouldn't be used? The strategy might generate more false signals in markets that are consolidative or range-bound. During significant news events or times of unexpected high volatility, it's advisable to tread with caution or stay out of the market. 9. How important is backtesting with this strategy? Backtesting is crucial as it allows traders to understand how the strategy would have performed in the past, offering insights into potential profitability and areas of improvement. Always backtest any new setting or tweak before applying it to live trades. 10. What if the strategy isn't working for me? No strategy guarantees consistent profits. If it's not working for you, consider reviewing your settings, seeking expert advice, or complementing the Supertrend Advance Strategy with other analysis methods. Remember, continuous learning and adaptation are the keys to trading success. Other comments Value of combining several indicators in this script and how they work together Diversification of Signals: Just as diversifying an investment portfolio can reduce risk, using multiple indicators can offer varied perspectives on potential price movements. Each indicator can capture a different facet of the market, ensuring that traders are not overly reliant on a single data point. Confirmation & Reduced False Signals: A common challenge with many indicators is the potential for false signals. By requiring confirmation from multiple indicators before acting, the chances of acting on a false signal can be significantly reduced. Flexibility Across Market Conditions: Different indicators might perform better under different market conditions. For example, while moving averages might excel in trending markets, oscillators like RSI might be more useful during sideways or range-bound conditions. A mashup strategy can potentially adapt better to varying market scenarios. Comprehensive Analysis: With multiple indicators, traders can gauge trend strength, momentum, volatility, and potential market reversals all at once, providing a holistic view of the market. How do the different indicators in the Supertrend Advance Strategy work together? Supertrend: This is primarily a trend-following indicator. It provides traders with buy and sell signals based on the volatility of the price. When combined with other indicators, it can filter out noise and give more weight to strong, confirmed trends. EMA (Exponential Moving Average): EMA gives more weight to recent price data. It can be used to identify the direction and strength of a trend. When the price is above the EMA, it's generally considered bullish, and vice versa. RSI (Relative Strength Index): An oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. By cross-referencing with other indicators like EMA or MACD, traders can spot potential reversals or confirmations of a trend. MACD (Moving Average Convergence Divergence): This indicator identifies changes in the strength, direction, momentum, and duration of a trend in a stock's price. When the MACD line crosses above the signal line, it can be a bullish sign, and when it crosses below, it can be bearish. Pairing MACD with Supertrend can provide dual confirmation of a trend. CCI (Commodity Channel Index): Initially developed for commodities, CCI can indicate overbought or oversold conditions. It can be used in conjunction with other indicators to determine entry and exit points. In essence, the synergy of these indicators provides a balanced, comprehensive approach to trading. Each indicator offers its unique lens into market conditions, and when they align, it can be a powerful indication of a trading opportunity. This combination not only reduces the potential drawbacks of each individual indicator but leverages their strengths, aiming for more consistent and informed trading decisions. Backtesting and Default Settings • This indicator has been optimized to be applied for 1 hour-charts. However, the underlying principles of this strategy are supply and demand in the financial markets and the strategy can be applied to all timeframes. Daytraders can use the 1min- or 5min charts, swing-traders can use the daily charts. • This strategy has been designed to identify the most promising, highest probability entries and trades for each stock or other financial security. • The combination of the qualifiers results in a highly selective strategy which only considers the most promising swing-trading entries. As a result, you will normally only find a low number of trades for each stock or other financial security per year in case you apply this strategy for the daily charts. Shorter timeframes will result in a higher number of trades / year. • Consequently, traders need to apply this strategy for a full watchlist rather than just one financial security. • Default properties: RSI on (length 14, RSI buy level 50, sell level 50), EMA, RSI, MACD on, type of strategy pullback, SL/TP type: ATR (length 10, factor 3), trade direction both, quantity 5, take profit swing hl 5.1, highest / lowest lookback 2, enable ATR trail (ATR length 10, SL ATR multiplier 1.4, TP multiplier 2.1, lookback = 4, trade direction = both).
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SOFR Spread (proxy: FEDFUNDS - US03MY)📊 SOFR Spread (Proxy: FEDFUNDS - US03MY) – Monitoring USD Money Market Liquidity In 2008, the spread exhibits a sharp vertical spike, signaling a severe liquidity dislocation: investors rushed into short-term U.S. Treasuries, pushing their yields down dramatically, while the FEDFUNDS rate remained relatively high. This behavior indicates extreme systemic stress in the interbank lending market, preceding massive Federal Reserve interventions such as rate cuts, emergency liquidity operations, and the launch of quantitative easing (QE). Description: This indicator plots the spread between the Effective Federal Funds Rate (FEDFUNDS) and the 3-Month US Treasury Bill yield (US03MY), used here as a proxy for the SOFR spread. It serves as a simple yet powerful tool to detect liquidity dislocations and stress signals in the US short-term funding markets. Interpretation: 🔴 Spread > 0.20% → Possible liquidity stress: elevated repo rates, cash shortage, interbank distrust. 🟡 Spread ≈ 0% → Normal market conditions, balanced liquidity. 🟢 Spread < 0% → Excess liquidity: strong demand for T-Bills, “flight to safety”, or distortion due to expansionary monetary policy. Ideal for: Monitoring Fed policy impact Anticipating market-wide liquidity squeezes Correlation with DXY, SPX, VIX, MOVE Index, and risk sentiment 🧠 Note: As SOFR is not directly available on TradingView, FEDFUNDS is used as a reliable proxy, closely tracking the same trends in most macro conditions.
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