Traffic Lights Trading - Buy-Sell-Wait signals🚦 Traffic Light System: User Manual This system is a trend-following momentum indicator designed to filter out market noise and identify high-probability entries.
It combines Triple EMA alignment, Gaussian Channels, and PVSRA Volume analysis.
How to Read the Signals The indicator displays "Traffic Light" icons above the bars only when the market state changes.
Signal Market State Technical Requirements
🟢 GREENBULLISH Price is above Gaussian Midline + EMA 5 > EMA 26 + High/Climax Volume.
🟡 YELLOWNEUTRAL Trends are transitioning or volume is too low. Wait for a state change.
🔴 REDBEARISH Price is below Gaussian Midline + EMA 5 < EMA 26 + High/Climax Volume.
📊 The Dashboard & Components Located at the top right, the dashboard provides real-time data on the current bar:Trend Status:
Shows the macro direction (Bullish/Bearish/Neutral).
Volume Activity:
CLIMAX (Purple): Extreme volume; often signifies the start of a move or an exhaustion point.
RISING (Aqua): Healthy institutional interest.
NORMAL (Gray): Retail-driven movement; avoid entries.
Market Action: The final verdict—BUY, SELL, or WAIT.
Chart Overlays The Ribbon: EMA 5 (Lime) and EMA 26 (Red).
Look for the Lime line to be above Red for longs.
Gaussian Channel: The shaded gray zone. It acts as a dynamic "fair value" area. Look for price to break out of this channel to confirm trend strength.
EMA 100: The Blue line. Use this as your "Line in the Sand" for long-term trend bias.
🛠 Best Practices for Trading The "First Green" Entry: The strongest move is usually the first Green light that appears after a long period of Yellow or Red.
Volume Confirmation: Never take a signal if the Volume Activity is "NORMAL.
The script filters this automatically, but always look for the Climax (Purple) or Rising (Aqua) bars for conviction.
Exit Strategy: A common exit signal is when the light flips from Green/Red back to Yellow, or when the price touches the opposite side of the Gaussian Channel.
⚙️ Settings & Customization Moving Averages: Adjust the 5/26/100 lengths to match your timeframe (e.g., use larger numbers for Scalping to avoid noise).
Gaussian Multiplier: Increase this (e.g., to 3.0) to make the channel wider, which results in fewer but more conservative signals.
Volume Avg Period: Controls how sensitive the system is to "Climax" volume.
Website : tltrading.lovable.app
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