OPEN-SOURCE SCRIPT
IU Probability Calculator
Updated
How This Script Works:
1. This script calculate the probability of price reaching a user-defined price level within one candle with the help Normal Distribution Probability Table.
2. Normal Distribution Probability Table is use for calculating probability of events, it's very powerful for calculation of probability and this script is fully based on that table.
3. It takes the Average True Range value or Standard Deviation value of past user-defined length bar.
4. After that it take this formula z = ( price_level - close ) / (ATR or Standard Deviation) and return the value for z, for the bearish side it take z = (close - price level) / (ATR or Standard Deviation ) formula.
5. Once we have the z it look into Normal Distribution Probability Table and match the value.
6. Now the value of z is multiple buy 100 in order to make it look in percentage term.
7. After that this script subtract the final value with 100 because probability always comes under 100%
8. finally we plot the probability at the bottom of the chart the red line indicates "The probability of price not reaching that price level", While the green line indicates "Probability of price Reaching that level " .
9. This script will work fine for both of the directions
How This Is Useful For The User:
1. With this script user can know the probability of price reaching the certain level within one candle for both Directions .
2. This is useful while creating options hedging strategies
3. This can be helpful for deciding stop loss level.
4. It's useful for scalpers for managing their traders and it can be use by binary option traders.
1. This script calculate the probability of price reaching a user-defined price level within one candle with the help Normal Distribution Probability Table.
2. Normal Distribution Probability Table is use for calculating probability of events, it's very powerful for calculation of probability and this script is fully based on that table.
3. It takes the Average True Range value or Standard Deviation value of past user-defined length bar.
4. After that it take this formula z = ( price_level - close ) / (ATR or Standard Deviation) and return the value for z, for the bearish side it take z = (close - price level) / (ATR or Standard Deviation ) formula.
5. Once we have the z it look into Normal Distribution Probability Table and match the value.
6. Now the value of z is multiple buy 100 in order to make it look in percentage term.
7. After that this script subtract the final value with 100 because probability always comes under 100%
8. finally we plot the probability at the bottom of the chart the red line indicates "The probability of price not reaching that price level", While the green line indicates "Probability of price Reaching that level " .
9. This script will work fine for both of the directions
How This Is Useful For The User:
1. With this script user can know the probability of price reaching the certain level within one candle for both Directions .
2. This is useful while creating options hedging strategies
3. This can be helpful for deciding stop loss level.
4. It's useful for scalpers for managing their traders and it can be use by binary option traders.
Release Notes
How This Script Works:1. This script calculate the probability of price reaching a user-defined price level within one candle with the help Normal Distribution Probability Table.
2. Normal Distribution Probability Table is use for calculating probability of events, it's very powerful for calculation of probability and this script is fully based on that table.
3. It takes the Average True Range value or Standard Deviation value of past user-defined length bar.
4. After that it take this formula z = ( price_level - close ) / (ATR or Standard Deviation) and return the value for z, for the bearish side it take z = (close - price level) / (ATR or Standard Deviation ) formula.
5. Once we have the z it look into Normal Distribution Probability Table and match the value.
6. Now the value of z is multiple buy 100 in order to make it look in percentage term.
7. After that this script subtract the final value with 100 because probability always comes under 100%
8. finally we plot the probability at the bottom of the chart the red line indicates "The probability of price not reaching that price level", While the green line indicates "Probability of price Reaching that level " .
9. This script will work fine for both of the directions
How This Is Useful For The User:
1. With this script user can know the probability of price reaching the certain level within one candle for both Directions .
2. This is useful while creating options hedging strategies
3. This can be helpful for deciding stop loss level.
4. It's useful for scalpers for managing their traders and it can be use by binary option traders.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.