[blackcat] L1 Trading Risk Assessment Indicator

Level: 1

Background

Risk assessment is a general term used in many industries to determine the likelihood of losing an asset, loan, or investment. Risk assessment is important in determining how profitable a particular investment is and which techniques are best for risk mitigation. It shows the upward reward versus the risk profile. Risk assessment is important in determining the rate of return an investor would need to earn in order to consider an investment as worth the potential risk.

Function

L1 Trading Risk Assessment Indicator provides a trading risk evaluation mechanism that follows the megatrend. By defining transaction risk as 4 levels: highly risky, risky, safe, and highly safe, the current bar’s evaluation value can be compared with historical bar data to understand the current level of trading risk and the level of trading risk Trend.

Key Signal

h1~h5 --> trading risk level threshold, which can be adjusted according different markets.
currentsafetylevel --> it indicates current bar risk assessment result

Pros and Cons

Pros:

1. according risk level, proper position size can be adjusted
2. know global trend and select propoer time to exit


Cons:

1. no exact long and short entry are disclosed
2. different markets require different thresholds


Remarks

An improved version of KDJ with less satration observed.

Readme

In real life, I am a prolific inventor. I have successfully applied for more than 60 international and regional patents in the past 12 years. But in the past two years or so, I have tried to transfer my creativity to the development of trading strategies. Tradingview is the ideal platform for me. I am selecting and contributing some of the hundreds of scripts to publish in Tradingview community. Welcome everyone to interact with me to discuss these interesting pine scripts.

The scripts posted are categorized into 5 levels according to my efforts or manhours put into these works.

Level 1 : interesting script snippets or distinctive improvement from classic indicators or strategy. Level 1 scripts can usually appear in more complex indicators as a function module or element.

Level 2 : composite indicator/strategy. By selecting or combining several independent or dependent functions or sub indicators in proper way, the composite script exhibits a resonance phenomenon which can filter out noise or fake trading signal to enhance trading confidence level.

Level 3 : comprehensive indicator/strategy. They are simple trading systems based on my strategies. They are commonly containing several or all of entry signal, close signal, stop loss, take profit, re-entry, risk management, and position sizing techniques. Even some interesting fundamental and mass psychological aspects are incorporated.

Level 4 : script snippets or functions that do not disclose source code. Interesting element that can reveal market laws and work as raw material for indicators and strategies. If you find Level 1~2 scripts are helpful, Level 4 is a private version that took me far more efforts to develop.

Level 5 : indicator/strategy that do not disclose source code. private version of Level 3 script with my accumulated script processing skills or a large number of custom functions. I had a private function library built in past two years. Level 5 scripts use many of them to achieve private trading strategy.