Easy Trade Pro [Buy and Sell Strategy + Backtesting System]Hello Traders,
Easy Trade Pro is a comprehensive tool that combines multiple technical indicators into a single customizable one. This tool is the culmination of an extensive trading career, it is designed to help traders navigate the markets in any timeframe and financial asset, like Equities, Futures, Crypto, Forex and Commodities.
Before we deep dive into the comprehensive guide on what Easy Trade Pro is, let's kick off by showcasing the strategy used in this example. Please note, we have adopted an extremely conservative approach strictly following the Tradingview House Rules, which you can review here: www.tradingview.com
The backtest strategy parameters:
Currency pair: EUR USD
Timeframe: 15-min chart
Market: Spot, no leverage
Broker: FXCM
Trading range: 2022-09-01 07:30 — 2023-06-26 20:00
Backtesting range: 2022-08-31 23:00 — 2023-06-26 20:00
Initial Capital: $10,000
Buy Order Size: 20% of the capital, $2,000
Stop Loss: 0.50%
Sell orders: Four different take profits where we unload the position by 25% each time
Broker Fees: Commission set at 0.08$
Slippage: 10 ticks
Understanding FXCM Commissions and Setting Realistic Slippage for EUR/USD Spot Trading:
◉I would like to provide some clarity on the commission structure and slippage setting used in the study for trading the EUR/USD pair on the FXCM spot market. Based on the information available, FXCM charges a commission of $4.00 per standard lot (100,000) on both sides of the trade (meaning at open and close) for the EUR/USD pair. Since the study involve an order size of $2,000 USD, which is equivalent to 0.02 lots, the commission fee for one side of the trade (either buying or selling) would be calculated as $4.00 multiplied by 0.02, which is $0.08. This means that for each individual trade, whether it be a buy or sell, the commission fee would be $0.08.
◉As for slippage, it is crucial to account for the inherent uncertainty in the execution price due to market fluctuations. In the forex market, the EUR/USD pair is quoted with a precision of five decimal places, with the smallest price change being a "pipette" (0.00001). Given that slippage can vary based on market conditions, it is considered fair practice to use a slippage of around 10 ticks under normal market conditions for the EUR/USD pair. This allows for a more realistic representation of the execution price, especially in a liquid and fast-moving market such as forex.
More detailed information about FXCM fees structure in the link below:
docs.fxcorporate.com
Enter a Trade conditions:
For our buy order, we utilize a custom buy signal called 'Bullish Reversal'. A detailed explanation of this and other buy orders can be found later in the guide, specifically in section 1).
To enhance realism in our trading strategy, we have implemented a confirmation mechanism. When utilizing the strategy tester, you have the option to input a value to determine the number of confirmation candles to consider.
For example, if you set the input to 1, the system will check if the next candle following the signal meets the criteria for confirmation. If set to 2, the system will evaluate the second candle, and so on for higher values. The confirmation is determined by comparing the closing or opening price of the selected buy signal candle with the corresponding closing price of the confirmation candle.
In this case we choose as buy signal: 'Bullish Reversal' + 2 candle of confirmation
Exit a trade conditions:
On the sell side, we exit a trade in four different types of sell orders where we take profits. Inside '', you will encounter unique labels attributed to our custom sell signals. A detailed explanation of these sell orders can be found later in the guide, specifically in section 1). We used custom order called:
1TP 'Good Sell'
2TP 'Good Sell'
3TP 'Good Sell'
4TP 'Bearish Reversal' + 4 confirmation candles
Our confirmation logic, for sell signals, is applied only to 'Bearish Reversal' signal. The confirmation is determined by comparing the closing or opening price of the selected 'Bearish Reversal' candle with the corresponding closing price of the confirmation candle. In this case, we wait for the fourth candle from the 'Bearish Reversal' signal to confirm the sell trade.
Protect your capital:
This super-conservative study involves a clear low risk, with the use of $2,000, 20% of our capital. If the stop loss of 0.5% were triggered, we lose 10$, equating to 0.10% of $10,000 - thus affecting only 0.10% of our capital.
Super Conservative Approach & Results:
With 353 closed trades, we achieved a net profit of 2.03%, or $203.34$ relative to our initial $10,000 capital, and a win rate of 73.37%.
Less Conservative Approach & Results:
We could also consider increasing our risk to 0.5% of our capital per trade. We would maintain our stop loss at 0.50%, but we would need to use all our capital to enter the market. If the stop loss of 0.5% will be triggered, we would lose 50$, equating to 0.5% of $10,000.
In this scenario, our net profit would have increased to 10.15%, equivalent to $1015.
Please be aware:
While fully automated strategies can bring considerable advantages, they are not without their cons. For one, relying solely on an automated system may not take into account the potential confluence of other strategies or indicators, such as the significance of support and resistance zones. These elements often require a more nuanced, human understanding of the markets and cannot always be perfectly replicated by an algorithm.
Additionally, it's essential to remember that a significant percentage of traders are not consistently profitable. As such, prudent risk management, a conservative approach, and acceptance of a reasonable profit are crucial aspects of successful trading. While the allure of high returns can be tempting, the sustainability of your trading strategy should always take precedence. Achieving steady, reliable profits over time often outweighs the appeal of a risky, high-return strategy that could potentially lead to substantial losses.
So, while automation can be a powerful tool in your trading arsenal, it's also important to consider other strategies and factors. Always ensure you're managing your risk effectively and approaching trading with a realistic and informed perspective.
------------------------------------------------------------------------ Why Easy Trade Pro is Original? ----------------------------------------------------------------------------------
We developed Easy Trade Pro as a unique and comprehensive solution, and we decided to protect our code to preserve its originality. We invested significant time and effort into making it a realistic trading strategy simulator. The standout features that set Easy Trade Pro apart include:
☀ Versatile Stop Loss Mechanisms: Stop loss execution can be complex and often requires careful coding to work as intended. In most freely available open-source codes, stop losses are implemented using the Average True Range (ATR). ATR can be beneficial but has limitations:
☁ Lagging Indicator - Like most technical indicators, the ATR is a lagging indicator. This means it is based on past data, and so it may not accurately reflect future market volatility. If market conditions change rapidly, the ATR may not adjust quickly enough, potentially leading to suboptimal stop loss levels.
☁ No Directional Information - The ATR measures volatility, but it does not provide any indication of the direction of the trend. Therefore, it should not be used as a standalone tool for making trading decisions, but should be used in conjunction with other technical analysis tools that can provide directional cues.
☁ Inefficiency in Trending Markets - In strongly trending markets, ATR-based stops can sometimes be too far from the current price level. This could lead to larger losses if the price moves against your trade before hitting the stop loss. On the flip side, in less volatile, sideways markets, an ATR-based stop might be set too close to the entry point, leading to premature stop outs.
☁ Overoptimization Risk - If you're backtesting a trading strategy, there's a risk of overoptimizing your stop loss settings by fine-tuning them to past data. The best ATR multiplier that worked in the past might not necessarily work in the future, leading to potential performance issues.
☀ We countered these by implementing four different types of 'protect the trade' mechanisms:
✔ Fixed Percentage Stop Loss
✔ Trailing Stop Loss
✔ Stop Loss Moved to Entry Upon Reaching Certain Gain
✔ Stop Loss Moved to Entry Upon Reaching First Take Profit Order ("Custom Order").
☀ Dual Exit Strategy: We incorporated two distinct methods of exiting a trade. The first uses our custom signals, while the second triggers exit at a certain percentage of gain.
☀ Multiple Take Profit Orders: You have the flexibility to establish up to four different sell orders. This feature enables you to fractionate your exit strategy according to your needs. You can choose to trigger these fractions based on our custom signals or determine your own exit points by setting targeted gains at a fixed percentage.
☀ Confirmation Candle System: This feature enhances trade precision by requiring confirmation candles after a buy or sell signal. This confirmation, dependent on the next candle's closing price, helps reduce false signals and improves entry and exit points. While our confirmation system is applicable to all custom buy signals, it's solely dedicated for the bearish reversal when it comes to sell signals.
☀ Universal Compatibility: Easy Trade Pro's Strategy Tester works perfectly with any asset class. The code can handle different contract types, including the SPX contracts and fractional assets like Bitcoin. It's optimized to ensure proper execution of trades without rounding issues.
☀ Bullish and Bearish Reversal candles: Our method of detecting these pivotal candles combines conditions from buy and sell signals with pertinent divergences in Price, RSI, and Volume (OBV). The distinguishing factor, however, lies in recognizing significant shifts in market structure and liquidity grabs. To further enhance the credibility of our indicator, we've incorporated Bollinger Bands, serving as an additional layer in spotting potential trend reversals, particularly when aligned with long-wick candlesticks, engulfing patterns, and morning or evening star formations.
☀ Non-Repainting Indicator: Our indicator signals are designed not to repaint. Once a signal appears, it stays fixed, offering a reliable tool for your trading decisions.
================================================== EXTENSIVE TECHNICAL DESCRIPTION ====================================================
Easy Trade Pro is versatile, allowing you to analyze market trends across any financial asset. With its rigorous testing, our tool can be used confidently on any timeframe, from 1D to 1min, whether you prefer longer-term or shorter-term trades.
Although we recommend trading on timeframes between 1D and 1min, higher timeframes like 1W chart, can also provide broader insights.
Our study combines a variety of popular technical indicators, such as RSI, Stochastic RSI, MACD, DMI, Bollinger Bands as well as relevant EMAs. On the volume side OBV and MFI. Using a data-driven approach, “Easy Trade Pro” analyzes historical market trends to identify optimal ways to combine these indicators with significant divergences between price and oscillators. On top of that the code considers relevant changes in market structure and liquidity grabs, to generate reliable and accurate signals for potential buy and sell opportunities.
* ☎ --> Please not that MACD, BBs, and EMAs account for a minimal part of our script <--- ☎, If you're looking for a simpler tool, consider checking out our open-source indicator, 'RSI, SRSI, MACD, and DMI cross - Open source code'. You can find it here:
With our customizable system, traders will be able to identify:
1) Three types of buy signals🐂,💰,💎 and sell signals 🐻,🔨,💀
2) Bullish and bearish reversal candles with support and resistance lines
3) Bull and bear momentum signals
4) A function that utilizes Color bars to identify the strength of the trend
5) Three customizable moving averages
6) Alerts direct to your email or phone
7) Advanced and customizable settings menu
8) Our software also includes a backtesting system that that allows users to test their trading strategies on historical data, to check how they would have performed in real-world market conditions. This can help refine a trading strategy and make more informed decisions.
------------------------------------------------------------------------------ 1) BUY AND SELL SIGNALS ---------------------------------------------------------------------------------
Our buy and sell signals are generated using a custom combination of RSI, MFI, and Stochastic RSI levels, as well as relevant MACD and Stochastic RSI crosses. These indicators are carefully analyzed to identify potential trading opportunities and determine optimal entry and exit points for trades.
RSI (Relative strength index) measures the strength of a security's price action, while the SRSI (Stochastic Relative Strength Index) is a momentum oscillator that measures the current price relative to its high and low range over a set period. The Money Flow Index (MFI) is another momentum indicator that uses both price and volume data to measure buying and selling pressure. MACD (Moving Average Convergence Divergence) is a popular technical indicator used in financial markets to analyze price trends and momentum.
▶ With our system, you'll be able to identify three different levels of buy signals:
◉ The first level of buy signal is represented by a 🐂 emoji and is a "Good Buy". This signal indicates a possible buying opportunity. It indicates that could be a good opportunity to enter in a long trade. It's important to note that, the "Good Buy" signal can sometimes be supplemented with a green "Bull" text and a flag plotshape positioned beneath the signal. In these scenarios, we categorize this as a "Good Buy Bull" signal.
◉ The second level of buy signal is represented by a 💰 emoji and is a "Great Buy". This signal indicates a stronger buying opportunity than the "Good Buy" signal.
◉ The third and strongest buy signal is represented by a 💎 emoji and is an "Incredible Buy". This signal indicates a stronger buying opportunity than the "Good Buy" and "Great Buy" signals
▶ With our system, you'll be able to identify three different levels of sell signals:
◉ On the sell side, the first level is represented by a 🐻 emoji and is a "Good Sell". This signal indicates a possible selling opportunity. It indicates that could be a good opportunity to exit a trade or open a short position. It's important to note that, the "Good Sell" signal can occasionally be accompanied by a red "Bear" text and a flag plotshape positioned beneath the signal. In such instances, we refer to this as a "Good Sell Bear" signal.
◉ The second sell signal is represented by a 🔨 emoji and is a "Great Sell". This signal indicates a stronger selling opportunity than the "Good Sell" signal.
◉ The third and strongest sell signal is represented by a 💀 emoji and is an "Incredible Sell". This signal indicates a stronger selling opportunity than the "Good Sell" and "Great Sell" signals.
------------------------------------------2) "BULLISH AND BEARISH REVERSAL CANDLES PLUS SUPPORT AND RESISTANCE LINES" ------------------------------------------------
Bullish and bearish reversal candles are specific candles that have more probability to reverse the trend.
Our trading indicator is designed to identify bullish and bearish reversal candles. Our method of detecting these pivotal candles combines conditions from buy and sell signals with pertinent divergences in Price, RSI, and Volume (OBV). The distinguishing factor, however, lies in recognizing significant shifts in market structure and liquidity grabs. To further enhance the credibility of our indicator, we've incorporated Bollinger Bands, serving as an additional layer in spotting potential trend reversals, particularly when aligned with long-wick candlesticks, engulfing patterns, and morning or evening star formations.
These candles are represented by blue and orange colors respectively by default. Additionally, the indicator also uses lines that are drawn at either the opening or closing of candles to help identify pivot points of support or resistance. These candles, lines color or shape are customizable in the settings menu.
How can I benefit the most from bullish reversal candles? To make the most of bullish reversal candles, a powerful strategy is:
E.g, 1D chart - Wait for the next 1 or 2 candles to close above the support line linked to the bullish reversal candle. For lower timeframes, it is recommended to wait for 2 or 3 candles before making a trading decision. A good tip is also to look for other signals (confluence), like a buy signal. Traders should decide based on their risk tolerance.
Here below we can see an example of a bullish reversal candle in the BTC/USDT, 1D, chart. The system identify a bullish reversal candle (blue color), the next 2 candles are green and closed above the support blue line, in addition we have other bullish signals (confluence).
How can I benefit the most from bullish reversal lines? Bullish reversal lines can help traders to identify key level of support and maintain control of their position until a clear break below occurs.
In the example below we se how the price retrace to the support line:
After touching the price bounce up.
How can I benefit the most from bearish reversal candles? To make the most of bearish reversal candles, a powerful strategy is:
E.g, 1D chart - Wait for the next 1 or 2 candles to close below the resistance line linked to the bearish reversal candle. For lower timeframes, it is recommended to wait for 2 or 3 candles before making a trading decision. Traders should decide based on their risk tolerance.
Here below we can see an example of a bearish reversal candle in the ETH/USDT, 1D, chart. The system identify a bearish reversal candle (orange color), the next candle is red and closes below the resistance orange line. A good tip is also to look for other signals (confluence), like a sell signal.
How can I benefit the most from bearish reversal lines? Bearish reversal lines can help traders to identify key level of resistance and maintain control of their position until a clear break above occurs.
In the example below we se how the price bounce back to the resistance line and get rejected.
------------------------------------------------------------------------- 3) BULL AND BEAR MOMENTUM SIGNALS -----------------------------------------------------------------------
We analyzed factors such as buy or sell signals, long or short confirmation signals, DMI crossup or crossdown and breaks of market structure (BOS) or change of character (CHoCh) to determine the strength and direction of the trend. These study give us bull trend or bear trend signals that can help traders identify potential trading opportunities and make informed decisions.
These conditions are represented by a green word "BULL" and a flag shape below (bull momentum) and by a red word "BEAR" and a flag shape above (bear momentum) respectively by default. These plots shapes are customizable in the settings menu.
How can I benefit the most from bull momentum signals? To make the most of bull momentum signals, a powerful strategy is:
E.g, 1D chart - Look for confluence. If bull signal comes with a "Good Buy 🐂" in the same candle the signal is more strong. Another good combo is to look for a bullish reversal candle prior or after this signal, usually within a range of 1/2 candles. For lower timeframes, it is recommended to wait 2/3 candles before making a trading decision.
In the picture below we can see an example of a bull momentum signal in the US500, 1D, chart.
How can I benefit the most from bear momentum signals? To make the most of bear momentum signals, a powerful strategy is:
E.g, 1D chart - Look for confluence. If bear signal comes with a "Good Sell 🐻" in the same candle the signal is more strong. Another good combo is to look for a bearish reversal candle prior or after this signal, usually within a range of 1/2 candles. For lower timeframes, it is recommended to wait 2/3 candles before making a trading decision.
In the picture below we can see an example of a bear momentum signal in combo with a sell signal, NETFLIX, 1D, chart.
-------------------------------------------------------------- 4) "COLOR BARS THAT INDICATE THE STRENGTH OF THE TREND -----------------------------------------------------
This code is responsible for changing the color of the bars on a chart based on certain conditions. The gradient colors are defined for green and red, and the algorithm checks if the current bar is within a certain range of either a bearish reversal or bullish reversal candle and whether the price is above or below certain exponential moving averages or if important break of market structure occurs.
Ultimately, this feature helps traders visually identify potential trends and market shifts and avoid getting distracted by price fluctuations. Please note that every gradient of color can be customize by the user. We set 3 different bullish colors and 3 different bearish colors.
Below the picture of the settings menu related to the bar color.
----------------------------------------------------------------------5)THREE CUSTOMIZABLE MOVING AVERAGES ----------------------------------------------------------------------
You can choose up to three moving averages, any length and any type like SMA, EMA, WMA, HMA, RMA, SWMA and VWMA. Furthermore, you have the freedom to adjust the color and width of the lines to your preference.
Below the picture of the settings menu related to the moving averages.
----------------------------------------------------------------------6) ALERTS DIRECT TO YOUR EMAIL OR PHONE --------------------------------------------------------------------
Our alert feature sends real-time notifications directly to your email or phone when a signal is generated, allowing you to take immediate action and stay ahead of the market.
With our system, you first establish your own rules for trading in the strategy tester - this includes your criteria for entering and exiting trades.
Once you've defined these conditions, our system will start sending you alerts. These alerts will be triggered whenever your specified conditions are met. So, if the market matches your 'enter trade' conditions, you'll receive an alert prompting. Similarly, when your 'exit trade' conditions are met, you'll receive another alert.
Remember, these alerts are purely based on the conditions you set.
Once the condition is met, you will receive alerts directly to your email or phone when enter and exit a trade based on your custom conditions. To make sure you receive these notifications click on notifications tab.
---------------------------------------------------------------7) ADVANCED AND CUSTOMIZABLE SETTINGS MENU----------------------------------------------------------------------
We designed Easy Trade indicators with traders in mind, so it's user-friendly, easy to navigate and users can customize inputs, style, and colors of every feature in the indicator's settings menu.
-----------------------------------------------------------------------8) EASY TRADE PRO - BACKTESTING SYSTEM----------------------------------------------------------------------
Easy Trade Pro features a highly effective and realistic backtesting system, designed to mirror as closely as possible the real-world scenarios of entering and exiting trades.
Step 1:
Open the settings menu of the Indicator.
Once opened the settings menu click on properties.
Decide on the capital you wish to invest. Choose whether to use contracts or USD and determine the size of your orders. For the sake of realism, we recommend not exceeding 25% of your capital per order. However, if you decide to utilize your entire capital, make sure to adjust your stop loss accordingly. For instance, if you have a capital of 10K and use 10K with a stop loss at 2%, your potential loss would be $200. Conversely, if you use only 2K of your 10K capital with a stop loss at 10%, you would still lose the same 2% of your capital. To make your simulation even more authentic, consider incorporating broker fees or commissions into your calculations. For example, spot market fees are typically around 0.10%. If you're backtesting markets with low liquidity, consider factoring in slippage as well.
Step 2:
Navigate to the 'Inputs' section and scroll down until you come across 'Backtesting System - Strategy Test'. Once you locate this, click on the box and activate the 'USE STRATEGY SYSTEM' option by checking the tick box.
Also You will then need to set a 'Start Date' and 'End Date', establishing a specific time period during which you wish to test your strategy.
Otherwise you can consider to use the deep backtesting feature.
Step 3:
It's now time to establish the conditions for entering a trade. You can choose from five different types of custom buy signals: Good Buy, Good Buy Bull, Great Buy, Incredible Buy, and Bullish Reversal. Note that 'Great Buy' and 'Incredible Buy' are rare signals, so we advise against using them frequently in mechanical strategy tests; instead, consider them more for manual live tests. For more consistent results, we recommend using the other buy signals.
After determining your preferred buy signal, you can choose how many confirmation candles you wish to wait for before entering a trade. A 'confirmation' means that if the next candle closes above the opening or closing price of the chosen buy signal, it's considered a confirmation. This could be the opening or closing price, depending on whether the candle is green (close > open) or red.
You can set the number of confirmation candles in different time frames: below 2h, between 2h and 10h, and above 10h.
Step 4:
It's now time to safeguard your trade by managing risk. You can choose to implement a stop loss, expressed in percentage terms, or opt for a trailing stop. A trailing stop is a type of stop loss order that moves with the market price. It is designed to protect gains by enabling a trade to remain open and continue to profit as long as the market price is moving in a favorable direction. However, the trade closes if the market price changes direction by a specified amount (the 'trailing stop distance').
Additionally, you can minimize losses and move the stop loss to your entry point once the price reaches a certain percentage of profit. This strategy can help secure potential gains while limiting the potential for losses.
Step 5:
Now it's time to set the conditions for exiting the trade. You have the option to divide your exit into a maximum of four parts, with each part representing 25% of the position size. For each take profit point, you can choose from three different custom sell signals: Good Sell, Good Sell Bear, and Bearish Reversal.
Similarly, the concept of confirmation candles also applies here, but in this case, the candles are not closing above. A 'confirmation' for a sell signal means that if the next candle closes below the opening or closing price of the selected sell signal, it's considered a confirmation. This could be the opening or closing price, depending on whether the candle is green (open > close) or red (close < open).
So, when you're looking to sell, a confirmation would occur if the next candlestick's closing price is lower than the opening or closing price of the candlestick that triggered the sell signal. This indicates a potential bearish trend, providing the confirmation to execute the sell order.
Additionally, we've introduced a feature that allows you to move your stop loss to the entry point whenever the first take profit (1TP) is reached, which equates to hitting one custom sell signal.
Step 6:
We've also designed an alternative method for taking profits. With this approach, you can choose to exit your position once a fixed percentage gain from the entry point is reached. For instance, you might decide to exit when a 10% profit is achieved. Similarly to the previous method, this approach allows you to choose up to four exit points and determine the proportion of your position you want to close at each stage.
Conclusion:
Easy Trade Pro provides users with various options for entering and exiting trades. To effectively utilize the indicator, we strongly recommend conducting thorough backtesting and considering the results across your preferred trading pairs. It is advisable to analyze a substantial number of trades, ideally exceeding 100 trades, to obtain reliable insights into the indicator's performance. This approach will help you gain a better understanding of how Easy Trade Pro aligns with your trading strategy and objectives.
❗Keep attention❗
It is important to note that no trading indicator or strategy is foolproof, and there is always a risk of losses in trading. While this indicator may provide useful information for making conclusions, it should not be used as the sole basis for making trading decisions. Traders should always use proper risk management techniques and consider multiple factors when making trading decisions.
It is also important to be aware of the limitations of simulated performance results. Hypothetical or simulated results do not represent actual trading, and since trades have not been executed, results may be over- or under-compensated for market factors such as lack of liquidity. Simulated trading programs are also designed with the benefit of hindsight, and no representation is being made that any account will achieve profits or losses similar to those shown. Therefore, our indicators are for informative purposes only and not intended to be used as financial advice.
We encourage traders to use our indicators as part of a well-rounded trading strategy and to always be aware of the risks involved in trading. Remember that past performance is not indicative of future results and always trade responsibly.
Strategy
Ta StrategyHello guys
This script follows traditional technical indicators
MACD, ADX, RSI and pivot points
If the price is above the resistance and the MACD has crossover ,and the RSI 14 is above 50
ADX is higher than 20, and DI+ is higher than DI-. This is a buy signal and vice versa for a sell signal
The script moves the stop loss to the entry price after the first target is reached
You can specify the quantity you want to sell when the price reaches the first target
There are also options like if you want the script to entry long or short, or both
you can reverse the strategy if it does not work well
If you want to inquire about any details, please let me know in the comments
Volatility Compression Breakout - LeafAlgo Pro StrategyThe Volatility Compression Breakout strategy is designed to identify periods of low volatility followed by potential breakout opportunities in the market. It aims to capture moments when the price consolidates within a narrow range, indicating a decrease in volatility, and anticipates a subsequent expansion in price movement. This strategy is based on our indicator of the same name (), but differs by offering many more options for the band/channel type and trend filters in addition to implementing the ability to use this strategy with algorithmic plug-ins (see details at the bottom).
This strategy features six types of bands/channels and five types of trend filters, for a total of 30 combinations. The six band/channel types are the Adaptive Gaussian MA channel (based on the Adaptive Gaussian MA that we previously published ()), standard Bollinger Bands, smoothed Bollinger Bands (basis is an EMA of the typical Bollinger Basis), Keltner Channels, a Quadratic Regression Channel (based on the channel that we previously published in the LeafAlgo Pro indicator ()), and Volatility-Based Mean Reversion Bands (). The five trend filters include an EMA, SMA, Weighted MA, McGinley Dynamic, and the Adaptive Gaussian MA itself.
Examples of the different band/channel types (all with EMA as the trend filter):
Adaptive Gaussian MA Channel:
Bollinger Bands:
Smoothed Bollinger Bands:
Keltner Channels:
Quadratic Regression Channel:
Volatility-Based Mean Reversion Bands:
Examples of the different trend filters (all with Keltner Channels):
EMA:
SMA:
WMA:
McGinley Dynamic:
Adaptive Gaussian MA:
How the Long/Short Entry Signals are Calculated:
A breakout signal upwards, accompanied by a long entry, is created when the high is greater than the secondary upper band (the upper band plus a standard deviation or with a multiplier, depending on which band/channel type is selected), the latest close is above the trend filter line, and the previous close was below the trend filter line. A break downwards, accompanied by a short entry, is created when the low is below the secondary lower band, the close is below the trend filter line, and the previous close was above the trend filter line. These conditions, along with a confirmed barstate, make up the strategy entry signals.
Coloration:
When the close price is above both the middle/basis and the trend filter, the bars are colored lime green, indicating a potential bullish market sentiment. When the close price is positioned above the basis but below the trend filter, or below the basis but above the trend filter, the bars are colored yellow, signifying a neutral or indecisive market condition. Conversely, when the close price falls below both the basis and the trend filter, the bars are colored fuchsia, suggesting a potential bearish market sentiment. Additionally, the coloration of the middle/basis line and the trend filter provides further visual cues for assessing the trend. When the close price is above the basis, the line is colored lime green, indicating a bullish trend. Conversely, when the close price is below the basis, the line is colored fuchsia, highlighting a bearish trend. Similarly, the trend line is colored lime green when the close price is above it, representing a bullish trend, and fuchsia when the close price is below it, indicating a bearish trend. The fill between the primary and secondary upper bands is colored lime and the fill between the primary and secondary lower bands is colored fuchsia. These colorations can be toggled on/off in the strategy settings menu.
How Changing Parameters Can Be Beneficial:
Modifying the parameters allows you to adapt the indicator to different market conditions and trading styles. For example, with Keltner Channels, increasing the compression period can help identify broader volatility patterns and major market shifts. On the other hand, decreasing the compression period provides more precise and timely signals for short-term traders. Adjusting the compression multiplier affects the width of the Keltner Channels. Higher multipliers increase the breakout threshold, filtering out smaller price movements and providing more reliable signals during significant market shifts. Lower multipliers make the indicator more sensitive to smaller price ranges, generating more frequent but potentially less reliable signals.
Changing the type of trend filter can drastically change your results. Test out each trend filter type and determine which one will work best for your purposes. Further, the MA periods in the trend filter settings can help you align your trades with the prevailing market direction. Increasing the period smoothes out the trend, filtering out shorter-term fluctuations and focusing on more sustained moves. Decreasing the period allows for quicker responses to changes in trend, capturing shorter-term price swings.
By adjusting the parameters and incorporating additional analysis techniques, you can customize the strategy to suit your trading style and preferences. However, it is crucial to exercise caution, conduct thorough analysis, and practice proper risk management to increase the likelihood of successful trades. Remember that no strategy can guarantee profits, and continuous learning and adaptation are key to long-term trading success.
Take Profit/Stop Loss Settings:
Take profit, stop loss, and trailing percentages are also included, found at the bottom of the Input tab under “TT and TTP” as well as “Stop Loss”. The take profit and stop loss levels will be reflected as green and red lines respectively on the chart as they occur. Make sure to understand the TP/SL ratio that you desire before use, as the desired hit rate/profitability percentage will be affected accordingly. The option for adding in a trailing stop has also been included, with options to choose between an ATR-based trail or a percentage-based trail. This strategy does NOT guarantee future returns. Apply caution in trading regardless of discretionary or algorithmic. Understand the concepts of risk/reward and the intricacies of each strategy choice before utilizing them in your personal trading.
Profitview/Pineconnector Settings:
If you wish to utilize Profitview’s automation system, find the included “Profitview Settings” under the Input tab of the strategy settings menu. If not, skip this section entirely as it can be left blank. Options will be “OPEN LONG TITLE”, “OPEN SHORT TITLE”, “CLOSE LONG TITLE”, and “CLOSE SHORT TITLE”. If you wished to trade SOL, for example, you would put “SOL LONG”, “SOL SHORT”, “SOL CLOSE LONG”, and “SOL CLOSE SHORT” in these areas. Within your Profitview extension, ensure that your Alerts all match these titles. To set an alert for use with Profitview, go to the “Alerts” tab in TradingView, then create an alert. Make sure that your desired asset and timeframe are currently displayed on your screen when creating the alert. Under the “Condition” option of the alert, select the strategy, then select the expiration time. If using TradingView Premium, this can be open-ended. Otherwise, select your desired expiration time and date. This can be updated whenever desired to ensure the strategy does not expire. Under “Alert actions”, nothing necessarily needs to be selected unless so desired. Leave the “Alert name” option empty. For the “Message”, delete the generated message and replace it with {{strategy.order.alert_message}} and nothing else. If using Pineconnector, follow the same directions for setting up an alert, but use the ",buy,,risk=" syntax as noted in the tooltips.
Additional Sample Settings (for ETHUSDT-Binance 45M):
Band/Channel Type - Keltner Channels (Compression Period of 20, Multiplier of 1.8x)
Trend Filter - WMA (50 length, no offset, close as the source)
TP/SL - 3.0% TP / 2.0% SL, 0.005 trailed TP, no trailed SL
The Z-score The Z-score, also known as the standard score, is a statistical measurement that describes a value's relationship to the mean of a group of values. It's measured in terms of standard deviations from the mean. If a Z-score is 0, it indicates that the data point's score is identical to the mean score. Z-scores may be positive or negative, with a positive value indicating the score is above the mean and a negative score indicating it is below the mean.
The concept of Z-score was introduced by statistician Carl Friedrich Gauss as part of his "method of the least squares," which was an important step in the development of the normal distribution and Z-score tables. It's a key concept in statistics and is used in various statistical tests.
In financial analysis, Z-scores are used to determine whether a data point is usual or unusual. You can think of it as a measure of how many standard deviations an element is from the mean. For instance, a Z-score of 1.0 would denote a value that is one standard deviation from the mean. Z-scores are also used to predict probabilities, with Z-scores having a distribution that is expected to be normal.
In trading, a Z-score is used to determine how often a trading system may produce a string of winners or losers. It can help a trader to understand whether the losses or profits they see are something that the system would most likely produce, or if it's a once in a blue moon situation. This helps traders make decisions about when to start or stop a system.
I just wanted to play a bit with the Z-score I guess.
Feel free to share your findings if you discover additional applications for this strategy or identify timeframes where it appears to perform more optimally.
How it works:
This strategy is based on a statistical concept called Z-score, which measures the number of standard deviations a data point is from the mean. In other words, it helps determine how unusual or usual a data point is.
In the context of this strategy, Z-score is applied to a 10-period EMA (Exponential Moving Average) of Heikin-Ashi candlestick close prices. The Z-score is calculated over a look-back period of 25 bars.
The EMA of the Z-score is then calculated over a 20-bar period, and the upper and lower thresholds (bounds for buy and sell signals) are defined using the 90th and 10th percentiles of this EMA score.
Long positions are taken when the Z-score crosses above the lower threshold or crosses above the mid-line (50th percentile). An additional long entry is made when the Z-score crosses above the highest value the EMA has been in the past 100 periods.
Short positions are initiated when the EMA crosses below the upper threshold, lower threshold or the highest value the EMA has been in the past 100 periods.
Positions are closed when opposing entry conditions are met, for example, a long position is closed when the short entry condition is true, and vice versa.
Set your desired start date for the strategy. This can be modified in the timestamp("YYYY MM DD") function at the top of the script.
BBO-ALPHA-PHANTOMHello friends, this is the second time I am publishing this script, hopefully the description will be sufficient and you can use it reliably.
Script Description:
The script consists of several indicators and generates buy and sell signals based on their calculations. Here's a breakdown of the functions and indicators used in the script:
Moving Average Convergence Divergence (MACD):
Fast Length: The number of periods used for calculating the fast moving average.
Slow Length: The number of periods used for calculating the slow moving average.
Source: The price source used for calculations (default is the closing price).
Signal Smoothing: The number of periods used for smoothing the signal line.
Oscillator MA Type: The type of moving average used for the oscillator line (default is Exponential Moving Average).
Signal Line MA Type: The type of moving average used for the signal line (default is Exponential Moving Average).
Benefit: MACD is a trend-following momentum indicator that helps identify potential trend reversals, bullish or bearish market conditions, and generate buy and sell signals based on the crossovers of the oscillator and signal lines.
Relative Strength Index (RSI):
RSI Length: The number of periods used for calculating RSI.
RSI Source: The price source used for RSI calculations (default is (high + low + close) / 3).
MA Type: The type of moving average used for smoothing RSI values (default is Simple Moving Average).
MA Length: The number of periods used for smoothing RSI values.
Benefit: RSI is a momentum oscillator that measures the speed and change of price movements. It helps identify overbought and oversold conditions, potential trend reversals, and generate buy and sell signals based on the crossovers of RSI and its moving average.
Money Flow Index (MFI):
MFI Length: The number of periods used for calculating MFI.
Source: The price source used for MFI calculations (default is (high + low + close) / 3).
Benefit: MFI is a momentum indicator that uses both price and volume data to measure buying and selling pressure. It helps identify overbought and oversold conditions and potential trend reversals.
Directional Movement Index (DMI):
Signal Length: The number of periods used for smoothing the ADX line.
Length: The number of periods used for calculating DMI.
Benefit: DMI consists of three lines: ADX, +DI (Plus Directional Indicator), and -DI (Minus Directional Indicator). ADX measures the strength of a trend, while +DI and -DI indicate the direction of the trend. DMI helps identify trend strength, trend direction, and potential trend reversals.
Stochastic Oscillator:
SmoothK: The number of periods used for smoothing %K line.
SmoothD: The number of periods used for smoothing %D line.
Length RSI: The number of periods used for calculating RSI within Stochastic.
Length Stoch: The number of periods used for calculating Stochastic.
Benefit: Stochastic Oscillator is a momentum indicator that compares the closing price of an asset to its price range over a specific period. It helps identify overbought and oversold conditions and potential trend reversals.
Moving Averages (MA):
MA50: Simple Moving Average with a length of 50 periods.
MA200: Simple Moving Average with a length of 200 periods.
Benefit: Moving averages are commonly used to
Advantages of the script compared to common indicators:
Comprehensive analysis: The script combines several indicators such as MACD, RSI, MFI, DMI, Stochastic Oscillator and Moving Averages. It thus provides a broader and more comprehensive view of the market and its development.
Synergy of indicators: Using multiple indicators increases the reliability and confirmation of signals. Combining different indicators can provide potentially stronger and more accurate signals of a trend change.
Identifying Oversold and Overbought Levels: RSI, MFI and Stochastic Oscillator are used to identify oversold and overbought levels in the market. This can help uncover opportunities to buy or sell in line with these levels.
Identifying trends and their strength: DMI and Moving Averages help identify trends in the market and provide information about their strength. This can help traders in deciding the appropriate time to enter and exit the market.
Early signal generation: The script generates signals based on a combination of various indicators, which can help traders identify potential trading opportunities at an early stage.
The main thing for me is that it helps me from overtrading, I only trade when I get an alert or see it on the chart. I recommend
I find it best to trade in the 1h and 2h time frame. The shorter ones like 15min and 30min are perfect for me to get out of the position.
It is important to note that no indicator guarantees 100% accuracy in generating signals and trading on financial
RSI-CCI Fusion StrategyRSI-CCI Fusion Strategy: Harnessing the Power of RSI and CCI
The "RSI-CCI Fusion Strategy" is a powerful trading approach that combines the strengths of the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) to provide enhanced trading insights. This strategy is based on the popular "RSI & CCI Fusion + Alerts" indicator, which utilizes the RSI and CCI indicators from TradingView .
1. Overview of RSI and CCI:
The Relative Strength Index (RSI) is a widely used momentum oscillator that measures the speed and change of price movements. It helps traders identify overbought and oversold conditions in the market. On the other hand, the Commodity Channel Index (CCI) is a versatile indicator that identifies cyclical trends and provides insights into overbought and oversold levels.
2. The RSI-CCI Fusion Strategy:
The RSI-CCI Fusion Strategy harnesses the combined power of the RSI and CCI indicators to generate robust trading signals. By blending the RSI and CCI, this strategy captures both momentum and cyclical trend dynamics, offering a more comprehensive view of the market.
3. Utilizing the RSI-CCI Fusion Indicator + Alerts:
The "RSI & CCI Fusion + Alerts" indicator serves as the backbone of the RSI-CCI Fusion Strategy. It integrates the RSI and CCI indicators from TradingView, providing traders with a clear and actionable trading signal.
4. How it Works:
- The indicator calculates the RSI and CCI values, standardizes them using z-score, and combines them with a weighted fusion approach.
- The resulting RSI-CCI Fusion indicator is plotted on the chart, accompanied by dynamic upper and lower bands, which help identify potential overbought and oversold conditions.
- Traders can customize alerts based on their preferred thresholds and timeframes, enabling them to receive timely notifications for potential buy and sell signals.
5. Implementing the RSI-CCI Fusion Strategy:
Traders following the RSI-CCI Fusion Strategy can utilize the buy and sell signals generated by the RSI-CCI Fusion indicator. When the indicator crosses below the upper band, it may signal a potential selling opportunity. Conversely, when it crosses above the lower band, it may indicate a potential buying opportunity. Traders can also consider additional factors and technical analysis tools to validate the signals before making trading decisions.
Conclusion: The RSI-CCI Fusion Strategy provides traders with a robust approach to analyze the market and make well-informed trading decisions. By incorporating the RSI and CCI indicators through the "RSI & CCI Fusion + Alerts" indicator, traders can take advantage of the combined strengths of these indicators. However, it is important to remember that no strategy guarantees success, and traders should always practice risk management and conduct thorough analysis before executing trades using this strategy.
Disclaimer: Trading involves risks, and it is important to conduct your own research and consult with a financial advisor before making any investment decisions.
Note: The RSI-CCI Fusion Strategy serves as a general guide, and individual traders may have different preferences and trading styles.
Williams %R Strategy
The Williams %R Strategy is a trading approach that is based on the Williams Percent Range indicator, available on the TradingView platform.
This strategy aims to identify potential overbought and oversold conditions in the market, providing clear buy and sell signals for entry and exit.
The strategy utilizes the Williams %R indicator, which measures the momentum of the market by comparing the current close price with the highest high and lowest low over a specified period. When the Williams %R crosses above the oversold level, a buy signal is generated, indicating a potential upward price movement. Conversely, when the indicator crosses below the overbought level, a sell signal is generated, suggesting a possible downward price movement.
Position management is straightforward with this strategy. Upon receiving a buy signal, a long position is initiated, and the position is closed when a sell signal is generated. This strategy allows traders to capture potential price reversals and take advantage of short-term market movements.
To manage risk, it is recommended to adjust the position size based on the available capital. In this strategy, the position size is set to 10% of the initial capital, ensuring proper risk allocation and capital preservation.
It is important to note that the Williams %R Strategy should be used in conjunction with other technical analysis tools and risk management techniques. Backtesting and paper trading can help evaluate the strategy's performance and fine-tune the parameters before deploying it with real funds.
Remember, trading involves risks, and past performance is not indicative of future results. It is always advised to do thorough research, seek professional advice, and carefully consider your financial goals and risk tolerance before making any investment decisions.
Model Indicator |ASE|The purpose of this indicator is to allow the user to build their own model. Each feature works cohesively together and depending on the filters you enable, the model gives less and more specific entries. This benefits the trader because they have complete control over the kinds of trades they want to take, while maintaining its automatic form.
We want to be as customizable as possible while still meeting our users’ needs. We started this indicator to propel us into our ultimate project, the ASE Algo.
Features:
SMC Display
Current Structure:
Liquidity Levels:
Daily Premium Discount Array
SMT Divergence
Displacement Candles:
Entry Factors
FVG
Continuation FVGs
MTF FVGs
Order Blocks
MTF Order Blocks
Confluence Filters
MS Reversal
Liquidity Level Raid
Inducement
Daily Prem/Disc Array
Target Factors
Liquidity Level Targets
Current Structure Targets
Trade Management
Trade Overlay
Risk:Reward Target
Benefits & Examples:
In the image below the indicator signaled multiple entries based on two simple confluence filters, a MS reversal (CHoCH/MSS) and a Liquidity Raid. Going from left to right we can see a short entry at the highs with a supporting Order Block. Liquidity levels are taken before we see a double IDM right below the respected OB that leads to the next signaled entry. In the middle of the chart we see a long entry that leads right into a short entry showing the effectiveness of such a simple model.
In this supporting image we are showcasing the first implementation of the Trade Overlay feature. This feature displays the Entry and Stop Loss to make it more visible and adds a risk to reward target. Additionally displayed is the SMC Toolkit indicator showing us additional confirmation with our signaled entries playing right out of a higher timeframe FVG.
An additional entry feature is the MTF zone. Setups can form on all timeframes and subjecting yourself to only one may lead you to miss out on some perfect setups or a larger move. In the image below we are on the 1 minute timeframe. We can see the Initial Reversal Entry which played out beautifully and filled a higher timeframe SFVG. With the MTF zone we can see a 3 minute and 5 minute Zone which produces the rest of the trend reaching another higher timeframe SFVG after filling the previous one. Once again showing the benefit of the Toolkit indicator but the plotted entries from such a simple model.
In addition to the model indicators filtered out entry zone, we can use additional confluences to confirm these entries. In the image below we can see a short entry printed after a move out of the Std. Dev. vwap wave which shows over extension. Taking the entry we can have a tight stop loss at the vwap wave or the recent high where we have a liquidity level, targeting a lower liquidity level or higher timeframe FVG.
For this example we are only filtering based on MS Reversals (CHoCH/MSS) to get our entries. Because of this we need additional confirmation to be confident in taking the plotted entry. In the image below you can see a long signal printed, confirmation being the previous Failed Reversal.
HK Percentile Interpolation One
This script is designed to execute a trading strategy based on Heikin Ashi candlesticks, moving averages, and percentile levels.
Please note that you should keep your original chart in normal candlestick mode and not switch it to Heikin Ashi mode. The script itself calculates Heikin Ashi values from regular candlesticks. If your chart is already in Heikin Ashi mode, the script would be calculating Heikin Ashi values based on Heikin Ashi values, which would produce incorrect results.
The strategy begins trading from a start date that you can specify by modifying the `startDate` parameter. The format of the date is "YYYY MM DD". So, for example, to start the strategy from January 1, 2022, you would set `startDate = timestamp("2022 01 01")`.
The script uses Heikin Ashi candlesticks, which are plotted in the chart. This approach can be useful for spotting trends and reversals more easily than with regular candlestick charts. This is particularly useful when backtesting in TradingView's "Rewind" mode, as you can see how the Heikin Ashi candles behaved at each step of the strategy.
Buy and sell signals are generated based on two factors:
1. The crossing over or under of the Heikin Ashi close price and the 75th percentile price level.
2. The Heikin Ashi close price being above certain moving averages.
You have the flexibility to adjust several parameters in the script, including:
1. The stop loss and trailing stop percentages (`stopLossPercentage` and `trailStopPercentage`). These parameters allow the strategy to exit trades if the price moves against you by a certain percentage.
2. The lookback period (`lookback`) used to calculate percentile levels. This determines the range of past bars used in the percentile calculation.
3. The lengths of the two moving averages (`yellowLine_length` and `purplLine_length`). These determine how sensitive the moving averages are to recent price changes.
4. The minimum holding period (`holdPeriod`). This sets the minimum number of bars that a trade must be kept open before it can be closed.
Please adjust these parameters according to your trading preferences and risk tolerance. Happy trading!
Premium PRISM Algorithm [ByteBoost]The ByteBoost PRISM strategy is designed to operate in various market conditions by leveraging the concept of brownian motion theory, which refers to the unpredictable movement of particles suspended in a fluid. This characteristic of random motion can be effectively utilized for analyzing time series data, such as market candles. Based on this notion, we are making the following assumptions regarding the market.
The stock price exhibits characteristics of Brownian motion.
The stock price is distributed in a log-normal pattern.
Volatility remains constant over time.
Options can only be exercised upon expiration.
Risk-free interest does not fluctuate over time.
There are no random or arbitrary opportunities present in the market.
Development Notes
This Strategy was developed with the PineScript language, version 5. This indicator, and most of the descriptions below, were derived largely from the TradingView reference manual. Feedback and suggestions for improvement are more than welcome, as well as recommended input settings and best practices to assist and guide new users effectively.
Features
The ByteBoost PRISM indicator is capable of analyzing multiple aspects of market behavior simultaneously such as:
Detection of potential trend reversals.
Assessment of trend strength and market sentiment.
Identification of stop loss levels.
Discovery of potential entry and exit points.
Ensuring compatibility and effectiveness with other indicators.
Visualization of strategy using historical data.
Customization options available.
Strategy Description
PRISM is an all in one strategy that allows the visualization of entry and exit points as well as the historical performance for every set of parameters. PRISM is a slow paced indicator recommended for the 1h timeframe, because it operates on the belief that markets move in a Brownian motion, for which it leaves enough space and time for the market to decide a trend and catch it at the right time as well as finding appropriate exits given the trend.
PRISM can exist in either an uptrend or downtrend state, but it does not necessarily imply that it reflects the true trend being observed. Instead, it emphasizes capturing significant movements and capitalizing on them by utilizing oscillator levels and exit points calculated based on oversold or overbought values, along with the volatility associated with these movements.
Usage
To use this strategy it is first needed to select a correct set of inputs that correspond to the market you are using, the extra, win difference and oscillator length are dependent on the current market and the average price it manages, so these inputs need to be modified for every pair of assets used.
The long and short tags signify the opportune moment to initiate a new position in the market, whether it's a long or short position, respectively. The exit tags indicate when these positions should be closed. If no exits occur before a new long or short position emerges, it is essential to conclude the existing position and commence a new one in the opposite direction.
Regarding exits, up to two exits can be executed for each movement. The user has the flexibility to determine how these exits are utilized. In the input section, a specific percentage of equity can be selected to be sold during the first exit. If set to 100%, only a single exit will be presented. Otherwise, the remaining equity will be sold during the second exit or at the next trend reversal depending on which action occurs first.
In case the user requires additional exits beyond the initial two, the alternative exits option can be activated in the inputs. This will provide access to supplementary exits, although they may be less advisable compared to the primary exits.
Inputs / Settings
Capital - If using any leverage multiply the amount of money to invest by the leverage, else input the amount to be invested in every trade.
Start date - The date from which the strategy should begin its analysis. Leave unchanged to start from the earliest available date based on your account's plan.
End date - The date until which the strategy should conduct its analysis. Leave unchanged to continue until the current date.
Extra - The minimum gain required in the market to trigger an exit opportunity. It can be a negative number to allow exits at a loss, potentially minimizing losses.
First exit % - If an exit is decided to be partial, it is very likely that there will be a second exit, this parameter determines the percentage of equity to be sold at the first exit. Note that a second exit may not always be applicable.
Win difference - The minimum difference between the entry point and the first exit to determine whether it should be a full exit or a partial exit, as the exit price approaches the entry price, the probability of a trend reversal increases, a full exit is beneficial.
Limit length - Specifies the number of candles to consider for the overbought and oversold market calculation.
Low limit - Sets the minimum value of the limit to decide a short exit.
High limit - Sets the maximum value of the limit to decide a long exit.
Band length - Determines the number of candles to consider for the volatility analysis.
Band height - Sets the multiplication factor of the band to set the maximum and minimum height.
Increment - Determines the rate at which trend reversals occur. A higher value brings the line closer to the current price faster.
Candles exit - Specifies the minimum number of candles required to pass for an exit to become available after initiating a new position.
Oscillator - Enables or disables the main oscillator, which helps determine entry points. Not all assets may benefit from this parameter.
Oscillator length - Specifies the number of candles considered for the entry points oscillator.
Highlighter - Applies a light color between the trend and average price of each bar.
Trend Labels - Displays labels indicating an uptrend or downtrend.
Signal Labels - View the labels indicating a new long or short position.
Exit Labels - Displays the labels indicating exit points.
Candle color - Color codes the inside of the candles with the current signal.
Cloud - Visualize the average price cloud to determine trend direction.
Oscillator points - Adds visual dots to indicate when the oscillator has changed its trend.
Oscillator line - Displays the values of the oscillator to indicate upcoming trend changes.
Alternative exits - Shows additional exits to the ones we recommend, useful if the user missed an exit or needs to have more than two.
Color uptrend - Determines the color scheme for identifying uptrend movements.
Color downtrend - Determines the color scheme for identifying downtrend movements.
Color long - Sets the color scheme for a new long position.
Color short - Sets the color scheme for a new short position.
Color exit - Decides the color scheme for the exit tag and cross shown.
Color alternative exit - Changes the color scheme for the alternative exit cross.
Color oscillator line - Determines the color scheme used for the oscillator line.
Indicator Visuals
The strategy plots the direction of the trend on the chart and changes its color based on this. It also plots shapes on the chart to denote potential buy (Long) and sell (Short) points, where the signals of short and long will appear as well as exit points which can be found as three different,
Exit 1 - A partial exit which sells the previously selected percentage of equity.
Exit 2 - A second exit that can only happen after an Exit 1 has happened, and sell the remaining amount of equity.
Exit Full - A full exit is executed when the price at the exit point is lower than the entry price plus the win difference value. This condition indicates that it is more advantageous to take a single exit rather than waiting for a second exit.
Strategy Alerts
The strategy does not include built-in alerts. However, alerts can be added using the TradingView interface based on the strategy's buy and sell conditions. This way you will be able to receive notifications on your computer or phone when a new signal goes out.
Details
Repainting: It is important to mention that the strategy can mark false long or short signals, as the oscillator is allowed to repaint on the same candle. So users must make sure the candle has closed on buy/sell conditions.
Excessive capital issue: If you configure the strategy with a big amount of capital (+$1,000,000 for example) it is possible that it will completely stop calculating exit signals, as they will be too big for TradingView’s engine to process.
Conclusion
The ByteBoost PRISM strategy empowers traders by providing comprehensive market analysis, clear entry and exit signals, and the ability to visualize strategy performance using historical data. It is a superior algorithm that maximizes profit potential and minimizes risks, making it the preferred choice for traders seeking a competitive edge in the financial markets.
Disclaimer
This strategy is provided as-is, with no guarantee of profits or responsibility for losses. Trading involves risk, and you should only trade with money you can afford to lose. Always conduct your own research and consider your financial situation before engaging in trading.
Monthly Strategy Performance TableWhat Is This?
This script code adds a Monthly Strategy Performance Table to your Pine Script strategy scripts so you can see a month-by-month and year-by-year breakdown of your P&L as a percentage of your account balance.
The table is based on realized equity rather than open equity, so it only updates the metrics when a trade is closed.
That's why some numbers will not match the Strategy Tester metrics (such as max drawdown), as the Strategy Tester bases metrics like max drawdown on open trade equity and not realized equity (closed trades).
The script is still a work-in-progress, so make sure to read the disclaimer below. But I think it's ready to release the code for others to play around with.
How To Use It
The script code includes one of my strategies as an example strategy. You need to replace my strategy code with your own. To do that just copy the source code below into a blank script, delete lines 11 -> 60 and paste your strategy code in there instead of mine. The script should work with most systems, but make sure to read the disclaimer below.
It works best with a significant amount of historical data, so it may not work very effectively on intraday timeframes as there is a severe limitation of available bars on TradingView. I recommend using it on 4HR timeframes and above, as anything less will produce very little usable data. Having a premium TradingView plan will also help boost the number of available bars.
You can hover your mouse over a table cell to get more information in the form of tooltips (such as the Long and Short win rate if you hover over your total return cell).
Credit
The code in this script is based on open-source code originally written by QuantNomad, I've made significant changes and additions to the original script but all credit for the idea and especially the display table code goes to them - I just built on top of it:
Why Did I Make This?
None of this is trading or investment advice, just my personal opinion based on my experience as a trader and systems developer these past 6+ years:
The TradingView Strategy Tester is severely limited in some important ways. And unless you use complex Excel formulas on exported test data, you can't see a granular perspective of your system's historical performance.
There is much more to creating profitable and tradeable systems than developing a strategy with a good win rate and a good return with a reasonable drawdown.
Some additional questions we need to ask ourselves are:
What did the system's worst drawdown look like?
How long did it last?
How often do drawdowns occur, and how quickly are they typically recovered?
How often do we have a break-even or losing month or year?
What is our expected compounded annual growth rate, and how does that growth rate compare to our max drawdown?
And many more questions that are too long to list and take a lifetime of trading experience to answer.
Without answering these kinds of questions, we run the risk of developing systems that look good on paper, but when it comes to live trading, we are uncomfortable or incapable of enduring the system's granular characteristics.
This Monthly Performance Table script code is intended to help bridge some of that gap with the Strategy Tester's limited default performance data.
Disclaimer
I've done my best to ensure the numbers this code outputs are accurate, and according to my testing with my personal strategy scripts it appears to work fine. But there is always a good chance I've missed something, or that this code will not work with your particular system.
The majority of my TradingView systems are extremely simple single-target systems that operate on a closed-candle basis to minimize many of the data reliability issues with the Strategy Tester, so I was unable to do much testing with multiple targets and pyramiding etc.
I've included a Debug option in the script that will display important data and information on a label each time a trade is closed. I recommend using the Debug option to confirm that the numbers you see in the table are accurate and match what your strategy is actually doing.
Always do your own due diligence, verify all claims as best you can, and never take anyone's word for anything.
Take care, and best of luck with your trading :)
Kind regards,
Matt.
PS. If you're interested in learning how this script works, I have a free hour-long video lesson breaking down the source code - just check out the links below this script or in my profile.
Premium Volatility Breakout Strategy [wbburgin]This the premium version of my Volatility Breakout strategy, which improves significantly on the original strategy (publicly available on my profile). Improvements are below. A note about any of my premium scripts: I will continue updating and improving the original (public) versions.
This strategy is not built for any specific asset or timeframe, and has been backtested on crypto, equities, and forex from 1min - 1day. However, I recommend using it on more volatile assets because it is a breakout strategy.
********** My Background
I am an investor, trader, and entrepreneur with 10 years of cryptocurrency and equity trading experience and founder of two fintech startups. I am a graduate of a prestigious university in the United States and carry broad and inclusive interests in mathematical finance, computer science, machine learning / artificial intelligence, as well as other fields.
**********
Improvements over the original Volatility Breakout strategy include:
Faster Trend Detection → The Premium Volatility Breakout strategy will catch trends faster by using adaptive volatility-weighted bands instead of standard-width volatility-weighted bands. This can improve win size and has performed well in my backtesting.
ADX Filter → False breakouts dampen the overall results of the original script, as well as the % profitable,so an ADX filter has been programmed into the script (toggle on/off in settings). This filter will only enter long and short trades when the ADX is above a certain threshold. This is by default toggled off because in most instances it will not be necessary, but in certain environments may be useful.
MA Configuration → Different types of moving averages and weights are now configurable in the settings. These can change the responsiveness of the strategy.
External Trend Filter → I use this strategy as a filter for some of my low-timeframe algorithms. I have added an external trend filter (a plot only displayed in the data window) that will return “1” when the trend is long and “-1” when the trend is short (displayed on-chart with red and green trend curves).
Customizable Alert Messages In-Strategy → In the settings, there will be text boxes where you can create your own alerts. All you will need to do is create an alert in the alert panel on TradingView and leave the message box blank - if you fill out the alert boxes in the settings, these will automatically populate into your alerts. There are in total four different customizable alerts messages: Entry and Exit alerts for both Long and Short sides. If you disable stop loss and/or take profit, these alerts will also be disabled. Similarly, if you disable shorts, all short alerts will be disabled.
About stop losses: This strategy does not come with a stop loss because the moving average acts as a stop loss / trade exit for both long and short entries.
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Display
You can turn off highlighting or barcolor in the settings. Additionally, future updates may include a color scheme for users using a light-themed window.
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Configuring Alerts
In TradingView desktop, go to the ‘Alerts’ tab on the right panel. Click the “+” button to create a new alert. Select this strategy for the condition and one of the two options that includes alert() function calls. Name the alert what you wish and clear the default message, because your text in the settings will replace this message.
Now that the alert is configured, you can go to the settings of the strategy and fill in your chosen text for the specific alert condition. You will need to check “Long and Short” in the “Trade Direction” setting in order for any Short Alerts to become active.
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Disclaimer
Copyright by wbburgin.
The information contained in my Scripts/Indicators/Algorithms does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Cyatophilum SmartStrategy MakerThis indicator allows you to use any other indicator from the TradingView library and create complex entry and exit conditions with ease thanks to several external inputs. Add risk management to your strategy and backtest it before creating alerts!
Key Features:
1 — Entry Conditions: Traders can define their entry conditions using up to three sources. They can choose from several options such as "Cross," "Crossover," "Crossunder," "Above," "Below," or "Equal" for comparing the selected sources.
2 — Entry Gates: Users can set logical gates (e.g., "AND," "OR," "XOR," "NAND," "XNOR") to combine multiple entry conditions.
3 — Exit Conditions: Similar to entry conditions, traders can define exit conditions based on two sources and select from various comparison options.
4 — Stop Loss: The indicator allows users to enable or disable a stop-loss feature. The stop-loss value is calculated based on a percentage of the base order price.
5 — Take Profit: Traders can set multiple take-profit levels by specifying the number of take profits, a base percentage, and a step value. Take profits can be defined as a percentage from the total volume or the base order.
6 — Safety Orders (DCA): The indicator supports the use of safety orders (Dollar Cost Averaging) to help manage risks. Users can set the number of safety orders, price deviation, step scale, and volume scale.
7 — Backtest Settings: Traders can define the start and end periods for backtesting their strategy. This feature allows them to analyze the performance of their strategy within specific timeframes.
8 — Alerts: The indicator provides the option to create alerts for entry, exit, stop loss, take profit, and safety orders. Users can customize the alert messages using placeholders for dynamic values like price, symbol, and order size.
Hobbiecode - RSI + Close previous dayThis is a simple strategy that is working well on SPY but also well performing on Mini Futures SP500. The strategy is composed by the followin rules:
1. If RSI(2) is less than 15, then enter at the close.
2. Exit on close if today’s close is higher than yesterday’s high.
If you backtest it on Mini Futures SP500 you will be able to track data from 1993. It is important to select D1 as timeframe.
Please share any comment or idea below.
Have a good trading,
Ramón.
Hobbiecode - Five Day Low RSI StrategyThis is a simple strategy that is working well on SPY but also well performing on Mini Futures SP500. The strategy is composed by the followin rules:
1. If today’s close is below yesterday’s five-day low, go long at the close.
2. Sell at the close when the two-day RSI closes above 50.
3. There is a time stop of five days if the sell criterium is not triggered.
If you backtest it on Mini Futures SP500 you will be able to track data from 1993. It is important to select D1 as timeframe.
Please share any comment or idea below.
Have a good trading,
Ramón.
Hobbiecode - SP500 IBS + HigherThis is a simple strategy that is working well on SPY but also well performing on Mini Futures SP500. The strategy is composed by the followin rules:
1. Today is Monday.
2. The close must be lower than the close on Friday.
3. The IBS must be below 0.5.
4. If 1-3 are true, then enter at the close.
5. Sell 5 trading days later (at the close).
If you backtest it on Mini Futures SP500 you will be able to track data from 1993. It is important to select D1 as timeframe.
Please share any comment or idea below.
Have a good trading,
Ramón.
VWAP Trendfollow Strategy [wbburgin]This is an experimental strategy that enters long when the instrument crosses over the upper standard deviation band of a VWAP and enters short when the instrument crosses below the bottom standard deviation band of the VWAP. I have added a trend filter as well, which stops entries that are opposite to the current trend of the VWAP. The trend filter will reduce total false breakouts, thus improving the % profitable while maintaining the overall returns of the strategy. Because this is a trend-following breakout strategy, the % profitable will typically be low but the average % return will be higher. As a rule, be sure to look at the average winning trade % compared to the average losing trade %, and compare that to the % profitable to judge the effectiveness of a strategy. Factor in fees and slippage as well.
This strategy appears to work better with the lower timeframes, and I was impressed with its results. It also appears to work on a wide range of asset classes. There isn't a stop loss or take profit built-in (other than the reversal signals, which close the current trade), so I would encourage you to expand on the strategy based on your own trading parameters.
You can toggle off the bar colors and the trend filter if you so desire.
Future updates to this script (or ideas of improving on it) might include a take profit level set at one standard deviation past the current level and a stop loss level set at one standard deviation closer to the vwap from the current level - or applying a multiple to the two based off of your reward/risk ratio.
About the strategy results below: this is with commissions of 0.5 % per trade.
Source CorrelationIn this small indicator I make it possible for the user to set two different input sources. Then, the indicator displays the correlation of these two input sources. It's a very small script, but I think it could be helpful to somebody to find uncorrelated indicators for his trading strategy. To use uncorrelated indicators is in general recommended.
Enjoy this small, but powerful tool. 🧙♂️
Volatility Breakout Strategy [Angel Algo]As traders, we're always looking for opportunities to profit from sudden price breakouts, and the Volatility Breakout Strategy aims to do just that.
This script is the perfect starting point for traders who want to experiment with capturing price movements resulting from increased volatility. The script plots the Average True Range (ATR) on the chart, which is a measure of the asset's volatility over a specified period. By setting the "Length" parameter, you can customize the period over which the volatility is measured.
Using the ATR, the strategy calculates upper and lower breakout levels and plots them on the chart. The signals for long and short positions are generated when the price crosses above the upper breakout level or below the lower breakout level, respectively. They are confirmed by checking the current bar state.
The strategy also fills the space between the upper and lower breakout levels with a color that indicates the latest signal direction. This feature helps traders quickly identify the prevailing trend.
The strategy uses the generated signals to enter trades. When a long or short signal is confirmed, and there is no open position in the direction of the signal, the strategy enters a long or short trade, respectively.
Choice of parameters.
Choosing the right value for the Length input parameter is crucial for tailoring the Volatility Breakout Strategy to suit your trading preferences. In general, a higher Length value implies a focus on capturing longer price moves. For instance, in this script, we have set the Length value to 20, resulting in trades that span approximately 100 candles. These trades encompass price trends consisting of multiple swings.
However, if your goal is to trade individual swings rather than longer trends, it's advisable to experiment with smaller values for the Length parameter. By reducing the Length, you can target shorter-term price movements and potentially increase the frequency of trades.
It's important to note that while a higher Length value tends to lead to longer trades, there is no strict correlation between the Length parameter and the average length of trades. This can vary across different markets. Therefore, it's essential to conduct thorough experimentation with various Length values and closely observe the length of trades they generate. Comparing these trade lengths with the average trend or swing length in the specific market can provide valuable insights.
Ideally, you should aim to select a Length value that aligns with the average trend or swing length observed in the market you are trading. This way, you can optimize the strategy to capture price movements that closely match the prevailing market conditions.
Remember, finding the optimal Length value is a process of trial and error, combined with careful observation of trade lengths and their correlation with market trends. So, don't be afraid to experiment and refine the Length parameter to maximize the effectiveness of the Volatility Breakout Strategy in your chosen market.
Disclaimer: This trading strategy is provided for educational and informational purposes only.Trading involves risk, and past performance is not indicative of future results.
Premium MTF Layered RSI - Bitcoin Bot [wbburgin]This the premium version of my MTF Layered RSI strategy, which improves significantly on the original strategy (publicly available on my profile). Improvements are below. This strategy will also appear as an overlay on your chart. It is completely non-repainting.
The MTF Layered RSI strategy uses the current timeframe and two configurable higher timeframes to enter a long position when Bitcoin is oversold on all three timeframes, and exit the long position when Bitcoin is overbought on the current timeframe. This hedges against situations where the RSI on higher timeframes never reaches the overbought level and we are left "holding the bag" so to speak with the classic "enter long at oversold and enter short at overbought" strategy.
IMPORTANT: This strategy does not work on ranges. It will work on all timeframes and assets, but does not work on ranges (Renko blocks and some other advanced types of charts).
********** My Background
I am an investor, trader, and entrepreneur with 10 years of cryptocurrency and equity trading experience and founder of two fintech startups. I am a graduate of a prestigious university in the United States and carry broad and inclusive interests in mathematical finance, computer science, machine learning / artificial intelligence, as well as other fields.
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Improvements over the original MTF RSI strategy include:
Filters for Uptrends and Downtrends → The Premium RSI strategy will adjust its buy and sell thresholds depending on whether the instrument is trending. This means that, in uptrends, the Premium strategy will buy more frequently, bringing in potentially greater profit, and in downtrends, the strategy will stop buying altogether. These filters and dynamic buy/sell thresholds have made this strategy more profitable in my backtesting across random timeframes, but I cannot guarantee that the strategy will be profitable for you on the default settings. To that end, I have enabled a number of different configurations that you can change in the settings of the strategy.
Stop Loss / Take Profit Calculation Per Tick → Stop loss and take profit are now both enabled in the script and each has their own alerts. You can specify what type of stop loss or take profit you want: percentage or ATR. If you have alerts configured, you will be alerted mid-bar, instead of at close. This helps prevent loss from abrupt falls in price between closing price and next bar open.
Customizable Alert Messages In-Strategy → In the settings, there will be text boxes where you can create your own alerts. All you will need to do is create an alert in the alert panel on Tradingview and leave the message box blank - if you fill out the alert boxes in the settings, these will automatically populate into your alerts. There are in total eight different customizable alerts messages: Entry, Exit, Stop loss, and Take profit alerts for both Long and Short sides. If you disable stop loss and/or take profit, these alerts will also be disabled. Similarly, if you disable shorts, all short alerts will be disabled.
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Display
Configuring Stop Loss or Take Profit will make their corresponding displays appear.
Separately from the trading boxes, background colors (green, red) signify extended uptrends and downtrends, respectively.
Configuring Alerts
In TradingView desktop, go to the ‘Alerts’ tab on the right panel. Click the “+” button to create a new alert. Select this strategy for the condition and one of the two options that includes alert() function calls. Name the alert what you wish and clear the default message, because your text in the settings will replace this message.
Now that the alert is configured, you can go to the settings of the strategy and fill in your chosen text for the specific alert condition. You will need to check “Long and Short” in the “Trade Direction” setting in order for any Short Alerts to become active. Similarly, you will need to check “Enable Stop Loss” for stop loss alerts to become active and “Enable Take Profit” for take profit alerts to become active.
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Disclaimer
Copyright by wbburgin.
The information contained in my Scripts/Indicators/Algorithms does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
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Notes on the Strategy Performance below: This is 3% of equity per trade, with a pyramiding number of 3. I did not include fees because Binance US on Bitcoin/USD does not charge fees on the instrument; however, I heavily encourage you to include fees in your backtesting if you use a different brokerage. To mitigate fees, this strategy is designed with a high average %/trade. If your current fees are greater than the strategy's average %/trade, I encourage you to choose a higher RSI period, such as 14 or 28, which will result in less trades but potentially a higher %/trade.
Pure Morning 2.0 - Candlestick Pattern Doji StrategyThe new "Pure Morning 2.0 - Candlestick Pattern Doji Strategy" is a trend-following, intraday cryptocurrency trading system authored by devil_machine.
The system identifies Doji and Morning Doji Star candlestick formations above the EMA60 as entry points for long trades.
For best results we recommend to use on 15-minute, 30-minute, or 1-hour timeframes, and are ideal for high-volatility markets.
The strategy also utilizes a profit target or trailing stop for exits, with stop loss set at the lowest low of the last 100 candles. The strategy's configuration details, such as Doji tolerance, and exit configurations are adjustable.
In this new version 2.0, we've incorporated a new selectable filter. Since the stop loss is set at the lowest low, this filter ensures that this value isn't too far from the entry price, thereby optimizing the Risk-Reward ratio.
In the specific case of ALPINE, a 9% Take-Profit and and Stop-Loss at Lowest Low of the last 100 candles were set, with an activated trailing-stop percentage, Max Loss Filter is not active.
Name : Pure Morning 2.0 - Candlestick Pattern Doji Strategy
Author : @devil_machine
Category : Trend Follower based on candlestick patterns.
Operating mode : Spot or Futures (only long).
Trades duration : Intraday
Timeframe : 15m, 30m, 1H
Market : Crypto
Suggested usage : Short-term trading, when the market is in trend and it is showing high volatility .
Entry : When a Doji or Morning Doji Star formation occurs above the EMA60.
Exit : Profit target or Trailing stop, Stop loss on the lowest low of the last 100 candles.
Configuration :
- Doji Settings (tolerances) for Entry Condition
- Max Loss Filter (Lowest Low filter)
- Exit Long configuration
- Trailing stop
Backtesting :
⁃ Exchange: BINANCE
⁃ Pair: ALPINEUSDT
⁃ Timeframe: 30m
⁃ Fee: 0.075%
⁃ Slippage: 1
- Initial Capital: 10000 USDT
- Position sizing: 10% of Equity
- Start: 2022-02-28 (Out Of Sample from 2022-12-23)
- Bar magnifier: on
Disclaimer : Risk Management is crucial, so adjust stop loss to your comfort level. A tight stop loss can help minimise potential losses. Use at your own risk.
How you or we can improve? Source code is open so share your ideas!
Leave a comment and smash the boost button!
Thanks for your attention, happy to support the TradingView community.
Rainbow IndicatorName of the indicator: Rainbow indicator
A brief description of the indicator:
Using this indicator, you can see the "margin of safety" for opening a position in shares of fundamentally strong companies with an acceptable P/E level, as well as the price range for closing a position.
The background to the creation of the indicator:
I got the idea to create this indicator thanks to the concept of the "margin of safety", which was invented by the father of value investing - Benjamin Graham. According to his idea, it is reasonable to buy shares of a company only when the price offered by the market is lower than the "intrinsic value" calculated on the basis of financial statements. The value of this difference is the "margin of safety”. At the same time, the indicator does not copy Graham's idea but develops it relying on my own methodology.
So, according to Graham, the "margin of safety" is a good discount to the intrinsic value of the company. That is, if a company's stock is trading at prices that are well below the company's intrinsic value (on a per-share basis), it's a good opportunity to consider buying it. In this case, you will have a certain margin of safety in case the company is in financial distress and its stock price goes down. Accordingly, the greater the discount, the better.
When it comes to the intrinsic value of a company, there are many approaches to determining it - from calculating the Price-to-book value financial ratio to the discounted cash flow method. As for my approach, I am not trying to find the cherished intrinsic value, but I am trying to understand how fundamentally strong the company is in front of me, and in how many years the investment in it will pay off. To determine fundamental strength, I use the appropriate Fundamental Strength Indicator . To estimate the payback period, I use the P/E ratio (*). If I am satisfied with both of these indicators, I move on to the Rainbow Indicator.
(*) If you want to learn more about the P/E ratio, I suggest reading my two articles on TradingView:
Price / Earnings: Interpretation #1
Price/Earnings: amazing interpretation #2
Indicator calculation methodology:
The Rainbow indicator starts with a simple moving average of one year (this is the thick red line in the center). Hereinafter a year will mean the last 252 trading days.
Applying a moving average of this length - is a good way to smooth out sharp price fluctuations which can happen during a year as much as possible, keeping the trend direction as much as possible. Thus, the moving average becomes for me the center of fluctuations of the imaginary pendulum of the market price.
Then the deviations are calculated from the center of fluctuations. To do this, a certain amount of earnings per share is subtracted from and added to the moving average. This is the diluted EPS of the last year.
Deviations with a "-" sign form the Lower Rainbow of four colors:
- The blue spectrum of the lower rainbow begins with a deflection of -4 EPS and ends with a deflection of -8 EPS.
- Green spectrum of the lower rainbow begins with a deflection of -8 EPS and ends with a deflection of -16 EPS.
- The orange spectrum of the lower rainbow begins with a deflection of -16 EPS and ends with a deflection of -32 EPS.
- Red spectrum of the lower rainbow begins with a deflection of -32 EPS and goes to infinity.
The Lower Rainbow is used to determine the price ranges that can be considered for buying stocks. It is in the spectra of the Lower Rainbow that the very "margin of safety" according to my methodology is located. The Lower Rainbow has the boundaries between the spectra as a solid line . And only the red spectrum of the Lower Rainbow has only one boundary.
Deviations with a "+" sign form the Upper Rainbow of four similar colors:
- The red spectrum of the upper rainbow begins with a deflection of 0 EPS and ends with a deflection of +4 EPS.
- The orange spectrum of the upper rainbow begins with a deflection of +4 EPS and ends with a deflection of +8 EPS.
- Green spectrum top rainbow begins with a deflection of +8 EPS and ends with a deflection of +16 EPS.
- The blue spectrum of the upper rainbow begins with a deflection of +16 EPS and goes to infinity.
The Upper Rainbow is used to determine the price ranges that can be considered for selling stocks already purchased. The top rainbow has boundaries between the spectra in the form of crosses . And only the blue spectrum of the upper rainbow has only one boundary.
The presence of the Empty Area (the size of 4 EPS) above the Lower Rainbow creates some asymmetry between the two rainbows - the Lower Rainbow looks wider than the Upper Rainbow. This asymmetry is deliberate because the market tends to fall much faster and deeper than it grows . Therefore, a wider Lower Rainbow is conducive to buying stocks at a good discount during a period of massive "sell-offs.
The situation, when the Lower Rainbow is below the center of fluctuations (the thick red line) and the Upper Rainbow, is above the center of fluctuations is called an Obverse . It is only possible to buy a stock in an Obverse situation .
The situation when the Lower Rainbow is above the center of fluctuations and the Upper Rainbow is below the center of fluctuations is called Reverse . In this situation, the stock cannot be considered for purchase , according to my approach.
Selling a previously purchased stock is possible in both situations: Reverse and Obverse. After loading the indicator, you can see a hint next to the closing price - Reverse or Obverse now.
Due to the fact that the size of the deviation from the center of fluctuation depends on the size of the diluted EPS, several important conclusions can be made:
- The Obverse situation is characteristic of companies that show a profit over the last year.
- The Reverse situation is typical for companies that show a loss over the last year.
- An increase in the width of both rainbows in the Obverse situation tells us about an increase in profits for the company.
- A decrease in the width of both rainbows in the Obverse situation tells us about a decrease in the company's profits.
- An increase in the width of both rainbows in the Reverse situation tells us about an increase in the company's losses.
- A decrease in the width of both rainbows in the Reverse situation tells us about a decrease in the company's losses.
- The higher the profit level of the company, the greater your "margin of safety" should be. This will provide the necessary margin of safety in case you go into a cycle of declining financial results. The appropriate width of the Lower Rainbow will just create this "margin".
- Increased profits in the company (after buying its stock) will allow you to stay in position longer by widening the Upper Rainbow.
- A decrease in profits in the company (after buying its stock) will allow you to close your position more quickly by narrowing the Upper Rainbow.
Conditions for opening and closing positions:
So, the Lower Rainbow has four differently colored spectra: blue, green, orange, and red. Each one highlights the desired range of prices acceptable for buying in an Obverse situation. The blue spectrum is upper with respect to the green spectrum, and the green spectrum is lower with respect to the blue spectrum, etc.
- If the current price is in the Blue Spectrum of the Lower Rainbow, that is a reason to consider that company for buying the first portion (*) of the stock.
- If the current price has fallen below (into the Green Spectrum of the Lower Rainbow), that is a reason to consider this company to buy a second portion of the stock.
- If the current price has fallen below (into the Orange Spectrum of the Lower Rainbow), it is a reason to consider this company to buy a third portion of the stock.
- If the current price has fallen below (into the Red Spectrum of the Lower Rainbow), that is a reason to consider that company to buy a fourth portion of the stock.
(*) The logic of the Rainbow Indicator implies that no more than 4 portions of one company's stock can be purchased. One portion refers to the number of shares you can consider buying at the current price (depending on your account size and personal diversification ratio - see information below).
The Upper Rainbow also has four differently colored spectra: blue, green, orange, and red. Each of them highlights the appropriate range of prices acceptable for closing an open position.
- If the current price is in the red spectrum of the Upper Rainbow, I close one portion of an open position bought in the red spectrum of the Lower Rainbow.
- If the current price is in the orange spectrum of the Upper Rainbow, I close one portion of an open position bought in the orange spectrum of the Lower Rainbow.
- If the current price is in the green spectrum of the Upper Rainbow, I close one portion of an open position bought in the green spectrum of the Lower Rainbow.
- If the current price is in the blue spectrum of the Upper Rainbow, I close one portion of an open position bought in the blue spectrum of the Lower Rainbow.
This position-closing logic applies to both the Obverse and Reverse situations. In both cases, the position is closed in portions in four steps. However, there are 3 exceptions to this rule when it is possible to close an entire position in whole rather than in parts:
- If there is a Reverse situation and the current price is above the thick red line.
- If I decide to invest in another company and I do not have enough available cash to purchase the necessary number of portions.
- If I find out about events that pose a real threat to the further existence of the company (for example, a bankruptcy filing), I can close the position earlier, without waiting for the price to hit the corresponding Upper Rainbow spectrum.
So, the basic scenario of opening and closing a position assumes the gradual purchase of shares in 4 stages and their gradual sale in 4 stages. However, there is a situation where one of the stages is skipped in the case of buying shares and in the case of selling them. For example, because the Fundamental Strength Indicator and the P/E ratio became acceptable for me only at a certain stage (spectrum) or the moment was missed for a transaction due to technical reasons. In such cases, I buy or sell more than one portion of a stock in the spectrum I am in. The number of additional portions will depend on the number of missed spectra. For example, if I have no position in the stock of the company in question, all conditions for buying the stock have been met, and the current price is in the orange spectrum of the Lower Rainbow, I can buy three portions of the stock at once (for the blue, green, and orange spectrum). I will sell these three portions in the corresponding Upper Rainbow spectra (orange, green, and blue). However, if for some reason the orange spectrum of the Upper Rainbow was missed, and the current price is in the green spectrum - I will sell two portions of the three (in the green spectrum). I will sell the last, third portion only when the price reaches the blue spectrum of the Upper Rainbow.
The Rainbow Indicator also helps calculate the number of shares that can be considered for purchase at the current price position in the Lower Rainbow spectra. To do this, you need to go to the indicator settings.
+ Cash in - Cash out +/- Closed profit/loss + Dividends - Fees - Taxes
Here I indicate the amount of funds deposited to my account, withdrawn from it, profit/loss on closed positions, dividends credited to the account, and taxes deducted from the account.
Diversification coefficient
The diversification coefficient determines how diversified I want my portfolio to be. For example, a diversification coefficient of 20 means that I plan to buy 20 share portions of different companies, but no more than 4 portions per company (based on the number of Lower Rainbow spectra).
The cost of purchased shares of this company (fees excluded)
Here I specify the amount of already purchased shares of the company in question in the currency of my portfolio. For example, if at this point in time, I have purchased 1000 shares at $300 per share, and my portfolio is expressed in $, I enter - $300,000.
The cost of all purchased shares in the portfolio (fees excluded)
Here I enter the amount of all purchased shares for all companies in the currency of my portfolio (without commissions spent on the purchase). This is necessary to determine the amount of available funds available to purchase shares.
After entering all the necessary data, I go to the checkbox, by checking it I confirm that the company in question has been studied with the Fundamental Strength Indicator and the P/E ratio, and their values are satisfactory to me. No calculation is performed without the checkbox checked. This is done intentionally because the application of the Rainbow Indicator for stock acquisition purposes is possible only after studying the Fundamental Strength of the company and an acceptable P/E value.
Next, I click "Ok" and get the calculation in the form of a table on the left.
Free cash in the portfolio
This is the amount of free cash available to purchase stocks. Please note that the price of the stock and the funds in your portfolio must be denominated in the same currency. On TradingView, you can choose which currency to display the stock price in.
Cash amount for one portion
The amount of cash needed to buy one portion of a stock. Depends on the diversification ratio entered.
Potential portions amount
Number of portions, available for purchase at the current price. Can be a fractional number.
Cash amount to buy
The amount of cash needed to buy portions available for purchase at the current price.
Shares amount to buy
Number of shares in portions available for purchase at the current price.
The table also contains additional information in the form of the current value of the company's market capitalization and P/E ratio.
Mandatory requirements for using the indicator:
- works only on a daily timeframe;
- the indicator is only applicable to shares of public companies;
- quarterly income statements for the last year are required;
- an acceptable for you P/E ratio is required to consider the company's stock for purchase;
- the Rainbow Indicator only applies in tandem with the Fundamental Strength Indicator. To consider a company's stock for purchase, you need confirmation that the company is fundamentally strong.
What is the value of the Rainbow Indicator?
- clearly demonstrates a company's profit and loss dynamics;
- shows the price ranges that can be used to open and close a position;
- takes into account the principle of gradual increase and decrease of a position;
- allows calculating the number of shares to be purchased;
- shows the current value of the P/E ratio;
- shows the current capitalization of the company.
Example:
As an example, consider the situation with NVIDIA Corporation stock (ticker - NVDA).
September 02, 2022:
Fundamental Strength Indicator - 11.46 (fundamentally strong company).
P/E - 39.58 (acceptable to me).
Current Price - $136.47 (is in the Orange Spectrum of the Lower Rainbow).
Situation - Obverse.
The basic conditions for buying this company's stock are met. The Rainbow Indicator settings are filled out as follows:
The table to the left of the Rainbow Indicator shows how many shares are possible to buy in the Orange Spectrum of Lower Rainbow at the current price = 10 shares. This corresponds to 2.73 portions.
To give you an example, I buy 10 shares of NVDA at $136.47 per share.
October 14, 2022:
NVDA's stock price has moved into the red spectrum of the Lower Rainbow.
The Fundamental Strength Indicator is 10.81 (fundamentally strong company).
P/E is 35.80 (an acceptable level for me).
Current Price - $112.27 (is in the Red Spectrum of the Lower Rainbow).
Situation - Obverse.
The basic conditions for buying this company's stock are still met. The Rainbow Indicator settings are populated as follows:
The table to the left of the Rainbow Indicator shows how many shares are possible to buy in the Lower Rainbow Red Spectrum at the current price (5 shares). This corresponds to 1.12 portions.
To give you an example, I buy 5 shares of NVDA at $112.27 per share. A total of 3.85 portions were purchased, which is the maximum possible number of portions at the current price level. The remainder in the form of 0.15 portions can be purchased only at a price level below $75 per share.
January 23, 2023:
The price of NVDA stock passes through the red spectrum of the Upper Rainbow and stops in the orange spectrum. As an example, I sell 5 shares bought in the red spectrum of the Lower Rainbow, for example at $180 per share (+60%). And also a third of the shares bought in the orange spectrum, 3 shares out of 10, for example at $190 a share (+39%). That leaves me with 7 shares.
January 27, 2023:
NVDA's stock price has continued to rise and has moved into the green spectrum of the Upper Rainbow. This is a reason to close some of the remaining 7 shares. I divide the 7 shares by 2 and round up to a whole number - that's 4 shares. For my example, I sell 4 shares at $199 a share (+46%). Now I am left with 3 shares of stock.
February 02, 2023:
The price of NVDA stock moves into the blue spectrum of the Upper Rainbow, and I close the remaining 3 shares, for example, at $216 per share (+58%). The entire position in NVDA stock is closed.
As you can see, the Fundamental Strength Indicator and the P/E ratio were not used in the process of closing the position. Decisions were made only on the basis of the Rainbow Indicator.
As another example, let's look at the situation with the shares of Papa Johns International, Inc. (ticker PZZA).
November 01, 2017:
Fundamental Strength Indicator - 13.22 points (fundamentally strong company).
P/E - 21.64 (acceptable to me).
Current Price - $62.26 (is in the blue spectrum of the Lower Rainbow).
Situation - Obverse.
The basic conditions for buying shares of this company are met. The settings of the Rainbow Indicator are filled as follows:
The table to the left of the Rainbow Indicator shows how many shares are possible to buy in the Lower Rainbow Blue Spectrum at the current price - 8 shares. This corresponds to 1 portion.
To give you an example, I buy 8 shares of PZZA at a price of $62.26.
August 8, 2018:
PZZA's share price has moved into the green spectrum of the Lower Rainbow.
The Fundamental Strength Indicator is a 9.83 (fundamentally strong company).
P/E is 16.07 (an acceptable level for me).
Current Price - $38.94 (is in the green spectrum of the Lower Rainbow).
Situation - Obverse.
The basic conditions for buying shares of this company are still met. The Rainbow Indicator settings are populated as follows:
The table to the left of the Rainbow Indicator shows how many shares are possible to buy in the Lower Rainbow Green Spectrum at the current price - 12 shares. This corresponds to 0.93 portions.
To give you an example, I buy 12 shares of PZZA at a price of $38.94. A total of 1.93 portions were purchased.
October 31, 2018:
PZZA's stock price moves into the Upper Rainbow red spectrum and is $54.54 per share. Since I did not have any portions purchased in the Lower Rainbow red spectrum, there is no closing part of the position.
February 01, 2019:
After a significant decline, PZZA's stock price moves into the orange spectrum of the Lower Rainbow at $38.51 per share. However, I am not taking any action because the company's Fundamental Strength on this day is 5.02 (a fundamentally mediocre company).
March 27, 2019:
PZZA's stock price passes the green and blue spectrum of the Upper Rainbow. This allowed to close the previously purchased 12 shares, for example, at $50 a share (+28%) and 8 shares at $50.38 a share (-19%).
Closing the entire position at once was facilitated by a significant narrowing in both rainbows. As we now know, this indicates a decline in earnings at the company.
Risk disclaimer:
When working with the Rainbow Indicator, keep in mind that the release of the Income statement (from which diluted EPS is derived) occurs some time after the end of the fiscal quarter. This means that the new relevant data for the calculation will only appear after the publication of the new statement. In this regard, there may be a significant change in the Rainbow Indicator after the publication of the new statement. The magnitude of this change will depend on both the content of the new statement and the number of days between the end of the financial quarter and the publication date of the statement. Prior to the publication date of the new statement, the latest actual data will be used for the calculations. Also, once again, please note that the Rainbow Indicator can only be used in tandem with the Fundamental Strength Indicator and the P/E ratio. Without these additional filters, the Rainbow Indicator loses its intended meaning.
The Rainbow Indicator allows you to determine the price ranges for opening and closing a position gradually, based on available data and the methodology I created. You can also use it to calculate the number of shares you can consider buying taking into account the position you already have. However, this Indicator and/or its description and examples cannot be used as the sole reason for buying or selling stocks or for any other action or inaction related to stocks.
Fundamental Strength IndicatorName of the indicator: Fundamental Strength Indicator
A brief description of the indicator:
Using this indicator, you can evaluate a company in terms of the strength of its financial performance and see how that score has changed over time.
The background to the creation of the indicator:
The main idea that inspired me to create this indicator is: " Even if you buy just 1 share of a company, treat it like buying the whole business ". However, when I need to evaluate the business of thousands of public companies traded on exchanges, there is an objective difficulty: it is very time-consuming. To solve this problem, I had to create a scoring system of the fundamental analysis of the company, embodied in this indicator.
What the indicator looks like:
- First, it is a Histogram with bars of three colors: green, orange, and red. The width of the histogram depends on the depth of data from the company statements. The more historical data, the wider the histogram over time.
The green color of the bars means that the company has been showing excellent financial results by the sum of the factors in that time period. According to my terminology, the company has a " strong foundation " during this period. Green corresponds to values between 8 and 15 (where 15 is the maximum possible positive value on the sum of the factors).
The orange color of the bars means that according to the sum of factors during this period the company demonstrated mediocre financial results, i.e. it has a " mediocre foundation ". Orange color corresponds to values from 1 to 7.
The red color of the bars means that according to the sum of factors in this period of time, the company demonstrated weak financial results, i.e. it has a " weak foundation ". The red color corresponds to values from -15 to 0 (where -15 is the maximum possible negative value on the sum of factors).
- Second, this is the Blue Line , which is the moving average of the Histogram bars over the last year (*). Averaging over the year is necessary in order to obtain a weighted estimate that is not subject to medium-term fluctuations. It is by the last value of the blue line that the actual Fundamental Strength of the company is determined.
(*) The last year means the last 252 trading days, including the current trading day.
- Third, these are operating, investing, and financing Cash Flows expressed in Diluted net income. These flows look like thick green, orange, and red lines, respectively.
- Fourth, this is the Table on the left, which shows the latest actual value of the Fundamental Strength and Cash Flows.
Indicator settings:
In the indicator settings, I can disable the visibility of the Histogram, Blue Line, Cash Flows (each separately), and Table. It helps to study each of the parameters separately. It is also possible to change the color, transparency, and thickness of lines.
Mandatory requirements for using the indicator:
- works only on a daily timeframe;
- only applies to shares of public companies;
- company financial statements for the last 4 quarters and more are required;
- it is necessary to have the data from the Balance sheet, Income statement, and Cash flow statement, required for the calculation.
If at least one component required for calculating the Fundamental Strength is missing, the message " no data to calculate the Fundamental Strength correctly " is displayed. In the same case, but for the operating cash flow, the message " no data to calculate the Operating Cash Flow correctly " is shown, and similarly for other flows.
What is the value of the Fundamental Strength Indicator:
- allows for a quantitative assessment of a company's financial performance in points (from -15 to 15 points);
- allows you to visually track how the company's financial performance has changed (positively/negatively) over time;
- allows to visually trace the movement of main cash flows over time;
- speeds up the process of selecting companies for your shortlist (if you are focused on financial results when selecting companies);
- allows you to protect yourself from investing in companies with weak and mediocre fundamentals.
Indicator calculation methodology:
Guided by the "Treat stock investments as buying the whole business" approach, you can imagine what kind of business an investor is interested in owning and simultaneously determine the input parameters for calculating the indicator.
(!) Here it is important to emphasize that the idea of a benchmark business for investment is a subjective notion, so be sure to check whether it coincides with your own opinion.
For me, a benchmark business is:
- A business that operates efficiently without diminishing the return on shareholders' investment. To assess the efficiency and profitability of a business, I use the following financial ratios (*): Diluted EPS and Return on Equity (ROE). The first two parameters for calculating the indicator are there.
- A business that scales sales and optimizes its costs. From this point of view, the following financial ratios are suitable: Gross margin, Operating expense ratio, and Total revenue. Plus three other metrics.
- A business that turns goods/services into cash quickly and does not fall behind on payments to suppliers. The following financial ratios will fit here: Days payable, Days sales outstanding, and Inventory to revenue ratio. These are three more metrics.
- A business that does not resort to significant accounts payable and shows financial strength. Here I use the following financial ratios: Current ratio, Interest coverage, and Debt to revenue ratio. These are the last three parameters.
(*) If you want to learn more about these financial ratios, I suggest reading my two articles on TradingView:
Financial ratios: digesting them together
What can financial ratios tell us?
Next, each of the parameters is assigned a certain number of points based on its last value or the position of that value relative to the annual maximum and minimum.
For example, if the Current ratio:
- greater than or equal to 2 (+1 point);
- less than or equal to 1 (-1 point);
- more than 1 but less than 2 (0 points).
Or for example, if Diluted EPS:
- near or above the annual high (+2 points);
- near the annual minimum and below (-2 points);
- between the annual maximum and minimum (0 points).
And so on with each of the parameters.
As a result, the maximum number of points a company can score is 15 points. The minimum number of points a company can score is -15 points. These levels are marked with horizontal dotted lines: the green line is for the maximum value, and the red line is for the minimum.
I track the number of points for each day of a company's life on a three-color Histogram. The resulting average value for the last year is on the Blue Line. For me, it is the last value of the Blue Line that determines - this is the actual Fundamental Strength of the company.
The business valuation model I created is more suitable for companies that produce goods or services, and where tangible assets play a significant role in the business. For example, when analyzing companies in the financial sector, you may see the message "no data to calculate the Fundamental Strength correctly". Many of them may simply be missing data that is used as input for the calculation: Inventory to revenue ratio, Days sales outstanding, etc.
Examples:
Below I will evaluate various companies using the Fundamental Strength Indicator.
Tesla, Inc.
The indicator shows that since 2020, Tesla Inc. has been steadily increasing its Fundamental Strength (from 3.27 in Q1 2020 to 12.79 in Q1 2023). This is noticeable both by the color change of the Histogram from orange to green and by the rising Blue Line. If you look in detail at what has been happening with the financials during this time, it's clear what meaningful work the company has done. Revenues have almost quadrupled. Earnings per share have increased 134 times. At the same time, total debt to revenue fell almost 10 times.
Keurig Dr Pepper Inc.
The company, formed in 2018 by the merger of Keurig Green Mountain and Dr Pepper Snapple Group, has failed to deliver outstanding financial results, causing its Fundamental Strength to fall from 4.63 in Q1 2018 to -0.53 in Q1 2023. During this period, the drop in diluted earnings per share was accompanied by higher debt and deteriorating liquidity.
Costco Wholesale Corporation
Wholesaler Costco has been surprisingly stable in its financial performance and with steady growth in both earnings and revenue. This is the reason why the Histogram bars are exceptionally green throughout the calculation of the indicator. The Fundamental Strength has not changed in three years and is high at 11 points.
As an additional filter, for example, when comparing two companies where all other conditions are equal - I use the dynamics of Cash Flows expressed in Diluted net income (*). These are the thick green, orange, and red lines over the Histogram.
Why do I use income as a unit of measure of Cash Flows? Because it is a good way to make the scale of indicator values the same for companies from different countries, with different currencies. It also allows you to use a single value scale for both Cash Flows and Fundamental Strength.
(*) If you want to learn more about Cash Flows, I suggest reading my two articles on TradingView:
Cash flow statement or Three great rivers
Cash flow vibrations
So, an additional filter shows the dynamics of Cash Flows over time.
To interpret the dynamics of Cash Flows, I pay attention to the following patterns:
- How the cash flows are positioned in relation to each other;
- In which zone each of the cash flows is located - in the positive or negative;
- What is the trend of each of the cash flows;
- How volatile each of the cash flows is.
As an example, let's look at several companies in order to interpret the dynamics of their Cash Flows.
John B. Sanfilippo & Son, Inc.
This is the most ideal situation for me: operating cash flow (green line) is above the other cash flows, investment cash flow (orange line) is near zero and practically unchanged, and financial cash flow (red line) is consistently below zero. This picture shows that the company lives off its operating cash flow, does not increase its debt, does not spend a substantial amount of money on expensive purchases, and retains (does not sell off) assets.
Parker Hannifin Corporation
With stable operating cash flow (green line), the company implements investment programs by raising additional funding. This is noticeable due to an increase in financial cash flow (red line) and a simultaneous decrease in investment cash flow (orange line) with a significant deepening into negative areas. Apparently, there is not enough operating cash flow to realize the planned investments. One has to wonder how sustainable a company can be if it invests in its development using borrowed funds without a subsequent increase in operating cash flow.
Schlumberger N. V.
The chaotic intertwining of cash flows outside of the Fundamental Strength range (-15 to 15) is indicative of the company's rich life, but to me, it is an indicator of high riskiness of its actions. And as we can see, Fundamental Strength has only begun to strengthen in the last year, when the external appearance of cash flow has normalized.
Risk disclaimer:
When working with the Fundamental Strength Indicator and the additional filter in the form of Cash Flows, you should understand that the publication of the Balance sheet, Income statement, and Cash flow statement takes place sometime after the end of the financial quarter. This means that new relevant data for the calculation will only appear after the publication of the new statements. In this regard, there may be a significant change in the values of the Indicator after the publication of new statements. The magnitude of this change will depend both on the content of the new statements and on the number of days between the end of the financial quarter and the publication date of the statements. Until the date of publication of the new statements, the latest relevant data will be used for calculations.
I would like to draw your attention to the fact that the calculation of Fundamental Strength and Cash Flows requires the availability of data for all parameters of the valuation model . It uses data that is exclusively available on TradingView (there is no reconciliation with other sources). If at least one parameter is missing, I switch to another company's analysis to continue using the indicator.
Thus, the Fundamental Strength Indicator and an additional filter in the form of Cash Flows make it possible to evaluate the financial results of the company based on the available data and the methodology I created. A simple visualization in the form of a three-color Histogram, a Blue line, and three thick Cash Flow lines significantly reduces the time for selecting fundamentally strong companies that fit the criteria of the selected model. However, this Indicator and/or its description and/or examples cannot be used as the sole reason for buying or selling stocks or for any other action or inaction related to stocks.
