Market First Signals - Relative Strength/Weakness

11 lug 2022

This market-first trading strategy gives BUY, SHORT, and CLOSE signals based on volume, trend, and relative strength or weakness to the market (SPY by default, can be customized). This indicator is useful for signaling day-trade entries and exits for tickers that are strong (or weak) against the market.

• Stocks that are showing relative strength (or weakness) to the market, are trending, and have decent movement generate a buy (or short) signal. When the trend runs out, a CLOSE signal is fired.
  
• Potential profit (based on ATR) and actual profit is calculated, predicting the type of move expected
  
• Unique 'stay in trade' logic helps prevent unnecessary CLOSE signals if a trend is likely to continue
  
• A colored plot indicates the strength of the current trend and turns orange/red when the strength is weakened.
  
• Crypto traders can uncheck 'Trade during market hours' for 24-hour trading, and should change the comparison ticker from SPY to BTCUSD or something similar for their market.
  

Enjoy!

KEY CONCEPTS

• The three- and five-minute timeframes are used to establish and verify trend (ADX/DI with custom logic)
  
• Entries and exits are based on Parabolic SAR and confirmed on multiple timeframes, trend, and relative volume
  
• Relative strength /weakness to the market compares ticker to SPY
  
• Chop is avoided at all costs. I've experimented with choppiness indicator below 38, but found that the ADX DI+/- readings work even better.
  
• Trend is established using ADX DI+/- readings over 20, confirmed by EMA 5/13 crossover and EMA5 slope
  
• Signals will fire only if the average volume for the current 5-min bar is above normal
  
• Only tickers with a five-bar / 13 period ATR of 1% the ticker's price generate signal.
  
• Only longs above daily-anchored VWAP, shorts below daily-anchored VWAP
  
• Signals fire on bar close to prevent repainting / look-ahead bias
  
• Indicator labels and alerts generated
  

SIGNALS

• BUY: up-trending tickers showing relative strength are bought on the three-minute PSAR
  
• SELL: when the close price falls below the 1, 3, and 5-minute PSAR, or the ADX DI- falls below 20
  
• SHORT: down-trending tickers with relative weakness are shorted on the three-minute PSAR
  
• COVER: when the close price moves above the 1, 3, and 5-minute PSAR, or the ADX DI- falls below 20
  

ALERTS
Alerts are generated on BUY, SELL, SHORT, and COVER signals, as well as optional LOST RELATIVE STRENGTH and LOST RELATIVE WEAKNESS

INPUTS

• Use relative strength/weakness comparison with the market: trigger trades based on the ticker's strength or weakness to the selected comparison ticker (usually SPY for equities or BTCUSD for crypto)
  
• Comparison Ticker for relative strength/weakness: Ticker to compare against for relative strength/weakness
  
• Trade during market hours only: Take buy/sells during specified hours. Disable this for crypto trading.
  
• Market hours (market time): Customize market hours - defaults to 9:30 to 16:00 EST
  
• "Only trade very strong trends": take trades only if an established trend is very strong (ADX over 40) (DEFAULT = OFF)
  
• "Limit trade direction to VWAP": Long trades only above VWAP, shorts below (DEFAULT = ON)
  
• "Limit trade direction to Market direction": Long trades only if SPY (or selected comparison ticker) is up, shorts if the market is down. (DEFAULT= OFF)
  
• "Limit trades based on a ticker's green/red status for the day": Long trades if the ticker is green for the day, shorts if red. (DEFAULT = OFF)
  

11 lug 2022

Note di rilascio

New 'possible trade' call-out gives an early warning to a trade that is promising, but not yet fully trending. Works when you select the 'only trade very strong trends' option.

13 lug 2022

Note di rilascio

• New alerts and callouts when a trend is failing
  
• Adjusted defaults - 'Only very strong trends' and 'Limit to red/green status' are enabled by default
  

1 ago 2022

Note di rilascio

• Bolstered entry/exit signals with Heiken Ashi reversals for better breakout detection and faster exits when a trend ends
  
• Added Bollinger Band width slope check for entries (weeds out entry on a dying trend)
  
• Removed 'Possible Buy/Short' feature as the signal is now more reliable for early entry
  

5 ago 2022

Note di rilascio

• Bolstered entry/exit signals with Heiken Ashi reversals for better breakout detection and faster exits when a trend ends
  
• Added Bollinger Band width slope check for entries (weeds out entry on a dying trend)
  
• Removed 'Possible Buy/Short' feature as the signal is now more reliable for early entry
  

7 ago 2022

Note di rilascio

• Added Heikin Ashi continuation entry signal
  

8 ago 2022

Note di rilascio

• Tempered Chop indicator check, allow a buy during choppy time if ADX indicates a sharp trend is starting
  
• Removed 'relative strength to spy' slop check
  
• Fixed up some issues with strategy signals firing twice
  

8 ago 2022

Note di rilascio

(fixed chart type, adjusted it back to standard candle)

5 set 2022

Note di rilascio

• Smaller Buy/Short/Close labels by default (larger size with more detail can be enabled in settings)
  
• Relative Strength alerts are disabled by default - use my RS/RW label indicator instead (tradingview.com/script/wWKsXxpH-Daily-Volume-RVol-RRVol-and-RS-RW-Labels/)

5 set 2022

Note di rilascio

(updated chart, removed comments)

23 gen 2023

Note di rilascio

Added Laguerre RSI smoothing to stay in trades longer and avoid chop

1 mar 2023

Note di rilascio

- Simplified and improved exit signals (now uses Laguerre RSI and Parabolic SAR only)
- Removed 'trend strength' label