ATR+StdTR Band and Trailing Stop

21 set

This Pine Script code plots the "ATR+StdTR Band and Trailing Stop," serving as a tool for volatility-based risk management and trend detection. While bands are typically set using a multiple of ATR, this script uses StdTR (the True Range standard deviation) and sets the band width based on ±(ATR + n times StdTR). StdTR is a great tool for detecting price volatility and anomalies, allowing traders to adapt to rapid changes in extreme market conditions. This helps traders proactively manage risk during sudden market fluctuations.

The following features are provided:

Table Display
A table is shown on the chart, allowing traders to visually track the current ATR value, StdTR (σ), and the long/short stop-loss levels (±ATR ± nσ). This enables real-time monitoring of risk management data.

Band Plots
The script plots bands that combine ATR with StdTR (nσ).
The upper and lower bands are calculated using the previous candle’s closing price (the source is customizable) and are plotted as ±(ATR + nσ), providing a clear visual of the price range.

ATR ± nσ Trailing Stop
The trailing stop dynamically adjusts the stop-loss levels based on price movements. In an uptrend, the stop-loss rises, while in a downtrend, it lowers, helping traders lock in profits while minimizing losses during significant reversals.

Breakout Detection
Breakouts are detected when the price exceeds the upper band or drops below the lower band. A visual marker (X) is displayed on the chart, allowing traders to quickly recognize when the price has moved beyond normal volatility ranges, making it easier to respond to trend formations or reversals.

Customization Points:
The ATR period and StdTR (n) are fully customizable.
The source for ATR band calculation can be adjusted, allowing traders to choose from close, open, high, low, etc.
The table’s display position and design (text color, size, etc.) can be customized to present the information clearly and effectively.

23 set

Note di rilascio

Script Description:
This Pine Script code plots the "ATR+StdTR Band and Trailing Stop," serving as a tool for volatility-based risk management and trend detection. While bands are typically set using a multiple of ATR, this script combines both ATR (Average True Range) and StdTR (the standard deviation of True Range) to create bands with a more statistically grounded basis.

Originality Points:
What sets this script apart from other indicators is its use of both ATR and the standard deviation of TR (StdTR) to define the band width. This approach enables more reliable risk management compared to bands based solely on empirical rules.

Band Configuration Using the Standard Deviation of True Range (TR):
Traditional Keltner Channels set the band width using a multiple of ATR. However, this script incorporates both ATR and the standard deviation of True Range (StdTR) to form the bands. Assuming that TR follows a normal distribution, the next candle’s True Range (TR) is predicted to fall within the range of "ATR + 2 times StdTR" with a 97.5% probability. This statistical approach provides a more reliable and precise method for setting the band width, which enhances risk management during market fluctuations.

Plotting Bands Based on the Previous Candle’s Closing Price (Customizable):
By default, the script plots bands using the previous candle's closing price as the basis, but the source can be customized to use open, high, or low prices. This customization allows traders to predict the next candle's movement range in real-time, facilitating more responsive trade decision-making. This method ensures that the bands are reflective of current market conditions, helping traders manage risk effectively by anticipating the expected movement of the next candle.

Risk Management:
The width of the bands is based on ATR and the standard deviation of True Range (StdTR), allowing traders to set stop-loss levels that adjust according to market volatility. When the market is stable, the bands narrow, and when volatility increases, the bands widen, enabling effective risk management.
Using a trailing stop helps to lock in profits while the price is trending upwards (or downwards) and automatically closes the position when the market reverses, minimizing potential losses.

Features Provided:
Table Display:
A table is shown on the chart, allowing traders to visually track the current ATR value, StdTR (σ), and the long/short stop-loss levels (±ATR ± nσ). This real-time data presentation enables users to closely monitor risk management metrics during trading.

Band Plots:
The script plots bands that combine ATR with StdTR (nσ). The upper and lower bands are calculated using the previous candle’s closing price by default (though this is customizable) and are plotted as ±(ATR + nσ), providing a clear visual of the expected price range.

ATR ± nσ Trailing Stop:
The trailing stop dynamically adjusts the stop-loss levels based on price movements. In an uptrend, the stop-loss level rises, and in a downtrend, it lowers, allowing traders to lock in profits while minimizing losses during significant reversals.

Breakout Detection:
Breakouts are detected when the price exceeds the upper band or drops below the lower band. A visual marker (X) is displayed on the chart to notify traders when the price moves beyond normal volatility ranges, helping them respond promptly to trend formations or reversals.

Customization Points:
The ATR period and StdTR multiplier (n) are fully customizable, enabling traders to adjust the sensitivity of the bands to fit their strategies.
The source for ATR and StdTR calculations can be adjusted to use the close, open, high, or low price, based on the trader’s preferences.
The table’s display position, as well as its text color and size, can be customized to clearly present the necessary information on the chart.