Price Reversal Probability + Price Forecast [TradeDots]The TradeDots Price Reversal Probability + Price Forecast Indicator helps traders discern market direction and identify potential trading opportunities.
📝 HOW IT WORKS
The indicator provides two types of reversal signals:
Bullish Reversal: Marked with a green label, indicating an expected upward market reversal.
Bearish Reversal: Marked with a red label, indicating an expected downward market reversal.
⭐️ Computation
This tool identifies significant reversal patterns using a mathematical model on a designated window of candlesticks to calculate price action changes. It incorporates candlestick data and price indicators, such as the Open, Close, High, Low of candlesticks and Average True Range (ATR), to detect similar occurrences in real-time.
Potential market turning points are marked with reversal labels and percentage changes , calculated using pivot high or low price data from the last reversal patterns of the opposite side.
For example, a green label on the chart indicates a bullish reversal pattern, showing the market is expected to reverse upward. However, signals are based on historical price actions and are not 100% accurate. If the price breaks down from the bullish reversal pivot low, the original signal will turn half transparent until the next reversal pattern is detected.
The algorithm groups consecutive bullish reversal patterns until a bearish reversal pattern appears. The last bullish label occurrence indicates the maximum number of bullish patterns required to confirm a reversal in the group. This information is stored to apply Bayesian statistical models and probability models to generate market insights.
⭐️ Statistical Analysis
Reversal signals are categorized into bullish and bearish groups, with each group storing consecutive reversal signals.
In the indicator table, each new reversal is labeled sequentially (e.g., "🟢 #1" for the first bullish reversal after a bearish signal). The number increases for each new signal on the same side and resets when a reversal signal on the opposite side appears.
The indicator provides two forecasts: the probability of reversal and the expected price change if the pattern is successful or unsuccessful.
⭐️ Probability of Reversal
By counting the number of consecutive reversal patterns on one side before a reversal pattern on the opposite side appears, we can calculate the probability of reversal of each signal throughout the entire price action history.
Using Bayes’ Theorem, the probability increases with each consecutive pattern. The values are displayed in the first two columns of the indicator table, with the current condition highlighted in orange.
⭐️ Price Forecast
The price forecast uses the pivot point of the last reversal pattern of the opposite side as a reference for calculating the percentage change.
For example, for a group of bullish patterns, the pivot high of the most recent bearish pattern is taken. A percentage is calculated with the pivot low of all bullish patterns in the same group. Repeating this model throughout the entire historical price action patterns gives the average price percentage difference between all bearish and bullish patterns.
Whenever a new reversal pattern is detected, a price can be forecasted using the percentage difference from the statistical model. The target price is calculated and displayed in the third and fourth columns of the indicator table.
Assisting Traders To Make Data-Informed Trading Decisions
All included features in this indicator:
Labeling of bullish and bearish reversal patterns
Success probability of each reversal pattern
Price targets of each reversal pattern
Visual aid for pattern confirmation
More (check the changelog below for current features)
🛠️ HOW TO USE
⭐️ Reversal Signals
There are two types of reversal signals identified by the algorithm that detects reversal patterns using price action analysis with candlestick data and price indicators. When the price breaks out from the labeled pivot, the label will turn half transparent.
Bullish reversal signals: Labeled in green. The number represents the price of the candlestick "low," and the percentage value indicates the price difference from the previous bearish reversal pattern's candlestick "high."
Bearish reversal signals: Labeled in red. The number represents the price of the candlestick "high," and the percentage value indicates the price difference from the previous bullish reversal pattern's candlestick "low."
⭐️ Probability Table
The probability table shows the likelihood of reversal for each number of occurrences of bullish and bearish reversal signals, displayed in the first two columns.
It also shows the target prices for both bullish and bearish conditions for each number of reversal patterns.
⭐️ Price Targets
By combining the probability of reversal and the price forecast, price targets for new reversal patterns are calculated. These insights help traders align their strategies with price action analysis and statistics by simply observing the candlestick chart in real-time.
Bullish Price Target: The average percentage price and probability that the next bearish reversal signal might hit.
Bearish Price Target: The average percentage price and probability that the next bullish reversal signal might hit.
⭐️ Market Trend Panel
The market trend panel is a small table that indicates the market trend using a 200 Exponential Moving Average (EMA) alongside reversal signals. A bullish reversal pattern above the moving average indicates a "bullish" market, while a bearish reversal pattern below it indicates a "bearish" market. If the price fluctuates around the moving average, it is identified as "choppy."
The panel also shows the risk and reward for each trade by taking the closing bullish and bearish targets from the most recent reversal pattern's price reference. Lastly, it displays the probability of reversal, consistent with the number highlighted in the probability table.
⭐️ Other Visual Aid
Other visual aids visualize the market trend and potential direction for users on the candlestick chart.
Background colors reflect the current market trend (green = bullish, red = bearish, blue = choppy).
A white plotted line represents the moving average for categorizing market trends.
❗️LIMITATIONS
Price targets represent only the mean of percentage differences. Therefore, the price could reverse before hitting either side of the price target.
When the market is in extreme price action or a new market pattern, the price targets may not be forecasted accurately and might move out of the model's range.
This model works best for assets with less price variation and a near-Gaussian distribution in returns. It may be less accurate for assets with random price movements.
CONCLUSION
This indicator uses fundamental statistics and mathematical models to generate reversal probabilities and price forecasts. It does not have the ability to predict the future with certainty. Traders should combine this indicator with other confirmation strategies to make informed investment decisions.
See Author's instructions below to get instant access to this indicator.
RISK DISCLAIMER
Trading entails substantial risk, and most day traders incur losses. All content, tools, scripts, articles, and education provided by TradeDots serve purely informational and educational purposes. Past performances are not definitive predictors of future results.
NOTES*
Calculations are based on historical data and do not guarantee future results.
Reversals exceeding ten consecutive occurrences are rare (likely <1% of total occurrences).
Users SHOULD NOT blindly follow the price targets as their trading strategy.
If you encounter a timeout with this indicator, reapply it to your chart.
Indicatore Momentum (MOM)
Median Momentum with Buy/Sell Signals and Bar ColorMomentum Calculation:
Momentum is calculated as the difference between the current close price and the close price momentum_length periods ago: momentum = close - close .
Highest and Lowest Momentum:
The highest and lowest momentum values over the specified length are calculated.
Median Momentum:
The median momentum is calculated as the average of the highest and lowest momentum values.
Color Setting:
medianColor is set based on whether the momentum is above, below, or equal to the median momentum.
barColor is set similarly for bar coloring.
Plotting:
The script plots the median momentum and the actual momentum values.
Buy and sell signals are generated when momentum crosses over or under the median momentum.
The script also plots the buy and sell signals with arrows on the chart.
MMI (Multi.Index.Indicator)Multi-Index Momentum Indicator (MMI)
The Multi-Index Momentum Indicator (MMI) is a custom TradingView Pine Script indicator designed to calculate and display the momentum difference between the base and quote indexes of various currency pairs. This indicator helps traders identify the relative strength or weakness of a currency pair by comparing the momentum of its base and quote indexes.
Features:
Currency Pair Detection: The indicator automatically detects the currency pair of the current chart and selects the appropriate base and quote indexes for that pair.
Index Data Retrieval: It fetches the closing prices of the base and quote indexes for the specified timeframe.
Momentum Calculation:
The indicator calculates the 14-period momentum for both the base and quote indexes and then computes the momentum difference.
Visual Representation: The momentum difference is plotted on the chart as a colored line. If the momentum difference is positive, the line is green; if negative, the line is red.
Data Availability Check:
The script checks if the index data is available. If any index data is missing, the script displays a red label on the chart indicating which index data is missing.
Zero Line: A horizontal line at the zero level is plotted for reference.
Supported Currency Pairs and Their Indexes:
USDJPY: Base Index - DXY, Quote Index - JPYX
EURUSD: Base Index - EXY, Quote Index - DXY
GBPUSD: Base Index - BXY, Quote Index - DXY
AUDUSD: Base Index - AXY, Quote Index - DXY
USDCHF: Base Index - DXY, Quote Index - SXY
USDCAD: Base Index - DXY, Quote Index - CXY
GBPJPY: Base Index - BXY, Quote Index - JPYX
WaveTrend Oscillator PlusThe WaveTrend based on “Enhanced WaveTrend” of EliCobra. The WaveTrend Oscillator is a popular technical analysis tool used to identify overbought and oversold conditions in the market and generate trading signals. This indicator introduces additional features for improved analysis and comparison across assets.
WaveTrend:
The original WaveTrend indicator calculates two lines based on exponential moving averages and their relationship to the asset's price. The first line measures the distance between the asset's price and its EMA, while the second line smooths the first line over a specific period. The result is divided by 0.015 multiplied by the smoothed difference ('d' for reference). The indicator aims to identify overbought and oversold conditions by analyzing the relationship between the two lines.
In the original formula, the rudimentary estimation factor 0.015 times 'd' fails to accomodate for approximately a quarter of the data, preventing the indicator from reaching the traditional stationary levels of +-100. This limitation renders the indicator quantitatively biased, as it relies on the user's subjective adjustment of the levels. The enhanced version replaces this factor with the standard deviation of the asset's price, resulting in improved estimation accuracy and provides a more dynamic and robust outcome, we thereafter multiply the result by 100 to achieve a more traditional oscillation.
Enhancements and Features:
Dynamic Estimation: The original indicator uses an arbitrary estimation factor, while the enhanced version replaces it with the standard deviation of the asset's price. This modification provides a more dynamic and accurate estimation, adapting to the specific price characteristics of each asset.
Stationary Support and Resistance Levels: The enhanced version provides stationary key support and resistance levels that range from -150 to 150. These levels are determined based on the analysis of the indicator's data and encompass more than 95% of the indicator's values. These levels offer important reference points for traders to identify potential price reversals or significant price movements.
Comparison Across Assets: The enhanced version allows for better comparison and analysis across different assets. By incorporating the standard deviation of the asset's price, the indicator provides a more consistent and comparable interpretation of the market conditions across multiple assets.
Z-Score Analysis:
The Z-Score is a statistical measurement that quantifies how far a particular data point deviates from the mean in terms of standard deviations. In the enhanced version, the calculation involves determining the basis (mean) and deviation (standard deviation) of the asset's price to calculate its Z-Score, thereafter applying a smoothing technique to generate the final WaveTrend value.
Utility:
The offers traders and investors valuable insights into overbought and oversold conditions in the market. By analyzing the indicator's values and referencing the stationary support and resistance levels, traders can identify potential trend reversals, evaluate market strength, and make better informed analysis.
The following indicators were added:
⎆⎆ Squeeze Momentum Indicator
⎆⎆ Elliott Wave Oscillator
⎆⎆ Expert Trend Locator
Trade Scanner Pro [MarketSignalsPro]
█ OVERVIEW
Trade Scanner Pro is a trade signal generator based on my trend following momentum reversal system. It identifies a pullback and then confirms momentum exhaustion which produces a signal appearing as a set of suggested orders (horizontal lines) on the chart. The goal is to help traders capitalize on price momentum while simplifying decision making and offering a way to gauge expectations. It can be used for any market, any time frame and configured for counter trend signals also.
█ CONCEPT
While markets are highly random, especially on smaller time frames, trends do exist.
Trade Scanner Pro offers a visually structured way to align the user
with price momentum that is relevant to the trend. It accomplishes this by incorporating a unique mix of standard technical formulas to identify a pullback followed by a momentum reversal. The process occurs in 3 steps:
1 — Identifying the trend of the current time frame.
2 — Evaluating the retrace in terms of how far it moves away from the typical price.
3 — Confirming price exhaustion by recognizing a reversal in price momentum.
Once the criteria are met, a signal appears as a blue horizontal line. This is the entry price suggestion (see label). Stop and take profit orders are also calculated simultaneously. These appear as a red line and green line respectively with price labels. The stop and take profit orders are based upon an average of previous price ranges and will be relative to the price action on the chosen time frame. The initial reward/risk ratio is set to 1.5:1, and can be changed in the settings menu.
This system can also be adjusted to cater to the experience level of the trader. For example, more advanced traders can select “counter trend” mode which will only show signals on the opposite side of the trend. A trailing stop can be activated to help stay in a trade after reaching the profit level. There is also a “heads up” mode which colors the candles orange which means a signal is more likely to appear over the next couple of candles. More on these features in the next section.
For best results, time frames of 1 minute and above should be considered. The smaller the time frame, the more signals, but also more noise and stop outs. Knowing your
market and the most active time of day is especially important for smaller time frames.
█ FEATURES
The following features can be found in the settings menu of Trade Scanner Pro.
Show Trend:
The initial setting is “on”. This shows the trend label on the upper right corner of the screen. Trend can be either bullish or bearish. At times there will be a “conflict” label that appears below the trend label. Conflict means the trend MAY be in the process of changing. This occurs when price persists against the prevailing trend for a prolonged amount of time.
Counter Trend:
When selected will ignore signals on the side of the trend and show counter trend signals only. If the “heads up” feature is selected, orange candles will only appear for potential counter trend signals.
Trailing Stop:
When selected, a trailing stop order suggestion (orange line) will appear beginning from the stop loss price (red line) after a few closed candles. The trailing stop line will follow the price upon each new close of the candles until it is touched. This serves as a point of reference to capture larger market movements and skew reward/risk favorably over time.
Heads Up:
When selected will paint orange candles when there is a greater chance a signal will appear. For example, in trend mode it will only evaluate signals on the side of the trend. In counter trend mode it will evaluate counter trend signals only. For advanced users, this “pre signal” can offer potential opportunities to enter a trade before the signal appears.
Reward Ratio:
This is the reward part of the reward/risk formula used to establish the take profit suggestion on the chart. Initially it is set at 1.5 which produces a line on the chart at a 1.5:1 ratio. The user can change this setting to better align with their expectations. For example, if a larger market movement is anticipated, 2 can be entered into the input field and will generate a take profit line 2X farther than the stop loss line (2:1 reward/risk).
█ LIMITATIONS
Markets are HIGHLY random, especially on smaller time frames. No system that is based on public domain formulas can be expected to be HIGHLY accurate. It is reasonable to expect a 50% win rate more often than not. Profitability in such systems depends on the reward/risk rather than win rate.
This is a system based on price momentum which means MOMENTUM must be present for best results especially on very short time frames.
While this system helps to reduce the burden of analysis, the user should have some basic familiarity with technical analysis. Basic knowledge can help to better determine a quality signal over noise.
█ RAMBLINGS
The stop loss orders MUST be respected otherwise the user puts their entire account at risk. Signals can appear at price locations where larger magnitude risk is extremely high. Respecting the stop loss suggestions can help to mitigate this risk.
For best results set up notifications to receive a message on your desktop, smart phone or tablet rather than sitting in front of a computer screen waiting for a signal to appear. Keep in mind a 1 minute chart in a single market can produce 5 or 6 signals throughout the entire daily session and NOT all will be profitable. A 1 hour time frame may produce 1 or 2 throughout the day. The larger the time frame the lower frequency of signals.
█ THANKS
Special thanks to Cryptosnagger for
helping me translate my concept into a pine script reality.
MCOTs Intuition StrategyInitial Capital: The strategy starts with an initial capital of $50,000.
Execution: Trades are executed on every price tick to capture all potential movements.
Contract Size: The default position size is one contract per trade.
Timeframe: Although not explicitly mentioned, this strategy is intended for a one-minute timeframe.
RSI Calculation: The Relative Strength Index (RSI) is calculated over a user-defined period (default is 14 periods).
Standard Deviation: The script calculates the standard deviation of the change in RSI values to determine the threshold for entering trades.
Exhaustion Detection: Before entering a long or short position, the script checks for exhaustion in the RSI’s momentum. This is to avoid entering trades during extreme conditions where a reversal is likely.
Entry Conditions: A long position is entered when the current RSI momentum exceeds the standard deviation threshold and is less than the previous momentum multiplied by an exhaustion factor. A short position is entered under the opposite conditions.
Limit Orders for Exit: Instead of traditional stop loss and take profit orders, the strategy uses limit orders to exit positions. This means the strategy sets a desired price level to close the position and waits for the market to reach this price.
Profit Target and Stop Loss: The script allows setting a profit target and stop loss in terms of ticks, which are the smallest measurable increments in price movement for the traded asset.
blah blah whatever
UT Bot Stochastic RSIUT Bot Stochastic RSI is a powerful trading tool designed to help traders identify potential buy and sell signals in the market. This indicator combines the Stochastic and RSI (Relative Strength Index) oscillators, two of the most popular and effective technical analysis tools, to provide a comprehensive view of market conditions.
The Stochastic oscillator is a momentum indicator that compares a security's closing price to its price range over a given time period. The RSI, on the other hand, is a momentum oscillator that measures the speed and change of price movements. By combining these two indicators, the UT Bot Stochastic RSI can help traders identify overbought and oversold conditions, as well as potential trend reversals.
The UT Bot Stochastic RSI also includes an ATR (Average True Range) trailing stop, which can be used to set stop-loss levels and manage risk. This feature is particularly useful in volatile markets, where price movements can be large and unpredictable.
In addition to its powerful technical analysis tools, the UT Bot Stochastic RSI also includes a backtesting feature, allowing traders to test their strategies on historical data. This can help traders identify the most effective settings for the indicator and improve their trading performance.
Overall, the UT Bot Stochastic RSI is a versatile and effective tool for traders of all levels, providing valuable insights into market conditions and helping to improve trading decisions
Multi-Timeframe Momentum Indicator [Ox_kali]The Multi-Timeframe Momentum Indicator is a trend analysis tool designed to examine market momentum across various timeframes on a single chart. Utilizing the Relative Strength Index (RSI) to assess the market’s strength and direction, this indicator offers a multidimensional perspective on current trends, enriching technical analysis with a deeper understanding of price movements. Other oscillators, such as the MACD and StochRSI, will be integrated in future updates.
Regarding the operation with the RSI: when its value is below 50 for a given period, the trend is considered bearish. Conversely, a value above 50 indicates a bullish trend. The indicator goes beyond the isolated analysis of each period by calculating an average of the displayed trends, based on user preferences. This average, ranging from “Strong Down” to “Strong Up,” reflects the percentage of periods indicating a bullish or bearish trend, thus providing a precise overview of the overall market condition.
Key Features:
Multi-Timeframe Analysis : Allows RSI analysis across multiple timeframes, offering an overview of market dynamics.
Advanced Customization : Includes options to adjust the RSI period, the RSI trend threshold, and more.
Color and Transparency Options : Offers color styles for bullish and bearish trends, as well as adjustable transparency levels for personalized visualization.
Average Trend Display : Calculates and displays the average trend based on activated timeframes, providing a quick summary of the current market state.
Flexible Table Positioning : Allows users to choose the indicator’s display location on the chart for seamless integration.
List of Parameters:
RSI Period : Defines the RSI period for calculation.
RSI Up/Down Threshold: Threshold for determining bullish or bearish trends of the RSI.
Table Position: Location of the indicator’s display on the chart.
Color Style : Selection of the color style for the indicator.
Strong Down/Up Color (User) : Customization of colors for strong market movements.
Table TF Transparency : Adjustment of the transparency level for the timeframe table.
Show X Minute/Hour/Day/Week Trend : Activation of the RSI display for specific timeframes.
Show AVG : Option to display or not the calculated average trend.
the Multi-Timeframe Momentum Indicator , stands as a comprehensive tool for market trend analysis across various timeframes, leveraging the RSI for in-depth market insights. With the promise of future updates including the integration of additional oscillators like the MACD and StochRSI, this indicator is set to offer even more robust analysis capabilities.
Please note that the MTF-Momentum is not a guarantee of future market performance and should be used in conjunction with proper risk management. Always ensure that you have a thorough understanding of the indicator’s methodology and its limitations before making any investment decisions. Additionally, past performance is not indicative of future results.
ROC Since MorningThe "ROC Since Morning" indicator is designed for traders who wish to gauge the momentum of an asset from a specific time in the morning, allowing for a customizable analysis of pre-market and intraday movements. This indicator calculates the Rate of Change (ROC) from a user-defined hour, offering insights into how the price has moved since then.
How to Use:
Add the "ROC Since Morning" indicator to your chart.
Adjust the start hour input to your preferred time, considering pre-market hours or the official market opening time.
Analyze the ROC values to understand price movements and momentum since your specified start hour. A positive ROC indicates an upward price movement, while a negative ROC suggests downward movement.
GKD-C Momentum Candles [Loxx]The Giga Kaleidoscope GKD-C Momentum Candles is a Confirmation module included in Loxx's "Giga Kaleidoscope Modularized Trading System."
█ GKD-C Momentum Candles
The Momentum Candles indicator uses the difference between the closing and opening prices divided by the Average True Range (ATR) over 50 periods to calculate momentum. It sets upper and lower thresholds based on an ATR multiplier: the upper threshold (Tresh1) is 1 divided by the ATR multiplier, and the lower threshold (Tresh2) is the negative inverse of this value. These thresholds help identify significant momentum shifts, generating long/short signals.
█ Giga Kaleidoscope Modularized Trading System
Core components of an NNFX algorithmic trading strategy
The NNFX algorithm is built on the principles of trend, momentum, and volatility. There are six core components in the NNFX trading algorithm:
1. Volatility - price volatility; e.g., Average True Range, True Range Double, Close-to-Close, etc.
2. Baseline - a moving average to identify price trend
3. Confirmation 1 - a technical indicator used to identify trends
4. Confirmation 2 - a technical indicator used to identify trends
5. Continuation - a technical indicator used to identify trends
6. Volatility/Volume - a technical indicator used to identify volatility/volume breakouts/breakdown
7. Exit - a technical indicator used to determine when a trend is exhausted
8. Metamorphosis - a technical indicator that produces a compound signal from the combination of other GKD indicators*
*(not part of the NNFX algorithm)
What is Volatility in the NNFX trading system?
In the NNFX (No Nonsense Forex) trading system, ATR (Average True Range) is typically used to measure the volatility of an asset. It is used as a part of the system to help determine the appropriate stop loss and take profit levels for a trade. ATR is calculated by taking the average of the true range values over a specified period.
True range is calculated as the maximum of the following values:
-Current high minus the current low
-Absolute value of the current high minus the previous close
-Absolute value of the current low minus the previous close
ATR is a dynamic indicator that changes with changes in volatility. As volatility increases, the value of ATR increases, and as volatility decreases, the value of ATR decreases. By using ATR in NNFX system, traders can adjust their stop loss and take profit levels according to the volatility of the asset being traded. This helps to ensure that the trade is given enough room to move, while also minimizing potential losses.
Other types of volatility include True Range Double (TRD), Close-to-Close, and Garman-Klass
What is a Baseline indicator?
The baseline is essentially a moving average, and is used to determine the overall direction of the market.
The baseline in the NNFX system is used to filter out trades that are not in line with the long-term trend of the market. The baseline is plotted on the chart along with other indicators, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR).
Trades are only taken when the price is in the same direction as the baseline. For example, if the baseline is sloping upwards, only long trades are taken, and if the baseline is sloping downwards, only short trades are taken. This approach helps to ensure that trades are in line with the overall trend of the market, and reduces the risk of entering trades that are likely to fail.
By using a baseline in the NNFX system, traders can have a clear reference point for determining the overall trend of the market, and can make more informed trading decisions. The baseline helps to filter out noise and false signals, and ensures that trades are taken in the direction of the long-term trend.
What is a Confirmation indicator?
Confirmation indicators are technical indicators that are used to confirm the signals generated by primary indicators. Primary indicators are the core indicators used in the NNFX system, such as the Average True Range (ATR), the Moving Average (MA), and the Relative Strength Index (RSI).
The purpose of the confirmation indicators is to reduce false signals and improve the accuracy of the trading system. They are designed to confirm the signals generated by the primary indicators by providing additional information about the strength and direction of the trend.
Some examples of confirmation indicators that may be used in the NNFX system include the Bollinger Bands, the MACD (Moving Average Convergence Divergence), and the MACD Oscillator. These indicators can provide information about the volatility, momentum, and trend strength of the market, and can be used to confirm the signals generated by the primary indicators.
In the NNFX system, confirmation indicators are used in combination with primary indicators and other filters to create a trading system that is robust and reliable. By using multiple indicators to confirm trading signals, the system aims to reduce the risk of false signals and improve the overall profitability of the trades.
What is a Continuation indicator?
In the NNFX (No Nonsense Forex) trading system, a continuation indicator is a technical indicator that is used to confirm a current trend and predict that the trend is likely to continue in the same direction. A continuation indicator is typically used in conjunction with other indicators in the system, such as a baseline indicator, to provide a comprehensive trading strategy.
What is a Volatility/Volume indicator?
Volume indicators, such as the On Balance Volume (OBV), the Chaikin Money Flow (CMF), or the Volume Price Trend (VPT), are used to measure the amount of buying and selling activity in a market. They are based on the trading volume of the market, and can provide information about the strength of the trend. In the NNFX system, volume indicators are used to confirm trading signals generated by the Moving Average and the Relative Strength Index. Volatility indicators include Average Direction Index, Waddah Attar, and Volatility Ratio. In the NNFX trading system, volatility is a proxy for volume and vice versa.
By using volume indicators as confirmation tools, the NNFX trading system aims to reduce the risk of false signals and improve the overall profitability of trades. These indicators can provide additional information about the market that is not captured by the primary indicators, and can help traders to make more informed trading decisions. In addition, volume indicators can be used to identify potential changes in market trends and to confirm the strength of price movements.
What is an Exit indicator?
The exit indicator is used in conjunction with other indicators in the system, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR), to provide a comprehensive trading strategy.
The exit indicator in the NNFX system can be any technical indicator that is deemed effective at identifying optimal exit points. Examples of exit indicators that are commonly used include the Parabolic SAR, and the Average Directional Index (ADX).
The purpose of the exit indicator is to identify when a trend is likely to reverse or when the market conditions have changed, signaling the need to exit a trade. By using an exit indicator, traders can manage their risk and prevent significant losses.
In the NNFX system, the exit indicator is used in conjunction with a stop loss and a take profit order to maximize profits and minimize losses. The stop loss order is used to limit the amount of loss that can be incurred if the trade goes against the trader, while the take profit order is used to lock in profits when the trade is moving in the trader's favor.
Overall, the use of an exit indicator in the NNFX trading system is an important component of a comprehensive trading strategy. It allows traders to manage their risk effectively and improve the profitability of their trades by exiting at the right time.
What is an Metamorphosis indicator?
The concept of a metamorphosis indicator involves the integration of two or more GKD indicators to generate a compound signal. This is achieved by evaluating the accuracy of each indicator and selecting the signal from the indicator with the highest accuracy. As an illustration, let's consider a scenario where we calculate the accuracy of 10 indicators and choose the signal from the indicator that demonstrates the highest accuracy.
The resulting output from the metamorphosis indicator can then be utilized in a GKD-BT backtest by occupying a slot that aligns with the purpose of the metamorphosis indicator. The slot can be a GKD-B, GKD-C, or GKD-E slot, depending on the specific requirements and objectives of the indicator. This allows for seamless integration and utilization of the compound signal within the GKD-BT framework.
How does Loxx's GKD (Giga Kaleidoscope Modularized Trading System) implement the NNFX algorithm outlined above?
Loxx's GKD v2.0 system has five types of modules (indicators/strategies). These modules are:
1. GKD-BT - Backtesting module (Volatility, Number 1 in the NNFX algorithm)
2. GKD-B - Baseline module (Baseline and Volatility/Volume, Numbers 1 and 2 in the NNFX algorithm)
3. GKD-C - Confirmation 1/2 and Continuation module (Confirmation 1/2 and Continuation, Numbers 3, 4, and 5 in the NNFX algorithm)
4. GKD-V - Volatility/Volume module (Confirmation 1/2, Number 6 in the NNFX algorithm)
5. GKD-E - Exit module (Exit, Number 7 in the NNFX algorithm)
6. GKD-M - Metamorphosis module (Metamorphosis, Number 8 in the NNFX algorithm, but not part of the NNFX algorithm)
(additional module types will added in future releases)
Each module interacts with every module by passing data to A backtest module wherein the various components of the GKD system are combined to create a trading signal.
That is, the Baseline indicator passes its data to Volatility/Volume. The Volatility/Volume indicator passes its values to the Confirmation 1 indicator. The Confirmation 1 indicator passes its values to the Confirmation 2 indicator. The Confirmation 2 indicator passes its values to the Continuation indicator. The Continuation indicator passes its values to the Exit indicator, and finally, the Exit indicator passes its values to the Backtest strategy.
This chaining of indicators requires that each module conform to Loxx's GKD protocol, therefore allowing for the testing of every possible combination of technical indicators that make up the six components of the NNFX algorithm.
What does the application of the GKD trading system look like?
Example trading system:
Backtest: Multi-Ticker CC Backtest
Baseline: Hull Moving Average
Volatility/Volume: Hurst Exponent
Confirmation 1: Advance Trend Pressure as shown on the chart above
Confirmation 2: uf2018
Continuation: Coppock Curve
Exit: Rex Oscillator
Metamorphosis: Baseline Optimizer
Each GKD indicator is denoted with a module identifier of either: GKD-BT, GKD-B, GKD-C, GKD-V, GKD-M, or GKD-E. This allows traders to understand to which module each indicator belongs and where each indicator fits into the GKD system.
█ Giga Kaleidoscope Modularized Trading System Signals
Standard Entry
1. GKD-C Confirmation gives signal
2. Baseline agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
1-Candle Standard Entry
1a. GKD-C Confirmation gives signal
2a. Baseline agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Baseline Entry
1. GKD-B Baseline gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
7. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
1-Candle Baseline Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Volatility/Volume Entry
1. GKD-V Volatility/Volume gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Volatility/Volume Entry
1a. GKD-V Volatility/Volume gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSVVC Bars Back' prior
Next Candle
1b. Price retraced
2b. Volatility/Volume agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Baseline agrees
Confirmation 2 Entry
1. GKD-C Confirmation 2 gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Volatility/Volume agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Confirmation 2 Entry
1a. GKD-C Confirmation 2 gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSC2C Bars Back' prior
Next Candle
1b. Price retraced
2b. Confirmation 2 agrees
3b. Confirmation 1 agrees
4b. Volatility/Volume agrees
5b. Baseline agrees
PullBack Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price is beyond 1.0x Volatility of Baseline
Next Candle
1b. Price inside Goldie Locks Zone Minimum
2b. Price inside Goldie Locks Zone Maximum
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Continuation Entry
1. Standard Entry, 1-Candle Standard Entry, Baseline Entry, 1-Candle Baseline Entry, Volatility/Volume Entry, 1-Candle Volatility/Volume Entry, Confirmation 2 Entry, 1-Candle Confirmation 2 Entry, or Pullback entry triggered previously
2. Baseline hasn't crossed since entry signal trigger
4. Confirmation 1 agrees
5. Baseline agrees
6. Confirmation 2 agrees
GKD-C Schaff Trend, Volty-adaptive RSX [Loxx]The Giga Kaleidoscope GKD-C Schaff Trend, Volty-adaptive RSX is a Confirmation module included in Loxx's "Giga Kaleidoscope Modularized Trading System."
█ GKD-C Schaff Trend, Volty-adaptive RSX
The "Schaff Trend Cycle Jurik Volty Adaptive RSX" merges sophisticated analytical techniques to offer nuanced insights into market trends and cycles, emphasizing adaptability and precision. It marries the concept of RSX (Relative Strength Index modified by Jurik's smoothing) with a dynamically adjusted volatility coefficient, aiming to enhance the indicator's responsiveness and accuracy under varying market conditions.
The process begins by focusing on the market's momentum, a critical component that reflects the pace and direction of price movements. To capture and refine this momentum, the indicator employs a series of calculations that progressively smooth and iterate the data. This iterative smoothing is not arbitrary; it is meticulously calibrated to balance sensitivity to recent price movements against the historical price context, ensuring that the signal remains both timely and stable.
Simultaneously, the volatility of the market is meticulously analyzed through a separate but complementary mechanism. This part of the indicator calculates a volatility coefficient, a value that adjusts based on the observed market volatility. This coefficient is not static; it dynamically adapts, scaling the analysis based on the complexity and volatility of price movements. By evaluating how wildly or tamely prices are fluctuating, the volatility coefficient fine-tunes the indicator's overall sensitivity, making it more attuned to real-time market conditions.
Incorporating the RSX into this mix brings a layer of sophistication. The RSX, known for its smoothness and reduced lag compared to traditional RSI, is further refined by applying the volatility coefficient. This application ensures that the RSX's sensitivity is modulated according to the volatility of the market, allowing for a more nuanced and adaptive measure of price momentum.
The final output is a harmonious blend of smoothed momentum and volatility-adjusted sensitivity. This fusion creates a highly adaptive and responsive indicator, capable of identifying trend changes and market cycles with a high degree of precision. By adjusting its parameters in real-time, the Schaff Trend Cycle Jurik Volty Adaptive RSX stands out as a versatile tool, offering traders insights that are both deep and immediately relevant, tailored to the ever-changing tapestry of market dynamics.
█ Giga Kaleidoscope Modularized Trading System
Core components of an NNFX algorithmic trading strategy
The NNFX algorithm is built on the principles of trend, momentum, and volatility. There are six core components in the NNFX trading algorithm:
1. Volatility - price volatility; e.g., Average True Range, True Range Double, Close-to-Close, etc.
2. Baseline - a moving average to identify price trend
3. Confirmation 1 - a technical indicator used to identify trends
4. Confirmation 2 - a technical indicator used to identify trends
5. Continuation - a technical indicator used to identify trends
6. Volatility/Volume - a technical indicator used to identify volatility/volume breakouts/breakdown
7. Exit - a technical indicator used to determine when a trend is exhausted
8. Metamorphosis - a technical indicator that produces a compound signal from the combination of other GKD indicators*
*(not part of the NNFX algorithm)
What is Volatility in the NNFX trading system?
In the NNFX (No Nonsense Forex) trading system, ATR (Average True Range) is typically used to measure the volatility of an asset. It is used as a part of the system to help determine the appropriate stop loss and take profit levels for a trade. ATR is calculated by taking the average of the true range values over a specified period.
True range is calculated as the maximum of the following values:
-Current high minus the current low
-Absolute value of the current high minus the previous close
-Absolute value of the current low minus the previous close
ATR is a dynamic indicator that changes with changes in volatility. As volatility increases, the value of ATR increases, and as volatility decreases, the value of ATR decreases. By using ATR in NNFX system, traders can adjust their stop loss and take profit levels according to the volatility of the asset being traded. This helps to ensure that the trade is given enough room to move, while also minimizing potential losses.
Other types of volatility include True Range Double (TRD), Close-to-Close, and Garman-Klass
What is a Baseline indicator?
The baseline is essentially a moving average, and is used to determine the overall direction of the market.
The baseline in the NNFX system is used to filter out trades that are not in line with the long-term trend of the market. The baseline is plotted on the chart along with other indicators, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR).
Trades are only taken when the price is in the same direction as the baseline. For example, if the baseline is sloping upwards, only long trades are taken, and if the baseline is sloping downwards, only short trades are taken. This approach helps to ensure that trades are in line with the overall trend of the market, and reduces the risk of entering trades that are likely to fail.
By using a baseline in the NNFX system, traders can have a clear reference point for determining the overall trend of the market, and can make more informed trading decisions. The baseline helps to filter out noise and false signals, and ensures that trades are taken in the direction of the long-term trend.
What is a Confirmation indicator?
Confirmation indicators are technical indicators that are used to confirm the signals generated by primary indicators. Primary indicators are the core indicators used in the NNFX system, such as the Average True Range (ATR), the Moving Average (MA), and the Relative Strength Index (RSI).
The purpose of the confirmation indicators is to reduce false signals and improve the accuracy of the trading system. They are designed to confirm the signals generated by the primary indicators by providing additional information about the strength and direction of the trend.
Some examples of confirmation indicators that may be used in the NNFX system include the Bollinger Bands, the MACD (Moving Average Convergence Divergence), and the MACD Oscillator. These indicators can provide information about the volatility, momentum, and trend strength of the market, and can be used to confirm the signals generated by the primary indicators.
In the NNFX system, confirmation indicators are used in combination with primary indicators and other filters to create a trading system that is robust and reliable. By using multiple indicators to confirm trading signals, the system aims to reduce the risk of false signals and improve the overall profitability of the trades.
What is a Continuation indicator?
In the NNFX (No Nonsense Forex) trading system, a continuation indicator is a technical indicator that is used to confirm a current trend and predict that the trend is likely to continue in the same direction. A continuation indicator is typically used in conjunction with other indicators in the system, such as a baseline indicator, to provide a comprehensive trading strategy.
What is a Volatility/Volume indicator?
Volume indicators, such as the On Balance Volume (OBV), the Chaikin Money Flow (CMF), or the Volume Price Trend (VPT), are used to measure the amount of buying and selling activity in a market. They are based on the trading volume of the market, and can provide information about the strength of the trend. In the NNFX system, volume indicators are used to confirm trading signals generated by the Moving Average and the Relative Strength Index. Volatility indicators include Average Direction Index, Waddah Attar, and Volatility Ratio. In the NNFX trading system, volatility is a proxy for volume and vice versa.
By using volume indicators as confirmation tools, the NNFX trading system aims to reduce the risk of false signals and improve the overall profitability of trades. These indicators can provide additional information about the market that is not captured by the primary indicators, and can help traders to make more informed trading decisions. In addition, volume indicators can be used to identify potential changes in market trends and to confirm the strength of price movements.
What is an Exit indicator?
The exit indicator is used in conjunction with other indicators in the system, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR), to provide a comprehensive trading strategy.
The exit indicator in the NNFX system can be any technical indicator that is deemed effective at identifying optimal exit points. Examples of exit indicators that are commonly used include the Parabolic SAR, and the Average Directional Index (ADX).
The purpose of the exit indicator is to identify when a trend is likely to reverse or when the market conditions have changed, signaling the need to exit a trade. By using an exit indicator, traders can manage their risk and prevent significant losses.
In the NNFX system, the exit indicator is used in conjunction with a stop loss and a take profit order to maximize profits and minimize losses. The stop loss order is used to limit the amount of loss that can be incurred if the trade goes against the trader, while the take profit order is used to lock in profits when the trade is moving in the trader's favor.
Overall, the use of an exit indicator in the NNFX trading system is an important component of a comprehensive trading strategy. It allows traders to manage their risk effectively and improve the profitability of their trades by exiting at the right time.
What is an Metamorphosis indicator?
The concept of a metamorphosis indicator involves the integration of two or more GKD indicators to generate a compound signal. This is achieved by evaluating the accuracy of each indicator and selecting the signal from the indicator with the highest accuracy. As an illustration, let's consider a scenario where we calculate the accuracy of 10 indicators and choose the signal from the indicator that demonstrates the highest accuracy.
The resulting output from the metamorphosis indicator can then be utilized in a GKD-BT backtest by occupying a slot that aligns with the purpose of the metamorphosis indicator. The slot can be a GKD-B, GKD-C, or GKD-E slot, depending on the specific requirements and objectives of the indicator. This allows for seamless integration and utilization of the compound signal within the GKD-BT framework.
How does Loxx's GKD (Giga Kaleidoscope Modularized Trading System) implement the NNFX algorithm outlined above?
Loxx's GKD v2.0 system has five types of modules (indicators/strategies). These modules are:
1. GKD-BT - Backtesting module (Volatility, Number 1 in the NNFX algorithm)
2. GKD-B - Baseline module (Baseline and Volatility/Volume, Numbers 1 and 2 in the NNFX algorithm)
3. GKD-C - Confirmation 1/2 and Continuation module (Confirmation 1/2 and Continuation, Numbers 3, 4, and 5 in the NNFX algorithm)
4. GKD-V - Volatility/Volume module (Confirmation 1/2, Number 6 in the NNFX algorithm)
5. GKD-E - Exit module (Exit, Number 7 in the NNFX algorithm)
6. GKD-M - Metamorphosis module (Metamorphosis, Number 8 in the NNFX algorithm, but not part of the NNFX algorithm)
(additional module types will added in future releases)
Each module interacts with every module by passing data to A backtest module wherein the various components of the GKD system are combined to create a trading signal.
That is, the Baseline indicator passes its data to Volatility/Volume. The Volatility/Volume indicator passes its values to the Confirmation 1 indicator. The Confirmation 1 indicator passes its values to the Confirmation 2 indicator. The Confirmation 2 indicator passes its values to the Continuation indicator. The Continuation indicator passes its values to the Exit indicator, and finally, the Exit indicator passes its values to the Backtest strategy.
This chaining of indicators requires that each module conform to Loxx's GKD protocol, therefore allowing for the testing of every possible combination of technical indicators that make up the six components of the NNFX algorithm.
What does the application of the GKD trading system look like?
Example trading system:
Backtest: Multi-Ticker CC Backtest
Baseline: Hull Moving Average
Volatility/Volume: Hurst Exponent
Confirmation 1: Advance Trend Pressure as shown on the chart above
Confirmation 2: uf2018
Continuation: Coppock Curve
Exit: Rex Oscillator
Metamorphosis: Baseline Optimizer
Each GKD indicator is denoted with a module identifier of either: GKD-BT, GKD-B, GKD-C, GKD-V, GKD-M, or GKD-E. This allows traders to understand to which module each indicator belongs and where each indicator fits into the GKD system.
█ Giga Kaleidoscope Modularized Trading System Signals
Standard Entry
1. GKD-C Confirmation gives signal
2. Baseline agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
1-Candle Standard Entry
1a. GKD-C Confirmation gives signal
2a. Baseline agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Baseline Entry
1. GKD-B Baseline gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
7. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
1-Candle Baseline Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Volatility/Volume Entry
1. GKD-V Volatility/Volume gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Volatility/Volume Entry
1a. GKD-V Volatility/Volume gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSVVC Bars Back' prior
Next Candle
1b. Price retraced
2b. Volatility/Volume agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Baseline agrees
Confirmation 2 Entry
1. GKD-C Confirmation 2 gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Volatility/Volume agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Confirmation 2 Entry
1a. GKD-C Confirmation 2 gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSC2C Bars Back' prior
Next Candle
1b. Price retraced
2b. Confirmation 2 agrees
3b. Confirmation 1 agrees
4b. Volatility/Volume agrees
5b. Baseline agrees
PullBack Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price is beyond 1.0x Volatility of Baseline
Next Candle
1b. Price inside Goldie Locks Zone Minimum
2b. Price inside Goldie Locks Zone Maximum
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Continuation Entry
1. Standard Entry, 1-Candle Standard Entry, Baseline Entry, 1-Candle Baseline Entry, Volatility/Volume Entry, 1-Candle Volatility/Volume Entry, Confirmation 2 Entry, 1-Candle Confirmation 2 Entry, or Pullback entry triggered previously
2. Baseline hasn't crossed since entry signal trigger
4. Confirmation 1 agrees
5. Baseline agrees
6. Confirmation 2 agrees
GKD-C Composite Index [Loxx]The Giga Kaleidoscope GKD-C Composite Index is a Confirmation module included in Loxx's "Giga Kaleidoscope Modularized Trading System."
█ GKD-C Composite Index
The Composite Index is a sophisticated technical analysis tool that enhances the traditional Relative Strength Index (RSI) by incorporating momentum and multiple time frame analysis. It calculates two versions of the RSI, one at a slower period and another at a faster period, to capture both long-term trends and short-term market fluctuations. The innovation comes from introducing a momentum factor, RSIDelta, which is the difference between the slow RSI and its value a specified number of periods ago, highlighting the rate of change in market sentiment. Simultaneously, the fast RSI is smoothed with a simple moving average (SMA) over a designated period (RSIsma), blending immediate price movements with ongoing trends. The Composite Index then combines these elements (RSIDelta and RSIsma), creating a singular metric that embodies both momentum and the smoothed trend. This index is further refined by averaging it over two additional periods, offering a multifaceted view that assists in identifying overbought or oversold conditions with enhanced sensitivity to market dynamics. This method aims to provide traders with a deeper understanding of market forces, potentially leading to more informed trading decisions by capturing nuances missed by the standard RSI.
█ Giga Kaleidoscope Modularized Trading System
Core components of an NNFX algorithmic trading strategy
The NNFX algorithm is built on the principles of trend, momentum, and volatility. There are six core components in the NNFX trading algorithm:
1. Volatility - price volatility; e.g., Average True Range, True Range Double, Close-to-Close, etc.
2. Baseline - a moving average to identify price trend
3. Confirmation 1 - a technical indicator used to identify trends
4. Confirmation 2 - a technical indicator used to identify trends
5. Continuation - a technical indicator used to identify trends
6. Volatility/Volume - a technical indicator used to identify volatility/volume breakouts/breakdown
7. Exit - a technical indicator used to determine when a trend is exhausted
8. Metamorphosis - a technical indicator that produces a compound signal from the combination of other GKD indicators*
*(not part of the NNFX algorithm)
What is Volatility in the NNFX trading system?
In the NNFX (No Nonsense Forex) trading system, ATR (Average True Range) is typically used to measure the volatility of an asset. It is used as a part of the system to help determine the appropriate stop loss and take profit levels for a trade. ATR is calculated by taking the average of the true range values over a specified period.
True range is calculated as the maximum of the following values:
-Current high minus the current low
-Absolute value of the current high minus the previous close
-Absolute value of the current low minus the previous close
ATR is a dynamic indicator that changes with changes in volatility. As volatility increases, the value of ATR increases, and as volatility decreases, the value of ATR decreases. By using ATR in NNFX system, traders can adjust their stop loss and take profit levels according to the volatility of the asset being traded. This helps to ensure that the trade is given enough room to move, while also minimizing potential losses.
Other types of volatility include True Range Double (TRD), Close-to-Close, and Garman-Klass
What is a Baseline indicator?
The baseline is essentially a moving average, and is used to determine the overall direction of the market.
The baseline in the NNFX system is used to filter out trades that are not in line with the long-term trend of the market. The baseline is plotted on the chart along with other indicators, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR).
Trades are only taken when the price is in the same direction as the baseline. For example, if the baseline is sloping upwards, only long trades are taken, and if the baseline is sloping downwards, only short trades are taken. This approach helps to ensure that trades are in line with the overall trend of the market, and reduces the risk of entering trades that are likely to fail.
By using a baseline in the NNFX system, traders can have a clear reference point for determining the overall trend of the market, and can make more informed trading decisions. The baseline helps to filter out noise and false signals, and ensures that trades are taken in the direction of the long-term trend.
What is a Confirmation indicator?
Confirmation indicators are technical indicators that are used to confirm the signals generated by primary indicators. Primary indicators are the core indicators used in the NNFX system, such as the Average True Range (ATR), the Moving Average (MA), and the Relative Strength Index (RSI).
The purpose of the confirmation indicators is to reduce false signals and improve the accuracy of the trading system. They are designed to confirm the signals generated by the primary indicators by providing additional information about the strength and direction of the trend.
Some examples of confirmation indicators that may be used in the NNFX system include the Bollinger Bands, the MACD (Moving Average Convergence Divergence), and the MACD Oscillator. These indicators can provide information about the volatility, momentum, and trend strength of the market, and can be used to confirm the signals generated by the primary indicators.
In the NNFX system, confirmation indicators are used in combination with primary indicators and other filters to create a trading system that is robust and reliable. By using multiple indicators to confirm trading signals, the system aims to reduce the risk of false signals and improve the overall profitability of the trades.
What is a Continuation indicator?
In the NNFX (No Nonsense Forex) trading system, a continuation indicator is a technical indicator that is used to confirm a current trend and predict that the trend is likely to continue in the same direction. A continuation indicator is typically used in conjunction with other indicators in the system, such as a baseline indicator, to provide a comprehensive trading strategy.
What is a Volatility/Volume indicator?
Volume indicators, such as the On Balance Volume (OBV), the Chaikin Money Flow (CMF), or the Volume Price Trend (VPT), are used to measure the amount of buying and selling activity in a market. They are based on the trading volume of the market, and can provide information about the strength of the trend. In the NNFX system, volume indicators are used to confirm trading signals generated by the Moving Average and the Relative Strength Index. Volatility indicators include Average Direction Index, Waddah Attar, and Volatility Ratio. In the NNFX trading system, volatility is a proxy for volume and vice versa.
By using volume indicators as confirmation tools, the NNFX trading system aims to reduce the risk of false signals and improve the overall profitability of trades. These indicators can provide additional information about the market that is not captured by the primary indicators, and can help traders to make more informed trading decisions. In addition, volume indicators can be used to identify potential changes in market trends and to confirm the strength of price movements.
What is an Exit indicator?
The exit indicator is used in conjunction with other indicators in the system, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR), to provide a comprehensive trading strategy.
The exit indicator in the NNFX system can be any technical indicator that is deemed effective at identifying optimal exit points. Examples of exit indicators that are commonly used include the Parabolic SAR, and the Average Directional Index (ADX).
The purpose of the exit indicator is to identify when a trend is likely to reverse or when the market conditions have changed, signaling the need to exit a trade. By using an exit indicator, traders can manage their risk and prevent significant losses.
In the NNFX system, the exit indicator is used in conjunction with a stop loss and a take profit order to maximize profits and minimize losses. The stop loss order is used to limit the amount of loss that can be incurred if the trade goes against the trader, while the take profit order is used to lock in profits when the trade is moving in the trader's favor.
Overall, the use of an exit indicator in the NNFX trading system is an important component of a comprehensive trading strategy. It allows traders to manage their risk effectively and improve the profitability of their trades by exiting at the right time.
What is an Metamorphosis indicator?
The concept of a metamorphosis indicator involves the integration of two or more GKD indicators to generate a compound signal. This is achieved by evaluating the accuracy of each indicator and selecting the signal from the indicator with the highest accuracy. As an illustration, let's consider a scenario where we calculate the accuracy of 10 indicators and choose the signal from the indicator that demonstrates the highest accuracy.
The resulting output from the metamorphosis indicator can then be utilized in a GKD-BT backtest by occupying a slot that aligns with the purpose of the metamorphosis indicator. The slot can be a GKD-B, GKD-C, or GKD-E slot, depending on the specific requirements and objectives of the indicator. This allows for seamless integration and utilization of the compound signal within the GKD-BT framework.
How does Loxx's GKD (Giga Kaleidoscope Modularized Trading System) implement the NNFX algorithm outlined above?
Loxx's GKD v2.0 system has five types of modules (indicators/strategies). These modules are:
1. GKD-BT - Backtesting module (Volatility, Number 1 in the NNFX algorithm)
2. GKD-B - Baseline module (Baseline and Volatility/Volume, Numbers 1 and 2 in the NNFX algorithm)
3. GKD-C - Confirmation 1/2 and Continuation module (Confirmation 1/2 and Continuation, Numbers 3, 4, and 5 in the NNFX algorithm)
4. GKD-V - Volatility/Volume module (Confirmation 1/2, Number 6 in the NNFX algorithm)
5. GKD-E - Exit module (Exit, Number 7 in the NNFX algorithm)
6. GKD-M - Metamorphosis module (Metamorphosis, Number 8 in the NNFX algorithm, but not part of the NNFX algorithm)
(additional module types will added in future releases)
Each module interacts with every module by passing data to A backtest module wherein the various components of the GKD system are combined to create a trading signal.
That is, the Baseline indicator passes its data to Volatility/Volume. The Volatility/Volume indicator passes its values to the Confirmation 1 indicator. The Confirmation 1 indicator passes its values to the Confirmation 2 indicator. The Confirmation 2 indicator passes its values to the Continuation indicator. The Continuation indicator passes its values to the Exit indicator, and finally, the Exit indicator passes its values to the Backtest strategy.
This chaining of indicators requires that each module conform to Loxx's GKD protocol, therefore allowing for the testing of every possible combination of technical indicators that make up the six components of the NNFX algorithm.
What does the application of the GKD trading system look like?
Example trading system:
Backtest: Multi-Ticker CC Backtest
Baseline: Hull Moving Average
Volatility/Volume: Hurst Exponent
Confirmation 1: Advance Trend Pressure as shown on the chart above
Confirmation 2: uf2018
Continuation: Coppock Curve
Exit: Rex Oscillator
Metamorphosis: Baseline Optimizer
Each GKD indicator is denoted with a module identifier of either: GKD-BT, GKD-B, GKD-C, GKD-V, GKD-M, or GKD-E. This allows traders to understand to which module each indicator belongs and where each indicator fits into the GKD system.
█ Giga Kaleidoscope Modularized Trading System Signals
Standard Entry
1. GKD-C Confirmation gives signal
2. Baseline agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
1-Candle Standard Entry
1a. GKD-C Confirmation gives signal
2a. Baseline agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Baseline Entry
1. GKD-B Baseline gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
7. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
1-Candle Baseline Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Volatility/Volume Entry
1. GKD-V Volatility/Volume gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Volatility/Volume Entry
1a. GKD-V Volatility/Volume gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSVVC Bars Back' prior
Next Candle
1b. Price retraced
2b. Volatility/Volume agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Baseline agrees
Confirmation 2 Entry
1. GKD-C Confirmation 2 gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Volatility/Volume agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Confirmation 2 Entry
1a. GKD-C Confirmation 2 gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSC2C Bars Back' prior
Next Candle
1b. Price retraced
2b. Confirmation 2 agrees
3b. Confirmation 1 agrees
4b. Volatility/Volume agrees
5b. Baseline agrees
PullBack Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price is beyond 1.0x Volatility of Baseline
Next Candle
1b. Price inside Goldie Locks Zone Minimum
2b. Price inside Goldie Locks Zone Maximum
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Continuation Entry
1. Standard Entry, 1-Candle Standard Entry, Baseline Entry, 1-Candle Baseline Entry, Volatility/Volume Entry, 1-Candle Volatility/Volume Entry, Confirmation 2 Entry, 1-Candle Confirmation 2 Entry, or Pullback entry triggered previously
2. Baseline hasn't crossed since entry signal trigger
4. Confirmation 1 agrees
5. Baseline agrees
6. Confirmation 2 agrees
GKD-V Stiffness [Loxx]The Giga Kaleidoscope GKD-V Stiffness is a Volume/Volatility module included in Loxx's "Giga Kaleidoscope Modularized Trading System."
█ GKD-V Stiffness
The stiffness indicator quantifies the market's momentum by analyzing the relationship between price movements and volatility over a specific time frame. It employs a moving average to smooth out price data, providing a baseline for trend assessment. The key element in this calculation is the incorporation of a volatility factor, typically standard deviation, which adjusts the moving average to account for market volatility. This adjusted moving average creates a benchmark that the current price must surpass to signal significant momentum.
By comparing the current price to this volatility-adjusted moving average, the stiffness indicator determines the strength of the market's trend. A higher stiffness value, surpassing a predefined threshold, indicates a strong and potentially profitable trend, either upward or downward, suggesting opportunities for strategic trading positions. Conversely, a stiffness value below the threshold signifies insufficient momentum, advising traders to refrain from entering the market due to the high risk of unpredictability. This method provides a systematic approach to evaluate market trends, enabling traders to make decisions based on the robustness of price movements relative to historical volatility.
█ Giga Kaleidoscope Modularized Trading System
Core components of an NNFX algorithmic trading strategy
The NNFX algorithm is built on the principles of trend, momentum, and volatility. There are six core components in the NNFX trading algorithm:
1. Volatility - price volatility; e.g., Average True Range, True Range Double, Close-to-Close, etc.
2. Baseline - a moving average to identify price trend
3. Confirmation 1 - a technical indicator used to identify trends
4. Confirmation 2 - a technical indicator used to identify trends
5. Continuation - a technical indicator used to identify trends
6. Volatility/Volume - a technical indicator used to identify volatility/volume breakouts/breakdown
7. Exit - a technical indicator used to determine when a trend is exhausted
8. Metamorphosis - a technical indicator that produces a compound signal from the combination of other GKD indicators*
*(not part of the NNFX algorithm)
What is Volatility in the NNFX trading system?
In the NNFX (No Nonsense Forex) trading system, ATR (Average True Range) is typically used to measure the volatility of an asset. It is used as a part of the system to help determine the appropriate stop loss and take profit levels for a trade. ATR is calculated by taking the average of the true range values over a specified period.
True range is calculated as the maximum of the following values:
-Current high minus the current low
-Absolute value of the current high minus the previous close
-Absolute value of the current low minus the previous close
ATR is a dynamic indicator that changes with changes in volatility. As volatility increases, the value of ATR increases, and as volatility decreases, the value of ATR decreases. By using ATR in NNFX system, traders can adjust their stop loss and take profit levels according to the volatility of the asset being traded. This helps to ensure that the trade is given enough room to move, while also minimizing potential losses.
Other types of volatility include True Range Double (TRD), Close-to-Close, and Garman-Klass
What is a Baseline indicator?
The baseline is essentially a moving average, and is used to determine the overall direction of the market.
The baseline in the NNFX system is used to filter out trades that are not in line with the long-term trend of the market. The baseline is plotted on the chart along with other indicators, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR).
Trades are only taken when the price is in the same direction as the baseline. For example, if the baseline is sloping upwards, only long trades are taken, and if the baseline is sloping downwards, only short trades are taken. This approach helps to ensure that trades are in line with the overall trend of the market, and reduces the risk of entering trades that are likely to fail.
By using a baseline in the NNFX system, traders can have a clear reference point for determining the overall trend of the market, and can make more informed trading decisions. The baseline helps to filter out noise and false signals, and ensures that trades are taken in the direction of the long-term trend.
What is a Confirmation indicator?
Confirmation indicators are technical indicators that are used to confirm the signals generated by primary indicators. Primary indicators are the core indicators used in the NNFX system, such as the Average True Range (ATR), the Moving Average (MA), and the Relative Strength Index (RSI).
The purpose of the confirmation indicators is to reduce false signals and improve the accuracy of the trading system. They are designed to confirm the signals generated by the primary indicators by providing additional information about the strength and direction of the trend.
Some examples of confirmation indicators that may be used in the NNFX system include the Bollinger Bands, the MACD (Moving Average Convergence Divergence), and the MACD Oscillator. These indicators can provide information about the volatility, momentum, and trend strength of the market, and can be used to confirm the signals generated by the primary indicators.
In the NNFX system, confirmation indicators are used in combination with primary indicators and other filters to create a trading system that is robust and reliable. By using multiple indicators to confirm trading signals, the system aims to reduce the risk of false signals and improve the overall profitability of the trades.
What is a Continuation indicator?
In the NNFX (No Nonsense Forex) trading system, a continuation indicator is a technical indicator that is used to confirm a current trend and predict that the trend is likely to continue in the same direction. A continuation indicator is typically used in conjunction with other indicators in the system, such as a baseline indicator, to provide a comprehensive trading strategy.
What is a Volatility/Volume indicator?
Volume indicators, such as the On Balance Volume (OBV), the Chaikin Money Flow (CMF), or the Volume Price Trend (VPT), are used to measure the amount of buying and selling activity in a market. They are based on the trading volume of the market, and can provide information about the strength of the trend. In the NNFX system, volume indicators are used to confirm trading signals generated by the Moving Average and the Relative Strength Index. Volatility indicators include Average Direction Index, Waddah Attar, and Volatility Ratio. In the NNFX trading system, volatility is a proxy for volume and vice versa.
By using volume indicators as confirmation tools, the NNFX trading system aims to reduce the risk of false signals and improve the overall profitability of trades. These indicators can provide additional information about the market that is not captured by the primary indicators, and can help traders to make more informed trading decisions. In addition, volume indicators can be used to identify potential changes in market trends and to confirm the strength of price movements.
What is an Exit indicator?
The exit indicator is used in conjunction with other indicators in the system, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR), to provide a comprehensive trading strategy.
The exit indicator in the NNFX system can be any technical indicator that is deemed effective at identifying optimal exit points. Examples of exit indicators that are commonly used include the Parabolic SAR, and the Average Directional Index (ADX).
The purpose of the exit indicator is to identify when a trend is likely to reverse or when the market conditions have changed, signaling the need to exit a trade. By using an exit indicator, traders can manage their risk and prevent significant losses.
In the NNFX system, the exit indicator is used in conjunction with a stop loss and a take profit order to maximize profits and minimize losses. The stop loss order is used to limit the amount of loss that can be incurred if the trade goes against the trader, while the take profit order is used to lock in profits when the trade is moving in the trader's favor.
Overall, the use of an exit indicator in the NNFX trading system is an important component of a comprehensive trading strategy. It allows traders to manage their risk effectively and improve the profitability of their trades by exiting at the right time.
What is an Metamorphosis indicator?
The concept of a metamorphosis indicator involves the integration of two or more GKD indicators to generate a compound signal. This is achieved by evaluating the accuracy of each indicator and selecting the signal from the indicator with the highest accuracy. As an illustration, let's consider a scenario where we calculate the accuracy of 10 indicators and choose the signal from the indicator that demonstrates the highest accuracy.
The resulting output from the metamorphosis indicator can then be utilized in a GKD-BT backtest by occupying a slot that aligns with the purpose of the metamorphosis indicator. The slot can be a GKD-B, GKD-C, or GKD-E slot, depending on the specific requirements and objectives of the indicator. This allows for seamless integration and utilization of the compound signal within the GKD-BT framework.
How does Loxx's GKD (Giga Kaleidoscope Modularized Trading System) implement the NNFX algorithm outlined above?
Loxx's GKD v2.0 system has five types of modules (indicators/strategies). These modules are:
1. GKD-BT - Backtesting module (Volatility, Number 1 in the NNFX algorithm)
2. GKD-B - Baseline module (Baseline and Volatility/Volume, Numbers 1 and 2 in the NNFX algorithm)
3. GKD-C - Confirmation 1/2 and Continuation module (Confirmation 1/2 and Continuation, Numbers 3, 4, and 5 in the NNFX algorithm)
4. GKD-V - Volatility/Volume module (Confirmation 1/2, Number 6 in the NNFX algorithm)
5. GKD-E - Exit module (Exit, Number 7 in the NNFX algorithm)
6. GKD-M - Metamorphosis module (Metamorphosis, Number 8 in the NNFX algorithm, but not part of the NNFX algorithm)
(additional module types will added in future releases)
Each module interacts with every module by passing data to A backtest module wherein the various components of the GKD system are combined to create a trading signal.
That is, the Baseline indicator passes its data to Volatility/Volume. The Volatility/Volume indicator passes its values to the Confirmation 1 indicator. The Confirmation 1 indicator passes its values to the Confirmation 2 indicator. The Confirmation 2 indicator passes its values to the Continuation indicator. The Continuation indicator passes its values to the Exit indicator, and finally, the Exit indicator passes its values to the Backtest strategy.
This chaining of indicators requires that each module conform to Loxx's GKD protocol, therefore allowing for the testing of every possible combination of technical indicators that make up the six components of the NNFX algorithm.
What does the application of the GKD trading system look like?
Example trading system:
Backtest: Multi-Ticker CC Backtest
Baseline: Hull Moving Average
Volatility/Volume: Hurst Exponent
Confirmation 1: Advance Trend Pressure as shown on the chart above
Confirmation 2: uf2018
Continuation: Coppock Curve
Exit: Rex Oscillator
Metamorphosis: Baseline Optimizer
Each GKD indicator is denoted with a module identifier of either: GKD-BT, GKD-B, GKD-C, GKD-V, GKD-M, or GKD-E. This allows traders to understand to which module each indicator belongs and where each indicator fits into the GKD system.
█ Giga Kaleidoscope Modularized Trading System Signals
Standard Entry
1. GKD-C Confirmation gives signal
2. Baseline agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
1-Candle Standard Entry
1a. GKD-C Confirmation gives signal
2a. Baseline agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Baseline Entry
1. GKD-B Baseline gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Volatility/Volume agrees
7. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
1-Candle Baseline Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSBC Bars Back' prior
Next Candle
1b. Price retraced
2b. Baseline agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Volatility/Volume Entry
1. GKD-V Volatility/Volume gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Confirmation 2 agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Volatility/Volume Entry
1a. GKD-V Volatility/Volume gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSVVC Bars Back' prior
Next Candle
1b. Price retraced
2b. Volatility/Volume agrees
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Baseline agrees
Confirmation 2 Entry
1. GKD-C Confirmation 2 gives signal
2. Confirmation 1 agrees
3. Price inside Goldie Locks Zone Minimum
4. Price inside Goldie Locks Zone Maximum
5. Volatility/Volume agrees
6. Baseline agrees
7. Confirmation 1 signal was less than 7 candles prior
1-Candle Confirmation 2 Entry
1a. GKD-C Confirmation 2 gives signal
2a. Confirmation 1 agrees
3a. Price inside Goldie Locks Zone Minimum
4a. Price inside Goldie Locks Zone Maximum
5a. Confirmation 1 signal was less than 'Maximum Allowable PSC2C Bars Back' prior
Next Candle
1b. Price retraced
2b. Confirmation 2 agrees
3b. Confirmation 1 agrees
4b. Volatility/Volume agrees
5b. Baseline agrees
PullBack Entry
1a. GKD-B Baseline gives signal
2a. Confirmation 1 agrees
3a. Price is beyond 1.0x Volatility of Baseline
Next Candle
1b. Price inside Goldie Locks Zone Minimum
2b. Price inside Goldie Locks Zone Maximum
3b. Confirmation 1 agrees
4b. Confirmation 2 agrees
5b. Volatility/Volume agrees
Continuation Entry
1. Standard Entry, 1-Candle Standard Entry, Baseline Entry, 1-Candle Baseline Entry, Volatility/Volume Entry, 1-Candle Volatility/Volume Entry, Confirmation 2 Entry, 1-Candle Confirmation 2 Entry, or Pullback entry triggered previously
2. Baseline hasn't crossed since entry signal trigger
4. Confirmation 1 agrees
5. Baseline agrees
6. Confirmation 2 agrees
Momentum Velocity [BackQuant]Momentum Velocity
Main Features:
- Momentum Based Oscillator
- Divergences
- Overbought and Oversold Conditions based off a VZO
- Alert Conditions
- Ability to make Adaptive
- Big User input menu for customisation
The Momentum Velocity indicator is based on the principle of momentum , which is a measure of the rate of change or the speed at which prices move over a specified time period. The underlying assumption of momentum trading is that assets that have performed well in the recent past will continue to perform well in the near future, and conversely, assets that have performed poorly will continue to perform poorly. This concept is widely accepted and empirically supported in financial literature, making the Momentum Velocity indicator empirically sound for several reasons:
Empirical Evidence on Momentum
Academic Research: A foundational piece of research that supports the momentum strategy is Jegadeesh and Titman's study, "Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency," published in the Journal of Finance in 1993. The authors find that strategies which buy stocks that have performed well in the past and sell stocks that have performed poorly generate significantly higher than expected returns over 3- to 12-month holding periods. This study is one of many that empirically validate the momentum effect in stock returns.
Behavioural Finance Theories:
Behavioural finance provides explanations for the momentum effect that go beyond the efficient market hypothesis. Theories such as investor herding, overreaction and under reaction to news, and the disposition effect can cause price trends to continue. The momentum strategy exploits these behavioural biases by assuming that prices will continue to move in their current direction for some time.
Global Evidence:
The momentum effect is not limited to specific markets or asset classes. Studies have documented momentum profits across various countries, markets, and asset types (stocks, bonds, commodities, and currencies). For instance, Asness, Moskowitz, and Pedersen in their paper, "Value and Momentum Everywhere," published in the Journal of Finance in 2013, show that momentum strategies can yield positive returns in different international markets.
Risk Factors:
Some researchers argue that the returns to momentum strategies are compensation for bearing certain risks. However, the empirical evidence suggests that momentum returns are difficult to explain by traditional risk factors alone, adding to the strategy’s attractiveness. The factor model of Carhart (1997), which adds a momentum factor to the Fama and French three-factor model, highlights the importance of momentum as a distinct source of returns.
Empirical Evidence Application
The Momentum Velocity indicator applies these empirical insights by quantitatively measuring the speed and direction of price movements over a given period, adjusting for recent market conditions through adaptive filtering, and normalizing the results to identify potential trading signals. By doing so, it provides traders with a tool that not only captures the essence of the momentum anomaly but also enhances it with modern technical analysis techniques for real-time market application.
Trading Application
Due to the robustness of momentum, traders are able to use this as a confluence metric into their system on any timeframe. Providing robust signals, that by extention are adaptive to the market. This is also further enabled by using adaptive filtering.
Conclusion
In summary, the empirical soundness of the Momentum Velocity indicator is grounded in the well-documented momentum effect observed in financial markets. By leveraging historical price data to predict future price movements, it aligns with both academic research and observed market behavior, making it a potentially valuable tool for traders seeking to exploit momentum-based trading opportunities.
User Inputs:
Calculation Source: Choose the price component (e.g., close) to base calculations on.
Lookback Period: Define the period over which momentum and normalization are calculated.
Use Adaptive Filtering?: Toggle the use of DEMA for more responsive momentum calculation.
Adaptive Lookback Period: Set the period for the adaptive filter when enabled.
Show Momentum Moving Average?: Option to display a moving average of the plotosc for trend smoothing.
MA Period: Specify the period for the momentum moving average.
Show Static High and Low Levels: Display predefined levels indicating extreme momentum thresholds.
Color Bars According to Trend?: Color price bars based on the momentum direction for quick visual reference.
Show Overbought and Oversold Signals: Highlight extreme volume conditions as potential buy/sell signals.
Signal Calculation Period: Set the period for calculating volume-based signals.
Show Detected Divergences?: Enable or disable the visualization of bullish and bearish divergences.
How it can be used in the context of a Trading System
Momentum and momentum divergences are pivotal concepts in trading systems, offering traders insights into the strength and potential reversal points of market trends. Momentum, a measure of the rate of price changes, helps traders identify the velocity of market movements, allowing them to ride the wave of prevailing trends for profits. When momentum divergences occur—where price movement and momentum indicators move in opposite directions—they signal a weakening of the current trend and potential for reversal. Traders can use these signals to adjust their positions, entering or exiting trades based on the anticipation of trend changes. Incorporating momentum and its divergences into a trading system provides a dynamic strategy that leverages the market's natural cycles of trend strength and exhaustion, aiming to capitalize on both continuation and reversal opportunities for enhanced trading outcomes.
We have also added a volume based component for traders to use as a point of confluence. It is shown on the chart giving background hues for overbought and oversold signals.
Thus following all of the key points here are some sample backtests on the 1D Chart
Disclaimer: Backtests are based off past results, and are not indicative of the future.
INDEX:BTCUSD
INDEX:ETHUSD
BINANCE:SOLUSD
Forex Multi-Factor IndicatorMoving Averages (MA):
Two moving averages are plotted on the chart: a fast MA (blue line) and a slow MA (red line).
The fast MA is calculated using a shorter period (10 periods by default), while the slow MA is calculated using a longer period (30 periods by default).
Moving averages help identify trends by smoothing out price fluctuations. When the fast MA crosses above the slow MA, it suggests a bullish trend, and when the fast MA crosses below the slow MA, it suggests a bearish trend.
Relative Strength Index (RSI):
The RSI indicator (orange line) is plotted on a separate axis.
RSI measures the speed and change of price movements and oscillates between 0 and 100.
RSI values above 70 are considered overbought, indicating a potential reversal to the downside, while RSI values below 30 are considered oversold, indicating a potential reversal to the upside.
Volume Moving Average (Volume MA):
The volume moving average (purple line) is plotted on the same axis as the volume.
The volume moving average is calculated over a specified period (20 periods by default).
Volume analysis provides insights into the strength of price movements. When the volume increases along with price movements, it suggests strong conviction from traders.
Buy and Sell Signals:
Buy signals (green triangle) are generated when all of the following conditions are met:
The fast MA crosses above the slow MA (indicating a bullish trend).
The RSI is below the oversold level (indicating potential upward momentum).
The current price is above the fast MA, and the volume is higher than the volume MA (indicating positive volume trend).
Sell signals (red triangle) are generated when all of the following conditions are met:
The fast MA crosses below the slow MA (indicating a bearish trend).
The RSI is above the overbought level (indicating potential downward momentum).
The current price is below the fast MA, and the volume is lower than the volume MA (indicating negative volume trend).
Overall, this multi-factor indicator combines moving averages, RSI, and volume analysis to identify potential buying and selling opportunities in the Forex market. Traders can use the signals generated by this indicator as part of their trading strategy, but it's important to consider other factors such as risk management and market conditions before making trading decisions
Wave Pendulum Trend [QuantraSystems]Wave Pendulum Trend
Introduction
The Wave Pendulum Trend (𝓟𝓮𝓷𝓭𝓾𝓵𝓾𝓶 𝓣𝓻𝓮𝓷𝓭) extrapolates market trends using physical principles derived from waves and pendulums. This indicator is a bespoke build, and its performance and behavior cannot be compared to existing indicators.
It is designed for trend following but is also effective for identifying mean reversions, momentum strength, and shows range-bound market periods within the dynamic bands.
In order to ascertain a smooth yet rapid trend direction of the market, the 𝓟𝓮𝓷𝓭𝓾𝓵𝓾𝓶 𝓣𝓻𝓮𝓷𝓭 combines several factors. A bespoke set of functions captures the momentum of price movements and dynamically weighs it over time. The indicator then extrapolates acceleration from the change in delta of price movements.
Legend
With bar coloring enabled, the price section mirrors current trend conditions. Please keep this feature disabled if you intend to use multiple indicators to avoid confusion.
The 𝓟𝓮𝓷𝓭𝓾𝓵𝓾𝓶 𝓣𝓻𝓮𝓷𝓭 presents extensive market insights. The purple and green bands around the oscillator signal the selected standard deviation (default σ = 2), for the trader to calculate how common the trending movements are in relation to the selected asset’s history.
The inner, dynamic thresholds, indicated by the blue “Range-bound market” label in the graphic above, border the area that signals a ranging market if both 𝓐𝓬𝓬𝓮𝓵𝓮𝓻𝓪𝓽𝓲𝓸𝓷 and 𝓜𝓸𝓶𝓮𝓷𝓽𝓾𝓶 signals remain inside. If either line exceeds these thresholds, care is advised as a shift in market behavior is underway.
“Trend strength” in the graphic provides a good estimate for the trending movements strength.
If the signal lines exceed the set standard deviation in non-classic mode, a reversal is very likely.
Case Study
As shown in the above case study we see two profitable swing trades on the 4H chart of Ethereum. Please note the display variant here is set to “Heikin-Ashi”.
We always recommend using a multitude of indicators to attain multiple signals on the likelihood of opening the correct position. However, this standalone scenario serves as an example on how the 𝓟𝓮𝓷𝓭𝓾𝓵𝓾𝓶 𝓣𝓻𝓮𝓷𝓭 added two profitable swing trades.
The first short trade was opened after the 𝓐𝓬𝓬𝓮𝓵𝓮𝓻𝓪𝓽𝓲𝓸𝓷 and 𝓜𝓸𝓶𝓮𝓷𝓽𝓾𝓶 reversed after crossing the threshold of standard deviation. This trade offered a late entry only, these two factors were followed late by the third signal in this case – the trend reversal. Such a trade would require additional indicators to signal at the same time, so the trader can get more confirmations. The trade was closed after 6D with an 8% gain on a 1x short position.
The second trade is a long position that enters in the same manner. The trader takes the reversal beyond the select standard deviation as a likely entry. After 7D a triple confirmation was received, as indicated by the triangle, that a reversal or at least a plateau is extremely likely. The trade was closed after 7D with a 17.23% gain on a 1x long position.
Recommended Settings
Trend Following / Investing (1D chart)
Please use the default settings!
Swing Trading (4H chart)
Wave MA - Type: TEMA
Wave MA – Length: 30
Display Variant: Heikin-Ashi
Bar Coloring: Off
Choose Mode for Coloring: Signal
Notes
Quantra Standard Value Contents:
The Heikin-Ashi (HA) candle visualization smoothes out the signal line to provide more informative insights into momentum and trends. This allows earlier entries and exits by observing the indicator values transformed by the HA.
Various visualization options are available to adjust the indicator to the user’s preference: Aside from HA, a classic line, or a hybrid of both.
A special feature of Quantra’s indicators is that they are probabilistically built - therefore they work well as confluence and can easily be stacked to increase signal accuracy.
To add to Quantra's indicators’ utility we have added the option to change the price bars colors based on different signals:
Settings: TEMA and DEMA length settings should be longer compared to other Moving Averages (MAs). Due to its complex calculations, the indicator requires a larger amount of historical data for accurate computation.
Sensitivity to Divergences: The Wave Pendulum Trend is particularly sensitive to divergences, making it a useful tool in spotting potential trend reversals or continuations.
Trend Following and Reversions: While it is primarily used for trend following, it also excels in identifying market reversions.
Momentum and Acceleration: The interaction between momentum and acceleration is a key feature of this indicator.
Visualization: The indicator offers various visualization options, including bar coloring based on HA Candles and extremes and trends. It also introduces a novel approach to visualizing the oscillator in the "Classic" mode and provides an adjustable Standard Deviation (SD) measure for reversal signals in non-classic modes.
Choose Mode for Coloring
Trend Following (Indicator above mid line counts as uptrend, below is downtrend)
Extremes (Everything beyond the SD bands is highlighted to signal mean reversion)
Candles (Color of HA candles as barcolor)
Reversions (Only for HA) (Reversion Signals via the triangles if HA candles change trend while beyond the SD bands, high probability entries/exits)
Methodology
The methodology behind the Wave Pendulum Trend is inspired by wave and pendulum theories to extrapolate market moves. By calculating the momentum and its acceleration from price data, it provides a nuanced view of the market trend.
Traders should observe the color coding, which reflects the interplay between momentum, acceleration, and set thresholds for acceleration. The Signal Mode is particularly useful for quickly identifying trend, momentum, and acceleration exhaustions.
Additionally, the indicator can help filter out ranges with insufficient momentum acceleration. Traders are encouraged to experiment with this mode and adjust the threshold settings to suit their strategies.
Adaptive Fisherized Z-scoreHello Fellas,
It's time for a new adaptive fisherized indicator of me, where I apply adaptive length and more on a classic indicator.
Today, I chose the Z-score, also called standard score, as indicator of interest.
Special Features
Advanced Smoothing: JMA, T3, Hann Window and Super Smoother
Adaptive Length Algorithms: In-Phase Quadrature, Homodyne Discriminator, Median and Hilbert Transform
Inverse Fisher Transform (IFT)
Signals: Enter Long, Enter Short, Exit Long and Exit Short
Bar Coloring: Presents the trade state as bar colors
Band Levels: Changes the band levels
Decision Making
When you create such a mod you need to think about which concepts are the best to conclude. I decided to take Inverse Fisher Transform instead of normalization to make a version which fits to a fixed scale to avoid the usual distortion created by normalization.
Moreover, I chose JMA, T3, Hann Window and Super Smoother, because JMA and T3 are the bleeding-edge MA's at the moment with the best balance of lag and responsiveness. Additionally, I chose Hann Window and Super Smoother because of their extraordinary smoothing capabilities and because Ehlers favours them.
Furthermore, I decided to choose the half length of the dominant cycle instead of the full dominant cycle to make the indicator more responsive which is very important for a signal emitter like Z-score. Signal emitters always need to be faster or have the same speed as the filters they are combined with.
Usage
The Z-score is a low timeframe scalper which works best during choppy/ranging phases. The direction you should trade is determined by the last trend change. E.g. when the last trend change was from bearish market to bullish market and you are now in a choppy/ranging phase confirmed by e.g. Chop Zone or KAMA slope you want to do long trades.
Interpretation
The Z-score indicator is a momentum indicator which shows the number of standard deviations by which the value of a raw score (price/source) is above or below the mean value of what is being observed or measured. Easily explained, it is almost the same as Bollinger Bands with another visual representation form.
Signals
B -> Buy -> Z-score crosses above lower band
S -> Short -> Z-score crosses below upper band
BE -> Buy Exit -> Z-score crosses above 0
SE -> Sell Exit -> Z-score crosses below 0
If you were reading till here, thank you already. Now, follows a bunch of knowledge for people who don't know the concepts I talk about.
T3
The T3 moving average, short for "Tim Tillson's Triple Exponential Moving Average," is a technical indicator used in financial markets and technical analysis to smooth out price data over a specific period. It was developed by Tim Tillson, a software project manager at Hewlett-Packard, with expertise in Mathematics and Computer Science.
The T3 moving average is an enhancement of the traditional Exponential Moving Average (EMA) and aims to overcome some of its limitations. The primary goal of the T3 moving average is to provide a smoother representation of price trends while minimizing lag compared to other moving averages like Simple Moving Average (SMA), Weighted Moving Average (WMA), or EMA.
To compute the T3 moving average, it involves a triple smoothing process using exponential moving averages. Here's how it works:
Calculate the first exponential moving average (EMA1) of the price data over a specific period 'n.'
Calculate the second exponential moving average (EMA2) of EMA1 using the same period 'n.'
Calculate the third exponential moving average (EMA3) of EMA2 using the same period 'n.'
The formula for the T3 moving average is as follows:
T3 = 3 * (EMA1) - 3 * (EMA2) + (EMA3)
By applying this triple smoothing process, the T3 moving average is intended to offer reduced noise and improved responsiveness to price trends. It achieves this by incorporating multiple time frames of the exponential moving averages, resulting in a more accurate representation of the underlying price action.
JMA
The Jurik Moving Average (JMA) is a technical indicator used in trading to predict price direction. Developed by Mark Jurik, it’s a type of weighted moving average that gives more weight to recent market data rather than past historical data.
JMA is known for its superior noise elimination. It’s a causal, nonlinear, and adaptive filter, meaning it responds to changes in price action without introducing unnecessary lag. This makes JMA a world-class moving average that tracks and smooths price charts or any market-related time series with surprising agility.
In comparison to other moving averages, such as the Exponential Moving Average (EMA), JMA is known to track fast price movement more accurately. This allows traders to apply their strategies to a more accurate picture of price action.
Inverse Fisher Transform
The Inverse Fisher Transform is a transform used in DSP to alter the Probability Distribution Function (PDF) of a signal or in our case of indicators.
The result of using the Inverse Fisher Transform is that the output has a very high probability of being either +1 or –1. This bipolar probability distribution makes the Inverse Fisher Transform ideal for generating an indicator that provides clear buy and sell signals.
Hann Window
The Hann function (aka Hann Window) is named after the Austrian meteorologist Julius von Hann. It is a window function used to perform Hann smoothing.
Super Smoother
The Super Smoother uses a special mathematical process for the smoothing of data points.
The Super Smoother is a technical analysis indicator designed to be smoother and with less lag than a traditional moving average.
Adaptive Length
Length based on the dominant cycle length measured by a "dominant cycle measurement" algorithm.
Happy Trading!
Best regards,
simwai
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Credits to
@cheatcountry
@everget
@loxx
@DasanC
@blackcat1402
ML - Momentum Index (Pivots)Building upon the innovative foundations laid by Zeiierman's Machine Learning Momentum Index (MLMI), this variation introduces a series of refinements and new features aimed at bolstering the model's predictive accuracy and responsiveness. Licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License (CC BY-NC-SA 4.0), my adaptation seeks to enhance the original by offering a more nuanced approach to momentum-based trading.
Key Features :
Pivot-Based Analysis: Shifting focus from trend crosses to pivot points, this version employs pivot bars to offer a distinct perspective on market momentum, aiding in the identification of critical reversal points.
Extended Parameter Set: By integrating additional parameters for making predictions, the model gains improved adaptability, allowing for finer tuning to match market conditions.
Dataset Size Limitation: To ensure efficiency and mitigate the risk of calculation timeouts, a cap on the dataset size has been implemented, balancing between comprehensive historical analysis and computational agility.
Enhanced Price Source Flexibility: Users can select between closing prices or (suggested) OHLC4 as the basis for calculations, tailoring the indicator to different analysis preferences and strategies.
This adaptation not only inherits the robust framework of the original MLMI but also introduces innovations to enhance its utility in diverse trading scenarios. Whether you're looking to refine your short-term trading tactics or seeking stable indicators for long-term strategies, the ML - Momentum Index (Pivots) offers a versatile tool to navigate the complexities of the market.
For a deeper understanding of the modifications and to leverage the full potential of this indicator, users are encouraged to explore the tooltips and documentation provided within the script.
The Momentum Indicator calculations have been transitioned to the MLMomentumIndex library, simplifying the process of integration. Users can now seamlessly incorporate the momentumIndexPivots function into their scripts to conduct detailed momentum analysis with ease.
F.B_Consolidation Range Identifier
The "F.B_Consolidation Range Identifier" (F.B_CRI) is an indicator aimed at identifying consolidation areas in the price chart. Here is an explanation of the logic and usage of this indicator:
Calculation of Standard Deviation
This indicator analyzes the market's volatility by considering the standard deviation of price movements over a defined period. A higher standard deviation indicates larger price movement, while a lower standard deviation suggests potential consolidation, where price movements are limited.
Derivation of Standard Deviation
To track changes in volatility, the derivative of the standard deviation is calculated. Positive derivative values indicate increasing volatility, while negative values suggest a decrease in volatility. This allows for the identification of potential consolidation phases where volatility decreases, and the market may stabilize.
Identification of Consolidation Phase
The indicator signals potential consolidation phases when the standard deviation is low and/or the derivative of the standard deviation is negative. To represent consolidation phases on the chart, the standard deviation line, background, and candles are colored red. However, it's important to note that the display is customizable and can be configured according to individual needs.
🚨 Important 🚨
The indicator only indicates whether consolidation phases exist. If the standard deviation line, background, or candles are gray, it indicates that a trend exists in general, but not whether it is bullish or bearish. It is advisable to use other analytical tools to confirm the direction of the trend.
Unbounded RSIIntroducing the concept of "Unbounded RSI".
Instead of indexing the average gain and average loss, over the time period of interest, we leave the average gain and loss unbounded. Instead we "bound" them by difference of each and smoothen out this difference in an envelope using exponential average. See code.
What this does to traditional RSI concept?
No concept of "overbought", "oversold"
No concept of "60-40", "70-30" bands and arguments over it
No concept of "Range Shifts"
...
How to use it?
I am generally a positional long trader. So I present my version. Of course, I expect each individual who decide to use this concept, to come up with their ideas, based on their style and temperament.
The points below, I apply on a Weekly Timeframe Chart.
Once, we see a long consolidation and price breakout, we should be able to see "Green" histogram bars. These appear, once we have the stock at least 20% up from the 52WL and the "Unbounded RSI" has turned positive. This can be a good time to "enter" into the scrip.
The height of the bars are significant, since they essentially show, that the "gap" between the avg. gain and avg. loss is widening, indicating momentum. Swing trading can thrive in these environments I guess.
Falling heights indicate that gaps to close, though, the "gap can still be green". This means, momentum is now falling. Swing traders and "quick buck makers", would ideally book profits here. If the color of the bars still remain "Green" it indicates that momentum has reduced but still the gains are "more" than loss on the timeperiod selected.
Once the histogram turns red, it means that the gain is now lower than loss. An increasing height underground, means this loss is widening. Generally, this will corelate with price action (not necessarily volume).
At this time, exits should be looked for, may be also check other factors/indicators to decide, but surely the momentum and the gain% over the timeperiod selected has now gone.
Note for Pine Coders:
The source code can easily be modified to develop this concept further.
For example:
Use different smoothing algorithms
Remove 52WL condition and introduce new additional conditions
Instead of price change of the stock for gain/loss calculations, we use the concept of Relative Strength (RS, not RSI) and measuere the gain/loss based on a benchmark index . I intend to work on this concept, soon.
You shall see a variable "unboundedRSI" which is actually a ratio of the Avg. Gain / Avg. Loss. This ratio is not plotted. It is kept there, for future use.
Many more
ROC & EMAIn summary, this allows you to plot the ROC, its EMA, and dynamically display the value of this EMA on the chart.
You can configure different lengths and colors.
Unpretentious code, just for the pleasure of sharing.
Thank you for sharing your comments with me, which will be welcome.
Ultimate Momentum"Ultimate Momentum" – Elevating Your Momentum Analysis
Experience a refined approach to momentum analysis with "Ultimate Momentum," a sophisticated indicator seamlessly combining the strengths of RSI and CCI. This tool offers a nuanced understanding of market dynamics with the following features:
1. Harmonious Fusion: Witness the dynamic interplay between RSI and CCI, providing a comprehensive understanding of market nuances.
2. Optimized CCI Dynamics: Delve confidently into market intricacies with optimized CCI parameters, enhancing synergy with RSI for a nuanced perspective on trends.
3. Standardized Readings: "Ultimate Momentum" standardizes RSI and CCI, ensuring consistency and reliability in readings for refined signals.
4. Native TradingView Integration: Immerse yourself in the reliability of native TradingView codes for RSI and CCI, ensuring stability and compatibility.
How RSI and CCI Work Together:
RSI (Relative Strength Index): Captures price momentum with precision, measuring the speed and change of price movements.
CCI (Commodity Channel Index): Strategically integrated to complement RSI, offering a unique perspective on price fluctuations and potential trend reversals.
Why "Ultimate Momentum"?
In a crowded landscape, "Ultimate Momentum" stands out, redefining how traders interpret momentum. Gain a profound understanding of market dynamics, spot trend reversals, and make informed decisions.
Your Insights Matter:
Share your suggestions to enhance "Ultimate Momentum" in the comments. Your feedback is crucial as we strive to deliver an unparalleled momentum analysis tool.
EXOFADEEXOFADE is an incredible trading indicator designed help give traders a visual clue of price momentum by combining Linear regression calculations with volume.
Overview:
ExoFade is a unique and dynamic trading indicator designed for both beginner and professional traders. At its core, it uses a sophisticated blend of multiple linear regression analysis, incorporating price, time, and volume-weighted moving average (VWMA) to predict potential price movements. By analyzing these key factors, EXOFade offers an innovative approach to understanding market trends and identifying trade opportunities.
Why It Works:
ExoFade works by calculating a regression line that adapts to market conditions, factoring in both price trends and trading volumes. This approach provides a more nuanced view of market momentum, going beyond traditional price-only indicators. The inclusion of time as a variable offers unique insights into market dynamics, making ExoFade a valuable tool for various trading strategies.
Key Features to Look Out For:
Regression Line: The heart of ExoFade, offering visual cues about the market's direction.
ATR-Based Fade Levels: Utilizes Average True Range (ATR) to set dynamic levels that signal potential reversals or continuation. The indicator comes with three fade levels, which are described below
Alert Conditions: You can set up for alerts for when any of the fade levels have been been reached, indicating potential entry points.
What Are Fade Levels And How To Use The Enter Trades:
The exofade line always moves with price, this indicates that the current volume is moving in the same direction.
When you see the exofade start to move ahead of price. For example, in an Uptrend, if price stops making new highs and you see the exofade line continue moving up ahead of price as price stagnates, this is the first time that you should be expecting pull back or reversal. When the line starts to visibly curve, this when you want to enter the trade.
Sometimes, the exofade line will move just a little bit ahead of price, and sometimes it will move a clear distance ahead of price.
From my experience, the further ahead it moves from price without price keeping up, the higher the probability of a pullback or reversal.
The actual pullback then starts when the exofade line starts to curve, which signifies the start if the actual pullback.
Since we cannot sit and watch for when the line has either moved further ahead enough or started to curve, thats why i figured to use ATR as the best way to measure the distance the exofade line moves ahead of price and the ATR also happens to measure Volatility, which makes it a perfect match.
From forward testing this for months, i have found the pullbacks typically start when the exofade line has moved ahead of price by atleast 2 ATR's. A distance of 2 ATR and above are the ones i consider the best setups. This also marks the point for your stop loss, since 2 ATR is generally used stoploss level.
To catch and sell a pullback in an uptrend, you can set alert for one or both of these alerts
Fade Level 2 abv price - This alert will trigger once Exofade line reached 2 ATR ABOVE price (Just means it has reached 2 atr, dosent mean it has started curving yet)
Curve lvl 2 - SELL - This alert means the exofade line has started to curve at 2 ATR
To buy pullbacks in a downtrend you set the opposite alerts of the one above for curve below price
There are also same alerts for level 3 as well, which is 2.5 ATR
IMPORTANT NOTES - DONT SKIP THIS
For daily and intra-day swings - Use this on 1hr trend upwards - The exofade line much slower on higher timeframe, so when you get a curve on a high time frame, like the 4HR or Daily timeframe, those are excellent signals
For scalpers trading 1hr below - The exofade moves faster on lower timeframes, so more caution should be used with these on lower timeframes , you this with other confluences like a good momentum oscillator oversold/overbought regions StochRSI, MACD etc
EXTRA TIPS
- Since the curve forms slower on higher time frames, it means getting a curve the on daily and weekly chart can help in your trend analysis to detect early signs of potential trend reversals
-I typically pair this with my customized version of Nadaraya watsons envelope ( a free indicator on tradingview) It will further improve your entry and winrate. Biggest advantage is for setting a profit target. In a buy trade for example, you buy the curve below price and set your profit target for the top band of the nadaraya watson envelope. Very efficient for scalping
- Unique areas were you want to pay attention to the exofade is when price enters points of interest, this depending on your trading style could be a
-FVG - fair value gaps
-Order blocks
- Supply / Demand areas
-Volume profile Value area High and Value area Low
The are two scenarios i would like you to be cautious of
1. As with every indicator and strategy, i most definitely wouldn't use this during high impact news.
2. If price is trending very strongly in one direction only, such that even barely gives any decent pull backs at all. Most especially if that strong push is happening between the 4hr to Daily time frame. Do not attempt to counter those trends unless you know what you are doing. Its not advisable.
Instead i'll recommend using the Exofade to catch an entry in the direction of the trade for a continuation.
And Lastly
Since this indicator uses VOLUME data as part of its calculations. It will not work on any pairs that tradingview does not provide volume data for, like Gold. But it will work normally on Gold Futures, since that has volume data
