Range Channel by Atilla YurtsevenThis script creates a dynamic channel around a user-selected moving average (MA). It calculates the relative difference between price and the MA, then finds the average of the positive differences and the negative differences separately. Using these averages, it plots upper and lower bands around the MA as well as a histogram-like oscillator to show when price moves above or below the average thresholds.
How It Works
Moving Average Selection
The indicator allows you to choose among multiple MA types (SMA, EMA, WMA, Linear Regression, etc.). Depending on your preference, it calculates the chosen MA for the selected lookback period.
Relative Difference Calculation
It then computes the percentage difference between the source (typically the closing price) and the MA. (diff = (src / ma - 1) * 100)
Positive & Negative Averages
- Positive differences are averaged and represent how far the price typically moves above the MA.
- Negative differences are similarly averaged for when price moves below the MA.
Range Channel & Oscillator
- The channel is plotted around the MA using the average positive and negative differences (Upper Edge and Lower Edge).
- The “Untrended” histogram plots the difference (diff). Green bars occur when price is above the MA on average, and red bars when below. Two additional lines mark the upper and lower average thresholds on this histogram.
How to Use
Identify Overbought/Oversold Zones: The upper edge can serve as a dynamic overbought level, while the lower edge can suggest potential oversold conditions. When the histogram approaches or crosses these levels, it may signal price extremes relative to its average movement.
Trend Confirmation: Compare price action relative to the channel. If price and the histogram consistently remain above the MA and upper threshold, it could indicate a stronger bullish trend. If they remain below, it might signal a prolonged bearish trend.
Entry/Exit Timings:
- Entry: Traders can look for moments when price breaks back inside the channel from an extreme, anticipating a mean reversion.
- Exit: Watching how price interacts with these dynamic edges can help define stop-loss or take-profit points.
Because these thresholds adapt over time based on actual price behavior, they can be more responsive than fixed-percentage bands. However, like all indicators, it’s most effective when used in conjunction with other technical and fundamental tools.
Disclaimer
This script is provided for educational and informational purposes only. It does not guarantee any specific outcome or profit. Use it at your own discretion and risk.
Trade smart, stay safe.
Atilla Yurtseven
Cerca negli script per "smart"
Zero Lag Signals For Loop [QuantAlgo]Elevate your trend-following investing and trading strategy with Zero Lag Signals For Loop by QuantAlgo , a simple yet effective technical indicator that merges advanced zero-lag mechanism with adaptive trend analysis to bring you a fresh take on market momentum tracking. Its aim is to support both medium- to long-term investors monitoring broader market shifts and precision-focused traders seeking quality entries through its dual-focused analysis approach!
🟢 Core Architecture
The foundation of this indicator rests on its zero-lag implementation and dynamic trend assessment. By utilizing a loop-driven scoring system alongside volatility-based filtering, each market movement is evaluated through multiple historical lenses while accounting for current market conditions. This multi-layered approach helps differentiate between genuine trend movements and market noise across timeframe and asset classes.
🟢 Technical Foundation
Three distinct components of this indicator are:
Zero Lag EMA : An enhanced moving average calculation designed to minimize traditional lag effects
For Loop Scoring System : A comprehensive scoring mechanism that weighs current price action against historical contexts
Dynamic Volatility Analysis : A sophisticated ATR-based filter that adjusts signal sensitivity to market conditions
🟢 Key Features & Signals
The Zero Lag Signals For Loop provides market insights through:
Color-coded Zero Lag line that adapts to trend direction
Dynamic fills between price and Zero Lag basis for enhanced visualization
Trend change markers (L/S) that highlight potential reversal points
Smart bar coloring that helps visualize market momentum
Background color changes with vertical lines at significant trend shifts
Customizable alerts for both bullish and bearish reversals
🟢 Practical Usage Tips
Here's how you can get the most out of the Zero Lag Signals For Loop :
1/ Setup:
Add the indicator to your TradingView chart by clicking on the star icon to add it to your favorites ⭐️
Start with the default Zero Lag length for balanced sensitivity
Use the standard volatility multiplier for proper filtering
Keep the default loop range for comprehensive trend analysis
Adjust threshold levels based on your investing and/or trading style
2/ Reading Signals:
Watch for L/S markers - they indicate validated trend reversals
Pay attention to Zero Lag line color changes - they confirm trend direction
Monitor bar colors for additional trend confirmation
Configure alerts for trend changes in both bullish and bearish directions, ensuring you can act on significant technical developments promptly.
🟢 Pro Tips
Fine-tune the Zero Lag length based on your timeframe:
→ Lower values (20-40) for more responsive signals
→ Higher values (60-100) for stronger trend confirmation
Adjust volatility multiplier based on market conditions:
→ Increase multiplier in volatile markets
→ Decrease multiplier in stable trending markets
Combine with:
→ Volume analysis for trade validation
→ Multiple timeframe analysis for broader context
→ Other technical tools for comprehensive analysis
Golden & Death Cross with Re-Activation [By Oberlunar]🎄 Merry Christmas to All Traders! 🎄
Let me introduce you to a practical and customizable classic tool: the Golden & Death Cross with Re-Activation. This script is designed to help you navigate the markets with precision and adaptability.
Why Is This Script Important?
1. Customizable Moving Averages
You can choose from SMA, EMA, WMA, HMA, or RMA for both moving averages. This flexibility allows you to tailor the strategy to fit different markets and trading styles.
2. Smart Signal Handling
The script generates Golden Cross (LONG) and Death Cross (SHORT) signals while deactivating them automatically when the moving averages start to converge, avoiding unnecessary noise.
3. Reactivation Based on Distance Threshold
With the treshold parameter, signals are reactivated only when the moving averages move apart sufficiently, ensuring that the signals remain meaningful and not just random market noise.
What Are These Moving Averages?
SMA (Simple Moving Average),
EMA (Exponential Moving Average),
WMA (Weighted Moving Average),
HMA (Hull Moving Average),
RMA (Relative Moving Average)
Community Input
We invite you to test this script on various markets (forex, stocks, crypto) and share your insights:
Which moving average combination works best for EUR/USD?
How about BTC/USD?
Does the treshold make a noticeable difference?
Let us know in the comments!
Example Settings
MA 1 Type: HMA, Length: 21
MA 2 Type: HMA, Length: 200
Reactivation Threshold: 0.5
Experiment with it, and let us know your findings.
Wishing you a calm holiday season and a profitable new year ahead! 🎁
🎄 Merry Christmas and Happy Trading! 🎄
Uptrick: Smart BoundariesThis script is an indicator that combines the RSI (Relative Strength Index) and Bollinger Bands to highlight potential points where price momentum and volatility may both be at extreme levels. Below is a detailed explanation of its components, how it calculates signals, and why these two indicators have been merged into one tool. This script is intended solely for educational purposes and for traders who want to explore the combined use of momentum and volatility measures. Please remember that no single indicator guarantees profitable results.
Purpose of This Script
This script is designed to serve as a concise, all-in-one tool for traders seeking to track both momentum and volatility extremes in real time. By overlaying RSI signals with Bollinger Band boundaries, it helps users quickly identify points on a chart where price movement may be highly stretched. The goal is to offer a clearer snapshot of potential overbought or oversold conditions without requiring two separate indicators. Additionally, its optional pyramiding feature enables users to manage how many times they initiate trades when signals repeat in the same direction. Through these combined functions, the script aims to streamline technical analysis by consolidating two popular measures—momentum via RSI and volatility via Bollinger Bands—into a single, manageable interface.
1. Why Combine RSI and Bollinger Bands
• RSI (Relative Strength Index): This is a momentum oscillator that measures the speed and magnitude of recent price changes. It typically ranges between 0 and 100. Traders often watch for RSI crossing into “overbought” or “oversold” levels because it may indicate a potential shift in momentum.
• Bollinger Bands: These bands are plotted around a moving average, using a standard deviation multiplier to create an upper and lower boundary. They help illustrate how volatile the price has been relative to its recent average. When price moves outside these boundaries, some traders see it as a sign the price may be overstretched and could revert closer to the average.
Combining these two can be useful because it blends two different perspectives on market movement. RSI attempts to identify momentum extremes, while Bollinger Bands track volatility extremes. By looking for moments when both conditions agree, the script tries to highlight points where price might be unusually stretched in terms of both momentum and volatility.
2. How Signals Are Generated
• Buy Condition:
- RSI dips below a specified “oversold” level (for example, 30 by default).
- Price closes below the lower Bollinger Band.
When these occur together, the script draws a label indicating a potential bullish opportunity. The underlying reasoning is that momentum (RSI) suggests a stronger-than-usual sell-off, and price is also stretched below the lower Bollinger Band.
• Sell Condition:
- RSI rises above a specified “overbought” level (for example, 70 by default).
- Price closes above the upper Bollinger Band.
When these occur together, a label is plotted for a potential bearish opportunity. The rationale is that momentum (RSI) may be overheated, and the price is trading outside the top of its volatility range.
3. Pyramiding Logic and Trade Count Management
• Pyramiding refers to taking multiple positions in the same direction when signals keep firing. While some traders prefer just one position per signal, others like to scale into a trade if the market keeps pushing in their favor.
• This script uses variables that keep track of how many recent buy or sell signals have fired. If the count reaches a user-defined maximum, no more signals of that type will trigger additional labels. This protects traders from over-committing to one direction if the market conditions remain “extreme” for a prolonged period.
• If you disable the pyramiding feature, the script will only plot one label per side until the condition resets (i.e., until RSI and price conditions are no longer met).
4. Labels and Visual Feedback
• Whenever a buy or sell condition appears, the script plots a label directly on the chart:
- Buy labels under the price bar.
- Sell labels above the price bar.
These labels make it easier to review where both RSI and Bollinger Band conditions align. It can be helpful for visually scanning the chart to see if the signals show any patterns related to market reversals or trend continuations.
• The Bollinger Bands themselves are plotted so traders can see when the price is approaching or exceeding the upper or lower band. Watching the RSI and Bollinger Band plots simultaneously can give traders more context for each signal.
5. Originality and Usefulness
This script provides a distinct approach by merging two well-established concepts—RSI and Bollinger Bands—within a single framework, complemented by optional pyramiding controls. Rather than using each indicator separately, it attempts to uncover moments when momentum signals from RSI align with volatility extremes highlighted by Bollinger Bands. This combined perspective can aid in spotting areas of possible overextension in price. Additionally, the built-in pyramiding mechanism offers a method to manage multiple signals in the same direction, allowing users to adjust how aggressively they scale into trades. By integrating these elements together, the script aims to deliver a tool that caters to diverse trading styles while remaining straightforward to configure and interpret.
6. How to Use the Indicator
• Configure the Inputs:
- RSI Length (the lookback period used for the RSI calculation).
- RSI Overbought and Oversold Levels.
- Bollinger Bands Length and Multiplier (defines the moving average period and the degree of deviation).
- Option to reduce pyramiding.
• Set Alerts (Optional):
- You can create TradingView alerts for when these conditions occur, so you do not have to monitor the chart constantly. Choose the buy or sell alert conditions in your alert settings.
• Integration in a Trading Plan:
- This script alone is not a complete trading system. Consider combining it with other forms of analysis, such as support and resistance, volume profiles, or candlestick patterns. Thorough research, testing on historical data, and risk management are always recommended.
7. No Performance Guarantees
• This script does not promise any specific trading results. It is crucial to remember that no single indicator can accurately predict future market movements all the time. The script simply tries to highlight moments when two well-known indicators both point to an extreme condition.
• Actual trading decisions should factor in a range of market information, including personal risk tolerance and broader market conditions.
8. Purpose and Limitations
• Purpose:
- Provide a combined view of momentum (RSI) and volatility (Bollinger Bands) in a single script.
- Assist in spotting times when price may be at an extreme.
- Offer a configurable system for labeling potential buy or sell points based on these extremes.
• Limitations:
- Overbought and oversold conditions can persist for an extended period in trending markets.
- Bollinger Band breakouts do not always result in immediate reversals. Sometimes price keeps moving in the same direction.
- The script does not include a built-in exit strategy or risk management rules. Traders must handle these themselves.
Additional Disclosures
This script is published open-source and does not rely on any external or private libraries. It does not use lookahead methods or repaint signals; all calculations are performed on the current bar without referencing future data. Furthermore, the script is designed for standard candlestick or bar charts rather than non-standard chart types (e.g., Heikin Ashi, Renko). Traders should keep in mind that while the script can help locate potential momentum and volatility extremes, it does not include an exit strategy or account for factors like slippage or commission. All code comes from built-in Pine Script functions and standard formulas for RSI and Bollinger Bands. Anyone reviewing or modifying this script should exercise caution and incorporate proper risk management when applying it to their own trading.
Calculation Details
The script computes RSI by examining a user-defined number of prior bars (the RSI Length) and determining the average of up-moves relative to the average of down-moves over that period. This ratio is then scaled to a 0–100 range, so lower values typically indicate stronger downward momentum, while higher values suggest stronger upward momentum. In parallel, Bollinger Bands are generated by first calculating a simple moving average (SMA) of the closing price for the user-specified length. The script then measures the standard deviation of closing prices over the same period and multiplies it by the chosen factor (the Bollinger Bands Multiplier) to form the upper and lower boundaries around the SMA. These two measures are checked in tandem: if the RSI dips below a certain oversold threshold and price trades below the lower Bollinger Band, a condition is met that may imply a strong short-term sell-off; similarly, if the RSI surpasses the overbought threshold and price rises above the upper Band, it may indicate an overextended move to the upside. The pyramiding counters track how many of these signals occur in sequence, preventing excessive stacking of labels on the chart if conditions remain extreme for multiple bars.
Conclusion
This indicator aims to provide a more complete view of potential market extremes by overlaying the RSI’s momentum readings on top of Bollinger Band volatility signals. By doing so, it attempts to help traders see when both indicators suggest that the market might be oversold or overbought. The optional reduced pyramiding logic further refines how many signals appear, giving users the choice of a single entry or multiple scaling entries. It does not claim any guaranteed success or predictive power, but rather serves as a tool for those wanting to explore this combined approach. Always be cautious and consider multiple factors before placing any trades.
Adaptive Trend Flow [QuantAlgo]Adaptive Trend Flow 📈🌊
The Adaptive Trend Flow by QuantAlgo is a sophisticated technical indicator that harnesses the power of volatility-adjusted EMAs to navigate market trends with precision. By seamlessly integrating a dynamic dual-EMA system with adaptive volatility bands, this premium tool enables traders and investors to identify and capitalize on sustained market moves while effectively filtering out noise. The indicator's unique approach to trend detection combines classical technical analysis with modern adaptive techniques, providing traders and investors with clear, actionable signals across various market conditions and asset class.
💫 Indicator Architecture
The Adaptive Trend Flow provides a sophisticated framework for assessing market trends through a harmonious blend of EMA dynamics and volatility-based boundary calculations. Unlike traditional moving average systems that use fixed parameters, this indicator incorporates smart volatility measurements to automatically adjust its sensitivity to market conditions. The core algorithm employs a dual EMA system combined with standard deviation-based volatility bands, creating a self-adjusting mechanism that expands and contracts based on market volatility. This adaptive approach allows the indicator to maintain its effectiveness across different market phases - from ranging to trending conditions. The volatility-adjusted bands act as dynamic support and resistance levels, while the gradient visualization system provides instant visual feedback on trend strength and duration.
📊 Technical Composition and Calculation
The Adaptive Trend Flow is composed of several technical components that create a dynamic trending system:
Dual EMA System: Utilizes fast and slow EMAs for primary trend detection
Volatility Integration: Computes and smooths volatility for adaptive band calculation
Dynamic Band Generation: Creates volatility-adjusted boundaries for trend validation
Gradient Visualization: Provides progressive visual feedback on trend strength
📈 Key Indicators and Features
The Adaptive Trend Flow utilizes customizable length parameters for both EMAs and volatility calculations to adapt to different trading styles. The trend detection component evaluates price action relative to the dynamic bands to validate signals and identify potential reversals.
The indicator incorporates multi-layered visualization with:
Color-coded basis and trend lines (bullish/bearish)
Adaptive volatility-based bands
Progressive gradient background for trend duration
Clear trend reversal signals (𝑳/𝑺)
Smooth fills between key levels
Programmable alerts for trend changes
⚡️ Practical Applications and Examples
✅ Add the Indicator: Add the indicator to your TradingView chart by clicking on the star icon to add it to your favorites ⭐️
👀 Monitor Trends: Watch the basis line and trend band interactions to identify trend direction and strength. The gradient background intensity indicates trend duration and conviction.
🎯 Track Signals: Pay attention to the trend reversal markers that appear on the chart:
→ Long signals (𝑳) appear when price action confirms a bullish trend reversal
→ Short signals (𝑺) indicate validated bearish trend reversals
🔔 Set Alerts: Configure alerts for trend changes in both bullish and bearish directions, ensuring you never miss significant technical developments.
🌟 Summary and Tips
The Adaptive Trend Flow by QuantAlgo is a sophisticated technical tool designed to support trend-following strategies across different market environments and asset class. By combining dual EMA analysis with volatility-adjusted bands, it helps traders and investors identify significant trend changes while filtering out market noise, providing validated signals. The tool's adaptability through customizable EMA lengths, volatility smoothing, and sensitivity settings makes it suitable for various trading timeframes and styles, allowing users to capture trending opportunities while maintaining protection against false signals.
Key parameters to optimize for your trading and/or investing style:
Main Length: Adjust for more or less sensitivity to trend changes (default: 10)
Smoothing Length: Fine-tune volatility calculations for signal stability (default: 14)
Sensitivity: Balance band width for trend validation (default: 2.0)
Visual Settings: Customize appearance with color and display options
The Adaptive Trend Flow is particularly effective for:
Identifying sustained market trends
Detecting trend reversals with confirmation
Measuring trend strength and duration
Filtering out market noise and false signals
Remember to:
Allow the indicator to validate trend changes before taking action
Use the gradient background to gauge trend strength
Combine with volume analysis for additional confirmation
Consider multiple timeframes for a complete market view
Adjust sensitivity based on market volatility conditions
Mastering ATR for Smart Stop Loss and Take Profit PlacementUsing the ATR indicator to set Stop Loss and Take Profit levels provides a dynamic and flexible way to manage risk based on the volatility of the market. This method ensures that your SL and TP are always in tune with current market conditions, preventing unnecessary stop-outs while maximizing the potential for profit. The table in the script makes it easy to view your calculated levels directly on the chart, improving your trading efficiency.
If you're looking for a more automated way to manage your trades, integrating ATR-based SL and TP can be a powerful tool in your strategy.
Happy Trading!
SMA Ribbon [A]SMA Ribbon with Adjustable MA200
20, 50, 100, and 200 -period Simple Moving Averages (SMAs) for trend analysis.
The SMA200 dynamically changes color based on its direction—green when rising and red when falling. Additionally, you can lock the SMA200 to the daily timeframe , allowing it to display the 200-day moving average on lower timeframes, such as 4-hour or 1-hour charts.
Features:
Dynamic SMA200 Color: Automatically adjusts to show upward (green) or downward (red) trends.
Daily SMA200 Option: Enables the SMA200 to represent the 200-day moving average on intraday charts for long-term trend insights.
Smart Adaptation: The daily SMA200 setting is automatically disabled on daily or higher timeframes, ensuring accurate period calculations.
How to Use:
Use this script to identify key support/resistance levels and overall market trends.
Adjust the "Daily MA for MA200" option in the settings to toggle between timeframe-specific and daily-locked SMA200.
This script is ideal for traders seeking a clean and customizable tool for long-term and short-term trend analysis.
Portfolio [Afnan]🚀 Portfolio - Advanced Portfolio Management Indicator 📊
A game-changing portfolio management tool designed to help traders stay on top of their positions and manage risk efficiently. This indicator combines detailed tracking, real-time analytics, and visual clarity to ensure traders are well-equipped for the dynamic world of financial markets.
📈 Key Features 💡
Track up to 14 positions with ease
Real-time Profit & Loss (P&L) updates and risk metrics
Visual representation of entry, stop-loss (SL), and target levels
Alerts for stop-loss breaches and target achievements
Comprehensive portfolio summaries for quick analysis
Customizable options to suit individual trading styles
🔍 Main Components ⚙️
📊 1. Position Tracking
Detailed position data: entry, stop-loss, target levels, and more
Real-time risk-reward ratios
Insights into position size and exposure percentages
Continuous updates on P&L in real-time
📉 2. Visual Indicators
Clear visual markers for entry, SL, and target prices
Price labels with detailed percentage changes
Indicators that show the current position's market status
💼 3. Portfolio Summary
Aggregate account values and exposure
Summarized P&L metrics across all positions
Risk management insights for better decision-making
Daily performance tracking to evaluate strategies
⚠️ 4. Alert System
Instant notifications for stop-loss breaches
Alerts when target prices are hit
Alerts operate for the current chart symbol
⚡ Customization Options 🎨
Show or hide specific data columns
Adjust the table's position and size for better visibility
Personalize color schemes and text styles
Switch between full portfolio view and single symbol focus
📱 How to Use 📝
Input your positions in the indicator's settings
Enable or disable specific positions dynamically
Customize display preferences to your liking
Set up alerts for proactive risk management
Monitor all your trading activities in one comprehensive dashboard
📌 Important Notes ℹ️
Compatible with any trading symbol
Updates seamlessly during market hours
Alerts are specific to the currently active chart symbol
Maximum capacity: 14 simultaneous positions
Created by: @AfnanTAjuddin
⚠️ Disclaimer ⚠️
This indicator is a tool for informational purposes only. Ensure all calculations are verified and consult a financial professional before making investment decisions.
🎯 "Stay disciplined, trade smart, and let data guide your decisions." 📊
Engulfing bar detectorHere’s the updated description with the added step about using Fibonacci levels across timeframes for confirmation:
Liquidity Engulfing Bar Detector
The **Liquidity Engulfing Bar Detector** is a powerful tool designed for traders who want to identify high-probability reversal patterns in the market based on liquidity grabbing and price action. This indicator highlights **Bullish Engulfing** and **Bearish Engulfing** bars that fulfill specific liquidity criteria, helping you spot potential trend reversals and trading opportunities.
**Features**:
1. **Bullish Engulfing Bars**:
- The current candle's low dips below the previous candle's low (grabs liquidity).
- The current candle closes above the previous candle's open.
- A green label is plotted above the engulfing bar for easy identification.
2. **Bearish Engulfing Bars**:
- The current candle's high exceeds the previous candle's high (grabs liquidity).
- The current candle closes below the previous candle's open.
- A red label is plotted below the engulfing bar for clear visibility.
3. **Customizable Alerts**:
- Receive instant notifications via TradingView alerts when a bullish or bearish engulfing pattern is detected.
- Alerts are fully customizable, allowing you to stay updated without actively monitoring the chart.
4. **Visual Markers**:
- Clear and intuitive labels make it easy to spot key patterns directly on your chart.
- Fully integrated with any timeframe and market, ensuring versatility for all trading styles.
---
### **How to Use**:
1. **Add the Indicator**:
- Apply the Liquidity Engulfing Bar Detector to your chart to automatically highlight bullish and bearish engulfing bars.
2. **Enable Alerts**:
- Set up TradingView alerts to get notified of potential setups in real-time.
3. **Analyze with Fibonacci Levels**:
- Draw a Fibonacci retracement tool over the identified engulfing bar, from its low to its high (for bullish patterns) or high to low (for bearish patterns).
- Use the following Fibonacci levels as key zones of interest:
- **0.0 (start)**, **0.25**, **0.5 (midpoint)**, **0.75**, and **1.0 (end)**.
- These levels often act as critical support or resistance zones for price action.
4. **Use Multi-Timeframe Confirmation**:
- Validate zones from higher timeframes using lower timeframe candles:
- **1-minute candles** for confirming zones on the **15-minute chart**.
- **5-minute candles** for confirming zones on the **1-hour chart**.
- **15-minute candles** for confirming zones on the **4-hour chart**.
- This approach ensures precision in your entry points and aligns intraday movements with higher timeframe setups.
5. **Integrate with Your Strategy**:
- Combine the indicator with other tools (e.g., trendlines, moving averages, or volume analysis) for confirmation.
- Use proper risk management to maximize your trading edge.
---
### **Why Use This Indicator?**
Liquidity grabs often signal the participation of major market players, which can lead to significant reversals or continuations. By combining liquidity concepts with engulfing bar patterns and Fibonacci analysis, this indicator helps you:
- Identify key market turning points.
- Improve your entries and exits with multi-timeframe precision.
- Enhance your trading strategy with an edge rooted in smart money concepts.
---
**Note**: This indicator is best used with proper risk management and alongside other technical or fundamental analyses.
---
Let me know if there's anything more you'd like to include!
Azlan MA Silang PLUS++Overview
Azlan MA Silang PLUS++ is an advanced moving average crossover trading indicator designed for traders who want to jump back into the market when they missed their first opportunity to take a trade. It implements a sophisticated dual moving average system with customizable settings and re-entry signals, making it suitable for both trend following and swing trading strategies.
Key Features
• Dual Moving Average System with multiple MA types (EMA, SMA, WMA, LWMA)
• Customizable price sources for each moving average
• Smart re-entry system with configurable maximum re-entries
• Visual signals with background coloring and shape markers
• Comprehensive alert system for both initial and re-entry signals
• Flexible parameter customization through input options
Input Parameters
Moving Average Configuration
• MA1 Type: Choice between SMA, EMA, WMA, LWMA (default: EMA)
• MA2 Type: Choice between SMA, EMA, WMA, LWMA (default: EMA)
• MA1 Length: Minimum value 1 (default: 8)
• MA2 Length: Minimum value 1 (default: 15)
• MA1 & MA2 Shift: Offset values for moving averages
• Price Sources: Configurable for each MA (Open, High, Low, Close, HL/2, HLC/3, HLCC/4)
Re-entry System
• Enable/Disable re-entry signals
• Maximum re-entries allowed (default: 3)
Technical Implementation
Price Source Calculation
The script implements a flexible price source system through the price_source() function:
• Supports standard OHLC values
• Includes compound calculations (HL/2, HLC/3, HLCC/4)
• Defaults to close price if invalid source specified
Moving Average Types
Implements four MA calculations:
1. SMA (Simple Moving Average)
2. EMA (Exponential Moving Average)
3. WMA (Weighted Moving Average)
4. LWMA (Linear Weighted Moving Average)
Signal Generation Logic
Initial Signals
• Buy Signal: MA1 crosses above MA2 with price above both MAs
• Sell Signal: MA1 crosses below MA2 with price below both MAs
Re-entry Signals
Re-entry system activates when:
1. Price crosses under MA1 in buy mode (or over in sell mode)
2. Price returns to cross back over MA1 (or under for sells)
3. Position relative to MA2 confirms trend direction
4. Number of re-entries hasn't exceeded maximum allowed
Visual Components
• MA1: Blue line (width: 2)
• MA2: Red line (width: 2)
• Background Colors:
o Green (60% opacity): Bullish conditions
o Red (60% opacity): Bearish conditions
• Signal Markers:
o Initial Buy/Sell: Up/Down arrows with "BUY"/"SELL" labels
o Re-entry Buy/Sell: Up/Down arrows with "RE-BUY"/"RE-SELL" labels
Alert System
Generates alerts for:
• Initial buy/sell signals
• Re-entry opportunities
• Alerts include ticker and timeframe information
• Configured for once-per-bar-close frequency
Usage Tips
1. Moving Average Selection
o Shorter periods (MA1) capture faster moves
o Longer periods (MA2) identify overall trend
o EMA responds faster to price changes than SMA
2. Re-entry System
o Best used in strong trending markets
o Limit maximum re-entries based on market volatility
o Monitor price action around MA1 for potential re-entry points
3. Risk Management
o Use additional confirmation indicators
o Set appropriate stop-loss levels
o Consider market conditions when using re-entry signals
Code Structure
The script follows a modular design with distinct sections:
1. Input parameter definitions
2. Helper functions for price and MA calculations
3. Main signal generation logic
4. Visual elements and plotting
5. Alert system implementation
This organization makes the code maintainable and easy to modify for custom needs.
Price Action Dynamics Oscillator (PADO)1 minute ago
Price Action Dynamics Oscillator (PADO)
Indicator Overview and Technical Deep Dive
Concept and Philosophy
The Price Action Dynamics Oscillator (PADO) is a sophisticated technical analysis tool designed to provide multi-dimensional insights into market behavior by decomposing price action into manipulation and distribution metrics. The indicator goes beyond traditional momentum or trend indicators by introducing a nuanced approach to understanding market microstructure.
Key Architectural Components
1. Timeframe and Depth Selection
Pivot Depth Options:
Short Term (Length: 12 periods)
Intermediate Term (Length: 20 periods)
Long Term (Length: 100 periods)
This flexible configuration allows traders to adapt the indicator's sensitivity to different market conditions and trading styles.
2. Core Calculation Methodology
Manipulation Metrics
Calculates manipulation differently for green (bullish) and red (bearish) candles
Normalized against Average True Range (ATR) for consistent comparison across different volatility environments
Green Candle Manipulation: (Open - Low) / ATR
Red Candle Manipulation: (High - Open) / ATR
Distribution Metrics
Measures the directional strength and potential momentum shift
Green Candle Distribution: (Close - Open)
Red Candle Distribution: (Open - Close)
3. Normalization and Smoothing
Uses Simple Moving Average (SMA) for smoothing
Dynamic length calculation based on price range distance
Ensures minimum SMA length of 2 to prevent calculation errors
Unique Features
Visualization Toggles
Traders can selectively display:
Manipulation data
Distribution data
Long-term reference lines
Valuation metrics
Strategy signals
Valuation Comparative Analysis
Compares current manipulation and distribution metrics to 1000-bar long-term averages
Color-coded visualization for quick interpretation
Blue: Manipulation above average
Purple: Manipulation below average
Orange: Distribution above average
Yellow: Distribution below average
Strategy Deployment
Generates a composite strategy signal by comparing manipulation and distribution valuations
Uses Exponential Moving Average (EMA) for smoother signal generation
Incorporates volatility bands for context-aware signal interpretation
Quadrant Analysis
Classifies market state into four quadrants based on manipulation and distribution valuations:
Q1: Low Manipulation, High Distribution
Q2: High Manipulation, High Distribution
Q3: Low Manipulation, Low Distribution
Q4: High Manipulation, Low Distribution
Each quadrant is color-coded to provide visual market state representation.
Warning Signals
Manipulation Warning: When strategy crosses below low volatility band
Distribution Warning: When strategy crosses above high volatility band
Visual Indicators
Bar coloration based on strategy momentum
Multiple color states representing different market dynamics
Recommended Use Cases
Intraday and swing trading
Multi-timeframe market analysis
Volatility and momentum assessment
Trend reversal and continuation identification
Potential Limitations
Complexity might require significant trader education
Performance can vary across different market conditions
Requires careful parameter optimization
Recommended Settings
Best used on liquid markets with clear price action
Ideal for:
Forex
Futures
Large-cap stocks
Cryptocurrency pairs
Customization and Optimization
Traders should:
Backtest across multiple assets
Adjust timeframe settings
Calibrate visualization toggles
Use in conjunction with other technical indicators
Licensing
Mozilla Public License 2.0
Open-source and modification-friendly
Conclusion
The PADO represents an advanced approach to market analysis, blending traditional technical analysis with innovative metrics for deeper market understanding.
PADO Quadrant Color Analysis: Deep Dive
Quadrant Color Scheme Breakdown
Quadrant 1: Lime Green Background (RGB: 0, 255, 21, 90)
Condition: val_manip < 1 AND val_distr > 1
Market Interpretation:
Low Manipulation Pressure
High Distribution Activity
Potential Scenario:
Smart money might be gradually distributing positions
Trading Implications:
Caution for current trend followers
Potential preparation for trend change
Increased probability of consolidation or reversal
Quadrant 2: Bright Blue Background (RGB: 0, 191, 255, 90)
Condition: val_manip > 1 AND val_distr > 1
Market Interpretation:
High Manipulation Pressure
High Distribution Activity
Potential Scenario:
Strong institutional involvement
Potential market transition phase
Significant volume and momentum
Trading Implications:
High volatility expected
Increased market uncertainty
Potential for sharp price movements
Requires careful risk management
Quadrant 3: Light Gray Background (RGB: 252, 252, 252, 90)
Condition: val_manip < 1 AND val_distr < 1
Market Interpretation:
Low Manipulation Pressure
Low Distribution Activity
Potential Scenario:
Market consolidation
Reduced institutional activity
Potential low-volatility period
Trading Implications:
Range-bound market
Reduced trading opportunities
Potential setup for future breakout
Ideal for mean reversion strategies
Quadrant 4: Light Yellow Background (Hex: #f6ff0019)
Condition: val_manip > 1 AND val_distr < 1
Market Interpretation:
High Manipulation Pressure
Low Distribution Activity
Potential Scenario:
Accumulation of positions
Trading Implications:
Increased probability of directional move soon
Color Psychology and Technical Significance
Color Selection Rationale
Lime Green (Q1): Represents potential growth and transition
Bright Blue (Q2): Signifies high energy and institutional activity
Light Gray (Q3): Indicates neutrality and consolidation
Transparent Green (Q4): Suggests emerging trend potential
Advanced Interpretation Guidelines
Color Transition Analysis
Observe how the quadrant colors change
Rapid color shifts might indicate:
Market regime changes
Shifts in institutional sentiment
Potential trend acceleration or reversal
Technical Implementation Notes
Calculation Snippet
pinescriptCopyq1 = (val_manip < 1) and (val_distr > 1)
q2 = (val_manip > 1) and (val_distr > 1)
q3 = (val_manip < 1) and (val_distr < 1)
q4 = (val_manip > 1) and (val_distr < 1)
bgcolor(q1 ? color.rgb(0, 255, 21, 90):
q2 ? color.rgb(0, 191, 255, 90):
q3 ? color.rgb(252, 252, 252, 90):
q4 ? #f6ff0019:na)
Alpha Channel (Transparency)
90 and 0x19 values ensure background color doesn't overwhelm chart
Allows underlying price action to remain visible
Subtle visual cue without significant chart obstruction
Practical Trading Recommendations
Never Trade Solely on Quadrant Colors
Use as a complementary analysis tool
Combine with other technical and fundamental indicators
Timeframe Considerations
Validate quadrant signals across multiple timeframes
Longer timeframes provide more reliable signals
Risk Management
Set appropriate stop-loss levels
Use position sizing strategies
Be prepared for false signals
Recommended Workflow
Identify current quadrant
Assess overall market context
Confirm with other indicators
Execute with proper risk management
Direction Coefficient Indicator# Direction Coefficient Indicator with Advanced Volume & Volatility Adjustments
The Direction Coefficient Indicator represents an advanced technical analysis tool that combines price momentum analysis with sophisticated volume and volatility adjustments. This versatile indicator measures market direction while adapting to various trading conditions, making it valuable for both trend following and momentum trading strategies.
At its core, the indicator employs a unique approach to price analysis by establishing a dynamic reference period for calculations. It processes price data through an EMA smoothing mechanism to reduce market noise and presents results as percentage-based measurements, ensuring universal applicability across different markets and timeframes.
One of the indicator's standout features is its volume integration system. When enabled, this system implements volume-weighted calculations that provide enhanced accuracy during significant market moves while effectively reducing false signals during low-volume periods. This volume weighting mechanism proves particularly valuable in highly liquid markets where volume plays a crucial role in price movement validation.
The volatility adjustment feature sets this indicator apart from traditional momentum tools. By incorporating smart volatility normalization, the indicator adapts seamlessly to changing market conditions. This adjustment helps maintain consistent signals across different volatility regimes, preventing excessive noise during highly volatile periods while remaining sensitive enough during calmer market phases.
Direction change detection forms another crucial component of the indicator. The system continuously monitors momentum shifts and provides early warning signals for potential trend reversals. This feature helps traders avoid late exits from positions and offers valuable insights for potential market turning points. When the indicator detects significant changes in momentum, it displays a warning symbol (⚠) alongside its regular signals.
The visual presentation of the indicator utilizes an intuitive color-coded system. Green labels indicate positive momentum, while red labels signify negative momentum. The display system includes customizable label sizes and positions, allowing traders to adapt the visual elements to their specific chart setup and preferences. Label distance from candles, color schemes, and reference lines can all be adjusted to create an optimal visual experience.
For practical application, the indicator offers several parameter settings that traders can adjust. The time period parameters include adjustable lookback periods and EMA length, while advanced calculation options allow for enabling or disabling volume weighting and volatility adjustment features. These parameters can be fine-tuned based on specific trading timeframes and market conditions.
In trend following scenarios, traders can use the coefficient direction for trend confirmation while monitoring warning signals for potential exits. The volume weighting feature adds another layer of confirmation for trend strength. For momentum trading, strong coefficient readings can signal entry points, while warning signals help identify potential exit timing.
Risk management becomes more systematic with this indicator. Warning signals can guide stop loss placement, while the volatility adjustment feature assists in position sizing decisions. The volume weighting component helps traders evaluate the significance of price moves, contributing to more informed entry timing decisions.
The indicator performs optimally when traders start with default settings and gradually adjust parameters based on their specific needs. For longer-term trades, increasing the lookback period often provides more stable signals. In highly liquid markets, enabling volume weighting can enhance signal quality. The volatility adjustment feature proves particularly valuable during unstable market conditions.
The Direction Coefficient Indicator stands as a comprehensive solution for traders seeking a sophisticated yet practical approach to market analysis. By combining multiple analytical components into a single, customizable tool, it provides valuable insights while remaining accessible to traders of various experience levels.
For optimal results, traders should consider using this indicator in conjunction with other technical analysis tools while paying attention to its warning signals and volume-weighted insights. Regular parameter adjustment based on changing market conditions and specific trading styles will help maximize the indicator's effectiveness in various trading scenarios.
Indicateur de Coefficient Directeur
L'Indicateur de Coefficient Directeur représente un outil d'analyse technique avancé qui combine l'analyse de momentum des prix avec des ajustements sophistiqués de volume et de volatilité. Cet indicateur polyvalent mesure la direction du marché tout en s'adaptant à diverses conditions de trading, le rendant précieux tant pour le suivi de tendance que pour les stratégies de trading momentum.
À sa base, l'indicateur emploie une approche unique de l'analyse des prix en établissant une période de référence dynamique pour les calculs. Il traite les données de prix à travers un mécanisme de lissage EMA pour réduire le bruit du marché et présente les résultats sous forme de mesures en pourcentage, assurant une applicabilité universelle à travers différents marchés et temporalités.
L'une des caractéristiques distinctives de l'indicateur est son système d'intégration du volume. Lorsqu'il est activé, ce système met en œuvre des calculs pondérés par le volume qui fournissent une précision accrue pendant les mouvements significatifs du marché tout en réduisant efficacement les faux signaux pendant les périodes de faible volume. Ce mécanisme de pondération du volume s'avère particulièrement valuable dans les marchés très liquides où le volume joue un rôle crucial dans la validation des mouvements de prix.
La fonction d'ajustement de la volatilité distingue cet indicateur des outils de momentum traditionnels. En incorporant une normalisation intelligente de la volatilité, l'indicateur s'adapte parfaitement aux conditions changeantes du marché. Cet ajustement aide à maintenir des signaux cohérents à travers différents régimes de volatilité, empêchant le bruit excessif pendant les périodes très volatiles tout en restant suffisamment sensible pendant les phases de marché plus calmes.
La détection des changements de direction forme une autre composante cruciale de l'indicateur. Le système surveille continuellement les changements de momentum et fournit des signaux d'avertissement précoces pour les potentiels renversements de tendance. Cette fonctionnalité aide les traders à éviter les sorties tardives des positions et offre des aperçus précieux des potentiels points de retournement du marché. Lorsque l'indicateur détecte des changements significatifs de momentum, il affiche un symbole d'avertissement (⚠) à côté de ses signaux réguliers.
La présentation visuelle de l'indicateur utilise un système intuitif codé par couleurs. Les étiquettes vertes indiquent un momentum positif, tandis que les étiquettes rouges signifient un momentum négatif. Le système d'affichage inclut des tailles et positions d'étiquettes personnalisables, permettant aux traders d'adapter les éléments visuels à leur configuration spécifique de graphique et leurs préférences. La distance des étiquettes par rapport aux bougies, les schémas de couleurs et les lignes de référence peuvent tous être ajustés pour créer une expérience visuelle optimale.
Pour l'application pratique, l'indicateur offre plusieurs paramètres de réglage que les traders peuvent ajuster. Les paramètres de période temporelle incluent des périodes de référence ajustables et la longueur de l'EMA, tandis que les options de calcul avancées permettent d'activer ou de désactiver les fonctionnalités de pondération du volume et d'ajustement de la volatilité. Ces paramètres peuvent être affinés en fonction des temporalités de trading spécifiques et des conditions de marché.
Dans les scénarios de suivi de tendance, les traders peuvent utiliser la direction du coefficient pour la confirmation de tendance tout en surveillant les signaux d'avertissement pour les sorties potentielles. La fonction de pondération du volume ajoute une couche supplémentaire de confirmation pour la force de la tendance. Pour le trading momentum, des lectures fortes du coefficient peuvent signaler des points d'entrée, tandis que les signaux d'avertissement aident à identifier le timing potentiel de sortie.
La gestion du risque devient plus systématique avec cet indicateur. Les signaux d'avertissement peuvent guider le placement des stops loss, tandis que la fonction d'ajustement de la volatilité aide aux décisions de dimensionnement des positions. La composante de pondération du volume aide les traders à évaluer l'importance des mouvements de prix, contribuant à des décisions de timing d'entrée plus éclairées.
L'indicateur fonctionne de manière optimale lorsque les traders commencent avec les paramètres par défaut et ajustent progressivement les paramètres en fonction de leurs besoins spécifiques. Pour les trades à plus long terme, l'augmentation de la période de référence fournit souvent des signaux plus stables. Dans les marchés très liquides, l'activation de la pondération du volume peut améliorer la qualité des signaux. La fonction d'ajustement de la volatilité s'avère particulièrement précieuse pendant les conditions de marché instables.
L'Indicateur de Coefficient Directeur s'impose comme une solution complète pour les traders recherchant une approche sophistiquée mais pratique de l'analyse de marché. En combinant plusieurs composantes analytiques en un seul outil personnalisable, il fournit des aperçus précieux tout en restant accessible aux traders de différents niveaux d'expérience.
Pour des résultats optimaux, les traders devraient envisager d'utiliser cet indicateur en conjonction avec d'autres outils d'analyse technique tout en prêtant attention à ses signaux d'avertissement et ses aperçus pondérés par le volume. L'ajustement régulier des paramètres basé sur les conditions changeantes du marché et les styles de trading spécifiques aidera à maximiser l'efficacité de l'indicateur dans divers scénarios de trading.
Market structureHi all!
This script shows you the market structure. You can choose to show internal market structure (with pivots of a default length of 5) and swing market structure (with pivots of a default length of 50). For these two trends it will show you:
• Break of structure (BOS)
• Change of character (CHoCH) (mandatory)
• Equal high/low (EQH/EQL)
It's inspired by "Smart Money Concepts (SMC) " by LuxAlgo that will also show you the market structure.
It will create the two market structures depending on the pivots found. Both of these market structures can be enabled/disabled. The pivots length can be configured separately. The pivots found will be the 'base' of this indicator and will show you when price breaks it. When that happens a break of structure or a change of character will be created. The latest 5 pivots found within the current trends will be kept to take action on. The internal market structure is shown with dashed lines and swing market structure is shown with solid lines.
A break of structure is removed if an earlier pivots within the same trend is broken. Like in the images below, the first pivot (in the first image) is removed when an earlier pivot's higher price within the same trend is broken (the second image):
Equal high/lows have a pink zone (by default but can be changed by the user). These zones can be configured to be extended to the right (off by default). Equal high/lows are only possible if it's not been broken by price and if a later bar has a high/low within the limit it's added to the zone (without it being more 'extreme' (high or low) then the previous price). A factor (percentage of width) of the Average True Length (of length 14) that the pivot must be within to to be considered an Equal high/low. This is configurable and sets this 'limit' and is 10 by default.
You are able to show the pivots that are used. "HH" (higher high), "HL" (higher low), "LH" (lower high), "LL" (lower low) and "H"/"L" (for pivots (high/low) when the trend has changed) are the labels used.
This script has proven itself useful for me to quickly see how the current market is. You can see the pivots (price and bar) where break of structure or change of character happens to see the current trends. I hope that you will find this useful for you.
When programming I focused on simplicity and ease of read. I did not focus on performance, I will do so if it's a problem (haven't noticed it is one yet).
You can set alerts for when a change of character happens. You can configure it to fire on when it happens (all or once per bar) but it defaults to 'once_per_bar_close' to avoid repainting. This has the drawback to alert you when the bar closes.
TLDR: this is an indicator showing you the market structure (break of structures and change of characters) using swing points/pivots. Two trends can be shown, internal (with pivots of length of 5) and swing (with pivots of the length of 50).
Best of trading luck!
SMC StrategyThis Pine Script strategy is based on Smart Money Concepts (SMC), designed for TradingView. Here's a brief summary of what the script does:
1. Swing High and Low Calculation: It identifies recent swing highs and lows, which are used to define key zones.
2. Equilibrium, Premium, and Discount Zones:
- Equilibrium is the midpoint between the swing high and low.
- Premium Zone is above the equilibrium, indicating a potential resistance area (sell zone).
- Discount Zone is below the equilibrium, indicating a potential support area (buy zone).
3. Simple Moving Average (SMA): It uses a 50-period SMA to determine the trend direction. If the price is above the SMA, the trend is bullish; if it's below, the trend is bearish.
4. Buy and Sell Signals:
- Buy Signal: Generated when the price is in the discount zone and above the equilibrium, with the price also above the SMA.
- Sell Signal: Triggered when the price is in the premium zone and below the equilibrium, with the price also below the SMA.
5. Order Blocks: It detects basic order blocks by identifying the highest high and lowest low within the last 20 bars. These levels help confirm the buy and sell signals.
6. Liquidity Zones: It marks the swing high and low as potential liquidity zones, indicating where price may reverse due to institutional players' activity.
The strategy then executes trades based on these signals, plotting buy and sell markers on the chart and showing the key levels (zones) and trend direction.
SMC Order Block & Liquidity EntryThe SMC Order Block and Liquidity Trap Entry Strategy script uses Smart Money Concepts (SMC), which analyze institutional actions in the market, to assist traders in identifying high-probability trades. In order to help traders match their entry with institutional activity, this script highlights important regions of interest, including order blocks, liquidity zones, and indications for Break of Structure (BOS) or Change of Character (CHoCH).
The fundamental ideas of this approach, which focuses on regions where institutions frequently make sizable orders or sweep liquidity, are based on SMC principles. Order blocks, which are frequently important support or resistance zones when institutions are involved, are the final bullish or bearish candle before a significant price move in the other direction. There are liquidity zones that show where retail stop-loss orders build up (above recent highs or below recent lows), such as Buy-Side Liquidity (BSL) and Sell-Side Liquidity (SSL). Before changing the direction of the price, institutions could target these zones, giving traders possible chances.
The script depicts liquidity levels above or below recent highs and lows, automatically finds order blocks within a specified lookback time, and looks for BOS (a continuation signal) or CHoCH (a reversal signal). When liquidity retests inside an order block coincide with BOS or CHoCH circumstances, entry signals are produced. While short entries are triggered when the price breaks below the order block and SSL, long entry alerts are triggered when the price breaks above the order block and BSL.
EMD Oscillator (Zeiierman)█ Overview
The Empirical Mode Decomposition (EMD) Oscillator is an advanced indicator designed to analyze market trends and cycles with high precision. It breaks down complex price data into simpler parts called Intrinsic Mode Functions (IMFs), allowing traders to see underlying patterns and trends that aren’t visible with traditional indicators. The result is a dynamic oscillator that provides insights into overbought and oversold conditions, as well as trend direction and strength. This indicator is suitable for all types of traders, from beginners to advanced, looking to gain deeper insights into market behavior.
█ How It Works
The core of this indicator is the Empirical Mode Decomposition (EMD) process, a method typically used in signal processing and advanced scientific fields. It works by breaking down price data into various “layers,” each representing different frequencies in the market’s movement. Imagine peeling layers off an onion: each layer (or IMF) reveals a different aspect of the price action.
⚪ Data Decomposition (Sifting): The indicator “sifts” through historical price data to detect natural oscillations within it. Each oscillation (or IMF) highlights a unique rhythm in price behavior, from rapid fluctuations to broader, slower trends.
⚪ Adaptive Signal Reconstruction: The EMD Oscillator allows traders to select specific IMFs for a custom signal reconstruction. This reconstructed signal provides a composite view of market behavior, showing both short-term cycles and long-term trends based on which IMFs are included.
⚪ Normalization: To make the oscillator easy to interpret, the reconstructed signal is scaled between -1 and 1. This normalization lets traders quickly spot overbought and oversold conditions, as well as trend direction, without worrying about the raw magnitude of price changes.
The indicator adapts to changing market conditions, making it effective for identifying real-time market cycles and potential turning points.
█ Key Calculations: The Math Behind the EMD Oscillator
The EMD Oscillator’s advanced nature lies in its high-level mathematical operations:
⚪ Intrinsic Mode Functions (IMFs)
IMFs are extracted from the data and act as the building blocks of this indicator. Each IMF is a unique oscillation within the price data, similar to how a band might be divided into treble, mid, and bass frequencies. In the EMD Oscillator:
Higher-Frequency IMFs: Represent short-term market “noise” and quick fluctuations.
Lower-Frequency IMFs: Capture broader market trends, showing more stable and long-term patterns.
⚪ Sifting Process: The Heart of EMD
The sifting process isolates each IMF by repeatedly separating and refining the data. Think of this as filtering water through finer and finer mesh sieves until only the clearest parts remain. Mathematically, it involves:
Extrema Detection: Finding all peaks and troughs (local maxima and minima) in the data.
Envelope Calculation: Smoothing these peaks and troughs into upper and lower envelopes using cubic spline interpolation (a method for creating smooth curves between data points).
Mean Removal: Calculating the average between these envelopes and subtracting it from the data to isolate one IMF. This process repeats until the IMF criteria are met, resulting in a clean oscillation without trend influences.
⚪ Spline Interpolation
The cubic spline interpolation is an advanced mathematical technique that allows smooth curves between points, which is essential for creating the upper and lower envelopes around each IMF. This interpolation solves a tridiagonal matrix (a specialized mathematical problem) to ensure that the envelopes align smoothly with the data’s natural oscillations.
To give a relatable example: imagine drawing a smooth line that passes through each peak and trough of a mountain range on a map. Spline interpolation ensures that line is as smooth and close to reality as possible. Achieving this in Pine Script is technically demanding and demonstrates a high level of mathematical coding.
⚪ Amplitude Normalization
To make the oscillator more readable, the final signal is scaled by its maximum amplitude. This amplitude normalization brings the oscillator into a range of -1 to 1, creating consistent signals regardless of price level or volatility.
█ Comparison with Other Signal Processing Methods
Unlike standard technical indicators that often rely on fixed parameters or pre-defined mathematical functions, the EMD adapts to the data itself, capturing natural cycles and irregularities in real-time. For example, if the market becomes more volatile, EMD adjusts automatically to reflect this without requiring parameter changes from the trader. In this way, it behaves more like a “smart” indicator, intuitively adapting to the market, unlike most traditional methods. EMD’s adaptive approach is akin to AI’s ability to learn from data, making it both resilient and robust in non-linear markets. This makes it a great alternative to methods that struggle in volatile environments, such as fixed-parameter oscillators or moving averages.
█ How to Use
Identify Market Cycles and Trends: Use the EMD Oscillator to spot market cycles that represent phases of buying or selling pressure. The smoothed version of the oscillator can help highlight broader trends, while the main oscillator reveals immediate cycles.
Spot Overbought and Oversold Levels: When the oscillator approaches +1 or -1, it may indicate that the market is overbought or oversold, signaling potential entry or exit points.
Confirm Divergences: If the price movement diverges from the oscillator's direction, it may indicate a potential reversal. For example, if prices make higher highs while the oscillator makes lower highs, it could be a sign of weakening trend strength.
█ Settings
Window Length (N): Defines the number of historical bars used for EMD analysis. A larger window captures more data but may slow down performance.
Number of IMFs (M): Sets how many IMFs to extract. Higher values allow for a more detailed decomposition, isolating smaller cycles within the data.
Amplitude Window (L): Controls the length of the window used for amplitude calculation, affecting the smoothness of the normalized oscillator.
Extraction Range (IMF Start and End): Allows you to select which IMFs to include in the reconstructed signal. Starting with lower IMFs captures faster cycles, while ending with higher IMFs includes slower, trend-based components.
Sifting Stopping Criterion (S-number): Sets how precisely each IMF should be refined. Higher values yield more accurate IMFs but take longer to compute.
Max Sifting Iterations (num_siftings): Limits the number of sifting iterations for each IMF extraction, balancing between performance and accuracy.
Source: The price data used for the analysis, such as close or open prices. This determines which price movements are decomposed by the indicator.
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Disclaimer
The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
