TrueLevel BandsTrueLevel Bands is a powerful trading indicator that employs linear regression and standard deviation to create dynamic, envelope-style bands around the price action of a financial instrument. These bands are designed to help traders identify potential support and resistance levels, trend direction, and volatility.
The TrueLevel Bands indicator consists of multiple envelope bands, each constructed using different timeframes or lengths, and a multiple (mult) factor. The multiple factor determines the width of the bands by adjusting the number of standard deviations from the linear regression line.
Key Features of TrueLevel Bands
1. Multi-Timeframe Analysis: Unlike traditional moving average-based indicators, TrueLevel Bands allow traders to incorporate multiple timeframes into their analysis. This helps traders capture both short-term and long-term market dynamics, offering a more comprehensive understanding of price behavior.
2. Customization: The TrueLevel Bands indicator offers a high level of customization, allowing traders to adjust the lengths and multiple factors to suit their trading style and preferences. This flexibility enables traders to fine-tune the indicator to work optimally with various instruments and market conditions.
3. Adaptive Volatility: By incorporating standard deviation, TrueLevel Bands can automatically adjust to changing market volatility. This feature enables the bands to expand during periods of high volatility and contract during periods of low volatility, providing traders with a more accurate representation of market dynamics.
4. Dynamic Support and Resistance Levels: TrueLevel Bands can help traders identify dynamic support and resistance levels, as the bands adjust in real-time according to price action. This can be particularly useful for traders looking to enter or exit positions based on support and resistance levels.
5. The "Global Trend Line" refers to the average of the bands used to indicate the overall trend.
Why TrueLevel Bands are Different from Classic Moving Averages
TrueLevel Bands differ from conventional moving averages in several ways:
1. Linear Regression: While moving averages are based on simple arithmetic means, TrueLevel Bands use linear regression to determine the centerline. This offers a more accurate representation of the trend and helps traders better assess potential entry and exit points.
2. Envelope Style Bands: Unlike moving averages, which are single lines, TrueLevel Bands form envelope-style bands around the price action. This provides traders with a visual representation of potential support and resistance levels, trend direction, and volatility.
3. Multi-Timeframe Analysis: Classic moving averages typically focus on a single timeframe. In contrast, TrueLevel Bands incorporate multiple timeframes, enabling traders to capture a broader understanding of market dynamics.
4. Adaptive Volatility: Traditional moving averages do not account for changing market volatility, whereas TrueLevel Bands automatically adjust to volatility shifts through the use of standard deviation.
The TrueLevel Bands indicator is a powerful, versatile tool that offers traders a unique approach to technical analysis. With its ability to adapt to changing market conditions, provide multi-timeframe analysis, and dynamic support and resistance levels, TrueLevel Bands can serve as an invaluable asset to both novice and experienced traders looking to gain an edge in the markets. Indicateur
Extended Recursive Bands StrategyThe original indicator was created by alexgrover .
All credit goes to alexgrover for creating the indicator that this strategy uses.
This strategy was posted because there were multiple requests for it, and no strategy based on this indicator exists yet.
The Recursive Bands Indicator, an indicator specially created to be extremely efficient, I think you already know that calculation time is extra important in algorithmic trading, and this is the principal motivation for the creation of the proposed indicator. Originally described in Alex's paper "Pierrefeu, Alex (2019): Recursive Bands - A New Indicator For Technical Analysis", the indicator framework has been widely used in his previous uploaded indicators, however it would have been a shame to not upload it, however user experience being a major concern for me, I decided to add extra options, which explain the term "extended".
The Indicator
The indicator displays one upper and one lower band, every common usages applied to bands indicators such as support/resistance , breakout, trailing stop, etc, can also be applied to this one. Length controls how reactive the bands are, higher values will make the bands cross the price less often.
In order to provide more flexibility for the user alexgrover added the option to use various methods for the calculation of the indicator, therefore the indicator can use the average true range , standard deviation, average high-low range, and one totally exclusive method specially designed for this indicator.
Added logic:
We have implemented a logic that checks whether the bands have been following in the same direction for a set amount of bars. This logic must be true before it can enter trades. This is completely new code that was written by us entirely, and it makes a huge difference on strategy performance.
Strategy Long conditions:
1 — Price low is below the the lower band.
2 — The lower band keeps increasing in value until the 'lookback' setting amount of bars is reached.
Strategy Short conditions:
1 — Price high is above the upper band.
2 — The upper band keeps decreasing in value until the 'lookback' setting amount of bars is reached.
Strategy Properties:
We have set a default commission of 0.06% because these are Bybit's fees. The strategy uses an order size of 10% of equity, since drawdown is very low like this. We also use a 10 tick slippage to keep results realistic and account for this. All other settings were left as default apart from initial capital, just to decrease the size of the numbers. Stratégie
Nadaraya-Watson non repainting [LPWN]// ENGLISH
The problem of the wonderfuls Nadaraya-Watson indicators is that they repainting, @jdehorty made an aproximation of the Nadaraya-Watson Estimator using raational Quadratic Kernel so i used this indicator as inspiration i just added the Upper and lower band using ATR with this we get an aproximation of Nadaraya-Watson Envelope without repainting
Settings:
Bandwidth. This is the number of bars that the indicator will use as a lookback window.
Relative Weighting Parameter. The alpha parameter for the Rational Quadratic Kernel function. This is a hyperparameter that controls the smoothness of the curve. A lower value of alpha will result in a smoother, more stretched-out curve, while a lower value will result in a more wiggly curve with a tighter fit to the data. As this parameter approaches 0, the longer time frames will exert more influence on the estimation, and as it approaches infinity, the curve will become identical to the one produced by the Gaussian Kernel.
Color Smoothing. Toggles the mechanism for coloring the estimation plot between rate of change and cross over modes.
ATR Period. Period to calculate the ATR (upper and lower bands)
Multiplier. Separation of the bands
// SPANISH
El problema de los maravillosos indicadores de Nadaraya-Watson es que repintan, @jdehorty hizo una aproximación delNadaraya-Watson Estimator usando un Kernel cuadrático racional, así que usé este indicador como inspiración y solo agregamos la banda superior e inferior usando ATR con esto obtenemos una aproximación de Nadaraya-Watson Envelope sin volver a pintar
Configuración:
Banda ancha. Este es el número de barras que el indicador utilizará como ventana retrospectiva.
Parámetro de ponderación relativa. El parámetro alfa para la función Rational Quadratic Kernel. Este es un hiperparámetro que controla la suavidad de la curva. Un valor más bajo de alfa dará como resultado una curva más suave y estirada, mientras que un valor más bajo dará como resultado una curva más ondulada con un ajuste más ajustado a los datos. A medida que este parámetro se acerque a 0, los marcos de tiempo más largos ejercerán más influencia en la estimación y, a medida que se acerque al infinito, la curva será idéntica a la que produce el Gaussian Kernel.
Suavizado de color. Alterna el mecanismo para colorear el gráfico de estimación entre la tasa de cambio y los modos cruzados.
Período ATR. Periodo para calcular el ATR (bandas superior e inferior)
Multiplicador. Separación de las bandas Indicateur
ENVELOPE RSI - Buy Sell SignalsThis indicator is mainly based on Overbought and Oversold . Indicator for short-term trading. This way you can get small but acceptable signals.
The main basis of the indicator is as follows:
To buy, the indicator is waiting for the instrument to be oversold from the RSI point of view. Then, if the chart crosses the bottom line of the Envelope indicator from the bottom to the top, a buy signal is issued.
For sell, the indicator waits for the instrument to be overbought from the RSI perspective. Then, if the chart crosses the top line of the Envelope indicator from top to bottom, a sell signal is issued.
The general basis is the consonance of the price and the RSI indicator .
The best settings I came up with myself:
Time frame: 15 minutes
Overbought: 80
Oversell: 25
RSI Length: 8
It can be done on different instruments. But always set your profit and loss limits.
(Profit to loss ratio in this indicator can be 1: 1.)
Disclaimer : This information and trading indicators and tools provided neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decision you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.
I am not liable for any profit, financial improvement, losses or damages, monetary or other that may result from the application of information contained within this indicator. Individual traders must use their own due diligence in analyzing featured trading indicators, other trading tools, webinars and other educational materials to determine if they represent suitable and useable features and capabilities for the individual trader. Indicateur
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[RedK] Stepped Moving Average Channel (SMAC)The Stepping Moving Average Channel (SMAC) is not an indicator - It is more of a trading tool that was put together to enable a trader to take advantage of relatively fast price moves with quick incremental gain - maybe by exploiting opportunities to trade basic options (Calls, Puts) or to help with in/out-type swing trades. This is more a price-level visualization tool so please use it with this in mind, and not as a trading tool by itself.
While it looks very similar to a Donchian channel, SMAC plots a stepping channel of the moving average of the high & low prices (channel borders) - with an envelope that is at a user-specified % distance from the channel borders.
This setup, when combined with other Moving Averages and lower indicators, may make it easier for a trader to prepare for a trade with clear entry and exit price levels being planned upfront.
For example, a trader wants to capture 2% of the next move, will set the envelope to 2% and have clearer view of entry/exit price levels for such a scenario. once the trader receives confirmation (from other indicators or charts) that the price is heading in the way expected, the SMAC may make it simpler and quicker to estimate (and visualize) the entry/exit price levels and track the movement.
* The stepping feature helps remove price noise and the auto-stepping feature is designed to "snap to" those mental price levels that trader gravitate towards.
* The moving average type I used here is the Compound Ratio MA (CoRA_Wave) .
* This MA type was selected because it has a very high responsiveness and good smoothness, and tracks the price values very closely.
* The MA type can be replaced within the code with any other MA as preferred.
The auto-stepping feature:
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User can override the auto-stepping by entering a manual step value
when the auto-stepping is active, it will attempt to pick the best step size based on the underlying price range and the timeframe selected.
The step selection may not be ideal in some combination of value / TF - i will continue to improve these combinations
Stepping can also be completely disabled - this bring SMAC back to a regular (though highly responsive) Hi/Lo MA channel with envelope
The Excel table snippet in the chart above shows the various step value / TF combinations.
Also the stepping values can be further customized by changing the appropriate part in the script.
Other features:
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* Rounding Options: The stepping calculations uses one of 2 selectable methods:
1 -- regular rounding (uses the round() function): which rounds the price up & down depending on where it is compared to the half-step value
example: a value of 17 with a step of 10 will be rounded to 20. a value of 13 in that case will be rounded to 10
2 -- Whole Step (uses the int() function): this will only consider whole/fully completed steps - if the average (hi or low) does not explicitly exceed the next step level, we will not get that next value.
example: both values of 17 and 13 with a step of 10 will be rounded to 10.
* The "Quick Table":
The Quick Table shows on the top-left - and can be disabled in the script settings - It shows the currently selected stepping mode and value - since the auto-step changes dynamically with the selected chart timeframe, this makes it easier for the trader to view the active "configuration"
overall, i hope some traders find this quick utility useful - if not to use, maybe to inspire other ideas
- please feel free to use or customize in any way you need. Feel free to share feedback and observations. Indicateur
Indicateur
stop out or margin call price levelsAbstract
This script finds the potential stop out or margin call price levels without considering timeframe.
This script computes stop out or margin call price levels that over leveraged positions buy cheap enough.
You can use this indicator to follow stop hunters.
Introduction
Stop hunting exists because of benefit conflict.
When most of retails traders are in the correct direction, big banks do not want to buy more expensive then retail traders.
Therefore, Big banks create sell pressure to make retail traders misunderstand their trade decisions are wrong.
When retail traders decide to cut loss, it is time big banks buy cheaper.
Many courses recommend average true range as a stop loss reference.
However, in different timeframe, average true ranges are different.
Therefore, we need to have a method to measure potential stop hunting levels which is not relative to timeframe.
There is a method because there are observable levels where over leveraged positions must cut loss.
For example, for a 100 leverage position, its margin call level is 0.005, so 0.005 drawdown is a potential stop hunting level.
Computing
For buy
potential stop out or margin call price level = low * ( 1 - ratio )
For sell
potential stop out or margin call price level = high * ( 1 + ratio )
Parameters
There are 4 levels available for adjusting.
The default values are :
(1) 0.001 : 500 leverage , 50% margin call
(2) 0.0025 : 200 leverage , 50% margin call
(3) 0.005 : 100 leverage , 50% margin call
(4) 0.010 : 50 leverage , 50% margin call
Usage
(1) Find an oversold price level. If you don't want to use an another indicator, you can use previous low.
(2) Memorize their stop out or margin call price levels of that level.
(2) Consider buy near those levels.
(3) If there are quick price rejection near those levels, better entry opportunities.
(4) Take profit and stop loss : you decide.
Conclusion
This script can find potential stop out or margin call price levels that over leveraged positions buy cheap enough.
If you are bored, you can consider find 100 signals you are interested in and share your observation.
Reference
Brokers, leverage and margin call threshold
Indicateur
Stratégie
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[blackcat] L2 Price Envelope TrackerLevel: 2
Background
Price envelopes sare shown at a set percentage above and below a moving average. They are used to indicate overbought and oversold levels and can be traded individually or in conjunction with a momentum indicator.
Function
L2 Price Envelope Tracker is an innovative indicator that use customized envelope of price to disclose overbought and oversold periods. With this function, long and short entries can be further developped in this pine script.
Key Signal
sma5 --> typical price moving average line
resistance --> upper envelope as resistance line
support ---> lower envelope as support line
Pros and Cons
Pros:
1. easy observe overbought and oversold zone
2. disclose exact long and short entries in overbought and oversold zones
Cons:
1. Only applicable for the trading pairs that support financial() functions. crypto/xau/xag/indice are not applicable
2. Need to tune r1 and s1 for different trading pairs
Remarks
NA
Readme
In real life, I am a prolific inventor. I have successfully applied for more than 60 international and regional patents in the past 12 years. But in the past two years or so, I have tried to transfer my creativity to the development of trading strategies. Tradingview is the ideal platform for me. I am selecting and contributing some of the hundreds of scripts to publish in Tradingview community. Welcome everyone to interact with me to discuss these interesting pine scripts.
The scripts posted are categorized into 5 levels according to my efforts or manhours put into these works.
Level 1 : interesting script snippets or distinctive improvement from classic indicators or strategy. Level 1 scripts can usually appear in more complex indicators as a function module or element.
Level 2 : composite indicator/strategy. By selecting or combining several independent or dependent functions or sub indicators in proper way, the composite script exhibits a resonance phenomenon which can filter out noise or fake trading signal to enhance trading confidence level.
Level 3 : comprehensive indicator/strategy. They are simple trading systems based on my strategies. They are commonly containing several or all of entry signal, close signal, stop loss, take profit, re-entry, risk management, and position sizing techniques. Even some interesting fundamental and mass psychological aspects are incorporated.
Level 4 : script snippets or functions that do not disclose source code. Interesting element that can reveal market laws and work as raw material for indicators and strategies. If you find Level 1~2 scripts are helpful, Level 4 is a private version that took me far more efforts to develop.
Level 5 : indicator/strategy that do not disclose source code. private version of Level 3 script with my accumulated script processing skills or a large number of custom functions. I had a private function library built in past two years. Level 5 scripts use many of them to achieve private trading strategy. Indicateur
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Bitcoin Margin Call Envelopes [saraphig & alexgrover]Bitcoin is the most well known digital currency, and allow two parties to make a transaction without the need of a central entity, this is why cryptocurrencies are said to be decentralized, there is no central unit in the transaction network, this can be achieved thanks to cryptography. Bitcoin is also the most traded cryptocurrency and has the largest market capitalization, this make it one of the most liquid cryptocurrency.
There has been tons of academic research studying the profitability of Bitcoin as well as its role as a safe heaven asset, with all giving mixed conclusions, some says that Bitcoin is to risky to be considered as an hedging instrument while others highlight similarities between Bitcoin and gold thus showing evidence on the usefulness of Bitcoin acting as an hedging instrument. Yet Bitcoin seems to attract more short term speculative investors rather than other ones that would use Bitcoin as an hedging instrument.
Once introduced, cryptocurrencies where of course heavily analyzed by technical analyst, and technical indicators where used by retail as well as institutional investors in order to forecast the future trends of bitcoin. I never really liked the idea of designing indicators that specifically worked for only one type of market and ever less on only one symbol. Yet the user @saraphig posted in Feb 20 an indicator called " Margin Call MovingAverage " who calculate liquidation price by using a volume weighted moving average. It took my attention and we decided to work together on a relatively more complete version that would include resistances levels.
I believe the proposed indicator might result useful to some users, the code also show a way to restrict the use of an indicator to only one symbol (line 9 to 16).
The Indicator
The indicator only work on BTCUSD, if you use another symbol you should see the following message:
The indicator plot 6 extremities, with 3 upper (resistance) extremities and 3 lower (support) extremities, each one based on the isolated margin mode liquidation price formula:
UPlp = MA/Leverage × (Leverage+1-(Leverage*0.005))
for upper extremities and:
DNlp = MA × Leverage/(Leverage+1-(Leverage*0.005))
for lower extremities.
Length control the period of the moving averages, with higher values of length increasing the probability of the price crossing an extremity. The Leverage's settings control how far away their associated extremities are from the price, with lower values of Leverage making the extremity farther away from the price, Leverage 3 control Up3 and Dn3, Leverage 2 control Up2 and Dn2, Leverage 1 control Up1 and Dn1, @saraphig recommend values for Leverage of either : 25, 20, 15, 10 ,5.
You can select 3 different types of moving average, the default moving average is the volume weighted moving average (VWMA), you can also choose a simple moving average (SMA) and the Kaufman adaptive moving average (KAMA).
Based on my understanding (which could be wrong) the original indicator aim to highlight points where margin calls might have occurred, hence the name of the indicator.
If you want a more "DSP" like description then i would say that each extremity represent a low-pass filter with a passband greater than 1 for upper extremities and lower than 1 for lower extremities, unlike bands indicators made by adding/subtracting a volatility indicator from another moving average this allow to conserve the original shape of the moving average, the downside of it being the inability to show properly on different scales.
here length = 200, on a 1h tf, each extremities are able to detect short-terms tops and bottoms. The extremity become wider when using lower time-frames.
You would then need to increase the Leverages settings, i recommend a time frame of 1h.
Conclusion
I'am not comfortable enough to make a conclusion, as i don't know the indicator that well, however i liked the original indicator posted by @saraphig and was curious about the idea behind it, studying the effect of margin calls on market liquidity as well as making indicators based on it might result a source of inspiration for other traders.
A big thanks to @saraphig who shared a lot of information about the original indicator and allowed me to post this one. I don't exclude working with him/her in the future, i invite you to follow him/her:
www.tradingview.com
Thx for reading and have a nice weekend! :3 Indicateur
Indicateur
Extended Recursive Bands - Maximum Efficiency With Extra OptionsIntroducing A New Calculation For Efficient Bands Calculation !
Here it is ! The Recursive Bands Indicator, an indicator specially created to be extremely efficient, i think you already know that calculation time is extra important in algorithmic trading, and this is the principal motivation for the creation of the proposed indicator. Originally described in my paper "Pierrefeu, Alex (2019): Recursive Bands - A New Indicator For Technical Analysis" , the indicator framework has been widely used in my previous uploaded indicators, however it would have been a shame to not upload it, however user experience being a major concern for me, i decided to add extra options, which explain the term "extended".
On The Indicator Calculation
You can skip this part if it doesn't interest you. The calculation of the indicator is based on recursion, but i want to explain the mathematical formula described in the paper.
I've seen some users trying to remake it from the calculations, however there was always something weird, and i understand, mathematical notations are always a bit weird, even myself don't always write them correctly/understand them, however this one is relatively simple to understand.
First lets explain each elements of the calculation :
α = smoothing constant, or 2/(length+1)
max/min = maximum and minimum function, max return the greatest input value while min return the lowest one, for example :
max(4,2) = 4 while min(4,2) = 2
the "||" notation mean taking the absolute value, for example : |-1| = abs(-1) = 1
The calculation after the max/min function is called the correction factor, and is the core of the indicator. The last two variables are just here to provide an initial value for upper and lower, basically when we start our calculations we will assign the value of the closing price for upper and lower.
The motivation behind using a smoothing constant in range of (0,1) was to tell the reader that the indicator is easily made adaptive, this is what i did on my adaptive trailing stop indicator by using the efficiency ratio as smoothing variable, the user can use 1/length instead of the provided calculation for alpha.
If you interested on the indicator main logic, it is actually really simple, by using upper = max(price,upper) and lower = min(price,lower) we would get the maximum/minimum price value at time t , therefore upper can only be greater or equal than its precedent value, while lower can only be lower or equal than its precedent value, in order to fix that we subtract/sum upper/lower with a value, this allow the upper band to be lower than its precedent value and lower to be greater than its precedent value, this is the role of the correction factor.
The Indicator
The indicator display one upper and one lower band, every common usages applied to bands indicators such as support/resistance, breakout, trailing stop...etc, can also be applied to this one. length control how reactive the bands are, higher values of length will make the bands cross the price less often.
In order to provide more flexibility for the user i added the option to use various methods for the calculation of the indicator, therefore the indicator can use the average true range, standard deviation, average high-low range, and one totally exclusive method specially designed for this indicator.
Classic Method
This option make the indicator use its classical calculation, this is the most efficient method of all.
Atr Method (atr)
This method use the average true range as correction factor, notice that lower values of length can still produce wide band.
Standard Deviation Method (stdev)
This method use a biased estimate of the standard deviation as correction factor.
The method produce smoother bands that converge more slowly toward the price in comparison with the classic correction factor.
Average High-Low Range Method (ahlr)
This method use the average of the high-low range as correction factor, extremely similar to the average true range.
Rising Falling Volatility (rfv) Method
A new method created for this indicator, this correction factor use the absolute prices changes when price value is greater/lower than any length past values of the price, this allow to have more boxy shaped bands, work best with greater values of length.
The bands can be in contact with this method, a possible fix in the future.
Conclusion
The recursive band indicator is one of my greatest indicators in my opinion (i would love to have yours), as you can see the idea behind it is extremely simple and allow for a super efficient band indicator, which was the original motivation behind it, in order to provide more fun for the users i also added more option for the correction factor, this allow the user to be creative and not get stuck with the original calculation.
Like the trend step indicator family we have almost ended our series on the recursive band framework, 1 more trailing stop will be added in the future, and then we'll have more "boring" stuff until i find something cool again, it shouldn't be long ;)
Thanks for reading !
Indicateur
Smart Envelope - Running Away From The TrendIntroduction
Envelopes indicators consist in displaying one upper and one lower extremity on the price chart. They are most of the time built by adding/subtracting a volatility estimator (rolling stdev, atr, range...etc) to a central tendency estimator (SMA, EMA, LSMA...etc) . Their interpretation is often subject to debate amongst technical analyst, some will use a support and resistance methodology, where price will start a downtrend once it cross the upper extremity, and a down trend once it cross the lower one. Others will prefer a breakout methodology, where price will reach higher highs once it cross the upper extremity, and lower lows when it cross the lower one. Because of price non stationarity its hard to select the best methodology, the support and resistance one will mostly work on ranging markets, while the breakout methodology mostly work on trending ones.
Therefore new methods where proposed, instead of using moving averages with a high lag, faster filters where used, such as the least squares moving average or zero lag exponential moving average, other band indicators where also created using adaptive filters, but improvements remain relatively low. The most difficult task would be to make extremities with the ability to return accurate support and resistances levels, and today i want to provide a new way to construct such extremities by using the recursive bands framework that allow extremely creative and efficient indicators.
The Main Idea
With classical bands indicators, the upper and lower extremity will still be correlated with the main trend, the problem behind such method is that we can't use a support and resistance methodology with trending markets, the fact that reversals exist tells us that our extremities will always be crossed by the main trend, here is an example :
Here the support is correlated with the main trend, in order for it to be accurate we must assume the trend will go on for ever, and will only detect higher lows, this is what we expect with the orange line, but we can see that a severe down trend totally destroy our plan.
In short we need to give some headroom to our extremities, and thus one extremity can't be correlated with the main trend.
The proposed Indicator
We want to minimize the correlation between the extremities, so if the upper extremity rise, the lower one must fall. This allow to give some headroom and allow the user to anticipate larger movements, this is how bands seeking to give support and resistances points should work.
The indicator has a length setting that control the wideness of the extremities, unlike other indicators low values such as 14 can still create really wide bands, take that into account.
length = 5. Lower length values allow for more motion from the extremities, but does not necessarily involve detecting shorter terms support and resistances levels. The factor setting is not that important, but it allow to return extremities with more motion when high, and really wide bands when below 1 and greater than 0.
Central Tendency Estimator
Something fun with the recursive band framework is that the bands are no longer based on the central tendency estimator but its the central tendency estimator who is based on the bands. The central tendency estimator can also provide support and resistances points with the price, like classical moving averages, altho its lack of motion is this time a downside.
Conclusion
Altho the extremities are more accurate than other band indicators, the problem remain the same, larger trend will always break the extremities and continue creating higher/lower highs/lows, at this point our stop loss would certainly be triggered. This is a huge downsides of contrarian strategy, we sure might anticipate reversals earlier, but we are exposed to larger price movements, therefore the risk is extreme.
But the proposed methodology might still prove useful to develop more robust support and resistances levels based on envelopes indicators.
Thanks for reading !
Indicateur
Indicateur
Bands-Trailing Stop UtilityIntroduction
Bands and trailing stops are important indicators in technical analysis, while we could think that both are different they can be in fact closely related, at least in the way they are made. Bands and trailing stops can be made from a simple central tendency estimator, like a moving average, and from a volatility estimator like standard deviation, atr...etc.
This is why i propose this utility that allow you to make bands and trailing stops from any indicator in the price chart.
How To Use
All you have to do is select the indicator you want to make bands from in the settings, so just open the Bands-Trailing Stop Utility indicator settings and select your indicator in "Source". Make sure your source indicator is not in "hide" mode.
For example here i'am using a moving average as source for the indicator. Mult control how spread the bands are from each others, by default mult = 1, if we use mult = 2 we get :
Mult can be non-integer as well as lower than 1 (when lower than 1 the bands would be closer to each others)
Error/Volatility Estimators
You can choose from a wide variety of volatility estimators, select the estimator from the "Method" scrolling parameter in settings, by default the indicator will use the running mean absolute error (MAE) which don't use length. Other estimators use length, making length = to the period of the source indicator can help get better results.
The root moving averaged squared error (RMASE) is just the square root of the simple moving average of the squared difference between the closing price and the source indicator. length control the period of the moving average of RMASE.
You can also use the average true range with period length. It might work better with low lagging moving averages.
The range is simply the difference between the highest and lowest over length periods of the source indicator.
Stdev is simply the price running standard deviation.
Trailing Stop
When the trailing stop mode is checked the bands will be replaced by a trailing stop, the trailing stop will still depend on every settings of the indicator like mult/volatility estimator...etc.
Conclusion
You might find an use to this tool if you want to make bands/trailing stops from pretty much everything. The indicator used as source for the examples is a smooth exponential averager that i could share if i see interest from peoples.
Thanks for reading !
Indicateur
