How does it work?
Last updated
Last updated
Optimal Usage on 4-Hour Time Frame
To achieve maximum efficiency with this script, it is recommended to use it on a 4-hour time frame. Upon integration with your TradingView chart, you'll observe the emergence of signals within a specific timeframe, alongside a color-coded background for easy visualization of market conditions (red for down trend, green for up trend).
Start and End Dates
Automated Trading: If you're enabling automatic trading through a webhook, set the "Start Date" to the date of activation.
Back-testing: For analyzing past performance, adjust the "Start Date" and "End Date" according to your test period.
Time Zone Setting
Ensure your TradingView time zone is set to UTC. This is crucial for the script's session time to synchronize properly for optimal operation.
The script employs a combination of technical analysis (TA) indicators to track price movements closely. It also incorporates trend-following indicators to support decision-making. For instance:
Entering Trades: A long position requires a green background, while a short position needs a red background, aligning with the current trend to minimize risk & maximise profitability.
Volatility High and Low: These settings help identify periods of high volatility within the 4-hour window. The script might exit a trade if a candle surpasses the defined volatility range, interpreting this as a potential liquidity capture and a sign of an impending reversal.
By following these guidelines, you can leverage the script's capabilities to align with market trends and manage volatility effectively.
When observing the price action, if a candle opens, climbs but then retracts below its opening price within the same time frame, this signals a potential exit point for our trade to secure profits. So for example Volatility high would be the price change from candle open to candle high and the volatility low would be the amount from high to close.
Following this, we patiently await a new signal from our trading script for the next opportune entry point. One might inquire why we do not opt for a short position in such scenarios. The answer lies in the unpredictable nature of price movement during periods of high volatility, prompting a more cautious strategy of waiting for a clearer signal.
Our script operates within a designated trading window, set by default to run between 01:01 and 22:59. This timing strategy is designed to sidestep the potential pitfalls of trade entries or exits during the daily reset period, thereby mitigating risk.
An additional feature of our trading script is the "SL on Entry" (Stop Loss on Entry) option. However, its utilization is not recommended for optimal script performance. Due to the script operating on a 4-hour time frame, any stop loss set would only be triggered four hours post the relevant candle's formation. This delay significantly undermines the feature's effectiveness, leading to a notable decline in overall profitability.
Performance during flat market conditions
The script maintains an active trade position unless extreme volatility necessitates trade closure, awaiting the next opportunity. During periods when price achieves equilibrium, it may execute several trades. Although these trades may initially result in minor losses or drawdown, the strategy is designed to ensure that the big market movements are never missed.
