Nigel, I'm a novice with this stuff. I made an indicator on TV that helps to visualize how a stock interacts with its ATR extensions over the 50D SMA. You or your readers may find it to be of interest. It's open source. https://www.tradingview.com/v/EqxeehZR/
Fantastic work here, Nigel. And given the state of the market right now, this could prove to be one of the most useful indicators to track. I'm interested in your two latest scripts and will consider giving swingthestrat a trial when I have a bit more time to devote to active trading.
The book teaches you an empirical way to read price action and trade it. It teaches you how to scan for reversals, continuations and tightness.
Imagine if you can encode any chart in the world, irrespective of the timeframe based on 7 candle patterns. Soon you'll discover there are only a handful of ways price can reverse. Have a look at the article - The Encyclopaedia of Strat Combos.
what a nice way to use ATR! Everthing should be using ATR instead of pure %. A few questions on the calculation of ATR: 1. Are you using 14 D ATR or 21 D ATR as basic ATR calculations? I know most people uses 14 D. 2. Do you use a year or 2 years as the lookback for the adaptive ATR? It could be different if it's a beaten leader.
The dashboard grades the momentum and extension of the trend using a custom standard deviation score.
Upside (Bullish) Extremes:
- SAFE (0 to +1.9σ): Normal, healthy trend behaviour. Safe to hold and ride the momentum.
- STRETCH (+2.0σ to +2.9σ): The trend is getting hot. A warning sign to start managing risk, tightening up or moving trailing stops.
- TRAP (+3.0σ and above): Extreme exhaustion. The "rubber band" is at its breaking point. This is your primary profit-taking zone, Ideally partials and walk the stop tightly; entering new long positions here is statistically dangerous as you risk buying the top.
Downside (Bearish) Extremes:
- SAFE (0 to -1.9σ): Normal, healthy downward trend behaviour or consolidation. Safe to hold short positions and ride the downward momentum.
- CAPIT (-2.0σ to -2.9σ): Short for Capitulation. The downside trend is getting overextended and entering a high-velocity selling phase. A clear warning sign to manage risk or secure partial gains on short positions.
- BUY (-3.0σ and below): Peak bearish exhaustion. The rubber band is stretched to its absolute lower mathematical limit. This is your primary zone to cover short positions and lock in profit; chasing new short positions here is dangerous as a violent mean-reversion bounce becomes highly probable.
Nigel, I'm a novice with this stuff. I made an indicator on TV that helps to visualize how a stock interacts with its ATR extensions over the 50D SMA. You or your readers may find it to be of interest. It's open source. https://www.tradingview.com/v/EqxeehZR/
Love it. Thanks for sharing.
Some great nuance to the ATR extension. Adjusting it to take into account the stock's own history was inspired.
Thank you @Bertus, you are very kind. Glad you found it useful.
Fantastic work here, Nigel. And given the state of the market right now, this could prove to be one of the most useful indicators to track. I'm interested in your two latest scripts and will consider giving swingthestrat a trial when I have a bit more time to devote to active trading.
Thanks Marty for the interest. You should be able to book a 121 with me via SwingTheStrat when you are ready.
Is the covered in your book as well ?
The book teaches you an empirical way to read price action and trade it. It teaches you how to scan for reversals, continuations and tightness.
Imagine if you can encode any chart in the world, irrespective of the timeframe based on 7 candle patterns. Soon you'll discover there are only a handful of ways price can reverse. Have a look at the article - The Encyclopaedia of Strat Combos.
I am a novice when it comes to trading and tradingview, but where do I find this extension cloud indicator on tradingview?
Hey Max - Try this free version created by one of the readers - https://thestratlab.substack.com/p/backtesting-jeff-suns-50-sma-atr/comment/273177008
what a nice way to use ATR! Everthing should be using ATR instead of pure %. A few questions on the calculation of ATR: 1. Are you using 14 D ATR or 21 D ATR as basic ATR calculations? I know most people uses 14 D. 2. Do you use a year or 2 years as the lookback for the adaptive ATR? It could be different if it's a beaten leader.
Thanks Dr.Wang. I'm using ATR[14]. For the adaptive 3σ thresholds I use the last 4999 trading days.
Great read Nigel, thanks!
Glad you found it useful @Francesco - Smart Stocks . Thanks you for everything you do for the trading community.
what is meant by trap signal in the table Nigel
Understanding the Dashboard Scale:
The dashboard grades the momentum and extension of the trend using a custom standard deviation score.
Upside (Bullish) Extremes:
- SAFE (0 to +1.9σ): Normal, healthy trend behaviour. Safe to hold and ride the momentum.
- STRETCH (+2.0σ to +2.9σ): The trend is getting hot. A warning sign to start managing risk, tightening up or moving trailing stops.
- TRAP (+3.0σ and above): Extreme exhaustion. The "rubber band" is at its breaking point. This is your primary profit-taking zone, Ideally partials and walk the stop tightly; entering new long positions here is statistically dangerous as you risk buying the top.
Downside (Bearish) Extremes:
- SAFE (0 to -1.9σ): Normal, healthy downward trend behaviour or consolidation. Safe to hold short positions and ride the downward momentum.
- CAPIT (-2.0σ to -2.9σ): Short for Capitulation. The downside trend is getting overextended and entering a high-velocity selling phase. A clear warning sign to manage risk or secure partial gains on short positions.
- BUY (-3.0σ and below): Peak bearish exhaustion. The rubber band is stretched to its absolute lower mathematical limit. This is your primary zone to cover short positions and lock in profit; chasing new short positions here is dangerous as a violent mean-reversion bounce becomes highly probable.
Thanks so much Nigel