Ribbon Trend [Orderflowing]

7 thg 11, 2023

Ribbon Trend [Orderflowing] | Customizable Smoothing | Forecasting (+)
Built using Pine Script V5.

Introduction
The Ribbon Trend indicator is a unique tool to deliver a better view of market trends.
It stands out with its unique smoothing capabilities and customizable features, offering a fresh perspective beyond a standard moving average ribbon.

Inspiration and Originality
The inspiration for the Ribbon Trend came from a desire to evolve the standard MA ribbon or the basic two-part MAs into something bolder.
The addition of unique smoothing features not commonly found in other MA Ribbon indicators underscores its originality and the value it brings to a trader.

Core Functionality
At its core, it can use a selection of moving averages, including Hull, Double Exponential, Exponential, Weighted, and Linear Regression.
These are not just randomly chosen; each has a purpose, providing a foundation for the trend ribbon based on your input, allowing for much personalization of the script to fit your trading style.

Smoothing Techniques
What sets the indicator apart is its smoothing process.
Designed to reduce market noise, offering a clearer trend.
You have full control over the degree of smoothing, with options for single/double smoothing, and weighted smoothing.
The key is that the trend representation is accurate and sufficiently responsive to market conditions.

How It Works:
Here's a detailed explanation of how it operates:

Input Parameters:

• The price data (such as closing price) that the moving averages will be calculated on.
  
• The number of periods to be used in the moving average calculation.
  
• The period length for the signal line, which is derived from the main moving average.
  
• The type of moving average to be used (HMA, DEMA, EMA, WMA, LINREG).
  
• The factor by which the moving average is smoothed to reduce noise.
  
• Option to decide if a second smoothing should be applied.
  
• The factor for the second smoothing, if applied.
  
• Option to decide if weighted smoothing should be applied.
  
• The factor for the weighted smoothing, if applied.
  
• Option to decide if the forecast lines should be displayed.
  
• Optional: Choose the color of the forecast lines.
  

Moving Average Calculations:
The script has functions for each moving average type, which take the source and the length as arguments. (HMA, DEMA, EMA, WMA, LINREG).

Smoothing Mechanism:
The selected moving average is first smoothed using an Exponential Moving Average with the smoothing factor.
If double smoothing is on, the smoothed moving average is further smoothed using the other smoothing factor.
If weighted smoothing is on, the smoothed moving average is combined with the original moving average using the weight factor to provide a balance between responsiveness and smoothness.

Trend and Signal Line Calculation:
The script calculates a signal line using the Hull Moving Average of the smoothed moving average over the signal length.
The main moving average (ma value) and the signal line (ma signal) are plotted on the chart, with their colors determined by their relative positions to indicate bullish or bearish trends.

Visual:
A fill color is applied between the main moving average and the signal line to create the 'ribbon' effect, which changes color based on the trend direction.
The plotting of the moving average and signal line, along with the fill, provides a clear visual representation of the trend.

Forecasting Feature:
The script includes a forecasting feature that projects the trend line forward, giving traders a visual cue of potential future trend directions.
This is achieved by extending the current trend lines forward by a set number of periods to create dotted forecast lines.

Below you see the smoothing examples snapshots of the indicator to get a better understanding:

Single Smoothing (Based on User Input):


Double Smoothing (User Input -> Second Smoothing Factor):


Weighted Smoothing (User Input -> Weight Factor):


Combined Smoothing Features (1|2|Weighted):


Visual Clarity and Interpretation
The indicator enhances visual clarity with a color-coded system.
A bullish trend is indicated by a blue ribbon, while a bearish trend is represented by red.
The color scheme simplifies the interpretation of trend direction.
(You can also change color in the style tab)

Adaptability for Trading Style
Flexible and suitable for various trading styles and timeframes.
Settings are fully adjustable, allowing traders to fine-tune the indicator to their specific needs, whether for scalping, day trading, or longer-term strategies.

Its trend can be used to:

• Identify the start/end of trends, providing traders with entry and exit signals.
  
• Recognize shifts in volatility for breakouts or breakdowns.
  
• Enhance other trading systems or strategies by providing an additional layer of trend analysis.
  
• Use the direction of the trend as a “Mean Reversion Target”
  
• Use the trend to add size to winning positions or cut losing positions.
  

Commitment to Value
This indicator is not a recombination of existing tools.
The value is within the matrix of calculation and smoothing techniques based on user input.
The Ribbon Trend provides a distinct advantage, justifying its place as a closed source script.

Customization and User Input
The Ribbon Trend respects the need for customization.
It empowers you to set preferences for the source, moving average length, signal period, and smoothing factors.
The optional forecast lines, adjustable in visibility and color, further enhances its adaptability.

Conclusion and Usage
It is more than a basic indicator.
It is a comprehensive and fully customizable trend analysis tool.
It is designed to integrate seamlessly with your trading strategy, providing a layer of confluence.
It is not a standalone solution but a solid addition to your trading arsenal.

25 thg 1

Phát hành các Ghi chú

V1.1 - Adjusted Forecasting Feature

31 thg 1

Phát hành các Ghi chú

V1.2 - Added Laguerre MA Type

31 thg 8

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V1.3 - Input Section Reworked.
Added Optional Crossover Signals & Custom Color Selection.