Dynamic Testing

20 thg 11, 2024

Input Parameters

• `lookbackPeriod`: Number of candles to check for determining the highest high (resistance) and lowest low (support) levels.
  
• `atrPeriod`: The period for calculating the Average True Range (ATR), a measure of market volatility.
  
• `atrMultiplierSL`: Multiplier to calculate the stop-loss distance relative to the ATR.
  
• `atrMultiplierTP1` and `atrMultiplierTP2`: Multipliers to calculate two take-profit levels relative to ATR.
  
• `rewardToRisk`: The ratio between reward (profit) and risk (stop loss) for trade management.
  

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Core Calculations
ATR (Average True Range)

atr = ta.atr(atrPeriod)

ATR is computed using the specified period to gauge price volatility.

Volume SMA

volumeSMA = ta.sma(volume, atrPeriod)

The script calculates the simple moving average of volume over the same period as ATR. This is used as a threshold for validating high-volume scenarios.

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Support and Resistance Levels

• `support`: Lowest price over the last `lookbackPeriod` candles.
  
• `resistance`: Highest price over the same period.
  
• `supportBuffer` and `resistanceBuffer`: These are "buffered" zones around support and resistance, calculated using half of the ATR to prevent false breakouts.
  

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Entry Scenarios
Bullish Entry (`isBullishEntry`)

1. The close is above the buffered support level.
   
2. The low of the current candle touches or breaks below the support level.
   
3. The trading volume is greater than the `volumeSMA`.
   

Bearish Entry (`isBearishEntry`)

1. The close is below the buffered resistance level.
   
2. The high of the current candle touches or exceeds the resistance level.
   
3. The trading volume is greater than the `volumeSMA`.
   

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Box Visualization
Bullish and Bearish Boxes

• Bullish Box (`bullishBox`):
  - A green, semi-transparent rectangle around the support level to highlight the bullish entry zone.
  - Dynamically updates based on recent price action.
  
• Bearish Box (`bearishBox`):
  - A red, semi-transparent rectangle around the resistance level to highlight the bearish entry zone.
  - Adjusts similarly as price evolves.
  

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Stop Loss and Take Profit Calculations
Bullish Trades

• Stop Loss (`bullishSL`): Calculated as [code]support - atrMultiplierSL * ATR[/code].
  
• Take Profit 1 (`bullishTP1`):[code]support + rewardToRisk * atrMultiplierTP1 * ATR[/code].
  
• Take Profit 2 (`bullishTP2`):[code]support + rewardToRisk * atrMultiplierTP2 * ATR[/code].
  

Bearish Trades

• Stop Loss (`bearishSL`):[code]resistance + atrMultiplierSL * ATR[/code].
  
• Take Profit 1 (`bearishTP1`):[code]resistance - rewardToRisk * atrMultiplierTP1 * ATR[/code].
  
• Take Profit 2 (`bearishTP2`):[code]resistance - rewardToRisk * atrMultiplierTP2 * ATR[/code].
  

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Visualization for Key Levels
Bullish Scenario

• Green lines represent `bullishTP1` and `bullishTP2` for profit targets.
  
• A red line indicates the `bullishSL`.
  
• Labels like "TP1," "TP2," and "SL" dynamically appear at respective levels to make the targets and risk visually clear.
  

Bearish Scenario

• Red lines represent `bearishTP1` and `bearishTP2`.
  
• A green line marks the `bearishSL`.
  
• Similar dynamic labeling for `TP1`, `TP2`, and `SL` at corresponding bearish levels.
  

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Dynamic Updates

• Both the entry boxes and key level visualizations (lines and labels) adjust dynamically based on real-time price and volume data.
  

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Purpose

1. Identify high-probability bullish and bearish trade setups.
   
2. Define clear entry zones (using boxes) and exit levels (TP1, TP2, SL).
   
3. Incorporate volatility (via ATR) and volume into decision-making.
   

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Technical Summary

• Dynamically visualize support/resistance levels.
  
• Set risk-managed trades using ATR-based stop-loss and profit levels.
  
• Automate visual trade zones for enhanced chart clarity.
  

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22 thg 11, 2024

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Updated