Cumulative Volume Delta Strategy | Flux Charts

18 oct.

💎GENERAL OVERVIEW
Introducing the Cumulative Volume Delta Strategy (CVDS) Indicator, an advanced tool designed to enhance trading strategies by identifying potential trend reversals through volume dynamics. This script features integrated order block detection, Fair Value Gaps (FVGs), and a dynamic take-profit (TP) and stop-loss (SL) system. For an in-depth understanding of the strategy, refer to the "HOW DOES IT WORK?" section below.



Features of the new Cumulative Volume Delta Strategy (CVDS) Indicator :

1. Cumulative Volume Delta-based Strategy
   
2. Order Block and Fair Value Gap (FVG) Entry Methods
   
3. Dynamic TP/SL System
   
4. Customizable Risk Management Settings
   
5. Alerts for Buy, Sell, TP, and SL Signals
   

📌HOW DOES IT WORK ?
The CVDS indicator operates by tracking the net volume difference between buyers and sellers to identify divergences that could indicate potential trend reversals. A cumulative volume delta (CVD) calculation is employed to measure the intensity of these divergences in relation to price movements. The net volume sum is reset every trading day (can be changed from the settings using the anchor period option), and divergences are detected when the cumulative volume crosses the 0-line over or under.

Once a significant divergence is detected, the indicator identifies breakout points, confirmed by either Fair Value Gaps (FVGs) or Order Blocks (OBs). Depending on your chosen entry mode, the indicator will trigger a buy or sell entry when the confirmation signal aligns with the breakout direction. Alerts for Buy, Sell, Take-Profit, and Stop-Loss are available.

Note that the indicator cannot run on 1-minute and 1-second charts, as it needs to get data from a lower timeframe. 1-minutes & 1-second timeframes are the minimum timeframes in their ranges respectively.



🚩UNIQUENESS
What sets this indicator apart is the combination of volume divergence analysis with advanced price action tools like Fair Value Gaps (FVGs) and Order Blocks (OBs). The ability to choose between these methods, along with a dynamic TP/SL system that adapts based on volatility, provides flexibility for traders in any market condition. The backtesting dashboard provides metrics about the performance of the indicator. You can use it to tune the settings for best use in the current ticker. The CVD-based strategy ensures that trades are initiated only when meaningful divergences between volume and price occur, filtering out noise and increasing the likelihood of profitable trades.



⚙️SETTINGS
1. General Configuration

Anchor Period: Time anchor period used in CVD calculation. This is essentially the period that the volume delta sum will be reset. Lower timeframes may result in more entries at the cost of less reliable results.

Entry Mode: Choose between FVGs or OBs to trigger your entries based on the confirmation signals.

Retracement Requirement: Enable to confirm the entry after a retracement toward the FVG or OB.

2. Fair Value Gaps

FVG Sensitivity: Modify the sensitivity of FVG detection, allowing for more or fewer gaps to be considered valid.

3. Order Blocks (OB)

Swing Length: Define the swing length to identify OB formations. Shorter lengths find smaller OBs, while longer lengths detect larger structures.

4. TP / SL

TP / SL Method:
a) Dynamic: The TP / SL zones will be auto-determined by the algorithm based on the Average True Range (ATR) of the current ticker.

b) Fixed : You can adjust the exact TP / SL ratios from the settings below.

Dynamic Risk: The risk you're willing to take if "Dynamic" TP / SL Method is selected. Higher risk usually means a better winrate at the cost of losing more if the strategy fails. This setting is has a crucial effect on the performance of the indicator, as different tickers may have different volatility so the indicator may have increased performance when this setting is correctly adjusted.