SIV Trading Light

SmartInVisions Trading Light (SIV Trading Light)

**Multi-Factor Market Regime & Trade Bias Indicator**

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## Overview and Purpose

**SmartInVisions Trading Light (SIV Trading Light)** is a market **context and trade-bias indicator**, not a signal generator.

Its purpose is to answer one practical trading question:

> *“Given the current market conditions, is it statistically more favorable to think LONG, SHORT, or stay neutral?”*

Instead of relying on a single indicator, SIV Trading Light **combines several independent market dimensions into one coherent score**.
This allows traders to avoid over-trading in unfavorable environments and to align trades with the dominant market context.

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## Why This Is NOT a Simple Indicator Mashup

This script does **not** simply merge popular indicators.

Each component is:

* normalized,
* weighted,
* evaluated against thresholds,
* and translated into **positive, neutral, or negative score contributions**.

Only the **combined interaction** of these components produces the final trade bias.
No single indicator can dominate the result on its own.

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## Core Calculation Concept

At every bar, the indicator evaluates multiple independent factors.
Each factor contributes points to a **total bias score**.

The score is then classified into one of three states:

* **LONG bias**
* **NEUTRAL**
* **SHORT bias**

The indicator does **not** predict price direction.
It classifies the **current trading environment**.

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## Components and How They Work Together

### 1. Trend Structure (Moving Averages)

**Purpose:** Identify the dominant directional structure.

* Fast MA vs Slow MA relationship
* Price position relative to the slow MA
* Optional slope confirmation

Contribution:

* Positive points in aligned uptrends
* Negative points in aligned downtrends
* Neutral in mixed or unclear structures

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### 2. Momentum (RSI)

**Purpose:** Measure directional strength.

* RSI above upper threshold → bullish momentum
* RSI below lower threshold → bearish momentum
* Mid-range RSI → neutral

Momentum refines trend signals by confirming or weakening them.

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### 3. Trend Quality / Choppiness (ADX)

**Purpose:** Filter out sideways or noisy markets.

* ADX above threshold → trending environment
* ADX below threshold → choppy environment

ADX does **not** define direction.
It modifies how much weight trend and momentum signals receive.

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### 4. Volatility Risk (ATR%)

**Purpose:** Penalize structurally dangerous environments.

ATR is normalized as a percentage of price:

* Excessively high volatility → risk penalty
* Extremely low volatility → participation penalty
* Balanced volatility → neutral or positive contribution

This prevents aggressive trading in unstable regimes.

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### 5. Market Participation (Relative Volume)

**Purpose:** Confirm whether moves are supported by volume.

* High relative volume → confirmation
* Low volume → weaker confidence

Volume acts as a confidence modifier, not as a directional signal.

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### 6. Higher-Timeframe Market Regime (Optional)

**Purpose:** Align trades with the dominant higher-timeframe context.

On a user-defined **regime timeframe**, the script evaluates:

* trend structure
* RSI momentum

The regime filter can:

* amplify signals aligned with the higher timeframe
* suppress signals against it

This avoids trading aggressively against dominant market structure.

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## Multi-Timeframe Design

The indicator separates two concepts:

* **Trading Timeframe**: the chart timeframe used for execution
* **Regime Timeframe**: a higher timeframe used for contextual bias

This design allows the same logic to be applied to:

* day trading
* swing trading
* longer-term investing

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## Presets and Customization

Built-in presets are provided for:

* Day Trading (USA / Europe)
* Swing Trading (USA / Europe)
* Investing (USA / Europe)

Presets define:

* factor weights
* thresholds
* score boundaries

They do **not** define:

* timeframes
* moving average types or lengths

This keeps structural decisions under user control while simplifying parameter tuning.

A **Custom mode** allows full manual configuration.

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## Visual Output

The indicator provides:

* two moving average overlays (fast / slow)
* an optional background color reflecting the current bias
* a compact badge summarizing mode, score, and state
* an optional breakdown table showing how each factor contributes to the score

These visuals are designed to explain **why** the current bias exists.

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## Alerts

Alerts are based on **state changes**, not on every bar.

Alert outputs include:

* numerical state (`1 = LONG, 0 = NEUTRAL, -1 = SHORT`)
* score value
* rounded moving average values

This allows integration into discretionary or systematic workflows without alert noise.

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## How This Indicator Should Be Used

✔ As a **trade filter**
✔ To avoid trading in unfavorable conditions
✔ To align discretionary entries with market context

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## What This Indicator Is NOT

✘ Not a buy/sell signal
✘ Not a prediction model
✘ Not a replacement for risk management

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## Credits and License

**Publisher:** SmartInVisions GmbH
**Concept & Design:** Reiner Ernst
**Implementation & Iterative Development:** SmartInVisions GmbH + ChatGPT (OpenAI)

**License:** Mozilla Public License 2.0 (MPL-2.0)

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## Disclaimer

This script is provided for educational and research purposes only.
It does not constitute financial advice. Trading involves risk.

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