TrendSphere (Zeiierman)

5 oct. 2023

█ Overview
TrendSphere is designed to capture and visualize market trends and volatility effectively. It combines various volatility measures and trend analysis techniques, producing dynamic bands and a central trend line on the price chart. Its essence is to offer a real-time, reliable estimate of the underlying linear trend in the price.




█ How It Works
Real-Time Trend Estimation
At its core, TrendSphere is designed to offer instantaneous and accurate insights into the inherent linear trend of asset prices. By continually updating its estimations, it ensures traders are equipped with the most current data. This allows the construction of support and resistance bands around the estimated trend, providing trading opportunities.

Dynamic Bands and Trend Line
TrendSphere plots a central trend line and dynamic bands around it on the price chart. Influenced by volatility, the distance between these elements offers a clear view of market conditions and the strength or weakness of trends. These bands not only depict potential turning points but also offer traders valuable opportunities to trade within the confines of the overarching trend.

Volatility Measures
Traders can select their preferred volatility measure and adjust settings to best fit their analysis needs. The bands and trend line dynamically respond to these selections, offering a tailored view of market conditions.

• ATR (Average True Range): Reflects market volatility by evaluating the range between high and low prices.
  
• Historical Volatility: Computes price variability using the standard deviation of log returns.
  
• Bollinger Band Width: Measures the distance between Bollinger Bands, providing another angle on market volatility.
  

Eliminating Common Complications
One of the standout features of TrendSphere is its ability to determine linear price trends without falling prey to challenges like backpainting or repainting. In layman's terms, this means traders get a more trustworthy and unaltered view of price movements, leading to enhanced decision-making in line with the genuine trajectory of price trends.


█ How to Use
Trend Analysis
Observe the central trend line; its direction indicates the prevailing trend. When the price is above the trend line, it suggests an upward trend, and when it's below, it indicates a downward trend.




Volatility Analysis
Wider bands imply higher market volatility, suggesting larger price swings, while narrower bands indicate lower volatility. Traders can use the bands to identify potential reversal points and overbought/oversold conditions.




Potential Trading Signals (Using Bollinger bandwidth as volatility measure)
Consider buying when the price is above the trend line with narrowing bands, suggesting a strong upward trend.




Consider selling when the price is below the trend line with narrowing bands, indicating a strong downward trend.




█ Settings
Select Volatility Measure
Choose the desired volatility measure: ATR, Historical Volatility, or Bollinger Band Width.

Volatility Scaling Factor
Adjusts the scale of the volatility measure, influencing the width of the bands.

Volatility Strength
Modifies the influence of volatility on the bands, adjusting their responsiveness to volatility changes.

Length
Defines the number of periods used in calculating the selected volatility measure, impacting the stability and responsiveness of the bands.

Trend Sensitivity
Adjusts the sensitivity of the trend component, affecting how quickly it reacts to price changes.


█ Related scripts with the same calculation philosophy
TrendCylinder
Predictive Trend and Structure


-----------------
Disclaimer

The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!