Diverging Chart Patterns - Ultimate [Trendoscope®]

6 mai

🎲 Presenting the Diverging Chart Patterns Ultimate Indicator
Much like its counterpart, the Converging Chart Patterns Ultimate indicator, this tool is an offshoot of our premium Auto Chart Patterns - Ultimate offering. However, it is exclusively designed to focus on diverging patterns.

🎲 Built on Extensive Research and Open-Source Foundations
Our journey toward creating this indicator has been guided by thorough research and insights gleaned from our previous works on Chart Patterns, which include:

• Algorithmic Identification of Chart Patterns
• Flag and Pennant Chart Patterns
• Trading Diverging Chart Patterns

Drawing from the groundwork established by our publicly available indicators - Auto Chart Patterns and Flags and Pennants - this tool represents the culmination of our efforts to furnish traders with a refined approach to navigating diverging patterns. It not only facilitates the formulation of technical trading strategies but also aids in assessing their efficacy through historical performance analysis. The specific patterns addressed by this indicator encompass:

• Rising Wedge (Diverging Type)
  
• Falling Wedge (Diverging Type)
  
• Diverging Triangle
  
• Rising Triangle (Diverging Type)
  
• Falling Triangle (Diverging Type)
  

🎲 Chart Pattern Scanning Methodology

Identifying diverging chart patterns follows a structured approach comprising several key steps:

1. Zigzag Examination: Start by analyzing each zigzag, focusing on the last 5 or 6 pivot points to pinpoint potential trend line pairs.
   
2. Divergence Verification: Project these trend lines backward and scrutinize for intersections within a specified number of bars prior. This step confirms the presence of divergence.
   
3. Pattern Categorization: Once divergence is confirmed, categorize each pattern based on the directional orientation of its trend lines. Refer to our article - Algorithmic Identification of Chart Patterns for detailed categorization guidelines.
   

🎲 Methodology or Trading for Chart Patterns

While traditional perspectives often prescribe specific trading biases to diverging patterns—for instance, labeling Rising Wedges as bearish and Falling Wedges as bullish, while acknowledging Triangles' versatility—there's limited empirical evidence to fully support these assumptions. Our indicator is crafted to empower users to explore and validate a wide range of trading hypotheses, including unconventional ones. This approach liberates trading strategies from being confined to historical market behaviors.

We offer extensive customization options to facilitate testing of diverse strategies. The initial setup accommodates both long and short trading scenarios for each identified pattern. Users retain the freedom to adjust trading directions and other parameters within the indicator's settings to align with their analytical preferences.

This open approach is grounded in the methodology detailed in - Trading Diverging Chart Patterns. It is exemplified by the following process, which users can customize and enhance using our indicator.



🎲 Insight into Indicator Components

The chart below provides an illustration of the components comprising our indicator:

1. Pattern Visualization: This functionality dynamically showcases patterns on the chart, emphasizing presently active ones. Historical patterns are omitted to uphold clarity and optimize performance, considering limitations in drawing object capacity.
   
2. Trading Annotations: The indicator conveniently denotes open trades directly on the chart, accommodating both long and short positions based on user preferences and the ongoing status of associated trades for each pattern.
   
3. Performance Metrics Table: A comprehensive table meticulously presents backtesting outcomes for individual patterns alongside aggregated results. It encompasses vital metrics such as win rates and the profit factor, calculated in alignment with the designated risk-reward ratio. These insights provide users with valuable assessments of potential profitability and trade strategy effectiveness.
   

🎲 Delving into the Indicator's Customization Features

Our indicator boasts a wealth of settings, empowering users to customize criteria and refine their trading strategies. Each setting comes with detailed tooltips, offering valuable insights into its functionality. Let's explore each category methodically.

🎯 Zigzag Configuration Options
These settings provide users with the flexibility to fine-tune their pattern analysis by adjusting the length and depth of the zigzag:

• Length Adjustment: Altering this parameter modifies the scale of detected patterns. Higher values highlight larger formations, while lower ones focus on more compact patterns.
  
• Depth Enhancement: This parameter adjusts the complexity of the recursive zigzag analysis, potentially revealing larger patterns across multiple levels. Users should exercise caution, as excessive depth may strain the indicator's processing capacity.
  

🎯 Pattern Scanning Settings
This collection of settings refines the pattern scanning process, typically adjusted to achieve precise geometric alignment of detected patterns. While many settings can be left at their default values for regular use, users are encouraged to customize them, particularly the "Last Pivot Direction," to explore different theoretical approaches to pattern trading.



🎯 Trade Configuration Settings
Arguably the most vital for users, these settings provide full control in shaping trading strategies based on diverging chart patterns. This encompasses the freedom to establish entry, stop, and target prices, fine-tune risk-reward ratios, choose historical depth for backtesting, and integrate filters to guide trade direction.



🎯 Pattern Specific Settings
Here, users have the flexibility to customize settings for individual patterns or groups, thereby refining the precision of their strategies. Alongside the option to enable/disable specific patterns and pattern groups, users can also choose pattern-specific settings such as Last Pivot Direction, Trade Direction Filter, and external filters.



🎯 Fully Customizable Alerts

Utilizing the alert() function, these notifications circumvent the usual template within the alert widget. To address this, we've integrated placeholders in the settings for creating comprehensive alert templates.

Available Categories Include

• New - Alerts when a new pattern is identified
  
• Entry - Alerts when an entry condition for a configured pattern based trade is met.
  
• Stop - Alerts when a trade that has reached entry gets stopped out without reaching target
  
• Target - Alerts when a trade reaches its target
  
• Invalidation - Alerts when a trade reaches an invalidation point before reaching the entry.
  

Each alert type can possess its unique template. Tailorable templates are crucial for effectively utilizing alerts within broker or exchange integration.

Here are some of the placeholders that are defined in the indicator.

• {type} - Alert type - new/entry/stop/target/invalid
  
• {pid} - Pattern ID of the pattern belonging to trade. Multiple trades can have same pattern id since a pattern can be traded in both long and short directions.
  
• {tid} - Unique Trade ID for the given trade.
  
• {ticker} - Ticker ID on which the indicator is run
  
• {timeframe} - Chart timeframe on which the indicator is run
  
• {basecurrency} - Base currency of the symbol
  
• {quotecurrency} - Quote currency of the symbol
  
• {pivots} - Pivot values of the pattern
  
• {price} - Current price when the alert is triggered.
  
• {pattern} - Name of the pattern on which the alert is triggered.
  
• {direction} - Direction of the trade.
  
• {entrydirection} - Direction of the entry signal. Used for specific bot integration.
  
• {exitdirection} - Direction of the exit signal. Used for specific bot integration.
  
• {entry} - Entry price of the trade
  
• {stop} - Stop price of the trade
  
• {target} - Target price of the trade
  
• {invalidation} - Invalidation price of the trade
  

🎯 Display and Stats
These settings regulate the display options on the chart. Closed trade statistics are showcased in a table and appear in the bottom-left corner of the chart. These can be tailored using the display settings.

29 août

Notes de version

Update DCPU1.1

Added options to filter the patterns based on size.


Pattern Size : Filters based on the number of bars the pattern spawns
Pattern Size Percent : Filters based on the size of pattern in terms of percent of price