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Absolute DM Levels
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Absolute DM Levels Indicator
The Absolute DM Levels indicator is a powerful tool designed to assist traders in identifying key price levels based on the Average Absolute Daily Movement (ADM) and Fibonacci ratios. This indicator combines volatility measurement with trend analysis to provide actionable insights for various trading strategies, including day trading, swing trading, and long-term investing.
Key Features:
1. Average Absolute Daily Movement (ADM) Calculation:
• Calculates the ADM over a user-specified period (default is 14 periods).
• ADM represents the average of the absolute differences between consecutive closing prices, offering a straightforward measure of market volatility.
2. Dynamic Level Generation Using Fibonacci Ratios:
• Computes multiple support and resistance levels above and below the previous close using ADM multiplied by key Fibonacci ratios (e.g., 38.2%, 50%, 61.8%, 78.6%, 100%).
• Optional Fibonacci extension levels are available for advanced target setting (e.g., 123.6%, 161.8%, up to 300%).
3. Trading Mode Customization:
• Allows selection of different trading types to adjust the timeframe and sensitivity of the indicator:
• Day Trading
• Multiday Trading
• Swing Trading
• Position Trading
• Long-term Trading
4. Trend Identification with EMA Ribbon:
• Utilizes a triple Exponential Moving Average (EMA) ribbon (default periods of 8, 21, and 34) to determine market trends.
• Identifies bullish, bearish, or neutral trends based on the alignment of price and EMAs.
5. Visual Aids and Alerts:
• Plots horizontal lines on the chart representing calculated levels for easy visualization.
• Color-coded levels and labels help distinguish between different types of levels (e.g., triggers, key targets, intermediate levels).
• Provides informational labels displaying current trading mode, range percentage of ADM, and trigger prices.
6. Customization Options:
• Use Options Labels: Choose between “Calls”/“Puts” or “Long”/“Short” labels for triggers.
• Show All Fibonacci Levels: Option to display all intermediate Fibonacci levels.
• Show Extensions: Option to display Fibonacci extension levels beyond 100% ADM.
• Level Size and Colors: Adjust line thickness and colors for different levels to suit personal preferences.
• Use Current Close: Option to base calculations on the current close price instead of the previous close.
How It Works:
1. ADM Calculation:
• The indicator calculates the ADM by taking the average of the absolute differences between consecutive closing prices over the specified period.
• ADM serves as a measure of average daily price movement, reflecting market volatility.
2. Level Computation:
• Trigger Levels:
• Upper Trigger: Previous Close + (Trigger Percentage × ADM)
• Lower Trigger: Previous Close - (Trigger Percentage × ADM)
• The default trigger percentage is 23.6% (a key Fibonacci retracement level).
• Fibonacci Levels:
• Levels are calculated by adding or subtracting Fibonacci ratios of the ADM from the previous close.
• These levels include common retracement percentages like 38.2%, 50%, 61.8%, and extensions like 123.6%, 161.8%, etc.
3. Trend Analysis:
• The EMA ribbon helps identify the market trend:
• Bullish Trend: Price ≥ Fast EMA ≥ Pivot EMA ≥ Slow EMA
• Bearish Trend: Price ≤ Fast EMA ≤ Pivot EMA ≤ Slow EMA
• Neutral Trend: Any other alignment.
• The trend is visually represented through color-coded labels and background colors.
4. Range Assessment:
• Compares the current period’s range (high - low) to the ADM.
• Displays the range as a percentage of ADM to assess whether the market is more or less volatile than average.
Use Cases:
1. Identifying Support and Resistance Levels:
• Use the plotted levels to anticipate potential areas where the price may encounter support or resistance.
• Helps in setting entry and exit points based on expected market reactions at these levels.
2. Trend Confirmation:
• Align trades with the identified trend to increase the probability of success.
• The EMA ribbon trend identification aids in confirming bullish or bearish market conditions.
3. Volatility Assessment:
• By comparing the current range to the ADM, traders can gauge market volatility.
• High percentages may indicate overextended moves, while low percentages might suggest consolidation.
4. Strategic Trade Planning:
• The trigger levels serve as potential breakout points.
• Fibonacci levels offer targets for profit-taking or setting stop-loss orders.
5. Customization for Different Trading Styles:
• Adjust the trading type to fit your trading horizon, whether you’re a day trader or a long-term investor.
• Customize levels and visual settings to match your analysis preferences.
How to Use the Indicator:
1. Add the Indicator to Your Chart:
• Apply the Absolute DM Levels indicator to your desired financial instrument chart.
2. Configure Settings:
• Select your Trading Type to adjust the timeframe and sensitivity.
• Set the ADM Length according to your preference for volatility measurement.
• Choose whether to Show All Fibonacci Levels and Show Extensions based on your analytical needs.
• Customize colors and level sizes for better visual clarity.
3. Interpret the Levels and Labels:
• Trend Labels: Observe the trend indication (bullish, bearish, neutral) provided by the EMA ribbon analysis.
• Information Table: Review the displayed range percentage and trigger prices.
• Plotted Levels: Use the horizontal lines to identify key support and resistance zones.
4. Incorporate into Your Trading Strategy:
• Combine the insights from the indicator with other technical analysis tools.
• Use the levels for setting up trades, managing risk, and identifying potential market turning points.
Notes:
• No Repainting: The indicator uses security functions with lookahead=barmerge.lookahead_on to ensure that calculations are based on completed data, minimizing repainting issues.
• Versatility: Suitable for various financial instruments, including stocks, forex, commodities, and cryptocurrencies.
• Complementary Tool: Designed to enhance your existing trading strategy, not replace thorough market analysis.
Disclaimer: The Absolute DM Levels indicator is intended for educational and informational purposes only. It should not be construed as financial advice. Trading financial instruments involves risk, and past performance is not indicative of future results. Always conduct your own analysis and consult with a professional financial advisor before making investment decisions.
The Absolute DM Levels indicator is a powerful tool designed to assist traders in identifying key price levels based on the Average Absolute Daily Movement (ADM) and Fibonacci ratios. This indicator combines volatility measurement with trend analysis to provide actionable insights for various trading strategies, including day trading, swing trading, and long-term investing.
Key Features:
1. Average Absolute Daily Movement (ADM) Calculation:
• Calculates the ADM over a user-specified period (default is 14 periods).
• ADM represents the average of the absolute differences between consecutive closing prices, offering a straightforward measure of market volatility.
2. Dynamic Level Generation Using Fibonacci Ratios:
• Computes multiple support and resistance levels above and below the previous close using ADM multiplied by key Fibonacci ratios (e.g., 38.2%, 50%, 61.8%, 78.6%, 100%).
• Optional Fibonacci extension levels are available for advanced target setting (e.g., 123.6%, 161.8%, up to 300%).
3. Trading Mode Customization:
• Allows selection of different trading types to adjust the timeframe and sensitivity of the indicator:
• Day Trading
• Multiday Trading
• Swing Trading
• Position Trading
• Long-term Trading
4. Trend Identification with EMA Ribbon:
• Utilizes a triple Exponential Moving Average (EMA) ribbon (default periods of 8, 21, and 34) to determine market trends.
• Identifies bullish, bearish, or neutral trends based on the alignment of price and EMAs.
5. Visual Aids and Alerts:
• Plots horizontal lines on the chart representing calculated levels for easy visualization.
• Color-coded levels and labels help distinguish between different types of levels (e.g., triggers, key targets, intermediate levels).
• Provides informational labels displaying current trading mode, range percentage of ADM, and trigger prices.
6. Customization Options:
• Use Options Labels: Choose between “Calls”/“Puts” or “Long”/“Short” labels for triggers.
• Show All Fibonacci Levels: Option to display all intermediate Fibonacci levels.
• Show Extensions: Option to display Fibonacci extension levels beyond 100% ADM.
• Level Size and Colors: Adjust line thickness and colors for different levels to suit personal preferences.
• Use Current Close: Option to base calculations on the current close price instead of the previous close.
How It Works:
1. ADM Calculation:
• The indicator calculates the ADM by taking the average of the absolute differences between consecutive closing prices over the specified period.
• ADM serves as a measure of average daily price movement, reflecting market volatility.
2. Level Computation:
• Trigger Levels:
• Upper Trigger: Previous Close + (Trigger Percentage × ADM)
• Lower Trigger: Previous Close - (Trigger Percentage × ADM)
• The default trigger percentage is 23.6% (a key Fibonacci retracement level).
• Fibonacci Levels:
• Levels are calculated by adding or subtracting Fibonacci ratios of the ADM from the previous close.
• These levels include common retracement percentages like 38.2%, 50%, 61.8%, and extensions like 123.6%, 161.8%, etc.
3. Trend Analysis:
• The EMA ribbon helps identify the market trend:
• Bullish Trend: Price ≥ Fast EMA ≥ Pivot EMA ≥ Slow EMA
• Bearish Trend: Price ≤ Fast EMA ≤ Pivot EMA ≤ Slow EMA
• Neutral Trend: Any other alignment.
• The trend is visually represented through color-coded labels and background colors.
4. Range Assessment:
• Compares the current period’s range (high - low) to the ADM.
• Displays the range as a percentage of ADM to assess whether the market is more or less volatile than average.
Use Cases:
1. Identifying Support and Resistance Levels:
• Use the plotted levels to anticipate potential areas where the price may encounter support or resistance.
• Helps in setting entry and exit points based on expected market reactions at these levels.
2. Trend Confirmation:
• Align trades with the identified trend to increase the probability of success.
• The EMA ribbon trend identification aids in confirming bullish or bearish market conditions.
3. Volatility Assessment:
• By comparing the current range to the ADM, traders can gauge market volatility.
• High percentages may indicate overextended moves, while low percentages might suggest consolidation.
4. Strategic Trade Planning:
• The trigger levels serve as potential breakout points.
• Fibonacci levels offer targets for profit-taking or setting stop-loss orders.
5. Customization for Different Trading Styles:
• Adjust the trading type to fit your trading horizon, whether you’re a day trader or a long-term investor.
• Customize levels and visual settings to match your analysis preferences.
How to Use the Indicator:
1. Add the Indicator to Your Chart:
• Apply the Absolute DM Levels indicator to your desired financial instrument chart.
2. Configure Settings:
• Select your Trading Type to adjust the timeframe and sensitivity.
• Set the ADM Length according to your preference for volatility measurement.
• Choose whether to Show All Fibonacci Levels and Show Extensions based on your analytical needs.
• Customize colors and level sizes for better visual clarity.
3. Interpret the Levels and Labels:
• Trend Labels: Observe the trend indication (bullish, bearish, neutral) provided by the EMA ribbon analysis.
• Information Table: Review the displayed range percentage and trigger prices.
• Plotted Levels: Use the horizontal lines to identify key support and resistance zones.
4. Incorporate into Your Trading Strategy:
• Combine the insights from the indicator with other technical analysis tools.
• Use the levels for setting up trades, managing risk, and identifying potential market turning points.
Notes:
• No Repainting: The indicator uses security functions with lookahead=barmerge.lookahead_on to ensure that calculations are based on completed data, minimizing repainting issues.
• Versatility: Suitable for various financial instruments, including stocks, forex, commodities, and cryptocurrencies.
• Complementary Tool: Designed to enhance your existing trading strategy, not replace thorough market analysis.
Disclaimer: The Absolute DM Levels indicator is intended for educational and informational purposes only. It should not be construed as financial advice. Trading financial instruments involves risk, and past performance is not indicative of future results. Always conduct your own analysis and consult with a professional financial advisor before making investment decisions.
版本注释
# Absolute DM Levels Indicator for TradingView## Overview
The **Absolute DM Levels** indicator is a versatile tool designed for traders looking to identify key price levels based on the historical average absolute net movement (AANM) of a security. By analyzing the average daily price changes over a specified period, this indicator helps traders anticipate potential support and resistance levels, set entry and exit points, and adjust their strategies across various trading timeframes.
---
## Key Features
- **Average Absolute Net Movement (AANM):** Calculates the average of the absolute differences between consecutive closing prices over a user-defined period (default is 14 periods).
- **Multiple Trading Modes:** Adapts to different trading styles with modes for Day, Multiday, Swing, Position, and Long-term trading.
- **Dynamic Price Levels:** Generates key levels above and below the previous close using Fibonacci ratios applied to the AANM.
- **Trigger Levels:** Identifies upper and lower trigger points for potential long (buy) and short (sell) positions.
- **Extension Levels:** Offers additional price targets beyond the standard range for extended market moves.
- **Trend Identification:** Utilizes the 8-21-34 Exponential Moving Average (EMA) Pivot Ribbon to determine bullish or bearish trends.
- **Informative Labels:** Displays current trading range information and trend status directly on the chart.
- **Customization:** Allows users to adjust colors, level visibility, and other settings to suit their preferences.
---
## How It Works
### 1. Calculating the Average Absolute Net Movement (AANM)
The AANM is computed by taking the average of the absolute differences between consecutive closing prices over a specified period. This provides a measure of the typical daily price movement, which forms the basis for calculating key levels.
**Formula:**
\[
\text{AANM} = \text{SMA}_{\text{length}}(|\text{Close}_i - \text{Close}_{i-1}|)
\]
- **SMA**: Simple Moving Average
- **length**: Number of periods (default is 14)
- **\(|\text{Close}_i - \text{Close}_{i-1}|\)**: Absolute difference between the current and previous close
### 2. Determining Trading Timeframe
The indicator adjusts its calculations based on the selected trading mode:
- **Day Trading:** Daily timeframe
- **Multiday Trading:** Weekly timeframe
- **Swing Trading:** Monthly timeframe
- **Position Trading:** Quarterly timeframe
- **Long-term Trading:** Yearly timeframe
This ensures that the AANM and corresponding levels are relevant to the trader's preferred timeframe.
### 3. Plotting Key Levels
Using the AANM and Fibonacci ratios, the indicator calculates multiple levels above and below the previous close:
- **Trigger Levels:** Set at 23.6% of the AANM above and below the previous close.
- **Fibonacci Levels:** Include 38.2%, 50%, 61.8%, 78.6%, and 100% levels, providing potential support and resistance points.
- **Extension Levels:** Additional levels beyond 100% (123.6%, 161.8%, 200%, etc.) for anticipating extended market moves.
**Example Calculation for Upper 61.8% Level:**
\[
\text{Upper 61.8% Level} = \text{Previous Close} + (\text{AANM} \times 0.618)
\]
### 4. Identifying Trend with EMA Pivot Ribbon
The indicator employs three EMAs to ascertain the market trend:
- **Fast EMA (default 8 periods)**
- **Pivot EMA (default 21 periods)**
- **Slow EMA (default 34 periods)**
**Trend Determination:**
- **Bullish Trend:** Price ≥ Fast EMA ≥ Pivot EMA ≥ Slow EMA
- **Bearish Trend:** Price ≤ Fast EMA ≤ Pivot EMA ≤ Slow EMA
- **Neutral Trend:** Any other configuration
### 5. Displaying Information Labels
The indicator provides informative labels that include:
- **Trend Status:** Indicates whether the market is bullish, bearish, or neutral.
- **Trading Range Info:** Shows the current trading range and how it compares to the AANM.
- **Trigger Points:** Highlights the upper and lower trigger levels for potential trades.
---
## Use Cases
### **1. Identifying Support and Resistance Levels**
By plotting levels based on the AANM and Fibonacci ratios, traders can anticipate where the price might encounter support or resistance. These levels can serve as potential entry or exit points.
### **2. Setting Entry and Exit Points**
- **Trigger Levels:** Use the upper and lower trigger levels to identify breakout points for initiating long or short positions.
- **Extension Levels:** Target these levels for profit-taking during strong trending markets.
### **3. Trend Confirmation**
The EMA Pivot Ribbon helps confirm the prevailing trend, allowing traders to align their strategies accordingly:
- **Bullish Trend:** Focus on long positions or call options.
- **Bearish Trend:** Consider short positions or put options.
- **Neutral Trend:** Exercise caution or employ range-bound strategies.
### **4. Adjusting Strategies Across Timeframes**
The ability to switch between different trading modes enables traders to adapt the indicator to their preferred timeframe, ensuring the levels and signals remain relevant.
### **5. Risk Management**
Understanding the typical price movement (AANM) aids in setting appropriate stop-loss and take-profit levels, enhancing overall risk management.
---
## Customization and Settings
- **AANM Length:** Adjust the number of periods used to calculate the AANM.
- **Trigger Percentage:** Modify the percentage of AANM used for setting trigger levels.
- **Colors and Visuals:** Customize the colors of levels, triggers, and labels for better visibility.
- **Level Visibility:** Choose which Fibonacci and extension levels to display based on trading preferences.
- **Use Options Labels:** Toggle between "Long/Short" and "Calls/Puts" labels, depending on your trading instruments.
---
## Conclusion
The **Absolute DM Levels** indicator is a comprehensive tool that combines price action analysis with trend identification to support a wide range of trading strategies. By leveraging historical average movements and key technical levels, traders can make more informed decisions, anticipate market movements, and enhance their trading performance across different timeframes.
**Note:** As with all technical indicators, it is recommended to use the Absolute DM Levels in conjunction with other analysis methods and risk management practices. Always consider market conditions and personal trading objectives before making trading decisions.
---
**Disclaimer:** This indicator is intended for educational and informational purposes only. It does not constitute financial advice. Trading financial instruments involves risk, and past performance is not indicative of future results. Always conduct your own analysis or consult a financial professional before making investment decisions.
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