Precision AlgoGuard

# Precision AlgoGuard — TradingView Description

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## Overview

Precision AlgoGuard is a market quality scoring indicator designed to identify unfavorable trading conditions in real-time. Unlike signal generators that tell you when to enter, AlgoGuard tells you when NOT to trade by detecting traps, false breakouts, and absorption patterns before they damage your positions.

The indicator outputs a 0-100 quality score along with a simple three-state system: OK (green), CAUTION (yellow), or NO TRADE (red).

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## What Makes This Indicator Unique

Most trap detection tools draw static zones on the chart and leave interpretation to the trader. AlgoGuard takes a different approach: it analyzes each bar in real-time using multiple detection methods, combines them into a single tradability score, and automatically adjusts its sensitivity based on the asset class you're trading.

A wick trap on a microcap stock looks very different from one on SPY. AlgoGuard accounts for this through behavior-tuned parameters that shift thresholds based on your selected mode (Micro, Small, Mid, Large, ETF, or Crypto).

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## How It Works

The indicator calculates a base score using normalized volume and range metrics, then applies penalties when it detects specific warning patterns:

**VWAP Pinning Detection**
When price remains stuck within a narrow band around VWAP for an extended period, it often signals institutional accumulation/distribution or indecision — conditions that produce choppy, unpredictable moves. AlgoGuard measures what percentage of recent bars have closed within a behavior-tuned ATR distance from VWAP.

**Wick Trap Detection**
Identifies bars where the wick dominates the range while the body remains small, occurring at recent swing highs or lows. This pattern suggests a stop-hunt or failed breakout — price pushed through a level to trigger stops, then immediately reversed. The detection requires the wick to exceed a threshold percentage of total range AND price to fail holding above/below the prior extreme.

**Fake Breakout Detection**
Monitors for breakouts that lack follow-through or participation. When price breaks a recent high but fails to hold above that level in subsequent bars, AND volume and range are below participation thresholds, AlgoGuard flags it as a fake breakout.

**Absorption Detection**
Detects the combination of: elevated volume (spike above average), compressed range (small bar relative to ATR), and high wickiness. This pattern often indicates large players absorbing supply/demand — the market is "churning" and a directional move may follow, but the current bar is not the time to enter.

**Low Volatility Penalty**
When ATR falls into the bottom 20th percentile of its recent range, a penalty is applied. Low volatility environments often produce false signals and whipsaws.

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## Scoring Logic

The score starts at a base value calculated from:
- Range relative to ATR (normalized, capped contribution)
- Volume relative to average (normalized, capped contribution)

Penalties are then subtracted for each detected condition:
- Wickiness penalty (scaled by wick-to-range ratio)
- VWAP pinning penalty
- Wick trap penalty
- Fake breakout penalty
- Absorption penalty
- Low volatility penalty

The final score is clamped between 0-100.

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## State System

**NO TRADE (Red)** — Score falls below threshold OR absorption/fake breakout detected. Avoid new entries.

**CAUTION (Yellow)** — Score is moderate OR VWAP pinning/wick trap detected. Proceed carefully, reduce size, or wait for confirmation.

**OK (Green)** — Score is healthy, no major warnings active. Normal trading conditions.

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## Behavior Modes

Select the mode that matches your instrument:

| Mode | Best For |
|------|----------|
| Micro | Sub-$500M market cap stocks |
| Small | $500M - $2B market cap |
| Mid | $2B - $10B market cap |
| Large | $10B+ large caps |
| ETF | Index ETFs (SPY, QQQ, etc.) |
| Crypto | Cryptocurrency pairs |

Each mode adjusts multiple internal parameters including VWAP pin band width, wick trap ratios, absorption thresholds, participation requirements, and score thresholds.

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## Settings

**ATR Length** (Default: 14) — Period for Average True Range calculation used in normalization and band measurements.

**Volume Average Length** (Default: 30) — Lookback for volume moving average used to detect relative volume spikes.

**ATR Percentile Length** (Default: 100) — Period for determining ATR percentile ranking to identify low volatility regimes.

**VWAP Pin Lookback Bars** (Default: 12) — Number of bars analyzed for VWAP pinning detection.

**Breakout Lookback** (Default: 20) — Period for identifying recent swing highs/lows used in wick trap and fake breakout detection.

**Follow Through Bars** (Default: 2) — Number of bars price must hold above breakout level to confirm legitimacy.

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## Display Options

**Show Background** — Highlights bars where absorption, fake breakouts, or wick traps are detected.

**Label Position / Size** — Customize the info table location and text size.

**Colors** — Customize OK, Caution, No Trade, and Event label colors.

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## How To Use

AlgoGuard is designed as a filter, not a signal generator. Use it alongside your existing strategy:

1. Before entering any trade, check AlgoGuard's state
2. If RED (No Trade): Stand aside regardless of your setup
3. If YELLOW (Caution): Reduce position size or require additional confirmation
4. If GREEN (OK): Proceed with normal risk parameters

The background shading helps you visually identify which specific condition triggered a warning — yellow shading for wick traps/fake breakouts, darker shading for absorption.

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## Alerts

Four alert conditions are available:
- No Trade condition triggered
- Caution condition triggered
- Absorption detected
- Fake Breakout detected
- Wick Trap detected

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## Important Notes

- This indicator does not repaint — states are determined on bar close
- AlgoGuard is a filter/context tool, not an entry signal generator
- No indicator can predict the future; use proper risk management
- Best used on intraday timeframes (1m - 1H) though works on all timeframes

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⚠️ **Disclaimer**: This indicator is for educational purposes only. Trading involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Always do your own research and consult with a licensed financial advisor before making any trading decisions.

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TSLA (Large Mode) — 5 Minute


IBRX (Small Mode) — 5 Minute


BTCUSD (Crypto Mode) — 5 Minute