Damage Indicator by Scipio Pro

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Scipio Pro's Damage Indicator detects strong momentum on tops and bottoms. It is intended for swing trading.

The script analyzes both recent and less-recent price action and performs candle stick analysis. It also uses SDs and multiple Bollinger Bands to find dynamic levels for entries.

A Bears Damaged signal emerges whenever there is convincing proof of strength at a bottom. Often, when the market reverses quickly, traders are caught offside and are forced to buy higher. The reverse goes for Bulls Damaged signals, which mean there is convincing proof of bearish strength at a (local?) top.

Whether the move gets legs depends in large part on the structure in which the show of momentum takes place. It is sensible to wonder after each signal whether the market structure (and other relevant context such as the majority of cash having been sidelined) dictates that risk-reward is skewed to the upside or to the downside. If, for example, a Bears Damaged signal emerges on the daily and risk-reward on the weekly is skewed to the upside, go 4x larger (again, just an example). If, on the other hand, the same signal emerges on the daily while the risk-reward is skewed to the downside on the weekly, bet much smaller and tighten your stop-loss. For best results, I suggest you always check one timeframe higher for your long-term risk-reward bias. (No financial advice, of course.)

Under Settings you'll find the so-called Noise Protection, which is switched "on" by default. We recommend you keep this switched on. Noise Protection ensures you do not see Damage signals on timeframes lower than the 4 hour. After all, chasing momentum on low timeframes is a losing game. The amount of noise increases exponentially as you move lower down the timeframes. Again, this indicator is for swing trades. Don't use it for scalping.

It should be useful for all assets, but is of course more useful on some than on others. As with all indicators, signals tend to be more meaningful if the asset in question is at least somewhat liquid, for instance.

As always, use at your own risk. Using indicators is no substitute for using one's brain.

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Presenting 2.0

Scipio Pro 2.0's most important new feature is the Dynamic Decay System. It offers clear and concise information on whether it’s historically advisable to stay in a trade, abandon the idea, or micromanage the position from a closer point.

The Dynamic Decay System is the result of our broader theory on decay. Dynamic Decay Theory is based on the idea that "alpha," in this case a Bears Damaged or Bulls Damaged signal, decays due to two factors: price action and time. The Dynamic Decay System is the first to measure and visualize this on your chart.

It should be helpful to both experienced traders and beginners. You can switch the decay system on and off in the EIP and Damage Indicator settings to turn these into a holistic system that includes risk management, signal decay visualization, and insights into whether the price action after a signal is conducive to staying in the trade.