Volume Weighted Balance of PowerAs always, this is not financial advice and use at your own risk. Trading is risky and can cost you significant sums of money if you are not careful. Make sure you always have a proper entry and exit plan that includes defining your risk before you enter a trade.
I have modified the Balance of Power indicator that measures the difference between the open and the close and the high and low of the current bar to incorporate volume information as well. Further, I have smoothed the indicator, which is usually very choppy and difficult to read with a 21 period Least Squares Moving Average to create a Volume-Weighted Balance of Power. Since we are all aware that volume precedes price I figured this could be a neat little trend-confirmation indicator.
Uses:
1) The indicator is fairly straight forward, when it crosses below its zero line, this signals that there is more selling pressure in the current market vs. buying. Conversely, when it crosses above its zero line, this means more buyers have stepped up and are pushing prices higher.
2) It is sensitive enough to volume and price shifts that it produce divergences, which are often thought to be some of the most powerful trading signals in any market.
3) Use this tool to confirm breaks from trendlines or trading ranges to see if there is enough pressure and volume to support the move.
Enjoy and trade responsibly!
توازن القوى
+ Balance of PowerThe Balance of Power is an indicator that measures the strength of buyers versus that of sellers in the market, and needs to be smoothed by a moving average to be of much practical use (come to think of it, most indicators are smoothed by a moving average; this is why the RSI lookback mostly commonly used is 14, and not 1, but I digress...). I suppose it is possible to use it without smoothing, but that would be very difficult I think.
The oscillator pivots around a center line, and as with most indicators like this, above 0 is generally considered bullish in a bullish trend, and vice versa in a downtrend.
It can be good for spotting divergences (moreso with smaller lookback periods than I like).
To wit, you might be wondering why I have the default lookback period set at such a large number. My only answer I can give is that I prefer it that way.
The indicator is quite choppy, even when smoothed. The long period helps me to make beter sense of the data (smooth it with a Hull or Jurik MA and you get a different story, though).
In my version of this indicator I provide a pretty broad selection of moving averages with which one may choose to smooth out the BOP, as well as an EMA provided to use as a sort of signal line for trade entries and/or exits, taking partial profits, scaling into a position, etc.
I've also added the option for a second BOP, which is on by default. I think you might find the results interesting by pairing differently smoothed BOPs together.
Of course, you don't have to use both. In the case of the default settings you might look at the EMA-BOP crossing the JMA-BOP as an opportunity to look into exiting or entering trades.
Candle coloring is, as usual, included. I'd say I kind of overdid it here, but that seems to be my style. I just couldn't deal with the fact that with the indicator set to cumulative modes there is no zero line, therefor the color of the indicator plot and the candle coloring would not match the color swatches for bullish/bearish colors. So, there are selections for cumulative indicator/candle colors, and standard indicator/candle colors. Donchian Channels obviously doesn't matter because the colors of things are based on the channel only.
I've added Donchian channel bands (which I've begun adding to many of my indicators), and all necessary alerts as well.
The Donchian Channels can be a really effective tool for entering and exiting trades. I haven't mentioned it in my other indicators that have it, so I will here:
The outermost edge of the band is that which references the indicator for where it is plotted, and the inner channel is sort of dragged along, creating the band
It's a simple mathematical calculation that TradingView actually provided themselves in their manual for pinescript.
When the BOP (or any other indicator using this) enters the band and then exits that could be an indication that price may be reversing, this the bands themselves act, or rather, show a current area of support/resistance for the BOP plot.
One thing that I did with it that they did not, is give the user the ability to change the width of the band. It can only go so narrow, obviously, but anywhere from three (quite wide) to eight is probably sufficient.
I've also provided the option of plotting the BOP as a cumulative line (like OBV), making it no longer an indicator which oscillates around a central pivot.
Because the balance of power is plotted as an accumulation, you may actually want to set the lookback to 1 (it works because it's not an oscillator then).
If you wish to smooth the noise, I suspect a low number would be acceptable here, but it's not necessary.
Oh, and lastly (almost forgot, as this was a late addition), I've added options for the BOPs calculated with volume as well. Gives a different bit of a perspective on the market, versus the traditional version which does not include volume. Screenshots below.
The above image is the balance of power calculated with volume. You can see the obvious difference versus the traditional indicator, where price is in a downtrend and you'd want to sell the orange.
Cumulative version. Looks a lot like OBV.
Cumulative version with volume.
Ultimate Trader Oscillator - UTO v1Note; this is experimental / learning work -- has nothing to do with the existing "Ultimate Oscillator" -- i call this project UTOpia :)
This is based on some research work i was doing around the Balance Of Power - which i posted about in the past
the conclusion form there was a questions of, what would we get if we create an indicator that takes into consideration other factors that may be affecting momentum - so while the classic Balance of Power formula looks at where the open and close of a bar are compared to the full bar range, this is only a small part of the insight we need - when we visually inspect a price chart, we also look at many other factors. for example, how the bar closes compared to previous bar(s), how much did the bulls (or bears) managed to move the high (or low) of the bar compared to previous one, how much volume, how is the price spread ...etc
so i wanted to build an indicator that does exactly that - we will give a score of +100 / -100 to each bar based on these factors (some were identified in the linked post) -- imagine here that we are a judge in a tug of war contest (or a beauty contest if you would :)) and we give a score to the participating teams - the scores are given in different "categories" as these teams make effort to win the game (each bar) - to be totally fair, in some scoring categories, we choose to take the average of 3 points for a fair assessment - the final score is calculated based on the average from all judges - and then and average over the desired length is calculated. this score should be very fair and represents the true effort from all angles, right? that would be our UTOPIA :)
in our case, we don't use an average of total score after each category is evaluated, but rather create a directional index (similar to RSI) -- so we can avoid big spikes in the resulting numbers, and maintain a oscillator -like result.
-- the code is commented to explain the various pieces - and how the scoring happen.
the results are interesting - and you can see how the UTO stacks against the classic RSI and BoP - but it's more of a work to build on, rather than a usable indicator - although i do use it in my own trading :)
one final thought here, i came to learn after few years that the best indicators do not necessarily lead to profitable trading. from an indicator standpoint, if everyone else is trading using (for example) a moving average crossover or RSI, then a successful trader should be looking at these classic indicators too, cause these common indicators will drive the mass behavior - and will at many times trigger "self- fulfilling prophesies" in price action - but that's not the only or the biggest reason - the big reasons have to do with the fact that trading needs a lot of effort outside the charts, in researching markets, learning the discipline, then managing positions and managing the portfolio. these are all big topics to put in such short words.
i hope some will find this work inspiring.
Balance of Power StrategyA simple variation on the balance of power idea, using a weighted moving average and a basic lookback to attempt to predict the motion in the next tick.
As far as a trading pattern goes, it's performance is rather conservative, and it is rather noisy as it doesn't do a good job of preventing quick, meaningless trades.
True Balance of powerThis is an improvement of the script published by LazyBear,
The improvements are:
1. it includes gaps because it uses true range in stead of the current bar,
2. it has been turned into a percent oscillator as the basic algorithm belongs in the family of stochastic oscillators.
Unlike the usual stochatics I refrained from over the top averaging and smoothing, nor did I attempt a signal line. There’s no need to make a mock MACD.
The indicator should be interpreted as a stochastics, the difference between Stochs and MACD is that stochs report inclinations, i.e. in which direction the market is edging, while MACD reports movements, in which direction the market is moving. Stochs are an early indicator, MACD is lagging. The emoline is a 30 period linear regression, I use linear regressions because these have no lagging, react immidiately to changes, I use a 30 period version because that is not so nervous. You might say that an MA gives an average while a linear regression gives an ‘over all’ of the periods.
The back ground color is red when the emoline is below zero, that is where the market ‘looks down’, white where the market ‘looks up’. This doesn’t mean that the market will actually go down or up, it may allways change its mind.
Have fun and take care, Eykpunter.
Volume weighted Balance of PowerIt's a simple indication.
I multiplied the output of bop with volume, make it more smoother.
SN Smoothed Balance of Power v2Hi all,
here is an updated version of the indicator script I published yesterday.
The goal of this indicator is to try and find darkpool activity. The indicator itself is not enough to fully identify darkpool but it should be able to detect quiet accumulation. What makes this Balance of Power different from others on TV is that it is smoothed by using a moving average.
Notes:
- The values that are default are completely arbitrary except for the VWMA length (a 14-day period for the 1D chart is the norm). For instance the limit where it shows red/green I picked because it works best for the 1D chart I am using. Other TF's and charts will need tweaking of all the values you find in the options menu to get the best results.
- I modified the indicator such that it is usable on charts that do not show volume. HOWEVER, this chart is default to NYMEX: CL1!. To get different volume data this needs to be changed in the option menu.
- I am in no way an expert on darkpool/HFT trading and am merely going from the information I found on the internet. Consider this an experiment.
Credits:
- Lazybear for some of the plotting-code
- Igor Livshin for the formula
- TahaBintahir for the Symbol-code (although I'm not sure who the original author is...)
Smoothed Balance of PowerSmoothed BOP to try and find dark pool activity. Only works in charts with working volume!
Credits go to LazyBear for some coding on the plotting and Igor Livshin for the formula.
Indicator: Balance Of Power**** Code updated. Make sure you pick up the latest version posted (not the code in the published chart) ******
An oscillator that represents the battle between the bulls and the bears in the market.
BOP supports spotting price divergence, trends, and overbought-oversold levels.A change in the BOP trend serves as a warning signal and should be confirmed by a change in the price direction.
More info @ www.fxtimes.com
Updated the code to match ThinkOrSwim platform's indicator (request from user @mika2k1). v2 code here: pastebin.com
This allows you to plot only the EMA (instead of actual BOP). Sample image posted in the comments below.
