4 Candle Reversal Indicator for ThinkorSwim

BenTen

BenTen

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This indicator is based on pure price action candlestick pattern.
  • If the first 3 candles in the pattern are BEARISH and the 4th candle BULLISH engulfs the 3rd candle then a GREEN triangle UP will display BELOW the 4th candle
  • If the first 3 candles in the pattern are BULLISH and the 4th candle BEARISH engulfs the 3rd candle then a RED triangle DOWN will display ABOVE the 4th candle
This version for ThinkorSwim, I replaced the signals with green and red colored bars.

Recommended timeframes:
  • Hourly and Daily to identify trend / swing trading
  • 5m for day trading




thinkScript Code



This is a repost from our private Warehouse forums. This post is provided to our general members who wish to purchase the indicator as a single product.
 
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diazlaz

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This looks like it will have great potential in 1 min chart. need to backtest - adding to my backlog. Does anyone have any good exit indicators that will complement this strategy?
 
BenTen

BenTen

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@diazlaz Heard of DMI Oscillator? It's available in ThinkorSwim. I heard it's very good with helping you stay in and ride the trend. Test it out.
 
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diazlaz

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@diazlaz Heard of DMI Oscillator? It's available in ThinkorSwim. I heard it's very good with helping you stay in and ride the trend. Test it out.


Thanks Ben, shows promise, suggest folks to experiment with your favorite and share your findings. I have a number of other ideas I will test.

Here is the 4 candles, turned into arrows, with the SSL as a bar below and a ALMA + DMI below. There are a number of possible exit indicators, you can see the DMI maps nicely, when the DMI turns opposite of the trend exit, the SSL can also be used when it turns counter trend exit, and also once it breaks a lower ALMA it could also be used. (moving average line plotted on the upper).

great potential. suggest folks to play with it some more.
 
BenTen

BenTen

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@diazlaz I'm not sure about your preference or the type of trader you are but for me the 1 minute chart is too noisy. I found the 5m chart to be the bare minimum for day trading. But if the 1m works for you then absolutely use that. I found some great backtesting result with this candle indicator on the 5 minute chart. You should check it out as well.
 
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diazlaz

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@diazlaz I'm not sure about your preference or the type of trader you are but for me the 1 minute chart is too noisy. I found the 5m chart to be the bare minimum for day trading. But if the 1m works for you then absolutely use that. I found some great backtesting result with this candle indicator on the 5 minute chart. You should check it out as well.
thanks Ben. I will build systems and have automated algo's trade the 1 minute, intraday trade the 5 minute and then swing trade. also more and more looking at weekly trading position and momentum. I been so focus on the 1 minute chart lately, thanks for awareness and need to go to a higher timeframe. appreciate that.

I'm amazed the simplicity of this indicator and leveraging price action with great potential. we should all pair this up with 1 or 2 additional confirmation indicators and I think this could turn into a viable trading plan.

Here is the an example on a 5 minute MSFT and FB.



 
BenTen

BenTen

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@diazlaz Glad to hear your plan. I hope you the best of luck. Great looking chart there. Simple and clean ;)
 

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