Failed Auction Indicator for ThinkorSwim


Simply put a failed auction in trading is a situation where there are multiple buyers/sellers willing to pay the same price for the item auctioned(shares/futures contract) but only one trader gets the price and auction ends and moves in other direction. On candlestick charts, it can be seen as two or more consecutive candles having the same exact high or low and the next candle opens and goes in the other direction.

Failed auction acts as a magnet and majority of the times the price will always come back to the failed auction price and repair the auction so to speak.

Below is a very simple indicator that shows a bubble when it detects a failed auction. It can be used as an indicator for scalping with proper trade management.

Other Example Usage:
  • If I am about to go short and I see there is an un-repaired failed auction at candles above my short price, I will be cognizant about that fact before entering the trade. Or maybe even not enter the trade.
  • If I am about to go long with un-repaired failed auction above my price, Failed Auction can act as an additional confirmation to go long.
  • Failed Auction can help you with your Profit Targets. Example: If your PT is x but you also have an un-repaired failed auction at $x.5 I will put my PT at or above $x.5 because I know that the price will repair the failed auction

Example 1:


Example 2:


# Failed Auction
# By captut @

input highFailedAuc = yes;
input lowFailedAuc = yes;
input alert = no;

def fAucHigh = (high[1] == high) and (high[1] > high[-1]);
def fAucLow = (low[1] == low) and (low[1] < low[-1]);

AddChartBubble(fAucHigh and highFailedAuc, high, "FA @"+high,, yes);
AddChartBubble(fAucLow and lowFailedAuc, low, "FA @"+low,, no);

Alert(fAucHigh and highFailedAuc and alert, "Failed Auction High @"+high);
Alert(fAucLow and lowFailedAuc and alert, "Failed Auction Low @"+low);

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