HOT ZONE - RSI with IV Percentile: Buy Stock or Sell Put Options Signal

BenTen

BenTen

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@Vinny1993 That is the link to a custom watchlist column. You may have to pull it up manually after it has been added to your ThinkorSwim. It should be under Custom Quotes.
 
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firestick55

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@firestick55 It would be helpful if you could let us know what is not working.
when i try to copy the and paste the script, it doesn't work or maybe am doing something wrong
 
BenTen

BenTen

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@firestick55 You probably did something wrong. Can you post a screenshot of your chart and where you added the code in your ToS?
 
BenTen

BenTen

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@firestick55 You can just import the code posted on the first page of this thread. It's much easier. See this tutorial if you don't know how to do that.
 
BenTen

BenTen

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@generic The original post made it very clear what it's for. I suggest spending more time going over it.
 
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tem2005

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@everyone

What are best recommended setting you like? When I changed the setting from simple to exponential or from close to vwap, arrows appearance changed. So far i don't get the best recommended as I'm still testing
 
wtf_dude

wtf_dude

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@everyone

What are best recommended setting you like? When I changed the setting from simple to exponential or from close to vwap, arrows appearance changed. So far i don't get the best recommended as I'm still testing
May take a while with real world testing to see what works "best" or gives any kind of edge, but I bet you'll find that the default settings he put work just fine. Remember, that RSI is by default based on the wilders average and that things generally end up being self-fulfilling prophecies when everybody is looking at the same thing.
 
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tem2005

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Yesterday and today signals were not so accurate and I understand that market may continue uptrend even if RSI overbought. But when I changed length it improved. But as you said Idk if ultimate result will be the same either changed or not..
 
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naveenkugmar_369

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Thanks @chewie76!! This looks great. one question though, what is the study to get the color candle as in your screen print. Thanks in advance.
 
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tmvo89

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It's gonna get heated up with the Hot Zone indicator! Hope you like it. It is a combination of RSI with IV percentile. The red colored area where IV is greater than RSI is the Hot Zone. Inside the Hot Zone are some colored circles on the midline. A yellow circle is a caution warning. This means it could be a good buy, but be cautious because it is a weak signal. The red circle is the HOT warning. This means it's time to buy or sell put options.

NOTE: there may be a string of red circles, so the first one that appears may not be the best entry because more could follow. You'll want to see the RSI and IV come back together for extra confirmation. Another confirmation is the ZSCORE upper indicator on this forum. Below are a few examples.

This indicator works great with the BTD indicator. Enjoy heating up your account with the Hot Zone!

This is an example of CWH on a daily chart.



This is an example of SPY on 12/24/2019. It showed the EXACT low! Then it ripped higher for the next 4 months.



This is an example of TSLA. 3 days this year were HOT buys in the middle of March 2020.



There is another version of this indicator that @FateOwnzYou helped make. SHOUT OUT to you fellow scripter! You're awesome! This version is cleaner to the eye and basically subtracts the RSI from IV and makes one single line so the greater the distance between them the further down the Hot Zone goes. I added the yellow and red circles, but you may want to adjust these settings for your trading style. The only negative is you don't actually see the actual RSI indicator, and some people who already use RSI would probably prefer using the other version to keep the RSI. The clear advantage is it gives clear buy and sell areas. Under the green line is a buy area. Over the red line is a sell area shaded in green (collect your cash money!) . (Any area in red could be considered a buy area, but the closer to the green line, the better.)

Lets look at a DAY TRADE in /RTY. Look at both of these Hot Zone indicators. Notice the one on the bottom. Circled areas for buys and sells.



Here is an example of QQQ on a daily chart. Notice the HOT circles and buy area on lower indicator and the sell areas.



Added ARROWS to the indicator. See below.



Below is an example of day trading /RTY using a 2 min chart. Look at the sell signal arrow and the two red hot buy dots that are highlighted, both followed by green buy arrows.



Hot Zone-RSI

Code:
#HOTZONE-RSI: RSI-IV_percentile indicator
#developed by Chewie76 9-30-2020
### Global Variables ###
declare lower;
input length = 14;
input over_Bought2 = 80;
input over_Bought = 70;
input over_Sold = 30;
input over_Sold2 = 20;
input price = close;
input averageType = AverageType.WILDERS;
input showBreakoutSignals = yes;

### RSI ###
def NetChgAvg = MovingAverage(averageType, price - price[1], length);
def TotChgAvg = MovingAverage(averageType, AbsValue(price - price[1]), length);
def ChgRatio = if TotChgAvg != 0 then NetChgAvg / TotChgAvg else 0;

plot RSI = 50 * (ChgRatio + 1);
plot MiddleLine = 50;
Middleline.SetDefaultColor(Color.YELLOW);
RSI.SetLineWeight(2);

plot OverSold = over_Sold;
plot OverBought = over_Bought;
plot UpSignal = if RSI crosses above OverSold then OverSold else Double.NaN;
plot DownSignal = if RSI crosses below OverBought then OverBought else Double.NaN;

AddCloud(Over_Bought2, OverBought, Color.dark_RED, Color.CURRENT);
AddCloud(OverSold, Over_Sold2, Color.dark_GREEN, Color.CURRENT);

UpSignal.SetHiding(!showBreakoutSignals);
DownSignal.SetHiding(!showBreakoutSignals);

RSI.DefineColor("OverBought", color.red);
RSI.DefineColor("Normal", GetColor(9));
RSI.DefineColor("OverSold", color.green);
RSI.AssignValueColor(if RSI > over_Bought then RSI.Color("OverBought") else if RSI < over_Sold then RSI.Color("OverSold") else RSI.Color("Normal"));
OverSold.SetDefaultColor(color.green);
OverBought.SetDefaultColor(color.red);
UpSignal.SetDefaultColor(Color.UPTICK);
UpSignal.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
DownSignal.SetDefaultColor(Color.DOWNTICK);
DownSignal.SetPaintingStrategy(PaintingStrategy.ARROW_DOWN);

AddCloud(RSI, OverBought, Color.RED, Color.CURRENT);
AddCloud(OverSold, RSI, Color.GREEN, Color.CURRENT);

### IVPercentile ###
def vol = imp_volatility();
input TimePeriod = 252;

def data = if !isNaN(vol) then vol else vol[-1];
def hi = highest(data, TimePeriod);
def lo = lowest(data, TimePeriod);
plot Percentile = (data - lo) / (hi - lo) * 100;
def lowend = Percentile < 25;
def highend = Percentile > 50;

input over_Bought1 = 98;
input over_Sold1 = 2;

Percentile.DefineColor("OverBought", Color.red);
Percentile.DefineColor("Normal", color.magenta);
Percentile.DefineColor("OverSold", Color.GREEN);
Percentile.AssignValueColor(if Percentile > over_Bought1 then Percentile.color("OverBought") else if Percentile < over_Sold1 then Percentile.color("OverSold") else Percentile.color("Normal"));

AddCloud(percentile, rsi, Color.RED, Color.CURRENT);

### Squeeze Relationship (RSI and IV) ###
def RSIIV = if percentile - RSI >= 40 and RSI < 32 then 1 else 0;
plot HOT = if RSIIV then 50 else Double.nan;
HOT.SetPaintingStrategy(PaintingStrategy.POINTS);
HOT.SetLineWeight(4);
HOT.SetDefaultColor(Color.RED);

def RSIIV1 = if (percentile - RSI >= 30 and RSI > 32 and RSI < 40, 1, Double.NaN);
plot CAUTION = if RSIIV1 then 50 else Double.nan;
CAUTION.SetPaintingStrategy(PaintingStrategy.POINTS);
CAUTION.SetLineWeight(4);
CAUTION.SetDefaultColor(Color.YELLOW);

Shareable link: http://tos.mx/I8BLRv2

Hot Zone line

Code:
#HOTZONE LINE: RSI-IV_percentile indicator
#developed by Chewie76 with help from FateOwnzYou 9-30-2020

### Global Variables ###
declare lower;
input length = 14;
input price = close;
input averageType = AverageType.WILDERS;
input showBreakoutSignals = yes;

def NetChgAvg = MovingAverage(averageType, price - price[1], length);
def TotChgAvg = MovingAverage(averageType, AbsValue(price - price[1]), length);
def ChgRatio = if TotChgAvg != 0 then NetChgAvg / TotChgAvg else 0;

def RSI = (50 * (ChgRatio + 1))*-1;
plot MiddleLine = 0;
plot TakeProfit = 60;
plot BUY = -60;
TakeProfit.SetLineWeight(1);
TakeProfit.SetDefaultColor(Color.RED);
BUY.SetLineWeight(1);
BUY.SetDefaultColor(Color.GREEN);

def vol = imp_volatility();
input TimePeriod = 252;

def data = if !isNaN(vol) then vol else vol[-1];
def hi = highest(data, TimePeriod);
def lo = lowest(data, TimePeriod);
def Percentile = ((data - lo) / (hi - lo) * 100)*-1;
def lowend = Percentile < 25;
def highend = Percentile > 50;

plot HotZone = percentile - rsi;
HotZone.SetLineWeight(1);
HotZone.SetDefaultColor(Color.MAGENTA);

AddCloud(middleline, HotZone, Color.red, Color.CURRENT);
AddCloud(takeprofit,HotZone, Color.CURRENT, Color.GREEN);


### Caution Relationship (RSI and IV) ###
plot CAUTION = if(HotZone <-45 and HotZone > -60,1,double.nan);
#plot CAUTION = if RSIIV1 then 0 else Double.nan;
CAUTION.SetPaintingStrategy(PaintingStrategy.POINTS);
CAUTION.SetLineWeight(4);
CAUTION.SetDefaultColor(Color.YELLOW);

### HOT Relationship (RSI and IV) ###
def RSIIV2 = if HotZone <= -60 then 1 else 0;
plot HOT = if RSIIV2 then 0 else Double.nan;
HOT.SetPaintingStrategy(PaintingStrategy.POINTS);
HOT.SetLineWeight(4);
HOT.SetDefaultColor(Color.RED);

#Arrows#
plot UpSignal = if HotZone crosses above BUY then BUY else Double.NaN;
plot DownSignal = if HotZone crosses below TakeProfit then TakeProfit else Double.NaN;

UpSignal.SetHiding(!showBreakoutSignals);
DownSignal.SetHiding(!showBreakoutSignals);

UpSignal.SetDefaultColor(Color.GREEN);
DownSignal.SetDefaultColor(Color.RED);
UpSignal.SetDefaultColor(Color.UPTICK);
UpSignal.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
DownSignal.SetDefaultColor(Color.DOWNTICK);
DownSignal.SetPaintingStrategy(PaintingStrategy.ARROW_DOWN);

Shareable link: http://tos.mx/zexG7vA

There are some traders who don't like to use lower indicators. Good news for YOU!!! I created an UPPER indicator that uses BOTH of these into one!!! You can turn on/off the arrows. You can turn on/off the hot and caution dots for the Hotzone and Hotzone line indicators. NOTE: IF you display dots for BOTH indicators, the Hotzone Line dots will plot over the Hotzone indicator dots. If you want to have the opposite, I believe you would just have to move their order within the code.

Below is an example of using the arrows from the HotZone Line indicator with the dots from the HotZone indicator on /ES 15 min chart.



Here is the link to the Hotzone UPPER indicator: http://tos.mx/6Co9B16

Looking for a watchlist column? Here you go! http://tos.mx/f8iJHPk

Adjust the timeframe on it. It will look like the below. It will have a yellow CAUTION for the yellow dot and a red HOT for red dot. The reason there are two columns is because they are set to different timeframes.



Let me know what you think!!!!!

Hey Do you have instruction on how to add this to the watchlist?
 
wtf_dude

wtf_dude

Active member
Hey Do you have instruction on how to add this to the watchlist?
There are TONS of ways and lessons to find how to add watchlist columns with shared TOS links. It's the same process no matter which study or column you use. If you have a question.... Use. the. search. function. People are not on the forum to be unpaid TOS coders and instructors... It's supposed to be collaborative.

(This goes for all the new members, not just you)
 
BenTen

BenTen

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@tmvo89 Watch the video below. It has instructions on how to use the scanner and how to add custom watchlist column.

Note: the indicator in this video is different but same process.

 
lowtrade

lowtrade

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This indicator seems to be good but I'm finding very few stocks or none including all sectors using the scan. Is this just me or are you guys having the same issue?

 
wtf_dude

wtf_dude

Active member
@lowtrade Same, but it's not really much of an issue. Just not a good entry point from the looks of it. Very few buy signals happening in the market right now in general
 
B

barbaros

Active member
@chewie76 what settings and timeframe do you think is appropriate for intraday scalping? I mainly trade /ES.
 
S

Scola

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So we want to wait for the dots, and then when the white line crosses the purple line we can buy correct?
 

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