How to detect TRADING SETUPS with PINE SCRIPT • Pine Script [OUTDATED V4] Tutorial

hey traders this is matthew from pinescript mastery welcome back to another pinescript video lesson in today's video i'll be showing you how to detect candlestick patterns while the rsi is overbought or oversold now the techniques shown in this video can be used with any type of market condition so you could use stochastics emas bollinger bands you name it so i hope you find it helpful and let's get started so first things first all i've done here is add the rsi to my chart so that we can see what the value is when we're working with our script and all i'm going to do here is open up the panscript editor and we just have a blank script here all i've done is change the title and short title and we've set overlay to true because we want this script to draw over the top of price action not into its own box like the rsi does here so let's get started the first thing i like to do as always is get user input and in today's video we need three different values from the user we need to get the rsi length that they desire uh the next value we need is rsi overbought and i'm going to use an input type of float here because that just gives the user a little bit more flexibility and control over the value so instead of just setting it to 80 or 70 let's set it to 70 by default uh they could set it to 70.5 70.1 you get the idea so that i like to just give my users as much control as possible over my scripts but of course you could hard code these values if you wanted to and just put a 70 there instead it's up to you but it's always good practice to give your user as much control as possible next up is rsi oversold level and i can just copy this line of code here paste it in there change this to oversold change this to 30. and that's all the user inputs we need for this particular script the next thing we need to do is get our actual rsi values and our trading conditions so in this case we're just checking if the rsi is overbought or oversold or in other words if the rsi value exceeds 70 or 30. so that's quite easy to do all we need to do first of all is get the rsi value so we use the inbuilt function rsi and we pass it a price source so in this case we're just going to calculate the rsi based on closing price like the normal rsi would and we're going to pass it our rsi length from the settings menu so that our users can adjust this if they desire next up we need to check our rsi value against our rsi overbought and oversold levels so first of all let's create a new boolean variable called rsi bullish and this is going to be set to true only if the rsi value that we just got here is less than or equal to our rsi oversold level because we want to be buying when price is overextended to the downside and selling when it's overextended to the upside so this will check the current candles rsi value but we also need to check the previous candles rsi value because there will be occasions such as in here where notice the rsi goes overbought on this bar but if the next bar was a bearish engulfing candle for example and that's the setup we were looking for then the script will not detect it as valid because the rsi is no longer overbought so we need to check is the current candle's rsi value oversold or was the previous candles rsi value oversold if either of these two conditions are met then we can begin looking for our entry candlestick setup pattern and in today's example we're just going to be detecting bullish and bearish engulfing candles just because they're relatively simple to detect and the concept can be applied to any candlestick pattern so it really doesn't matter what we detect here and at the end of this video i'll show you where you can get the code for detecting other candlestick patterns if you want to use different candlestick patterns but first of all let's copy this line of code here paste it in there rename this to rsi bearish and we need to flip these operators around so now we're checking is the rsi greater than or equal to our rsi overbought threshold and that's it we are now detecting the rsi value and our trading conditions the next thing we need to do is detect our candlestick so as i said we're detecting bullish engulfing candles and bearish engulfing candles so in the case of a bearish engulfing candle we want to detect if the current closing price is less than or equal to the previous candle's opening price and did the previous candle close as a bullish candle that's all we need to know in order to detect bearish engulfing candles so let's go back to the editor and we'll write that out in code so for a bearish engulfing candle we need to check is the current closing price less than or equal to the previous candles open price and did the previous candle close greater than its opening price or in other words did it close green or bullish and then we need to do the same thing for bearish candles so it's just the opposite here we want to detect if the current candle closed higher than the previous candles open and did the previous candle close bearish so we need to know so did the current candle close greater than or equal to the previous candles open and did the previous candle close lower than it's open done so we need to do in order to detect bullish and bearish engulfing candles now obviously you could optimize this you could only search for swing low engulfing candles or swing high bearish engulfing candles you could take the size of the candle into consideration you could check if it closes above the previous candles wick or below in a bearish example and this will affect the efficacy and accuracy of your script if you're using it to trade so there's just some ideas to play around with we won't do that in this video because it just takes too long to go over and i want to keep this video as short and to the point as possible and if you need help with this i have a free basics course over at panscriptmastery.com where i go into great detail about how to do this sort of thing but anyway let's get back to our code and now that we have our candlestick patterns detected we need to detect valid trading setups so we need to combine these two conditions we need to check is our rsi overbought or oversold and did we get a bullish or bearish golfing candle so i'm going to create a new section code here and i'm going to call this section detect trading setups we're going to have a bullish setup and a bearish setup now the bullish setup is simply going to be is our rsi bullish condition met so is rsi oversold and did we get a bullish engulfing candlestick pattern simple same with the bearish setup was our rsi bearish set to true and did we get a bearish engulfing candle stick pattern and that's it we're pretty much done now we just need to draw this information to our chart so let's do that now draw data not dara draw data to chart so we're going to use the plot shape function here we're just going to draw a down arrow a red down arrow above bearish setups and a green up arrow below bullish setups so we're going to use a plot shape function and now you could just pass bullish setup into here and that would work just fine but i prefer to do it a little bit differently i like to use a conditional statement in here and i like to say do we have a bullish setup question mark if so then i want to plot one otherwise i want to plot n a or not a number not applicable and this will make more sense when we finish writing this code i'll show you exactly why i do this in here but you don't have to if you're not used to conditional statements you don't understand them you don't want to use them just get rid of this part here next up we need to give it a style which is a shape so if you type shape dot control space or command space if you're on a mac this will give you your list of shapes you can choose from so in this particular case i want to just go with arrow up and arrow down so for bullish setup we want to use arrow up i want to give it a color of color dot green since it's a bullish setup we need to set the location to location dot below bar because we want this arrow drawing underneath the bars not on top of them otherwise it won't look right then finally it's a it's good practice to title your plots you don't have to do this this is completely optional but it'll make sense why this is a good idea when we're finished writing out these two plot shape functions so let's paste that down there and change this to bearish setup change our shape to arrow down our color to color.red our location to above bar since it's a bearish setup we want it above the bar pointing down change our title to bearish now we can get rid of our plot close function every script needs at least one plot call in it and now that we have our plot shape functions written out we don't need this anymore so now i can save the script should compile without any errors there we go i can click add to chart and we'll now be detecting candlestick patterns bearish and bullish engulfing candles whenever the rsi goes overbought or oversold very simple but extremely effective and this is just the beginning once you master these techniques you can apply them to any indicator any candlestick pattern you can layer them on top of each other you could compare multiple time frames you could look for divergences in price action versus your indicator values you could draw your stops and targets using the atr indicator and automatically calculate all that information for you basically the possibilities are limitless within the pine script framework once you master these techniques so i'm just showing you the basics today if you want to take this stuff to the next level then again head over to pinescriptmastery.com where i have a bunch of lessons covering how to make profitable strategy scripts and how to create your own trading tools to assist in your trading process and before we finish this video i'll show you how to add alert functionality to this script so you can get an sms or push notification alert whenever these types of setups are detected by your script and then it's like having a second pair of eyes on the markets at all times you can leave your computer and rest assured that you'll get an alert sent to your phone whenever a trading setup is detected it can save an immense amount of time in your trading process once you write a script to assist in your own trading but before we continue let me demonstrate why i put this conditional statement in here if you hover over a candle that does not have a signal on it you can see here it has n a in red this is our bearish setup plot so when the script does not detect a trading setup it just draws n a up here if i remove this conditional statement and i save the script now you see when i hover over any candle that does not have a bearish setup we get 0.000 drawing to our chart and this will draw as many zeros as there are decimal places on your price scale and now for a small script like this that's not a that's not an issue doesn't really matter but if you're writing a long and complex script that has dozens of plots you can have numbers stretching across your entire chart which obstructs your chart it just looks messy of course you can come up into the settings menu and go to status line and turn off indicator values and that will remove those numbers but i like to leave them on because quite often i rely on these numbers to inform my trading process so that's a little trick that i learned to do is just using this conditional statement if i save the script now you'll notice that when we hover over a candle that has a setup detected we're drawing 1.000 but when we're over a candle that doesn't we're just drawing n a and as i just mentioned if you have over a dozen plots on your chart which some scripts do this can save a lot of space in your indicator values section now finally let's add alert functionality to this script so i'm just going to create a new little section a new single line of code here and we're just going to call the alert condition function now you can only call this once per script so we need to combine our setups into our alert condition but that's really easy to do all we need to do is type in here bullish setup or bearish setup comma so this is our condition so you could also write here condition equals condition is set to bullish setup or bearish setup if either of these variables are true then an alert will be triggered and then finally this condition this alert condition requires a title so we'll just call this rsi setup alert and it requires a message so i'm just going to say rsi trading setup detected for and then i'm going to stick in here my ticker so this ticker placeholder will be replaced with whatever symbol i'm on when i set the alert so that's it save the script we now have a functioning rsi exhaustion detection script that is detecting bullish and bearish engulfing candles whenever the rsi exceeds 30 or 70 and we get a bullish or bearish engulfing candle you can come up to the settings menu you can change these values so i could change this rsi length and these rsi thresholds and that will adjust how many setups are detected and accuracy of those setups obviously and if we come up to the settings menu we go to style because we named our plots in our script we can change the color of these symbols that are drawing onto our chart we can change the shape of them and where they are placed so that's why i always recommend to title your plots whenever possible so that's it for today's lesson finally before i let you go i just want to quickly show you how you can quickly and easily get the source code to detect other candlestick patterns if you want to replace this bullish and bearish engulfing candlestick pattern with a different candlestick pattern so if you come up here to your indicators and strategies button click on that you'll see a new section that was added here recently called candlestick patterns and this is created by the trading view team and if you click on this there's a list here a long list quite a long list of various candlestick patterns so i've actually never heard of an abandoned baby candlestick pattern but hey if it works it works so let's go with doji let's keep it simple i mean you could check any of these candlestick patterns here but just for this example we're going to go with doji so if i click on that script it'll add it to my chart and now it's detecting doji candles all over my chart so if i wanted to use these candlestick patterns in my rsi script all i need to do is come up here click on the source code button of this candlestick pattern script and that will open up the source code of that candlestick pattern now some of these candlestick patterns are way more complicated than they need to be but this can help you learn how to detect some of these candlesticks now to be honest with you these scripts are insanely over complicated you do not need this much code in order to detect a doji candle i'm not entirely sure why the trading view team went and made these scripts so convoluted but i guess they're just showing off various ways you can use pinescript in order to detect certain patterns in the market but if you go through these scripts and you analyze what they're doing here you should be able to find a simple way to convert this into a couple of lines of code and then you come up to the source code of this rsi script and you just paste that code into here and rename your candlestick patterns and then all you need to do is check the rsi conditions and then check if you are detecting your various candlestick patterns now if you want help with this i have a course where i go into quite a lot of detail about how to detect various candlestick patterns and they're a lot a lot lot simpler than these inbuilt trading view scripts so here's my password mastery course here we come down to the candlestick patterns section there's a couple of very basic candlestick patterns in here but they're so much more simple than the inbuilt training view scripts and let's go with let's say hammer and shooting star candlestick patterns so here's a video lesson on how to detect these patterns but if i just come down here and i just copy this section of code here we go back to our rsi script and now we can remove this ridiculously complex doji script open up our script come down to our candlestick patterns section and here i'm going to just add a new section just so that we don't need to delete this i'm going to say detect hammers and stars paste that code in there and now i can copy hammer candle over our bullish engulfing candles and star candle over our bearish engulfing candle pattern save the script and now the script will only be detecting bearish shooting star candles and bullish hammer candles whenever the rsi is overbought or oversold such as in here so you can see there long wick to the downside and a smaller body on top than the wick you can obviously adjust these uh parameters for your candlestick patterns in the codes quite easy to do but that's the end of this lesson i hope you enjoyed that i hope you found that interesting and informative i'll be back soon with new free instructional videos but if you can't wait for that head over to my website and check out the free course because there's a few things i cover in there that i haven't covered on youtube and if you're new to pinescript then i'm sure you'll find that information really valuable and helpful in your coding journey that's it for today thanks for watching thanks for your time and i'll see in the next video have a great week and good luck with your training take care goodbye

Channel: The Art of Trading

Views: 19,288

Keywords: tradingview, pine script, tradingview indicators, forex algo, crypto algo, stock algo, trading algo, trading algorithm, how to create trading strategies, how to code your own trading scripts, trading scripts, forex scripts, crypto scripts, stock scripts, bitcoin scripts, trading signals, forex signals, crypto signals, stock signals, detect trading setups, pine script mastery, pine script mastery course, how to use tradingview, how to use pine script, scripting, ema

Id: SfwrMsAISeI

Length: 20min 15sec (1215 seconds)

Published: Fri Sep 25 2020