Firstly, 100% of the credit goes to Greg Morris @ Stockcharts.com for the article detailing the concept and most of the settings/components. I've simply implemented his idea. I haven't sought permission from him, but given that he was open with the components of the indicator I'm assuming he's happy for me to go ahead and code this in pinescript. See the article here: stockcharts.com/articles/dancing/2019/07/trend-gauge-568.html
Okay, so this is part of a system/indicator Greg outlined in the article that he calls Trend Gauge. The idea is fairly simple: take a group of indexes that cover the breadth of the market you want to trade, track their relationship/position to their 200 period Exponential Moving Average (EMA), and assign scores to bull/bear crosses + relative location to the EMA. Once you've normalized and aggregated the scores you finish up with a trend following indicator that works surprisingly well.
This part is called Mega Trend Plus, and tracks whether an index is above or below its 200 period EMA. I'll be releasing the second part ("Trend Strength") soon. Once that's done I'll combine them to form the full "Trend Gauge" indicator.
I decided to provide the base version that people can then experiment with and tweak to their liking, so Greg's version shown in the article is smoother than the one provided here. It's up to you to play with smoothing options, and potentially tweak the weightings of the various components. Please see the script for info on what the various inputs are - I've added notes there.
So, how does it do? Well, as you can see from the chart above it works pretty well overall. The S&P 500 has been fairly trendy over the last few decades, so it's been prime territory for a system like this. It would have kept you out of the big bear markets (particularly GFC & 2015-16), and that's the goal of any trend-based system. They thrive on how little they lose, not necessarily on how much they make.
As you can see, the indicator is pretty choppy. So it's not designed (in the current configuration) to provide accurate buy/hold/sell signals. It currently functions more as a market gauge / strength indicator.
Hopefully you find this concept interesting. It's simple, but the best systems often are.
Please add comments below if you come up with an interesting configuration or variation.
진정한 TradingView 정신에 따라, 이 스크립트의 저자는 트레이더들이 이해하고 검증할 수 있도록 오픈 소스로 공개했습니다. 저자에게 박수를 보냅니다! 이 코드는 무료로 사용할 수 있지만, 출판물에서 이 코드를 재사용하는 것은 하우스 룰에 의해 관리됩니다. 님은 즐겨찾기로 이 스크립트를 차트에서 쓸 수 있습니다.