Option Scalper

2023년 5월 28일

What is Scalping?

Scalping is a trading strategy aimed at profiting from quick momentum in a volatile index or stock or any other instrument that can be traded.


Traders who use such strategies place anywhere from 10 to a few hundred trades in a single day.

The idea behind such type of trading is that small moves in an index or stock price are much easier to capture than the larger moves.

Traders who use such strategies are known as scalpers. When you take many small profits a number of times, say 10 points scalped 20 times per day, they can easily add up to large gains.

An Option Buyer's Biggest Enemy is Time Decay and when you scalp, you do not allow the time decay to eat your Option Premium as your Entry and Exit is often quick enough.


What is Option Scalper?


Option Scalper indicator is a momentum-based indicator that tries to detect momentum based upon a number of factors as given below:

(1) Price action accumulated over a period of time when big candles are nowhere
(2) Repeatedly Occurring, certain Candle patterns which indicate if buyers have the upper hand or sellers are ruling the market.
(3) Gradient of moving averages which shows consistency of net buying/selling force
(4) Price jumping normal distribution line and landing in outlying areas, signalling increasing momentum of buying/selling activity.

Based upon the above factors, when Option Scalper thinks a move has the potential to turn into a big move, it generates its Buy/Sell Signals.

When aggressive buying or selling starts where Buying & Selling Forces become unequal, the Price starts moving in one direction with candles making Higher Highs or Lower Lows, moving average lines start scaling up or down or volumes start increasing.

Option Scalper detects these (1) Higher Highs or Lower Lows, (2) scaling up moving average lines, and/or (3) price breaking out of channels; and generates Buy or Sell signals.

In order to use this indicator, simply deploy this on your chart, and wait for Buy/Sell signals. When a Buy/Sell Signal appears, a small line starts forming up at the closing level of Buy/Sell signal candle. Your Entry will be above that line for Buy Signal and below that line for Sell Signal.



It works on all time frames.

Whenever a Buy Signal is followed by Sell signal (let it be after 7 - 8 candles or after many candles) or vice-versa, you have to switch your position to make most of the reverse move.

It is a general purpose indicator and may be used on stocks, commodities, forex and any other instruments alike and is not meant for any specific market.


How to Take Buy/Sell Entry with Option Scalper?

Whenever a Buy/Sell Signal appears on a candle, Option Scalper starts marking its closing price with a horizontal line that keeps extending towards right side with every new candle. This line is Blue in Color for Buy Signal and dark golden color for Sell Signal.

Initially this horizontal line will be very small but as more and more candles appear with the passage of time, the length of the line keeps increasing.

The purpose of this line is to mark the closing price of Signal candle and you have to take your Buy Entry above this line (if last signal is BUY) or you have to take your trade Below this line (if last signal is SELL).

The indicator will also draw another line at the Opening Price of Signal Candle, which can act as your initial stop loss. If trade starts moving in your direction and price goes above upper variance line (light green curvy line) or goes below lower variance line (purple wavy line), then that line becomes your trailing stop loss line from that point onwards.

The indicator also marks the consolidation zone for you. If the Buy/Sell Signal has come but price is in consolidation zone (grey colour cloud), do not take any positions yet and wait for the price to come out of the cloud and breach the Entry Line.



Exiting Buy/Sell Positions and Re-Entry Rules

1. Exiting your Buy Trade: When a Buy Trade is active, indicator can detect where the ongoing upmove may end or retrace for a while and it will print an X symbol (RED COLOR) to warn you. After you see a Red Color X symbol, if price starts making lower lows, you can exit your Buy Trade there or if you are in good profit, you can wait for the price to go below upper variance line (the green color Trailing Stop Loss Line for Buy Trade). See the image below for Red Color X symbol which warns you to be prepared for EXIT from Buy Trade:

2. Re-Entry for Buy Trade: If the last signal on your chart is still Buy Signal but your stop loss has been hit once or twice and you have no open positions now, you can RE-ENTER in buy trade if and when price again climbs above the grey cloud.

3. Exiting your Sell Trade: When a Sell Trade is active, indicator can detect where the ongoing down-move may end or retrace for a while and it will print an X symbol (Green COLOR) to warn you. After you see a Green Color X symbol, if price starts making higher highs, you can exit your Sell Trade there or if you are in good profit, you can wait for the price to go above lower variance line (the purple color Trailing Stop Loss Line for Sell Trade).

4. Re-Entry for Sell Trade: If the last signal on your chart is Sell Signal but your stop loss has been hit once or twice and you have no open positions now, you can RE-ENTER in Sell trade if and when price again crosses below the grey color cloud.

See the image below for recognizing Red and Green X symbols which indicate that temporary retracement or reversal signal is developing:




What are the other features of Option Scalper?

1. End to End Horizontal Support/Resistance Lines: Indicator also detects, prints and deletes horizontal support and resistance lines which can help in your trading decisions. For example, a Buy Signal comes and price crosses above upper variance line and also crosses nearby horizontal resistance line means it has higher probability of moving further up. The reverse is also true (for Sell Signal). See an example of a resistance line below:



2. Star Symbols: If 5 or more consecutive candles are of the same color, then Star Symbol (*) starts appearing above or below the candles. When price has moved too high or too low from the upper or lower variance line, these stars indicate that there is higher probability of retracement happening now which should prompt you to book full or partial profit. See the circled stars in the below image



3. Color Changing Candles: If a candle changes its color from Red to Purple or from Green to light green, they indicate increased intensity of Selling or Buying activity. For example, if each 1 min candle within a 5 min candle is red, then that 5 min candle will turn purple which means Selling pressure is too much and there are very few or no buyers at all. Reverse is also true when Green Candle becomes Light Green. Example images of such candles can be seen below:




4. Consolidation Zone: It is very important for an option buyer to strike only when there is momentum and not to take any fresh trade (or if you already have a position, then closing it for the time being) when price is in consolidation zone. Consolidation zone is marked by a grey colour cloud as seen in below image.




What Type of Alerts Can be Set up: You can set up 3 type of alerts with this indicator (a) Buy Entry Signal which happens when Price closes above the marked Buy Price Level (b) Sell Signal which happens when Price closes below the marked Sell Price Level or (c) Any signal (if you want to be alerted when either Buy or Sell Signal happens)


How to get this indicator?

This is invite-only indicator. Get in touch with us using information given below in Signature field to try this indicator FREE. You may also chat with us through Private Chat feature of TradingView.

2023년 12월 30일

릴리즈 노트

Update: it is every trader's dream to Enter at absolute bottom and Exit at absolute top for long trades and vice-versa for Short Trades. With this demand in mind, some new code has been inserted in the indicator which tries to pick up these tops and bottoms of up and down moves.

Indicator prints PEOB (probably end of buying pressure) and PEOS (probably end of selling pressure) when it thinks buying pressure or selling pressure is dying. Traders must note that the candle where PEOB or PEOS is printed, should be taken as a milestone and they can exit their positions (partially or fully) when following candles confirm the end of buying or selling wave.

The criteria for printing of PEOB or PEOS is very strict and these marks will occur rarely, however, there is no 100% guarantee that every time market will respect PEOB or PEOS symbol, though there is very high probability that turning points will occur around these milestones.

1월 28일

릴리즈 노트

What is new in this update:

(a) Tweaked the code which marks consolidation zone. Now consolidation zone will be tighter giving you early exit from a Sell or Buy position.
(b) Re-Introduced 'Yellow' and 'parrot green' candles which work on Multi-Time Frame concept and indicate sustained Selling or Buying for a given time frame.