Ever wanted a script that could tell you what is the maximum reasonably safe leverage if you were to open a trade and hold it for a given number of candles? This is it!
Using rate of change based volatility and the maximum expected number of candles/periods you will hold your trade for, based on your risk profile this indicator will tell you what is the maximum reasonable leverage. Stop losses / take profits or some other prudent exit strategy should not be avoided. The idea is effectively to prevent yourself from using leverage that is too risky for the current market conditions on whatever timeframe you are entering your trade based on.
If you have any suggestions on how to improve the indicator, please leave a comment below!
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- Added 'valid for:' in the live-table - Fixed small text issues
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- Improved the default settings
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- Lowered the risk in the low-risk profile - Added 'Sketchy' risk profile
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- Added 'recommended' risk profile (lowest risk while still accepting some leverage) - Added cross-margin and isolated margin settings which affect the minimum and maximum leverage regardless of the volatility - Changed the default settings to make the indicator a bit faster to react to market changes
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- Small adjustments
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New Features
- Improved Cross-margin mode - Added liquidation levels - Reorganized the settings - Added fill color
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- Fixed a bug causing 'Low-ish Risk' profile to not work - Updated the preview-chart
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- Clarified the settings - Open-position max leverage text being yellow now indicates increasing risk
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- Added mini table option - Changed several math variables / limits - Cleaned Code a bit
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- Added symbols in the table to represent changing risk
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- Better color logic - Hide new-position leverage plot by default
@OutsourcE, the exact formulae I'm using to transform the volatility of the last N candles into a leverage number took me countless hours of work to get it to not suggest a leverage that ever ends up resulting in liquidation of your position, even if you took the perfectly wrong trade at that leverage and timing.
The market can always be crazier than the craziest point in the past of course so like any indication it's not full-proof. That being said, I spent countless hours adjusting the formulae to get a nearly perfect track record historically with trade lengths of 14 and 21 candles.. perhaps with other trade length settings in a given specific market you can fool the recommended risk profile.
Long story short, this indicator may eventually be something I can sell when it's no longer in beta an undetermined amount of years from now.