Pump and Dump Probability

2023년 9월 5일

The "Pump and Dump Probability" indicator is designed to provide traders with a probability score to detect potential pump and dump schemes in the market. It doesn't guarantee that a pump and dump will happen but offers a quantified metric to analyze suspicious trading activity. It evaluates four critical conditions, each contributing up to 25 points to the overall probability score. The conditions are:

Volume Surge: This assesses the current volume against a short-term moving average of the volume. A surge in volume can sometimes indicate the "pump" phase where the price is artificially inflated.

Price Acceleration: By comparing short-term price changes to longer-term changes, the script identifies unnatural accelerations in price that might not be backed by genuine market sentiment.

Moving Average Deviation: In regular market conditions, prices tend to hover around their moving averages. Large deviations, especially in the absence of significant news or events, can be suspicious.

RSI Overbought Condition: Extremely high RSI values can suggest overbought conditions. When combined with other signs, it can contribute to the suspicion of a pump and dump.

Usage:

Probability Score: The primary output of this script is a score ranging from 0 to 100. A score closer to 100 indicates a higher probability of pump and dump activity.
Threshold Levels: A max probability level at 100 (red) and a min probability level at 0 (green) are plotted for reference.

Parameters:

The script allows users to customize:

RSI Period: To adjust the sensitivity of the RSI calculation.

Extreme RSI Overbought Level: The RSI threshold for considering a market overbought.

Volume Multiplier: Define what constitutes a volume "surge" by setting this multiplier.

Short & Long Term Periods: These are for calculating price acceleration and setting the duration of the moving averages.

Charting:

The script outputs a clean and straightforward graph showing the probability score. The score itself is plotted in blue, with two horizontal reference lines at 0 (green) and 100 (red) to quickly assess the relative position of the current probability score.

Note:
While individual components (like RSI or volume analysis) are well-established in trading, our script's originality lies in its composite approach. Each indicator by itself might not be decisive, but when they converge, the likelihood of a pump and dump scenario increases. This integrated methodology offers a nuanced perspective that's more than the sum of its parts.

It's essential to remember that this script doesn't guarantee a pump and dump situation but merely quantifies specific market conditions that might indicate one. Always conduct thorough research and due diligence when using this or any other trading tool.