Hourly Scalp Engine

2021년 4월 14일

◆ Purpose of this Script

The Hourly Scalp Engine (HSE) is designed to show scalp long opportunities on lower timeframes (H, 2H or 4H) based on a Fibonacci-valued MA-like structure. It was tested for Bitcoin and Ethereum, with the 2H timeframe seemingly giving the best test results. The chart shows a few instances where the price crossed below the HSE to trigger an entry (marked manually with arrows).

◆ Settings

• Default scaling input (10.6) is tuned for Ethereum (ETH/USD) on Kraken.
  
• Scaling input for Bitcoin (XBT/USD) on Kraken: 10.4.
  
• Reasonable timeframes: H, 2H, 4H. Recommended timeframe: 2H.
  
• You should probably set an alert for when Price crosses under the HSE.
  

◆ Instructions

As this is purely a scalp engine (and not feasible for long-term trades), the instructions have to be followed precisely for intended functionality:

• As soon as Price crosses below the HSE, contemplate if you want to scalp, i.e. check current price, other indicators and market conditions. If yes, enter a scalp long. Do not enter the trade if: price has crossed above the HSE already and sits more than 1 % above it, or the down-wick was so deep and quick that it already retraced 10 % to the upside from the wick low (even if price is still below the HSE). In both cases it might be too late to enter.
  
• Watch the 2H candle, at which you entered the trade, closing. Draw a 10 % price range from the wick low to the upside. The range high is your exit point. Set a take profit trigger there. Set a stop loss slightly below the wick low.
  
• Observe the price action for the next 6 hours (i.e. the next three 2H candle closes). If price bounces up and hits the target, you exit with 10 % gains. If price hasn't moved to the target after 6 hours, close the trade at current price. If the stop loss should be hit in the meantime, you will have closed the trade automatically. The 10 % gain as a target was chosen because it seems to be hit very often, while higher targets are not reliably hit.
  

◆ Example Trade

Shown below is an example trade with correct drawing of the 10 % price range.



◆ Viability

From backtesting this should be a viable strategy for most instances where the HSE is crossed. However the HSE is not as hard as a boundary as e.g. the Confidence Bands (also published by DeanTrader), so that price can and will sometimes breach through (= close below) the HSE (as e.g. in the case of the March 2020 black swan event). Still even there a profitable trade could have been performed on the first bounce dependent on actual entry, although more risky due to very high volatility. Before using the HSE please make yourself familiar with the price action history of the considered asset and review the instances where the price crossed below the HSE in connection with the rules laid out in "Instructions" to understand the system and how to execute the trades. Also note that scalp trades are generally harder to perform than slower-paced swing trades, as timing becomes much more important and noise becomes relevant.

◆ Access

For access to this indicator please contact me via DM on TradingView or on Twitter (linked on my TradingView profile and in my signature).

2021년 4월 14일

릴리즈 노트

Change of the displayed chart.

2021년 4월 14일

릴리즈 노트

Addendum to the topic of stop losses: If you do not want to get wicked out during the trade, you could also decide to not set a stop loss but closely monitor the trade instead and act upon the specific price action (e.g. close the trade manually if price stays too long below the last wick low).

6월 14일

릴리즈 노트

Code update to Pinescript v6.