Consolidation and Range Pattern

25 de abr.

Hello Traders!

The TRN Consolidation and Range Pattern indicator utilizes a unique swing-based pattern recognition to pinpoint consolidation zones in real-time with unparalleled precision. The rectangle pattern, also known as a trading range or a consolidation pattern, is characterized by horizontal lines that act as support and resistance levels, creating a rectangular shape.



The value of this indicator is to support traders to easily identify consolidations and ranges. The special swing-based pattern recognition and the numerous built-in premium features make this indicator unique. Below, you'll find a list of these features.

Feature List

1. Real-time consolidation/range detection
   
2. Visualization of entry, stop-loss and take-profit levels
   
3. Pattern performance statistics
   
4. Calculation of risk rewards ratio
   
5. Risk Management
   
6. Breakout alerts
   
7. Customizable pattern size and accuracy
   
8. Customizable look and feel
   

The trader saves a lot of time scanning the markets for consolidation patterns, since everything is done automatically for the trader: Finding the consolidation, looking and alerting for a breakout, computing the entry, stop loss and take profit levels as well as handling the risk management and computing the optimal order quantity. Now, we describe how a combination of these features enhances the trading performance of confirmed consolidation patterns.

How to Trade with the TRN Consolidation and Range Pattern

1. Identify the Pattern
   
   Add the TRN Consolidation and Range Pattern to your chart and look for the pattern on the asset and timeframe of your choice. The pattern is detected in real-time. If the pattern develops further in the next bars, then the indicator updates the consolidation zone until a breakout is confirmed.
   
   You can also use the built-in alerts to easily get notified when a pattern occurs. In the indicator settings in the "Alerts" section you can choose whether you want to get notified when a pattern is in the making (Pattern active), confirms a breakout to the upside (B/O Up Confirmed) or confirms a breakout to the downside (B/O Down Confirmed). By selecting the "Unconfirmed" option, you will receive notifications when a pattern breakout occurs, even if it is not yet confirmed. This allows you to stay informed about potential breakout opportunities that are still awaiting confirmation.
   
   
2. Check Pattern Statistics
   
   The pattern statistics make it easy for you to see how successful a pattern is on the asset and timeframe you are watching. You should always check them out before entering a trade. The chart displays the statistics in the upper right corner. These statistics are categorized into two sections: "long" for patterns with an upward breakout and "short" for patterns with a downward breakout.
   
   In the initial columns, labeled as "short" and "long", the identified breakouts are further divided based on whether the risk-reward ratio (R) is below a specified value (< x) or equal to/greater than the specified value (>= x). The following columns represent the count of the events:
   
   
   1. Occ. (Occurrence) categorized according to the values of R from the first column
   2. TP1, TP2, TP3 (Take Profit) - targets 1, 2 and 3
   3. SL (Stop Loss)
   4. T/O (Time Out) - neither stop loss or targets where hit in a certain amount of time
   
   
   
3. Breakout – Entry, Stop Loss and Targets
   
   The indicator automatically displays the entry price line (EP) in grey et the point where the price breaks through the resistance or support levels, indicating that the consolidation period is over. Once a breakout has been confirmed, place a buy order near the EP level for a long position, or a sell order for a short position. Set your stop-loss at the price level of the red stop-loss line (SL) and set your take-profits at the price level of the green take-profit-lines (TP1, TP2, TP3). Note that your risk-reward ratio (R) was calculated based on TP1.
   
   
4. Risk Management
   
   The TRN Consolidation and Range Pattern comes with a built-in risk management feature. Just go to the settings and scroll down to the section "Risk Management".
   Here you can enter your Account Size and the percentage you want to Risk when you enter a position after a pattern breakout.
   
   In the "Trade Management" section, you have the option to define the minimum accepted risk-reward ratio for confirmed rectangles. This means that breakouts of patterns failing to meet the minimum risk-reward ratio will not be considered as confirmed signals.
   If a breakout gets confirmed, the indicator automatically calculates the position size (Quantity). You can read the quantity from the gray entry point line (EP), which is located to the right of the risk-reward ratio (R).
   
   
5. Customization and Settings
   
   The indicator can scan for smaller and larger patterns at the same time. Adjust the consolidation sizes in the indicator settings to align them with your preferences. A larger size results in larger consolidations. Depending on the asset class, the market or the market phase, different sizes can be used for the consolidation detection.
   
   To detect more patterns, increase the tolerance level, even though it may result in lower accuracy. However, be mindful that a higher tolerance level may result in more patterns hitting their stop-loss. Look for a tolerance level that leads to favorable statistics and focus on trading patterns with a proven performance history.
   
   Finally, you have the flexibility to customize various visual elements, such as the color of the pattern and whether to display values like price, target, or risk-reward ratio on your chart. You can also choose where these values appear.
   

Computation Details

The real-time detection of the consolidations and ranges utilizes a unique swing-based pattern recognition. The difference to other swing-based computations is that the pivot points are identified without a look-ahead value. The result is a faster and better real-time detection. Furthermore, the detection of equal lows or highs which form a support or resistance level is based on a dynamic volatility measurement similar to the ATR. The tolerance level unites several internal parameters into one and results in a user-friendly setting.

Risk Disclaimer

The content, tools, scripts, articles, and educational resources offered by TRN Trading are intended solely for informational and educational purposes. Remember, past performance does not ensure future outcomes.

7 de nov.

Notas de Lançamento

The following updates have been made:

The Settings UI and UX has been improved.
Default settings has been updated.