Optimized ICT Buy and Sell Signals

anteontem

I understand that you're seeing too many signals, which can make the strategy seem cluttered or overly reactive. To **optimize the strategy** and reduce the frequency of buy and sell signals, we can add a few improvements:

### Optimization Approach:
1. **Increase Lookback Periods**: By increasing the lookback periods for **Market Structure**, **Order Blocks**, and **FVGs**, we can make the strategy less sensitive to every little fluctuation and focus more on stronger trend shifts.
2. **Trend Confirmation with EMA**: Use the **EMA 9** as a trend filter. Only generate signals when the price is above the **EMA 9** for bullish signals and below the **EMA 9** for bearish signals.
3. **Limit Signals to Stronger Price Action**: For example, we can reduce the number of signals by requiring price to be closer to significant **order blocks** or **FVGs**, or only trigger signals when there is a **break of structure** (BoS) and confirmation of a trend reversal.

---

### Optimized Code

```pinescript
//version=5
indicator("Optimized ICT Buy and Sell Signals", overlay=true)

// --- Input Parameters ---
emaLength = input.int(9, title="EMA Length")
fvgLookback = input.int(10, title="Fair Value Gap Lookback Period")
orderBlockLookback = input.int(30, title="Order Block Lookback Period")
minGapSize = input.float(0.5, title="Min Gap Size (FVG)") // Minimum gap size for FVG detection

// --- EMA 9 (for trend direction) ---
ema9 = ta.ema(close, emaLength)
plot(ema9, title="EMA 9", color=color.blue, linewidth=2)

// --- Market Structure (ICT) ---
// Identify Higher Highs (HH) and Higher Lows (HL) for Bullish Market Structure
hhCondition = high > ta.highest(high, orderBlockLookback)[1] // Higher High
hlCondition = low > ta.lowest(low, orderBlockLookback)[1] // Higher Low
isBullishStructure = hhCondition and hlCondition // Bullish Market Structure condition

// Identify Lower Highs (LH) and Lower Lows (LL) for Bearish Market Structure
lhCondition = high < ta.highest(high, orderBlockLookback)[1] // Lower High
llCondition = low < ta.lowest(low, orderBlockLookback)[1] // Lower Low
isBearishStructure = lhCondition and llCondition // Bearish Market Structure condition

// --- Order Blocks (ICT) ---
// Bullish Order Block (consolidation before upmove)
var float bullishOrderBlock = na
if isBullishStructure
bullishOrderBlock := ta.valuewhen(low == ta.lowest(low, orderBlockLookback), low, 0)

// Bearish Order Block (consolidation before downmove)
var float bearishOrderBlock = na
if isBearishStructure
bearishOrderBlock := ta.valuewhen(high == ta.highest(high, orderBlockLookback), high, 0)

// --- Fair Value Gap (FVG) ---
// Bullish Fair Value Gap (FVG): Gap between a down-close followed by an up-close
fvgBullish = (low[fvgLookback] < high[1]) and (high[1] - low[fvgLookback] > minGapSize) // Bullish FVG condition with gap size filter

// Bearish Fair Value Gap (FVG): Gap between an up-close followed by a down-close
fvgBearish = (high[fvgLookback] > low[1]) and (high[fvgLookback] - low[1] > minGapSize) // Bearish FVG condition with gap size filter

// --- Entry Conditions ---
// Buy Condition: Bullish Market Structure and Price touching a Bullish Order Block or FVG, and above EMA
longCondition = isBullishStructure and (close <= bullishOrderBlock or fvgBullish) and close > ema9

// Sell Condition: Bearish Market Structure and Price touching a Bearish Order Block or FVG, and below EMA
shortCondition = isBearishStructure and (close >= bearishOrderBlock or fvgBearish) and close < ema9

// --- Plot Buy and Sell Signals on the Chart ---
plotshape(series=longCondition, location=location.belowbar, color=color.green, style=shape.labelup, title="Buy Signal", text="BUY", size=size.small)
plotshape(series=shortCondition, location=location.abovebar, color=color.red, style=shape.labeldown, title="Sell Signal", text="SELL", size=size.small)

// --- Highlight Order Blocks ---
plot(bullishOrderBlock, color=color.green, linewidth=1, title="Bullish Order Block", style=plot.style_circles)
plot(bearishOrderBlock, color=color.red, linewidth=1, title="Bearish Order Block", style=plot.style_circles)

// --- Highlight Fair Value Gaps (FVG) ---
bgcolor(fvgBullish ? color.new(color.green, 90) : na, title="Bullish FVG", transp=90)
bgcolor(fvgBearish ? color.new(color.red, 90) : na, title="Bearish FVG", transp=90)

// --- Alerts ---
// Alert for Buy Signals
alertcondition(longCondition, title="Long Signal", message="Optimized ICT Buy Signal: Bullish structure, price touching bullish order block or FVG, and above EMA.")

// Alert for Sell Signals
alertcondition(shortCondition, title="Short Signal", message="Optimized ICT Sell Signal: Bearish structure, price touching bearish order block or FVG, and below EMA.")
```

### Key Optimizations:

1. **Increased Lookback Periods**:
- The `orderBlockLookback` has been increased to **30**. This allows for a larger window for identifying **order blocks** and **market structure** changes, reducing sensitivity to small price fluctuations.
- The `fvgLookback` has been increased to **10** to ensure that only larger price gaps are considered.

2. **Min Gap Size for FVG**:
- A new input parameter `minGapSize` has been introduced to **filter out small Fair Value Gaps (FVGs)**. This ensures that only significant gaps trigger buy or sell signals. The default value is **0.5** (you can adjust it as needed).

3. **EMA Filter**:
- Added a trend filter using the **EMA 9**. **Buy signals** are only triggered when the price is **above the EMA 9** (indicating an uptrend), and **sell signals** are only triggered when the price is **below the EMA 9** (indicating a downtrend).
- This helps reduce noise by confirming that signals are aligned with the broader market trend.

### How to Use:
1. **Apply the script** to your chart and observe the reduced number of buy and sell signals.
2. **Buy signals** will appear when:
- The price is in a **bullish market structure**.
- The price is near a **bullish order block** or filling a **bullish FVG**.
- The price is **above the EMA 9** (confirming an uptrend).
3. **Sell signals** will appear when:
- The price is in a **bearish market structure**.
- The price is near a **bearish order block** or filling a **bearish FVG**.
- The price is **below the EMA 9** (confirming a downtrend).

### Further Fine-Tuning:
- **Adjust Lookback Periods**: If you still find the signals too frequent or too few, you can tweak the `orderBlockLookback` or `fvgLookback` values further. Increasing them will give more weight to the larger market structures, reducing noise.
- **Test Different Timeframes**: This optimized version is still suited for lower timeframes like 15-minutes or 5-minutes but will also work on higher timeframes (1-hour, 4-hour, etc.). Test across different timeframes for better results.
- **Min Gap Size**: If you notice that the FVG condition is too restrictive or too lenient, adjust the `minGapSize` parameter.

### Conclusion:
This version of the strategy should give you fewer, more meaningful signals by focusing on larger market movements and confirming the trend direction with the **EMA 9**. If you find that the signals are still too frequent, feel free to further increase the lookback periods or tweak the FVG gap size.