AUTO-FIBONACCI Tool • Pine Script Tutorial

AUTO-FIBONACCI Tool • Pine Script Tutorial

hey what's up traders welcome back to
another video sorry i've been a little
slack with uploading to youtube lately
i've been really busy doing my own
studying into system automation i'm in a
mentor program with nick raj who goes by
the chartist and he teaches how to build
fully automated equity trading systems
and i'm learning some really cool stuff
there really advanced techniques for
back testing and building robust trading
systems so i'm hoping to be able to
share some of the stuff that i learned
from that course in the months to come
i've also been really busy building out
more content for the mastery course so
in today's video i'm going to share a
lesson from the mastery course that i
recorded to answer a student's question
he wanted to know how to work with
fibonacci so today's lesson is going to
be breaking down the automated fibonacci
tool that was created by the trading
view developers and it includes some
pretty cool advanced features such as
detecting pivot points and analyzing
impulsive moves in the markets and then
automatically calculating fibonacci
ratios between those two price points
before we start the lesson can you
please leave a comment in the comments
section to let me know what subject in
part script you are personally
struggling with the most or want to
learn more about and that will help give
me some ideas on what to cover next so
without further ado let's get into the
lesson i hope you find it interesting as
always thank you for your support
there'll be a link to the source code in
the video description and if you want to
increase your luck in the markets you
can always hit the subscribe button i've
heard that helps a lot in this lesson
we're going to be
breaking down the built-in trading view
auto fib tool so this tool right here is
automatically detecting a pivot point
like a an impulsive move in the market
and it is drawing the fibonacci ratios
between
the high and low of that move and it's a
pretty cool tool we're going to break
down the source code to it how it works
now it's a pretty fleshed out script it
has quite a lot of options here you can
turn on and off several uh well over a
dozen
fibonacci levels i've simplified the
script a bit i've turned off a bunch of
the fibonacci levels by default and
we're only working with some of the more
popular fibonacci ratios before we start
i should mention that the way i got the
source code to this script is i just
added the autofib retracement script to
my chart so this is the built-in
automatic fibonacci tool that the
trading view developers created if i
open up the source code by clicking on
this little source code button here this
is what the source code looked like when
i first saw it it's not a lot of
commenting here it's pretty dense code
but it does the job and so i copy and
pasted all of this code into my pine
editor and just made some small
adjustments to make the code a little
bit easier to read a little bit tidier
and i commented some of the sections of
code changed some of the function names
because they weren't very intuitive to
me personally and i just
organized the code a little bit better
so let's start breaking down the source
code first up we have a whole bunch of
user inputs i'm not going to go over all
of these they're pretty simple to
understand
if i open up the settings here we have
our deviation so this is
a multiplier that affects how much
uh price should deviate from the
previous pivot point in order for the
bar to become a new pivot now we haven't
covered pivots yet in the course but i
will create a lesson on that when i get
around to it in this lesson we'll touch
on pivots a little bit as the
script code here depends on
automatic detection of pivot points for
determining which price values to draw
the fib between so by default it sets
three deviations so this affects how the
script detects uh its price points so if
we increase this
now you can see it's detecting bigger
swings in the market
but it's set to 3 by default and i find
that to work pretty well on most markets
the next setting here is depth this is
how many bars
the minimum number of bars that will be
taken into account when calculating
what price points are important for
drawing the fibonacci between then we
have a bunch of like visual options here
you can reverse the ratio so if i click
on that now it's drawing from here down
to
here
if i turn off reverse it's drawing in
the direction of the impulsive move so
it's drawing the fib from the low up to
the high in this particular case
but you can reverse that there if you
want to you can also extend the lines
left and right
i turn these off by default to make it
easier to see what the indicator is
actually doing you can also turn the
prices on and that will display the
price values of each ratio and i added a
little option here i called delete last
line if i turn that off you can see that
the script is now displaying previous
pivots previous impulsive moves that it
detected in historical price action so
this is the pivot points at play this is
showing how the script identifies pivot
points which levels it thinks are
important and you can turn that on or
off in the settings menu i added this
option it's not in the default inbuilt
indicator i just was curious to see how
the script identified its swings
but this is turned on by default so that
you don't see those previous lines you
only see the current line then you can
turn the levels on or off which will
turn the text on or off and you can
change it to percent if you want to
or values then we have our labels
positioned left or right
um and our background transparency then
all of our fib levels here so you can
adjust the levels if you want to
and that will change where the lines
draw anyway that's the user inputs
covered let's get into the code here so
the first thing we do is um determine
our extending parameter so this is the
extend left or extend right for our
lines
we use this later on to tell the script
whether or not to extend the lines left
and right the next thing we do is
calculate the deviation threshold for
identifying major swings in the market
so dev threshold is deviation threshold
and that is calculated by dividing the
atr over the past 10 bars by the closing
price multiplied by 100 multiplied by
our threshold multiplier which is this
setting here and we use this later on to
identify major swings in the market the
next thing we do is prepare our pivot
variables
so these are for drawing and analyzing
the pivots in price action and the line
between them the next thing we do is
create a custom function for detecting
pivot points so this pivots function
takes a price source a length look back
length and whether or not it is a high
this function here returns some tuples
so two values
so the values it returns is either a bar
index and a
price value
or n a a bar index that's n a or nothing
and a price value that's nothing n a so
a float type of n a or an integer type
of n a now let's hide the indicator just
briefly and analyze what this code here
is doing
let's break it down so
down here is where the this custom
function is called so this function
returns two values
the bar index of the pivot point and the
price of the pivot point and it's
passing in a high and a low so it's
getting swing high pivots and swing low
pivots it's passing in our depth value
divided by two so that's this setting
here divided by two so
it's passing in five by default and then
we have these two boolean values here
this is for detecting high swing high
pivots
or swing low pivots if it's set to true
then it treats this code as if it's
trying to analyze a price high otherwise
if this value here is false
then it's trying to calculate the pivot
of a low swing low in price the first
thing is function does is it multiplies
the length by two and then gets a price
value over our look back period so five
bars by default so let's analyze this
bar right here if i put a vertical line
there
we divide our depth by two so we're
looking back five bars by default that's
what this value here would give us it
would give us the high of this bar five
bars ago then it creates a flag boolean
here called okay is this an okay pivot a
valid pivot it's set to true but then we
have a for loop here that invalidates
the pivot if certain conditions are met
so we loop over our look back period
this l2 variable which is our length
multiplied by two so this here would be
our actual depth in the settings menu
because we pass in this value divided by
two so we get half of this value and
then this l2 variable multiplies it by
two and then in this for loop here we
loop up to our look back periods or our
depth so 10 so if we're analyzing this
bar
we loop all the way back to this bar
here and then if we are analyzing swing
highs for pivots it checks if is high is
true
and the price source so in this case the
high
of this loop is greater than
our price value in the middle here then
okay is set to false and this pivot is
ignored so what this code here is
basically trying to do
is identify
a price action pattern that looks like
this so it takes several bars to
identify the swing high either side of
our midpoint so if we have a 10 bar look
back which is
this 10 bars between these two lines
because it passes in depth divided by 2
this is the bar that is analyzing as a
swing high and if this bar's high was
higher than the high of this bar and the
higher this bar
then this would be considered a valid
pivot point
and then we also um check the price
deviation to make sure that
it's a significant swing higher swing
low and price has moved significantly
from that swing high and then it's
obviously the same for swing lows but
opposite direction so it's looking for
this sort of pattern and we have our
midpoint and our
current bar
and the look back our depth our value
and it's looking for a pivot
between those two
uh candles anyway moving on we then get
those values calling this custom
function so i already explained what
these are the index of the pivot high
and the pivot high price the index of
the pivot low and the pivot low price
and when i say index i mean the bar
index so the bar count for that pivot
the next thing we have here is another
custom function that calculates the
price deviation from uh or between two
prices so we have our base price and the
price you want to analyze we multiply
the difference between these two prices
divided by the price multiplied by 100
and that gives us our price deviation
between these two values and this is
used for validating major swings in
price action by
analyzing this value here the next
custom function here is a custom
function for detecting pivots that meet
our deviation criteria so we already
have our function for detecting pivots
we get those pivot values
we also have a function for calculating
the deviation between two price values
this function here basically updates the
line
between our pivots only if the pivot
meets our criteria so if i turn off this
value here so that we can actually see
all of the lines that are being drawn so
you can see that it's actually ignoring
this swing high even though it's higher
than this one that's because of our
deviation setting here if i set this to
2 now it's detecting this pivot as valid
because this move here is now two
deviations from the high and it is
considered a valid uh move in price if
we increase that
uh deviation value this move in here is
no longer considered a big enough move
to be valid so depending on the market
you're trading you will need to play
around with this deviation value to get
the script to be more accurate for now
i'll move this down to two so that
we're getting a little bit more accurate
pivot detection but you can see through
here when price contracted because we're
using the atr in our calculation of
calculating the deviation
it's now detecting a little bit more
noise now that we've lowered that
deviation value but increase that now
it's treating consolidation a little bit
more accurately but anyway that is
something you'll need to play around
with that is how the inbuilt autofib
tool works
in training view it's not perfect
nothing when it comes to identifying
discretionary patterns and impulsive
moves in markets are discretionary
patterns
because how you identify a impulsive
move in the market depends very heavily
on how you read markets so is this
a
impulsive move is that a valid important
pullback or is this a valid important
pullback or is this whole move just one
impulsive move
that is something that will differ
between every trader and every script
that you write and all the parameters
that you input into that script will
affect how your script analyzes those
pivot points there is no black and white
answer to what constitutes a valid
impulsive move and a valid pivot so it
really is up to you how you define your
parameters for detecting these moves but
anyway moving on
let's break down the code for this
function this if statement here checks
if we have a new pivot in the same
direction as the last
and if we do it updates the line so i'll
show you what this looks like in real
time for this we'll use the bar replay
tool so if i put the bar replay tool on
let's do it here so now you can see that
the script is identifying this
as a impulsive move but if we cycle
forward a little bit once we get a
valid deviation from this low
the line will update so it will change
from here to something more like this so
let's keep cycling forward there we go
now we've had a significant move up from
this low and so the line has updated
from here
all the way down to here and this will
continue to happen as price action
develops so if we go even further now
this is the line
and if we keep going even further
eventually we'll get that retracement uh
here's the new price base the new price
low keep going keep going now we have
our impulsive move down to here and the
script is now detecting this as the next
pivot the whole time that this was
happening and this line kept updating
in the same direction the bearish
direction
so if we go forward a little bit more
and you saw that line update just then
that's what this if statement here does
so if we have a new pivot in the same
direction as the last
pivot then we update our line because we
have trend continuation occurring and to
update the line we use the line dot set
x y
to function we pass in the last line the
line that we were already drawing
and then a new bar index so that's the
new bar index and the new price value in
this case that would be a low and that
updates our line to reflect the new
development in price action and
otherwise if these conditions are not
met then we return a null or n a line
and an n a boolean value because we have
had no valid pivot detected so return
nothing and then this else statement
says if we do not have a
pivot point in the same direction as the
last then we check is the deviation
significant so does it exceed our
deviation
threshold
if so the price move is significant and
we have a new line
we need to create a new line between the
pivot points and if you have this turned
on in the settings menu then it would
delete the previous line so this line
here so the easiest way to explain this
bit of code here is to show you what it
looks like on the charts so that's what
happens here if we go forward a little
bit further one more bar
a couple more bars
there we go
what you just saw there this new line
being drawn is this else statement we
just had a significant move after a
valid pivot was detected that was
significant enough to overwrite the
previous one and now this is the new
pivot that we are analyzing with our
fibonacci tool and otherwise if we
detected a new pivot point and a new
impulsive move that was below our
deviation threshold then we just return
nothing and we don't update the line at
all we do nothing we wait for a more
significant move in price action before
we do anything so that's what the pivot
found function does it's a bit difficult
to explain
the code here but if you play around
with this in your own time edit the code
a little bit
play around with some of these values
you'll get a feel for what this code is
doing but basically it's either updating
the line in the same direction or
creating a new line when a new pivot is
detected anyway moving on we then check
if the bar index for the current pivot
high is not n a or in other words we
have a new pivot a new valid pivot then
we calculate the deviation from the last
pivot the last pivot high so this code
here is analyzing pivot highs so
any
swing high that the script is analyzing
is handled by this if statement and then
we get this tuple
value here the id
of our line and the is high boolean
value so we call our pivot found
function here we pass in the deviation
which is used for calculating whether or
not the pivot is a major swing in the
market we pass in this true boolean
value which tells the function that we
are analyzing highs price highs and then
we pass in our index of the last high
and the price value of the last high as
well so that we can analyze the new
pivot against the old pivot and then if
our function here returns a valid line
id so if the line is not
n a or in other words if the line has
been updated then update the price
values and delete the previous line so
this is our setting here if i turn this
on you can see all of our lines just
disappeared except for the last line on
our chart that the script detected so it
deletes the last line
and it updates all of our price values
so it updates the last line id it
updates whether the last pivot was a
swing high or a swing low it passes in
the last bar index that we analyzed it
passes in the previous index of the
pivot and the current pivot value it
saves these two values so that's this
index and this index and it saves the
last price value so this is analyzing
swing highs pivot highs so ph is pivot
high price value that's this value up
here it saves all of those values into
our
var variables here and the script just
continually analyzes and updates these
values when major pivots are detected so
next we have this else statement and
then this is exactly the same code here
that we have here but for swing lows so
if i unindent this
you can see that the code is identical
except that we are analyzing price lows
instead of highs or pivot lows instead
of pivot highs but in pine script if i
were to save this the script will not
compile because the indentation is not
correct so we need to indent and tab all
of this if statement in order to get our
indentation
compiling correctly but all of this code
here is doing exactly the same thing as
this code except for pivot lows anyway
moving on we then have another custom
function here that draws our fib lines
and this function takes two parameters a
price value or a fibonacci price value
and a color value and then it just
creates a new line at the current bar
index and it draws this line from the
last bar index of a pivot to the current
bar index and it just draws a horizontal
line between these two price values
which is our fibonacci
ratio and then it also assigns its
extending parameter so if i turn extend
right on
now the line the extend value here is
set to
extend right but i'm going to turn that
off so that's a little bit easier to see
what the script is currently doing
so here it updates the line if it
already exists otherwise if the line
does not already exist then it just
returns the
new line id and then next up we have our
custom function for drawing the labels
the text labels on our fibonacci tool it
takes a price value to draw out a text
value
and a text color value so this code here
just basically checks
where the label position is set to and
then we use the line.get bar index the
x1 and x2 values in a line is the bar
index
so if the label position is set to left
it gets the x1 value which is this bar
index here and it draws the text
to the left of this bar otherwise if
label position is set to right then it
draws it to the right of the
last bar index or the x2 value of our
line here but i'll set that back to left
and then if our label position is set to
left
we set the label style to style label
right otherwise we set it to style label
left so if we set this to right now this
is drawing to the right and then we set
our line
parameter based on whether we have
selected left or right here
if we've selected left then we align the
text to the right otherwise we align it
to the left
that's just to keep the text closer to
our
drawing tools here and then we have a
couple of strings here that
have a bunch of blank spaces
that's what this little red um character
with the white dot in it is if you
scroll up to the top here you can see
them here as well these are like forced
spaces in the string i'm not sure what
character this is you see this quite
often in a lot of the inbuilt training
view indicators especially in the
settings menu pinecoders tend to use
this character to help format their text
so you can see here that there's a space
between this character this line
character if i were to just replace this
with four spaces and save the code now
when i open up the settings menu you can
see that that space is gone because
pine script gets rid of any white space
in your
strings when drawing onto the chart or
into the settings menu and so if you
want those spaces to not be
trimmed from your string you need to use
this strange red character with the
white dot i'm not sure what this
character is or how you even get it but
you can just copy and paste this into
any scripts you want to use it in and it
will have the same effect
if you want to play around with this
source code and you don't want the
numbers drawing above the line like they
are here and you prefer them to draw in
line with the line then just delete
these special characters anyway the next
thing we do here is create a new label
with all of these values passed in to
the parameters the label also has a
color
of
black with a 100 transparency so that's
why you can't see any label color in the
background normally you would see a
colored label behind the text by setting
it to this value it's basically just
full transparency on a black color and
so it doesn't draw any label background
and that's it for our fibonacci labels
the next custom function here formats
our text so this is for the price values
if i turn on prices you can see that
we now have the prices in brackets
that's what this
function here does and we should
probably put a space in there so that
you have a space between the fibonacci
values like that
um the next custom function here formats
our label text so that's this fibonacci
ratio here if values
is set to
the show levels is set to values then we
show the fibonacci value if it's set to
percent then we multiply that fibonacci
ratio by 100 and add a percentage sign
on the end and that gives us our
fibonacci ratios as a percentage i'll
leave mine as values for now
the next custom function here checks if
price is crossing one of these fib
values so if the price on the current
bar is testing one of these fibonacci
values this custom function will return
true so this code here will check if
price has
dipped above or below one of these
fibonacci ratios and this function is
used later on
to trigger alerts but we'll get to that
in a moment the next thing we do here is
actually calculate our fibonacci values
so if you've watched the previous lesson
on how to manually calculate the
fibonacci values the code here the math
here is very similar first we get our
start price and our end price we use the
line
get function this gets the price value
of our line
so in this case on this particular bar
that would be the high of this bar so
end price would be set to the price
value at the end of our line which is
this bar's high price here and start
price is set to the starting price of
the line
so the line starts from the low here and
draws to the high
so our start price would be this bar's
low and our end price would be this
bar's high unless reverse is set to true
so if you turn on reverse in the
settings menu
it flips these values around
but i'll turn that off because i find
reverse fibonaccis to be a little
confusing not sure why you would use
them but i'm sure there are reasons to
the next thing we do is calculate the
price difference between our starting
price and our ending price that's what
this diff value is and then once we have
these values all of these values here we
can use these to calculate our fibonacci
price in the next custom function here
which is called process level and this
function this custom function processes
the given fibonacci level by calculating
the fib drawing the line and label for
each fib
detecting alerts so if one of these
fibonacci levels is being tested by
price section and it also fills the
background color of our chart between
the last fib so each fib is filled
between to get the background color here
if you set background transparency to
100 that will get rid of those
background fills let's set that back to
85 and break down this custom function
so here we have if show is set to true
and this show value is determined by
if the value is ticked so if i took that
on you can see it's now showing an extra
fibonacci level there if i turn it off
it goes away that's what this
parameter is for so if show is true then
this code gets executed we calculate our
fibonacci price using this formula here
this mathematical formula then we get
our line id by calling our draw fib line
function from up here this guy here that
draws the line once we have our line id
we can then draw our label so that draws
the text label next to the fibonacci
line and that's this function here
then we check if price is crossing the
current fibonacci line that this
function is processing if price has
crossed that line then we trigger an
alert that says autofib plus
the ticker id so in this case that would
be ada usdt is crossing level and then
it passes in the fibonacci value that
it's crossing and then the next thing we
do here is check if we have a previous
fibonacci line value if we do have a
previous fibonacci level then we fill
the line between those two levels with
the line fill function so the line fill
function takes a current line id and a
previous line id so in the case of this
lower fib that would be the lower one
and the 786 that would be these two
values here these two lines then it
passes in the color so the color is
whatever you've set in the settings menu
here combined with the overall
transparency setting and then once all
of this code has been executed and we've
processed each fibonacci level we return
the line id that we created up here and
then otherwise if we are not showing
this current fibonacci level we return
the previous line id
which is what we used to fill
between the two lines like i just
explained and then that's pretty much it
for the script the final thing here is
we get a whole bunch of user inputs all
the fibonacci levels from the settings
menu and this is all the same code all
grouped under fibonacci levels under
this little subtitle here all of this
code is just copy and pasted and the
level numbers are changed none of them
have titles because it's obvious what
they are they're fibonacci ratios they
have a checkbox to turn them on or off
and they have a color parameter here so
you can change the color of each fib if
you want to and then once we get all of
our fibonacci user inputs
then we process each fibonacci level one
by one using the process level function
and this function here basically
combines everything above it all of this
code here that we just went over is
processed
for each fibonacci level but only once a
significant pivot is detected so this
script combines pivot detection with
fibonacci calculation it's quite an
advanced uh script actually just in
terms of all the layers it has and how
fleshed out it is in terms of its
drawing capabilities and everything all
of the formatting the settings menu it's
quite a powerful script not a hell of a
lot of code considering what it does
but anyway that's it for this lesson
that is how the autofib script works
again the best way to understand what
this code is doing is to do what i did
which is copy this source code into your
editor and just play around with some of
the values for example maybe you want to
try drawing a horizontal line at the
pivot high and pivot low to try and
isolate exactly where in the code the
pivot high and pivot low prices are
detected and then you could reverse
engineer how the script detects pivot
points for
any other use case you might have for
analyzing impulsive moves and price
action and then if i get out of my bar
replay tool
and we cycle through some markets
you can see the tool at work again it's
not perfect it is going to miss some
impulsive moves some of you might draw
the fib from this swing low to the swing
high for example but this script
requires
a decent deviation
from the previous swing lower swing high
in order to consider it a major move in
the market all right thanks for watching
everybody i hope you found that
interesting and useful in your own
trading and coding make sure to
subscribe because i'll be back very soon
with some more content about trading and
plan script especially system
development as i get more proficient
with that side of things but for now
thanks for watching take care best of
luck with your trading and i'll speak
with you in the next video
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