DAY TRADING TOOL in Pine Script

hey what's up Traders welcome back to
the channel in today's video I'm going
to be doing something a little different
to the past few videos I've been doing
and that's because it's just a simple
tool that I've built here to assist with
day trading so what you see on my chart
right now this white vertical line is
the beginning of a new day's trading
session so this is the very first bar of
today's trading and the middle white
line is today's opening price the red
line is yesterday's high and the blue
line is yesterday's low and this Aqua
line is you can see there's two Aqua
lines here these two lines are the five
period daily ATR multiplied by half so
this is a half ATR half daily ATR
distance from today's opening price one
of the most important abilities of a day
trader is their ability to predict how
much a market can move in a given day
because you tend to open and exit
multiple trades in some cases but
usually even if you open only one trade
the whole point of data trading is to
have that trade closed by the end of the
day so how do you know where to close
your trade well there's obviously
infinite exit reasons you could have but
one important factor to consider is how
far has the market moved today in
relation to its most recent volatility
so here if price action comes up to this
line here then I know that we have
exceeded a half five day ATR distance
so the ATR is adding up the past five
days and we know that if on this five
minute chart price session gets up here
let me change this to a 180r
now this is quite rare that a market
would move a full ATI in a day hey guys
uh while editing this I realize I should
probably substantiate that claim so I
just quickly made a little script here
that counts in the red number here how
many bars on the daily chart printed
above the five day ATR you can see
there's a 41 chance of that happening so
it's not necessarily rare but it is
uncommon that a day will print a higher
range than its five-day ATR and we know
that to be true because we know that
markets tend to consolidate more than
they tend to Trend but anyway just
wanted to make sure that I'm not saying
things that aren't true so let's get
back to the video so it's going to be
rare that the market will move this
entire distance in a day that's why I
prefer to set it to something like 0.5
or 0.6 that's much more conservative but
now we can reference today's opening
price throughout today's trading session
you can see that once we opened and we
trickled up here we retested it and took
off from there
so there's a good chance this could act
as support if price comes back down here
same with yesterday's low so we have a
Zone here to reference for potential
buying opportunities we haven't uh sort
of a recent impulse leg here we are on a
downtrend so you might not want to be
looking for long trades but again day
trading we're not too concerned with the
long-term higher time frame Trend we're
just concerned with the very most recent
price action especially on these lower
lower time frames for swing trading time
frames yes the longer term trend is
important or directional bias is
important but when you're day trading
five minute chart there's so much noise
in a given day that it really doesn't
matter that much what your directional
bias is you're just trying to capture
little swings in the market and just to
quickly demonstrate this concept this is
Matt from the future recording this a
new day is begun trading and I recorded
this video that I'm editing yesterday if
I throw on the bar replay tool to a bar
just before today's trading began these
are yesterday's levels I was recording
around this time you can see that the
market did in fact test this Aqua line
this five day fifty percent five day ATR
and it also retested yesterday's high
and now we're consolidating up here so
if I was day trading yesterday which I
wasn't because I was recording videos
for the Mastery course I can see a setup
here that would have caught my eye it
would have been interesting maybe a
tradable opportunity you can see we had
a triple top here intraday and then we
finally broke through that if I were to
go long on this breakout I'd probably
have a pretty tight stop being a day
trading setup you can see that this line
would have been a great spot to
potentially take profit when we started
to struggle now in this case this is a
60 ATR this is just an arbitrary number
this is just to be conservative because
we know that 40 of the time the market
will not move a full ATR during the day
so having a lower ATR multiplier makes
sense to be more conservative let's even
if we say it's 70 when the price action
tested this range this area up here and
started to struggle this would be a
great spot to take off some risk take
some profit move your stop to break even
maybe under these those and then see if
the market can continue higher it in
fact did and then we've got this nice
big double top here had I been involved
in a trade here this sort of Candlestick
pattern a swing High bearish engulfing
candle is a pattern I like to trade
because it's a simple rules-based
pattern if we throw on an RSI here I can
guarantee this Market would have been
overbought at this point yeah there we
go we have a swing High bearish
engulfing candle at yesterday's high
with the RSI overbought That's a classic
exit reason that I use very frequently
especially with this double top and RSI
Divergence great place to take off a day
trade now a swing trade you might want
to hold that position because it looks
like we might break out today to new
Highs but we're talking about day
trading here intraday trading not
holding trades for multiple days so so
anyway that's what this tool does let's
break down the source code so we're just
dealing with a regular indicator here
overlay is set to true so we're drawing
over press action we're getting some
user input we're getting our higher time
frame reference reference time frame our
ATR length and our ATM multiplier for
drawing these Blue Aqua lines next thing
we're doing is creating a non-repainting
security function this isn't necessary
we could just use this line of code on
these three lines here I just happen to
base this script off a higher time frame
indicator it was my high time frame high
low that's a public open source script I
believe you want to check that out it's
very similar to The Script except that
it draws the daily high and low on all
price action this particular script only
draws the most recent days high and load
that's just to reduce clutter if we're
drawing these lines over all of the bars
in our chart we get pretty overwhelmed
with too many lines and so the way I've
written this script is it only draws the
most recent days levels now with this
non-repainting security function I
actually read through the documentation
recently and found this version
of the non-repainting code it's pretty
similar to mine but let's stick with
best practices and we'll use the code
from the training view documentation
here paste those custom function
parameters into the security function
parameters here so I'll leave a link to
this documentation under the video if
you want to read about this I don't want
to go into this in today's video because
it's quite a complicated subject that
I've covered in the past so go and check
the videos on my YouTube channel if you
want to understand this subject more
intimately but for today's lesson this
will do all you need to know is that
this code here will get the daily charts
high and low without repainting so let's
save the code and make sure that that is
in fact what's happening here yep
perfect
so the non-repainting security function
means that it's not going to get today's
high and low it's going to get
yesterday's high and low over real-time
price action repainting is a misleading
term for some of the behaviors that our
scripts can do when referencing higher
time frames but for today's lesson all
we want to do is draw yesterday's high
and low over today's price action this
function achieves that so the next thing
we need to do is get our higher time
frame price data data if you're
Australian
we have three variables here higher time
frame High higher time frame low higher
time frame ATR so to get the higher time
frame ATR we pass in a price Source just
like we would to get the high and low
but this price Source or this expression
is the inbuilt ATR function with our ATR
length input so 5 period ATR by default
from this resolution from this time
frame the daily chart from the current
symbol that we have loaded on our chart
and then we multiply that ATR value that
daily ATR value by our ATM our
multiplier input now that's all the
information we need to plot this
information onto our chart so let's move
on now this is completely optional I
couldn't as far as I know with
pinescript there's no way to just draw a
vertical line like this if you hold alt
and press V on a Windows computer
that will just drop a vertical line on
your chart and no matter how far you
scroll out
that vertical Lane will draw all the way
to the top and bottom of your chart
however when it comes to drawing lines
on our charts which is how I achieve
this vertical line here we can't tell
Pine script to extend that line
indefinitely up and down
for whatever reason you can only extend
left and right so I came up with a
cheeky solution here because I don't
know what price scale is going to be on
our chart what I've done here is just
write a little block of code that stores
the highest price that this this chart
ever reached and then we draw our
vertical line from that highest price
down to zero
so it extends indefinitely to the
downside well to zero but to the upside
it only extends to the highest price
that our chart ever achieved now I could
probably get rid of this to be honest
and instead of
using the highest high I could just put
in something like nine nine nine nine
nine nine nine nine
save our code and see that compiles that
might be too many nines there we go
perfect so I might just leave that as it
is for now because I doubt anyone's
going to be trading a market that has a
value higher than this but if you do
um just keep this block of code in your
script and it will work just fine but
for now to keep things simple let me get
rid of of that block I can also get rid
of this debug plot code
save my script and perfect now that we
have our higher time frame information I
now need to change this comment to new
day and line variables what we need to
do now is store the line object for all
of the lines you see on my chart here
now I can actually get rid of this new
day of Boolean that doesn't actually get
used in the script anywhere I'm just
noticing so there's a bit of tidying up
there
so the first thing we need to do
is store all of our line variables
and changes to open price and line
variables so open price is going to
store the opening price of the first bar
in today's trading session
then we have one two three four five six
lines here so that's one two three four
five six includes this
um Center Line This vertical line that's
new day line and then we have open price
line which is this middle white line we
have upper line which is this line here
we have lower line which is this lower
ATR line here then we have yesterday's
high
and yes it is low
to make this a little more intuitive
I'll add ATR in here
upper ATR ATR ATR ATR
save that and I'll also add line on the
end
of these two so before we draw these
lines on our intraday price action we
need to get the ATR ranges so this is
our ATR high and our ATR low
so to get that we simply get our open
price this white line and we add our
higher time frame ATR to that line and
subtract it for our ATR low line and
that gives us our day's potential
volatility range at the moment I've set
this to 60 percent
so these lines are representing 60 of
one five day ATR so we've had some
pretty strong trending price action in
the past five days so our ATR is quite
wide there's no guarantee that price
action will move this far today but it's
a reasonable estimate that at the end of
the day
there is the potential that price action
could fall this far or rise as far and
obviously could even exceed that
significantly but at least we have some
price targets some price targets to
reference like for example if we get
down to these lows here that would be a
60
ETR move that could be a great place to
take profit on any short positions that
we may be lucky enough to capture
Falling Towards this Lane for example if
price action does break this low retest
it we get short we might want to try and
hold this trade if we can maybe with a
trailing stop until we get down to this
line here and then we could potentially
take off all of our position or part of
our position and manage that trade much
more conservatively when we get down to
the 60 ATR move
especially in conjunction with previous
important structure levels but anyway
this is not a trading lesson this is
just a trading tool and an example
script so let's wrap up today's lesson
with all of the magic that draws this
stuff so first we need to detect a new
day that's done using the change
function in the TA Library so ta.change
will detect a change in the time of the
daily chart and what I should probably
do here is change this to our res input
that way if the user wants to plot
weekly time frames weekly levels or even
four hour levels let's have a look at
what it looks like with a four hour
level let's change this to four hours
there we go
so now we're plotting the most recent
four hour bars levels and the four hour
five period ATR levels so you can see
this is quite an interesting little tool
it's a simple tool but with a bit of
creativity it could make for a pretty
useful intraday trading tool so once we
detect the change in that higher time
frame bar
we then save that Bar's opening price so
in the case of these current settings a
new day began on this bar so we saved
that opening price remember the opening
price is used to calculate our ATR
levels up here and I'm just realizing we
don't actually need these ATR high and
low variables here because they're
actually overridden here anyway so get
rid of them let's keep the script as
lean as possible and yeah so we're
saving the open price we're deleting all
of the previous lines so on this day
wherever this day started this one
started at 7am so this day would have
started at 7am there all of the lines
that were drawing on this previous day
get deleted when a new day is detected
so we delete all of the lines on the
previous bar that's what this little
historical operator reference is doing
it's deleting all of the lines on the
previous bar and then recreating them to
create a new line we just use the
line.new function we pass in the bar
index that we want to draw the line from
so in this case that's going to be the
bar index of the first bar of the
trading session which is this bar here
where this white vertical line is and
then we need to pass in a price so let's
cover our price lines first for our open
Price Line we just pass in the opening
price and then we need to tell it so now
we're telling it to draw a line starting
here
and then we tell it to draw it from
this bar index to one bar index ahead so
we're drawing the line from one bar
across to the next bar
and then I've passed in the extend dot
right parameter to all of these lines
and so the line is being extended from
here all the way to the right
indefinitely same for all of our lanes
so we have our upper ATL line which is
doing exactly the same thing but we're
adding a higher time frame ATR to that
and subtracting it for our lower ATL
line we are drawing yesterday's high and
yesterday's low extending all of these
to the right and that's how we get these
lines on our chart and then this new day
line is doing exactly the same thing but
we're not extending it because we are
drawing it from 9999999 all the way down
to zero and that gives us this
solid white vertical line and that's it
for the script pretty simple I thought
it was a pretty interesting tool that
some of you might find helpful in your
own trading you can obviously build a
whole strategy around this if you wanted
to by building on this script but for
now that will do it for today's lesson I
hope you found it interesting if you
want to learn more about panscript check
out panshipmastery.com and I'll speak
with you in the next lesson take care
and best of luck with your Trading