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what's up traders in this video i'm
going to be breaking down
the settings menu for my latest version
of the ultimate pullback indicator
so the ultimate pullback indicator is a
script that i've been working on since i
began trading in 2017.
i have been working on it actively for
all this time and i've been improving it
over those years based on things i've
learned about trading and pine script
obviously
and
this latest version is
updated to pinescript version 5. it
includes a bunch of new enhancements
improvements it includes automated
trading functionality through autoview
and pine connector
it
i mean it has everything you could ever
want out of a pullback indicator and if
it doesn't have everything you want and
you subscribe to it
shoot me an email and maybe i can add
that feature to it but in this video i'm
just going to be breaking down the
settings menu the
various options you have to use with
this indicator this video is intended
for
free trial members and paid users of
this indicator to guide them through
what all the settings do
so if you're not into that if you're not
interested in this indicator you might
not find this video very interesting but
if you are a pine scripter someone who
is interested in learning pine script
you might just want to watch this video
for ideas to implement into your own
scripts because there are some pretty
cool features in the script the reason
why
i am charging money for this script is
one it takes me a lot of time to
maintain an update and i spend a lot of
time on this script i've exerted all of
my expertise into the script basically
all of my knowledge about trading
particularly this style of trading pull
backs momentum trend continuation
trading and pine script
this is a script that i use in my own
trading i've currently been running it
for two or three months now automating
my trading through pine connector and it
has been profitable for me i'm not
saying it will be for you depending on
the settings you select
but it has proven itself to me and i'm
ready to release this new update before
we begin i'll show you a quick glimpse
of the source code to give you an idea
of how much effort and time has gone
into this
script this project of mine there are
three scripts that accompany it
technically two that you get access to
and one brand new library script that
uses
features of panscript five that if
you're not a pine script coder you won't
be interested in that so in short this
is a trading tool it's intended to
assist in your trading i use it in my
own trading to assist in my training
both manual and automated trading it
also generates alerts things like that
to help me manage my positions
anyway that's all i had to say
let's get into the video now i'm not
gonna lie there is a lot to cover here
on this indicator it's a very advanced
indicator script with a lot of different
bells and whistles and features i would
just encourage you to stick to what you
know and only experiment once you get
comfortable with the indicator you don't
need to adjust any of the settings to
use this the default settings should be
fine on a lot of markets out there for
the most part i use this indicator in my
own trading with the default settings
that's why i've made them the default
settings but if you do want to get
experimental and creative and start
testing different variations of
the techniques that this indicator
employs i definitely encourage you to do
that there are
hundreds of ways to trade this indicator
this strategy profitably certainly
thousands of ways to trade it
unprofitably
but there are at least dozens to
hundreds of ways that you could set this
indicator up in totally different
configurations for different markets and
time frames and find it to be profitable
one word of caution would be don't
overwhelm yourself don't go down the
rabbit hole of over optimization
i do get emails sometimes from traders
where they are just trying to do too
much with this indicator just because
they can in trading less is more simple
is better just because you can use all
of these settings and tweak them and
change them doesn't mean you should
um i would only tweak a few at a time
and keep in mind that you're trying to
make a strategy that is robust across
multiple markets not one that is perfect
for a single market that is a road to
insanity quite frankly if you spend too
much time optimizing a strategy for a
single market and time frame you can
send yourself crazy
and you'll never find profitability in
trading sometimes good enough is good
enough don't spend your life searching
for the perfect setup just find one that
is profitable within your risk tolerance
that makes a decent return and performs
in a way that you're comfortable with
and then just trade that for a while and
then maybe over time you'll come up with
different ways to improve your approach
and maybe then you should come back and
experiment with adjusting some of these
settings personally i keep this simple i
trade it with basically just a
one-to-one target and two positions and
i trail my stop-loss on my second
position that's the common way i trade
this sometimes i'll trade it with one
position and shoot for a greater than
one to one risk reward profile depending
on the market and time frame and market
conditions but anyway that's my advice
for this script and i'll go into more
detail in other lessons on techniques
and profitable trading approaches with
this indicator that you can use and
explore so let's open up the settings
menu if i click
if i click on this little cog here
that'll open up the settings interface
and this is what the default settings on
so the first thing to note is that all
of the settings are organized into
categories so up the top here we have
our display settings
and
all of these settings control what draws
onto our chart
so we have draw p labels here this is
what controls our profit and loss labels
if i turn that off these labels go away
and these labels show how many pips the
trade won or lost so if i turn that back
on and i hover over this label you can
see it tells me how many bars i was in
the trade for what my max adverse
excursion was in pips
and a percentage so mae and mfe a max
adverse excursion and max favorable
excursion
that's basically just how far price went
against us before hitting our profit
target in the case of an mae and in the
mfe the max favorable excursion it's how
far price went in our favor before
turning around and stopping us out these
are useful metrics to track in your back
testing
to give you an idea of whether you're
giving your trades too much room to
breathe or too little room to breathe
but you can turn these off if you don't
want to see them by clicking on this
check checkbox here
you can also turn off your stop-loss
size so you can turn all the labels off
if you want to and then the script will
look like that
it's a little bit cleaner but less
information i normally leave these on
especially if i'm back testing next up
we have draw extended stops and targets
this just draws your stop loss and your
take profit until one of them is hit so
if i zoom out a bit here's a good
example the script kept drawing i'll
take profit all the way until this bar
here hit it also useful for back testing
next we have our draw back test results
so if i turn this on
this will turn on the inbuilt
back tester system
so in this indicator version of the upi
i've built out a custom backtester
system and this system displays your
starting balance your return in dollars
your return in percentage your max
drawdown as a percentage the pips that
it returned and the ending balance now
it's important to stress that this is a
rough
estimate very rough guide it doesn't
take into consideration
times when price
gets really close to your stop-loss
and maybe stops you out based on the
spread so here's an example here
even though this trade eventually lost
um when price got this close to the
stop-loss right here there is a chance
depending on the market you're trading
the time frame and the spread
there is a chance that you might have
been stopped out but the script doesn't
detect that because the script cannot
know the spread
of the current market and so i've tried
to make it as accurate as possible but
you need to factor in the possibility
that a number of trades were actually
losing trades but the script recorded
them as a winning trade there are also
occasions when price might have just
tagged your take profit and the script
recorded it as a win but then price
reversed and went on to stop you out for
a loss or for breakeven but the script
doesn't record that this is an
unfortunate limitation of pine strip
that we can't simulate the spread so
that is why i always strongly recommend
that you back test thoroughly manually
and don't just blindly trust any script
but certainly not this backtester system
here that being said i have done some
testing and this tester system does seem
to be quite accurate on most markets and
time frames i've only tested it on forex
markets but aside from the small number
of trades that may have been losing
trades or may have been falsely recorded
as winning trades it seems pretty
accurate and the way it works is it
simulates risking a percentage of your
account balance
on every trade that it detects so if i
open up the settings menu and i scroll
down to the
backtester settings
category
right here
here you can input your starting balance
and your risk per trade so by default
it's risking one percent per trade but
if i wanted to i could bump this up to
let's say two percent and you can see
how the simulator the back tester
simulator would have performed with that
level of risk we also have in the top
right here our
performance stats
and that is this setting here so if you
don't want either of these on your chart
you can turn them both off you can also
change the location of the stats display
so using this drop down here tr stands
for top right
bottom right and bottom left so if you
wanted to you can move it to the bottom
left for example
and the display will move down here you
can also
turn on a bunch of extra stats here if
you want to so we could see our
breakeven rate our win loss rate for
long shorts and our max adverse
excursion and max favorable excursion so
this is what it would look like to have
all the stats turned on now i'm not
going to go over all of the settings in
detail because each setting does have a
little tool tip here that explains what
it does if you hover your mouse over
these little eye information icons there
is a tool tip that will explain what
that setting does but i'll quickly
scroll through the settings and explain
what each section does so here's our
stops and targets section
you can change your stop loss to a fixed
pip amount by default it's disabled if
you change this to any number other than
zero then your stop loss will be a fixed
pip distance from your entry instead of
an atr based stop which is the default
setting so by default we have a one atr
stop loss which means the script
calculates the distance from your entry
to the swing high the recent swing high
of the setup
and then adds one atr to that distance
to get your stop-loss price
but obviously you can change this if you
want to you can have it tied a stop
or you could have
a wider stop it's worth playing around
with this on different markets and time
frames um for example on a daily chart
you might want a much tighter stop loss
than on an intraday chart so you can
control your stop loss and targets under
this section you can also control your
risk reward profile here by default it
sets all one to one but you can change
that here
you can set your breakeven distance so
for example if i wanted to i could set
my risk reward to two to one and my
breakeven to one to one
here is an example of a trade being
stopped out for break even so we entered
short here stop loss was up here price
came down to hit our one to one
breakeven target which is the blue line
and then our stop-loss came down to
break even and then this bar here came
up to stop us out for break even and has
a blue cross above it to indicate that
that was the case so that's our basic
uh stop-loss and risk reward settings
you can also adjust your minimum risk
reward to pull back origin let me reset
these first of all what this setting
does is it's a filter that filters out
any trades that do not meet the minimum
requirement of the minimum risk reward
profile to the pullback origin and the
pullback origin
is the lowest body
of the recent pullback
so we had an impulsive move down here
from price action we put in a new low
this was the wick of the low but this
these candle bodies here
is the pullback origin that the script
references
you can change that though in the
settings if you want to you can change
the pullback origin reference to wix
so if i change that to wix then the
script will
use this as the pullback origin and if
you come up to the style
section of the settings menu here and
you scroll down
to the bottom of the settings we have
our bullish and bearish
pullback
plots here they're all turned off by
default but if you want to see how the
script is detecting pullbacks you can
turn these on
so if i turn
bearish pullback close and bearish pull
back low on
you can see now where the script is
or how the script is detecting lows in
the pullback so as price moves lower the
blue line represents the wicks and then
at the bottom as brass begins to pull
back towards the moving average the red
line is our pullback origin body and the
blue line is our pullback origin wick so
turning this on is good for debugging
and just seeing how the script detects
the pullbacks it's not a perfect system
there are times especially during
consolidation where the script will
falsely detect pullbacks
there's not really any way around that
that's just a limitation of code in
general it's impossible to make a script
that can read a market and all the
nuances and subjectivity
involved in a market
like the human eye can that's why i
always encourage traders to
use discretion when using this indicator
it can be automated profitably and i am
running this through pine connector and
automating my trading on this script
using this strategy but it does perform
better and it is more accurate and more
profitable if you trade it manually with
discretion and you avoid any trades that
do not look like a valid pullback for
example here's a great example here
price pulls back we get an entry here
that trade gets stopped out and then
price moves back below the moving
average and the script begins looking
for another pullback
but we are basically in consolidation
here and then we detect another signal
this is an example of a signal i would
not take i would use my discretion to
not take the signal because we are
technically in consolidation even though
we've pulled back after a move below the
moving average using my human eye i can
see that this is not an ideal setup this
is not a high quality pullback setup and
so i would not have taken this and i
would have avoided this loss if you're
automating the script
it will just take this trade regardless
and even though it might be profitable
to trade every signal blindly that the
script detects depending on the settings
you've set up for the strategy it's
important to mention that the script is
not 100 accurate and no script is
when it comes to detecting market
conditions anyway moving on let me show
you what this minimum risk reward to
pull back origin does if i set this to
one to one and we zoom out you'll see a
bunch of signals
taken away are now ignored and our win
rate has dropped significantly our trade
count has dropped significantly the
reason for that is the script is now
only taking pullback trades where our
target
our profit target from our entry
falls above
the low
of the pullback so in this case the
pullback origin is set to closing price
and so this red line
needs to be beyond our take profit and
you can see that a whole bunch of trades
here have now been invalidated through
this actual trending market because when
a market is heavily trending
quite often it won't give you a
one-to-one risk reward to the pullback
origin so that's something to keep in
mind but depending on the time frame
you're trading the market you're trading
you may want to filter trades based on
the risk reward to the structure of the
pullback
if i change this to wic we'll get a lot
more trades being detected
nearly double
and that will obviously affect your win
rate as well so i encourage you to play
around with the filters and see what
works best for you and the way you like
to trade
so that's our stops and targets section
next up is our moving average section
this is self-explanatory you can select
the moving average type you want so
there's all different types here um ma1
is your main moving average you may find
certain moving averages to be more
profitable on certain markets and time
frames so playing around with the moving
average type and moving average length
is a good idea in your testing so here
i've changed the moving average to a 100
period sma and it has affected our
metrics a decent amount there's also ma
type 2 which is a filter moving average
so if i set this back to a 50 ema
we could use a 200 sma as a secondary
filter so now this big thick blue line
is our 200 sma and now the script will
only take long trades
if the setup occurs above the 50 ema and
the 200 ema
so any long trades that are detected
below the 200 sma but above the 50 ema
will not be considered valid and same
for short trades this script will not
take any short trades that occur below
the 50 ema but above the 200 ema so this
is just another filter to try to keep
you on the right side of momentum and
the trend again i encourage you to play
around with this filter based on
whichever markets and time frames you're
trading to disable the second m8 just
set it to zero
length and then the script will stop
using it
next we have max candles beyond moving
average
this determines how many candles are
allowed to close
above the moving average or below for
long trades
so here's a good example
here price has made a move below the
moving average it's pulled back to the
moving average and we've had one candle
close above it and then we had our
signal
if i were to set max candles beyond m a
to zero
this setup will be invalidated because
we've had one candle close above the
moving average you can see it just
disappeared
and so this setup is now invalidated and
that actually increased our win rate
slightly so this is another filter worth
playing around in your testing i find
that allowing at least one candle to
close beyond the moving average is a
good happy medium
you do get some lower quality trades but
the increase in trade frequency tends to
make up for that in terms of
profitability next up we have our
consolidation look back and max
consolidation count
this look back is how many bars to look
left
how many bars to look back on and this
max consolidation count is how many
times price can cross above and below
the moving average so the default
settings are basically saying
if price has crossed above and below
the moving average four times
over the past 10
bars that would look like this so 1
cross 2 cross 3 cross 4 cross
if that has happened and then we get a
pullback signal
the signal is invalidated because we've
crossed the moving average too many
times in recent price
and so we are likely consolidating i
find the default settings to be
sufficient in eliminating most clearly
bad trades around consolidation but you
may want to play around with this but i
like to leave it on four i found that
that worked across most markets on
average but depending on the market
you're trading you may want to play
around with that filter as well
next up we have our candle patterns so
the script detects several different
candle patterns by default it's only
detecting engulfing candles you can turn
on or off long trades and short trades
so if you only want to trade long you
can turn off short trades and then all
short trades
will be removed and the script will only
trade long and then you can also turn on
a bunch of candle pattern settings so
this setting means that engulfing
candles must engulf the wick if i turn
that on any setup like this one down
here
you can see that this setup here
does not engulf the wick of the previous
bar so this bearish engulfing candle
here engulfs the body of the bar but not
the wick
whereas these
setups do engulf the wick so that's just
another filter there by default turned
off you can also detect hammers and
shooting stars so this might be easier
if i turn off and golfing kennels and
just turn these alternative patterns on
one at a time
here you can see a hammer candle was
detected on the pullback so it must
still be a swing low to be considered
valid
and there are certain rules that you can
tweak about the hammer and star candles
such as it being green or red hammers
and stars perform better on certain time
frames and markets like all strategies
in all setup patterns
certain markets will perform better than
others
so again i encourage you to play around
with the different candlestick patterns
that the script can detect so you can
also turn on hammers and stars must
match color so hammers must be green
shooting stars must be red
that's just another filter there we also
can detect doji candles so if i turn
hammers off and turn doji's on let's
have a look for one here's one here
so here we have a
swing high
doji candle
and the way it detects the doji as valid
or invalid is by default using the
default settings the candle body must
account for
no more than five percent of the entire
candle size from top wick to bottom wick
so if the candle body is five percent or
less of the entire candle size so the
wicks must be a similar size to each
other then the doji is considered valid
and then we have another setting here
doji can be bullish and bearish this is
similar to the hammers and stars must
match color
if you turn this on then
the doji candle for short trades must be
red and the doji candle for long trades
must be green if you don't turn it on
then it can be any color so if this was
a green candle it would still be
considered considered a valid doji and
then finally we have our detect fractal
color change candles so that sounds
complicated but really it's not all
we're looking for
is a swing high candle that changes
color against the pullback so in the
case of a bearish setup we're looking
for
a price to make a new low
price to then pull back a few green
candles and then we're looking for a
swing high candle that is bearish that's
the only
rule for this setup it doesn't need to
be an engulfing candle it doesn't need
to be a hammer or star it doesn't need
to be a doji it just needs to be red
and so you can see it also detected this
doji candle since that was a swing high
that was red
so it's a very very simple entry pattern
but it can be profitable on some time
frames and markets which is why included
there's also a final filter here for our
candlestick patterns which is must touch
ma1 which is our main moving average
so if i turn on detect engulfing candles
and turn this must touch ma1 on and let
me turn off
our bullish and bearish pullbacks to
tidy up the chart a little now the
script is only taking trades that touch
the moving average
so any trade that occurs
too far from the moving average
is considered invalid so again this is
another filter that works quite well on
some time frames let me turn that off
and we'll move on to our candle settings
these are mostly self-explanatory and
have information tool tooltips so i'm
not going to go into too much detail but
we can set the max candle size
based on the atr so if the candle size
is greater than 2.5 times the current
atr it is invalidated by default but you
can tweak that here
the mass rejection wick size for
engulfing candles
determines how large the
rejection wick on the engulfing candle
can be here's a good example
so the rejection week for an engulfing
candle is the opposite wick it's not the
rejection wick to the downside that
would make it a hammer candle the
rejection wick is
in the opposite direction of the
engulfing candle so here we have a
bullish engulfing candle that engulfs
the body of the previous candle but the
rejection wick is quite large
if we were to turn the
max rejection width size to 1 that means
that the rejection weight cannot be
greater than the size of the candle body
so that trade gets invalidated there
that's just a filter that can enhance
the accuracy of the trade
the trading setups on some markets and
time frames by default it's disabled and
set to zero
next we have our star and hammer close
if i turn on hammers and stars i'll show
you what that means so here's a hammer
candle right here
the
hammer and star close percentage is
where the body must open and close
in relation to the candle size so if i
bring out my fibonacci tool this is the
best way to visualize this and i drag
from the low of this bar to the high if
i set it to 33.3 for example so if i
added 3 3 on the end of
this number
that now means that in order for a
hammer candle to be considered valid the
body must open
and close
above the 33.3 percent
high
so the upper third of the total candle
body
or candle size so for example if you set
this to 618 then the
hammer candle could look something like
this with a small wick on the bottom
so tweaking that number will change
how the script detects hammers and stars
we also have the hammer and star minimum
size as a multiplier of the atr so by
default the hammer and star candle must
be at least 10 percent of the current
atr this setting here just stops the
script from detecting tiny hammers and
stars so a candle that looks like this
in relation to recent price action would
be too small to be considered a hammer
and so that filter there filters out any
tiny hammers and stars then we have our
doji size remember i said that doji
candles must be a maximum five percent
of the total candle size you can tweak
that here then we have the max doji wick
size versus the other wick so if one
wick is greater than two times the size
of the other wick then the doji is
considered invalid because that means it
looks something like this
and this
is not considered a valid doji by the
script we need to see something more
like
this where the body is in the middle of
the candle and represents an indecision
pattern so this setting here can tweak
how the script detects that next up we
have our exit settings so this is for
governing our exit reasons so i'll jump
ahead to the exit reasons and come back
to these settings which govern the
parameters of our exits the first exit
reason we have here is use atr trailing
stop so all of these settings here will
overwrite your fixed take profit so if i
turn on use atr trailing stop reset my
chart let's turn off hammer candles and
turn on engulfing candles
and now here's an example of a trailing
stop
trade if i zoom out a bit this is
probably a better example
so you can see that the script is still
detecting pull back trades below the 50
moving average as usual we get a bearish
engulfing candle here that meets the
rules of the strategy one atr stop above
the high
one atr one to one target when this bar
here hits our profit target
the stop loss begins to trail our red
line here is our trailing stop loss and
it is trailing one atr above
the recent swing high so as price moves
down the atr moves down with it to lock
in profits
and it only moves into profit that's
what a trailing stop is it's designed to
lock in profits in a trending market and
then eventually our trade gets stopped
out for 99 pips here on a 29 pip stop
which if you look here
is a 3.38 risk reward trade you can
ignore the max adverse excursion but the
max favorable excursion was 129 pips so
we gave up a few pips here of profit but
we made a lot more than our one-to-one
target
using this trailing stop method so
that's one exit reason you can use with
the script but before we move on to the
others you do have some options here for
the trailing stop this is your atr
trailing stop multiplier so by default
it's a one atr but you can adjust this
just like the regular
atr stop loss
setting
then you have your trailing stop source
by default it's set to high or low but
you could set it to the closing price if
you wanted to and that would change how
the script trails the stop-loss so now
we're trailing from the closing price
and you can see that on this trade here
we got stopped out a bit prematurely so
there's pros and cons to all
exit approaches in any strategy
but the other option here is the open
so if we set that to open then
we can see how that affects this
particular trade
and you can see that we have a much
tighter stop loss here but this time the
trade
played out more profitably so that's
something you can play around with so
that's the atr trailing stop exit reason
next up we have the rsi engulfing exit
and that's where the rsi settings here
come into play so by default we're
operating on a 7 period with an 80 and
20 overbought and oversold threshold so
if i throw on the
relative strength index
onto my chart and i change the settings
to the same as the script there we go
you can see that the rsi went oversold
here so we entered short as we normally
do with the one atr stop as soon as our
one to one target was hit by price
the script began looking for an
engulfing candle that occurred while the
rsi was oversold and so we exited here
for 91 pips
that's what the rsi engulfing exit
reason does
the rsi exhaustion exit is exactly the
same except that it doesn't wait for an
engulfing candle it just waits for an
opposite colored candle so in this case
we're short
so as soon as we got a green candle
while the rsi was oversold if i hover
over
the candle proceeding this green candle
and we look down here you can see that
the rsi was just slightly oversold at 19
and so as soon as we got a green candle
on that next bar the script exited our
trade so that's a slightly more
conservative exit reason than the
engulfing exit the engulfing exit will
allow you to stay in trades longer but
sometimes you might not get the exit
reason and
so it's considered a more aggressive
approach to managing your positions the
next exit reason we have is the higher
close lower close exit reason so if i
turn that on and wait for the script to
load
same deal we enter short here with the
one atr stop and our one to one target
is hit on this bar and then the script
begins searching for a bar that closes
higher than the previous bar which
happened right here on this green bar
and we exited for 91 pips and it's
obviously the same for long trades but
in the opposite direction we're looking
for a lower close
candle that closes lower than the
previous bar and so this is just an
approach that allows you to stay in
moves a little bit longer and is
definitely more suited to markets with
strong momentum
the next exit reason is the same as this
one the higher close level close except
that we need two in a row so high closed
level closed times two
means that we need
two bars to close higher than the
previous bar in a row so that's just a
slightly more aggressive
exit reason and it's more aggressive
because it means you are likely to stay
in the trade longer than if you're just
waiting for a single higher close candle
and so that's for traders who want to
shoot for a larger risk reward profile
and don't mind
withstanding a little bit of pain
in exchange for the chance that the
market continues lower after that single
higher close candle now the second last
exit reason on this list is the ema
breach exit so if i turn that one on
this one's pretty self-explanatory once
you see it in action
so same entry reason as always bearish
engulfing candle one atr stop once our
one to one target is hit the
script begins monitoring or waiting for
price action to break and close above
our
main moving average
so in this case we've got the 50 ema
here as soon as this candle closed above
the 50 ema the script exited our trade
for 88 pips so this is more of a trend
following technique for traders who
prefer trend following rather than trend
continuation where you might be a little
more conservative with your profit
taking this allows you to stay in moves
longer and you get a
much higher risk reward profile but a
much lower win rate and so it really
depends on how you like to trade whether
or not you would use that exit reason
personally i'm not a fan of it because i
like to take my profit more
conservatively but i included the option
here for those of you who prefer the
trend following approach to trading and
then the final exit reason here is use
pullback origin exit so if i turn that
on
and we zoom in on this trade here is a
good example
i don't know if you noticed that but if
you look closely you can see that our
profit target has extended slightly we
are now placing our profit target at the
bodies of the pullback origin
and so we have our one atr stop as usual
from our
entry to our high one atr above that is
our stop and then our profit target is
set at the pullback origin now one
problem with this approach is that the
script does not discriminate between
pullback origins you can see that this
setup here has a three pip target and a
29 pip stop personally i'm not a fan of
inverse risk reward profiles i don't
like risking more when i'm wrong than i
make when i'm right i prefer the other
way around i prefer to make more money
when i'm right than i lose when i'm
wrong but for those of you who prefer a
much higher win rate this approach is
extremely um has an extremely high win
rate and decent returns but we have a
0.4 risk reward profile so we're only
making 40 cents on the dollar for every
time we take a trade and it wins versus
when it loses so that's not ideal but if
you still want to use this approach of
taking profit at the pullback origin
after your entry but you don't want an
inverse risk reward profile you can use
the minimum risk reward to pull back
origin filter so if i set this to one
all of these trades will disappear
because the risk reward profile to the
pullback origin is less than one to one
so if i come back to this trade here
that we first looked at if i throw on my
profit tool my p l tool here
my short p l tool from our entry
um down to our target you can see that
we have about a 1.2
risk reward profile from our entry to
the pullback origin so the script
considers this setup valid there are
markets and time frames that this is
profitable on it's not profitable on
this particular market and time frame
but i included the option because it is
a viable way of trading pullbacks if
that's how you like to do it so that's
it for our exit reasons i definitely
encourage you to play around with these
do some back testing and see what works
best on the markets and time frames you
like to trade assuming you're not
comfortable with just a fixed target
like the default settings but now let's
move on to our filters so here is our
time filters section this is pretty
self-explanatory by default we are
trading on all days but if you want to
turn any of these days off you can so
today is friday here in australia if i
click on friday and turn that off
and reset my chart
all of the price action that occurs on
friday
will be red now it's still early in the
morning here
um and the time is based on the exchange
and the exchange that i'm trading
is a foreign exchange market and so it's
still thursday night in america
and so it's not drawing the filter onto
my chart but here you can see
that
last week this was last friday the
script turned red
and it does not take any trades that
occur
within this red period
so for example here was a valid trade
if i turn friday back on and click ok
this trade comes back so that's pretty
self-explanatory
some days uh more profitable than others
and some days are not profitable at all
for example mondays tend to be pretty
slow for me so i usually turn mondays
off on intraday strategies but by
default all of these days are enabled
next we have our use time session filter
so this applies to all days and is just
a time session
so if you enable this whatever time
session you pick here
will turn red on your chart and the
script will ignore any trades between
that time session so for example if i
don't want to trade from 6 a.m to 10 a.m
i can set that up like that and now any
of these red zones are ignored by the
script and then the final time filter we
have to work with here is
our date filters so this is our start
and end filter so by default it's kind
of disabled only because i've set the
start filter so far back if you load up
a market that has price data that starts
beyond 2000 the first of january 2000
then it will ignore any trades before
that time
so for example if i set this to start
filter
let's say the 1st of january 2021
and i set the end filter to
let's do the 10th of october if i zoom
right out
um actually let's go to a four hour time
frame
here we go so this is the first of
january 2021
and any trades that occur before that
date are ignored by the script and the
chart turns red
any trade that occurs after our end date
the 10th of october is also ignored and
the chart turns red so those are all of
our date filters to disable them just
set this to a
really far back date and set the end
filter to a really far away date and
let's move on to our look back settings
and miscellaneous settings so the look
back settings are again self-explanatory
uh the first is our look back for swing
highs and lows this is used for our
trailing stop loss primarily and a few
other candlestick pattern detection
techniques
the script is designed to trade swing
high patterns so fractal patterns we're
looking for the tops and bottoms of pull
backs and so any candle pattern that
does not meet that criteria is ignored
and this look back setting can be used
to tweak how the script searches for
swing highs and lows and sorry if you
can hear that in the background it just
started raining here pretty heavily but
i need to get through this video
so i'm going to keep going the second
look back is our ma breach look back
this isn't for our exit reasons this is
for our
um ema invalidation and what i mean by
that is
um
it's it's for this setting here our
max candles beyond ma by default we can
only have one candle maximum close
beyond the moving average before our
entry pattern can be detected and
considered valid this ma breach look
back period
here
is how far back we look for that breach
so by default we're looking back five
bars for any moving average breaches
so here for example here is a trade that
the script ignored because we had too
many candles closing below
the
moving average over the past five bars
so that's what our look back settings do
next we have a miscellaneous setting so
you can set the atr length this is for
setting your stop loss you have the
point allowance setting
i'll explain what this does i couldn't
think of a better word for this the tool
tip here explains it in a little more
detail what it does but the best way to
explain what this does is to show you so
let me go to a market example of what
this setting does so here i am on pound
yen on the four hour chart
and look at this setup here
this to the naked eye looks like a valid
engulfing candle setup and this is a
setup i would trade in my manual
discretionary trading
the problem is the script doesn't detect
this as a valid setup because
it doesn't technically
fully engulf the previous candle if i
zoom right in really really close
and i put a horizontal line at the close
of that previous bar this
green candle here
opens one point
above the close of this previous bar and
so it's not considered a valid engulfing
candle by the script because um the
script is dumb
it only does exactly what i tell it to
and it doesn't know how to use
discretion to know when a setup is close
enough
and so i added this point allowance
setting to the script if we come back
down to that
and i set that to
one
one point
this setup will now be detected so what
this setting is doing is it's allowing
this engulfing candle to be considered
valid even though it opened one point
above the close if i set that to two
points then it would allow a two point
gap from the close and so on so the
purpose of this point allowance setting
is to correct for micro gaps on certain
data feeds so if you're trading through
oanda for example
that brokerage service very very very
rarely has gaps in its price action just
from the way its data feed works
here on global prime
we do have micro gaps that occur on some
markets and so that's what that setting
is for and this setting is disabled by
default if that's not something you want
the script to do
next up we have overwrite new stops and
targets
this is purely for back testing if i
turn this on
the script is now going to detect i was
going to overwrite old trade profit
targets with new trade profit targets
and stop losses
so for example here this trade was
detected here's its take profit but
before its take profit was hit a new
trade was detected and so
this trade was overwritten with this
trades
stops and targets
now our back tester system isn't going
to be accurate with this these two data
displays are going to be inaccurate
because
the script is not designed to be
actually traded this way this is purely
for back testing so if you're going to
turn that setting on make sure to turn
these two off
and the reason i added this is because
when you're manually back testing
strategies there may be times when you
cannot trade maybe you're at work maybe
you're asleep maybe you're at university
whatever it is you do
and you can't take certain trades by
turning this setting on the script will
show you all of the valid setups that
occur regardless of whether or not you
could have taken it and then you can use
your discretion during the manual back
testing process to determine whether or
not you could have entered certain
trades but by default that is turned off
to avoid confusion so
let me
turn that off again
uh the next setting is round stop loss
size this is purely for display purposes
just to make back testing easier if i
move this out of the way and i turn this
off just keep an eye on our
labels here now it's showing the exact
pip amount rounded to two decimal places
if i turn this on it just rounds it into
a whole number so that's just purely for
back testing it makes it easier to enter
that information into a spreadsheet
finally we have our use eap stop loss
algorithm this is the final
miscellaneous setting what this does is
it slightly tightens up our stop losses
so
this is intended for use on higher time
frames so if we go to a four hour chart
here and we'll see if we can find some
examples
so here we are on the pound dollar four
hour chart which has quite a high atr
this is going to be a good example of
what the eap stop-loss algorithm does
if we come back down to it
and
i turn it on keep an eye on our
stop-loss pips
when i turn this on notice that it
shrinks a little bit turn it off
our loss widens a bit turn it back on
shrinks a bit so the purpose of this eap
stop-loss algorithm will open up the
source code to where this is calculated
so here is the source code for
calculating the eap stop loss you don't
need to understand what this code does
but this is the easiest way i can think
to
show you so this eap
calculation takes in the atr as an input
and then it checks if the atr is between
20 and 30 then it returns 20. and then
this is our stop-loss distance so it
basically rounds the atr down based on
certain brackets so the next bracket is
if the atr is between 30 and 50 then it
sets the atr to 30 if it's between 50
and 100 then it sets it to 50. so if the
distance from our entry to the swing
high
was going to be 90 pips then this
algorithm will shrink that down
to
50 pips so we'll only add 50 pips to the
high instead of 90 pips to the high
now the purpose of this eap stop loss
algorithm
is for trading the pullback strategy the
way that stephen hart the creator of the
strategy trades it so if you're an eap
student if you're a student of stephen
hart from thetradingchannel.net or his
youtube channel the trading channel then
you'll know all about this and i don't
need to explain it if you are not a
student of stephen hart's courses i
would just recommend not using this
setting because it might be a bit
confusing but basically this is just a
way to slightly reduce your stop-loss
size on average which in turn allows you
to have a slightly larger position size
on average and leads to greater profits
over the long term on certain markets
and time frames by default this is
disabled so you don't have to worry
about it if that confused you and you're
not interested in using fancy
stop-loss techniques so let's go back to
euro dollar and i'll go over the final
settings here in the ultimate pullback
indicator so i went over this at the
start of the video but here is our back
tester settings this is where you set
your starting balance and your risk per
trade for our custom backtester system
down here so if i wanted to i could set
this to 100 let's set it to 125
600 and
600
now our starting balance will be
this number
and that affects our return
uh dollar amount and then of course we
can change our risk per trade for the
back tester if nine percent is too much
of a drawdown for this account balance
you could set it to say 0.5
per trade and see how that affects your
return and max drawdown but i'll leave
these back as they were and we'll look
at the autoview oanda settings so i'll
do separate videos on oanda and on pint
connector but this is where you set up
your automation settings for using
autoview
and you can customize everything here
your account balance
your account currency and risk per trade
all of that stuff and same with pi
connector here you can
set your license id your risk per trade
uh your spread for limit orders things
like that but again i'll go over this
i'll go over these settings in more
detail in a different video because this
one is already long enough and i'll need
to show you how to set up these
services which not everyone will want to
use and so i'll leave it outside the
scope of today's settings guide so
that's basically it for the ultimate
pullback indicator there's a lot to
cover there obviously finally before we
wrap this up i'll just cover the
ultimate pullback strategy which is a
companion script to the
upi the ultimate pullback indicator let
me reset the settings on both indicators
there we go they should be pretty much
identical now
so the strategy version the main
advantage of the strategy version is it
draws the pips straight onto the chart
so on the indicator version there's a
limit to how many labels you can have on
the chart on the strategy version there
is no limit so this is a great back
testing tool the strategy version of the
script is a great back to back testing
tool
it makes it really easy to enter this
data into a spreadsheet all of the
settings are the same there are some
settings that are removed from this
indicator just because they don't make
sense to be here the ultimate pullback
indicator version that i was just
showing you is the preferred version to
be using it gives slightly more advanced
information than the trading view back
tester system does but keep in mind
there will be slight differences in how
the scripts perform the back tester
system in trading view has a couple of
little quirks that i found really
difficult to simulate in my own
indicator code and so for example you
notice here if i turn on the upi
we have a 58.85
win rate over 384 trades if i open up
the strategy tester we have 387 trades
and a 58.91
win rate now the code between these two
scripts is almost identical certainly
the
setup detection
code is identical and so i don't know
why the strategy version took three
extra trades and has a slightly
different win rate but the metrics are
close enough
that i'm not too bothered about that you
should always do your own manual back
testing anyway the
trading view strategy tester is renowned
for being inaccurate especially on
certain
markets and time frames and
using certain settings with your scripts
so do not depend on the strategy tester
to tell whether or not a script is
profitable do not depend on my inbuilt
tester either make sure to do your own
research do your own homework do your
own testing the purpose of this
indicator is not to
shortcut the back testing process and
make it so that you don't need to do it
the purpose of this script is to help
you back test a lot quicker and be more
efficient about it so the ultimate
pullback strategy has all the same
settings here that we just went over
including pan connector and auto view
you can automate the strategy version of
the script if you want to it doesn't
really matter which script you use to
set your alerts
to set your alerts you just select the
script and the upi has a lot more alert
settings here
i'll go over the alerts in a different
video but here are the
unique alerts you can set for the
ultimate pullback indicator if you want
to trade through a third party like pine
connector or order view you'll need to
select any alert function call and put
in the appropriate web hook that's all
you need to do in order to automate this
script it will handle everything else
for you based on whatever you
set up in the
settings menu for these services down
here and that sums up the user guide for
this script if you'd like to find more
information on the ultimate pullback
indicator including information on how
to start your one month free trial to
test out the indicator in depth head to
upi.theartoftrading.com that'll redirect
you to my course website where you can
find more information on my digital
child my pride and joy the script that i
have sunk
hundreds maybe even thousands of hours
into over the past three years take care
best of luck with your trading
i'll speak with you soon
have a great day