MTF Fusion - PSAR [TradingIndicators]
MTF Fusion PSAR intelligently adapts to whatever timeframe you're trading - dynamically calculating Parabolic SAR (Stop and Reverse) levels combined from four appropriate higher timeframes to give you a much broader view of the market and an edge in your trading decisions. It is the third indicator in our MTF Fusion series, and leverages our MTF Fusion algorithm - only this time to visualize J. Welles Wilder Jr.'s famous Parabolic SAR indicator.
What is MTF Fusion?
Multi-Timeframe (MTF) Fusion is the process of combining calculations from multiple timeframes higher than the chart's into one 'fused' value or indicator. It is based on the idea that integrating data from higher timeframes can help us to better identify short-term trading opportunities within the context of long-term market trends.
How does it work?
Let's use the context of this indicator, which calculates PSAR levels, as an example to explain how MTF Fusion works and how you can perform it yourself.
Step 1: Selecting Higher Timeframes
The first step is to determine the appropriate higher timeframes to use for the fusion calculation. These timeframes should typically be chosen based on their ability to provide meaningful price levels and action which actively affect the price action of the smaller timeframe you're focused on. For example, if you are trading the 5 minute chart, you might select the 15 minute, 30 minute, and hourly timeframe as the higher timeframes you want to fuse in order to give you a more holistic view of the trends and action affecting you on the 5 minute. In this indicator, four higher timeframes are automatically selected depending on the timeframe of the chart it is applied to.
Step 2: Gathering Data and Calculations
Once the higher timeframes are identified, the next step is to calculate the data from these higher timeframes that will be used to calculate your fused values. In this indicator, for example, the values of PSAR levels are calculated by determining the value of the PSAR indicator for all four higher timeframes.
Step 3: Fusing the Values From Higher Timeframes
The next step is to actually combine the values from these higher timeframes to obtain your 'fused' indicator values. The simplest approach to this is to simply average them. If you have calculated the value of a PSAR level from three higher timeframes, you can, for example, calculate your 'multi-timeframe fused level' as (HigherTF_PSAR_Level_1 + HigherTF_PSAR_Level_2 + HigherTF_PSAR_Level_3) / 3.0.
Step 4: Visualization and Interpretation
Once the calculations are complete, the resulting fused indicator values are plotted on the chart. These values reflect the fusion of data from the multiple higher timeframes, giving a broader perspective on the market's behavior and potentially valuable insights without the need to manually consider values from each higher timeframe yourself.
What makes this script unique? Why is it closed source?
While the process described above is fairly unique and sounds simple, the truly important key lies in determining which higher timeframes to fuse together, and how to weight their values when calculating the fused end result in such a way that best leverages their relationship for useful TA.
This MTF Fusion indicator employs a smart, adaptive algorithm which automatically selects appropriate higher timeframes to use in fusion calculations depending on the timeframe of the chart it is applied to. It also uses a dynamic algorithm to adjust and weight the PSAR calculations depending on each higher timeframe's relationship to the chart timeframe. These algorithms are based on extensive testing and are the reason behind this script's closed source status.
What is the PSAR indicator?
The Parabolic SAR (Stop and Reverse) indicator is a technical analysis tool that helps identify potential trend reversals in price movements. It was developed by J. Welles Wilder Jr. and is widely used by traders to determine entry and exit points in the market. It consists of levels that are plotted above or below current price. The position of these plots relative to the price provides valuable information about the prevailing trend and potential reversal points.
Here's how the original PSAR indicator works:
Upward Trend: When the Parabolic SAR level is plotted below the price, it indicates an upward trend in the market. The level generally moves closer to the price as the trend progresses. This creates a parabolic curve that rises with time. Traders typically interpret this as a bullish signal, suggesting that it may be a good time to buy or hold positions.
Downward Trend: Conversely, when the Parabolic SAR level is plotted above the price, it indicates a downward trend in the market. The plot generally moves closer to the price as the trend continues, forming a parabolic curve that declines with time. This is considered a bearish signal, suggesting that it may be a suitable time to sell or avoid taking long positions.
Reversal Points: The primary purpose of the Parabolic SAR indicator is to identify potential trend reversals. When the price crosses above or below the Parabolic SAR level, it indicates a possible reversal in the trend.
The Parabolic SAR indicator is versatile and can be used in various market conditions and timeframes. It is particularly useful in trending markets, where it helps traders ride the trend and capture potential profits. However, it's important to note that the Parabolic SAR may generate false signals or provide delayed indications in sideways or choppy markets.
Included Features
Options
What is MTF Fusion?
Multi-Timeframe (MTF) Fusion is the process of combining calculations from multiple timeframes higher than the chart's into one 'fused' value or indicator. It is based on the idea that integrating data from higher timeframes can help us to better identify short-term trading opportunities within the context of long-term market trends.
How does it work?
Let's use the context of this indicator, which calculates PSAR levels, as an example to explain how MTF Fusion works and how you can perform it yourself.
Step 1: Selecting Higher Timeframes
The first step is to determine the appropriate higher timeframes to use for the fusion calculation. These timeframes should typically be chosen based on their ability to provide meaningful price levels and action which actively affect the price action of the smaller timeframe you're focused on. For example, if you are trading the 5 minute chart, you might select the 15 minute, 30 minute, and hourly timeframe as the higher timeframes you want to fuse in order to give you a more holistic view of the trends and action affecting you on the 5 minute. In this indicator, four higher timeframes are automatically selected depending on the timeframe of the chart it is applied to.
Step 2: Gathering Data and Calculations
Once the higher timeframes are identified, the next step is to calculate the data from these higher timeframes that will be used to calculate your fused values. In this indicator, for example, the values of PSAR levels are calculated by determining the value of the PSAR indicator for all four higher timeframes.
Step 3: Fusing the Values From Higher Timeframes
The next step is to actually combine the values from these higher timeframes to obtain your 'fused' indicator values. The simplest approach to this is to simply average them. If you have calculated the value of a PSAR level from three higher timeframes, you can, for example, calculate your 'multi-timeframe fused level' as (HigherTF_PSAR_Level_1 + HigherTF_PSAR_Level_2 + HigherTF_PSAR_Level_3) / 3.0.
Step 4: Visualization and Interpretation
Once the calculations are complete, the resulting fused indicator values are plotted on the chart. These values reflect the fusion of data from the multiple higher timeframes, giving a broader perspective on the market's behavior and potentially valuable insights without the need to manually consider values from each higher timeframe yourself.
What makes this script unique? Why is it closed source?
While the process described above is fairly unique and sounds simple, the truly important key lies in determining which higher timeframes to fuse together, and how to weight their values when calculating the fused end result in such a way that best leverages their relationship for useful TA.
This MTF Fusion indicator employs a smart, adaptive algorithm which automatically selects appropriate higher timeframes to use in fusion calculations depending on the timeframe of the chart it is applied to. It also uses a dynamic algorithm to adjust and weight the PSAR calculations depending on each higher timeframe's relationship to the chart timeframe. These algorithms are based on extensive testing and are the reason behind this script's closed source status.
What is the PSAR indicator?
The Parabolic SAR (Stop and Reverse) indicator is a technical analysis tool that helps identify potential trend reversals in price movements. It was developed by J. Welles Wilder Jr. and is widely used by traders to determine entry and exit points in the market. It consists of levels that are plotted above or below current price. The position of these plots relative to the price provides valuable information about the prevailing trend and potential reversal points.
Here's how the original PSAR indicator works:
Upward Trend: When the Parabolic SAR level is plotted below the price, it indicates an upward trend in the market. The level generally moves closer to the price as the trend progresses. This creates a parabolic curve that rises with time. Traders typically interpret this as a bullish signal, suggesting that it may be a good time to buy or hold positions.
Downward Trend: Conversely, when the Parabolic SAR level is plotted above the price, it indicates a downward trend in the market. The plot generally moves closer to the price as the trend continues, forming a parabolic curve that declines with time. This is considered a bearish signal, suggesting that it may be a suitable time to sell or avoid taking long positions.
Reversal Points: The primary purpose of the Parabolic SAR indicator is to identify potential trend reversals. When the price crosses above or below the Parabolic SAR level, it indicates a possible reversal in the trend.
The Parabolic SAR indicator is versatile and can be used in various market conditions and timeframes. It is particularly useful in trending markets, where it helps traders ride the trend and capture potential profits. However, it's important to note that the Parabolic SAR may generate false signals or provide delayed indications in sideways or choppy markets.
Included Features
- Fusion PSAR levels
- Filled zones to highlight trends
- Full customization of PSAR parameters
- Pre-built color stylings
Options
- Fusion View: Show/hide the Fusion PSAR levels calculated from multiple higher timeframes
- Fill Trending Zones: Show/hide the fill for 'trending zones' between price and the Fusion PSAR levels
- Start: Defines the rate at which the PSAR levels move closer to the price during the initial stages of a trend (higher = faster convergence, lower = slower convergence)
- Increment: Controls the rate at which the acceleration factor increases or decreases as the trend continues (higher = faster convergence, lower = slower convergence)
- Max: Sets a limit on the maximum value that the acceleration factor can reach
- Pre-Built Color Styles: Use a pre-built color styling (uncheck to use your own colors)
- Manual Color Styles: When pre-built color styles are disabled, use these color inputs to define your own