KK_Price Action Channel (TDI BH)

Hey guys,

this little script is an addition to another one I will release right after this.

This is the Price Action Channel. The bands are calculated using a smoothed moving average of the highs/lows. I have taken the smoothed moving average script from the public library in order to create this, so all props to whoever created that one.

I am fairly new to creating scripts so use it with caution and let me know what you think!

EDIT: Here is the script I have written this one for:
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//author: Kurbelklaus
//Code for the smoothed moving average taken from the public library
study(title = "KK_Price Action Channel", shorttitle="PAC", overlay=true)
srcH = high
srcL = low
lenH = input(5, minval=1, title="Length High")
lenL = input(5, minval=1, title="Length Low")
smmaH = na(smmaH[1]) ? sma(srcH, lenH) : (smmaH[1] * (lenH - 1) + srcH) / lenH
smmaL = na(smmaL[1]) ? sma(srcL, lenL) : (smmaL[1] * (lenL - 1) + srcL) / lenL
plot(smmaH, color=blue)
plot(smmaL, color=blue)
Hi Kurbelklaus,

I have found your script useful, I am also interested in scripting of technical indicators but i dont know where to start from so any pointers in terms of book or literature you give will be well appreciated. I come from an IT background where i work with powershell so I believe this will give me a good starting ground hopefully.

Thanks in advance for your response.
Hi i was just wondering how this system works as in reliability? as i have just came across the PDF. is it a good system to use or a waste of time? and also
+1 Reply
Kurbelklaus Brown.Michael.6
well just as with all systems it has it strength and weaknesses. This is clearly a trend following system, so it will make you money in strong trending environments and loose you money in sideways environments.

If this system works or not depends on the instrument you are using it on, so before using it maybe just do some paper trading with historical data on the specific instrument. Then before you start trading switch to a higher timeframe (1W when trading the daily for example) and try to determine the state of the instrument. Is it currently in a large range? Is it in a corrective phase? Is it in a trending phase? And ask yourself if the strategy will be suitable in this current state.

As always the key to success is using this system over a larger amount of time, as it only gives you a statistical edge but will never give you a 100% win rate. When doing so the position sizing is very important. Having a good position sizing strategy compared to a bad one or none at all will often make the difference between a system loosing or winning you money. If you havent gotten into this topic yet i highly recommend doing so first.

Kind regards
Ok I understand what the script is doing, but I am curious as to where the formula you used comes from in reference to the Traders Dynamic Index docs. I was under a different impression as to how to construct it. Being as it may, yours seems to be a lot closer to the images from the PDF on the subject. Thanks, (7 months late)
Kurbelklaus ShirokiHeishi
Hello Shiroki,
you're very welcome :)

The calculation logic for the Smoothed Moving Average has been taken from the Public Script Library, unfortunately it does not state the author.
The PDF itself only states, that you should take the 5-period Smoothed Moving Average of the highs and lows. And this is what i have done here.

I hope this answers your question.
Kind regards
ShirokiHeishi Kurbelklaus
Thanks, I was unclear in my previous post, I see where I was wrong in my construction. What I did was construct a simple MA, and that was not the correct way to visualize the channel. Thanks again.
Kurbelklaus ShirokiHeishi
Sure you're welcome!
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