Practical application: how and when to use it? - Buy or Sell Ribbon

Effective Implementation of the "Buy or Sell Ribbon" Indicator requires a comprehensive understanding of its features and applications.

Here, we delve into its practical application:

Short and Long-Term Trend Identification:

• Short Term: By observing shorter moving averages (e.g., 5 or 10 periods), you can identify immediate price movement. An upward series of short moving averages is a signal of short-term bullish momentum.

• Long Term: Longer moving averages (e.g., 50 or 200 periods) provide a panoramic view of the prevailing trend. These moving averages are often more stable and less susceptible to minor price fluctuations.

Adjustable Parameters in TradingView:

Here is the unified explanation of the parameters:

• Enable strategy backtesting on chart: By enabling this option, you can conduct backtesting on the chart to assess how this strategy would have performed in the past. It's advisable to use the suggested settings and activate the 'Trailing Stop' control unless you're an expert.

• Activate Trailing Stop Control: This option allows you to activate the Trailing Stop control, which is a tool for managing risk in your trades. Essentially, it automatically adjusts to protect your profits as the price moves in your favor.

• Use Recommended Strategy for BTC/USD • [Timeframe]: By choosing one of these options, the indicator will automatically apply the optimal settings for the BTC/USD pair for the specified timeframe (15min, 30min, 1h, 4h, 1D).

• Use Recommended Strategy for ETH/USD • [Timeframe]: By choosing one of these options, the indicator will automatically apply the optimal settings for the ETH/USD pair for the specified timeframe (15min, 30min, 1h, 4h, 1D).

• Use Custom Strategy Parameters Settings: This option is for advanced users who wish to customize the strategy parameters. If you're not an expert, it's recommended not to enable this option.

• _10 (Madrid Ribbon): This parameter appears to be a separator or a section title in the indicator settings. It does not have a direct functional effect based on the provided code.

• i_exp (Exponential MA): This input determines whether the moving averages plotted on the chart should be exponential moving averages (EMA) or simple moving averages (SMA). If i_exp is true, the indicator plots EMA, and if it's false, it plots SMA.

Support and Resistance Zones:

• Moving averages, especially longer-period ones, often act as support or resistance levels. When the price approaches an ascending moving average and bounces off it, it can act as support. Similarly, in a downtrend, a moving average can act as resistance.

Convergence and Divergence Detection:

• Sometimes, the price may make new highs while the moving averages do not. Or, the price may make new lows, but the moving averages may not follow that pattern. These are divergences and are often signals of a potential reversal.

Confirmation of Other Indicators:

• The "Buy or Sell Ribbon" can be used in conjunction with other indicators such as RSI, MACD, or Bollinger Bands. For example, if the RSI indicates overbought conditions in an uptrend confirmed by the Ribbon, it could be a stronger signal that the market might be ready for a correction.

Adaptability to Different Trading Strategies:

• Scalping: Traders operating on very short timeframes (like 1-minute or 5-minutes) can use the Ribbon to detect rapid trend changes.

• Swing Trading: Those trading on longer timeframes, such as daily, can use the Ribbon to identify optimal entry and exit points within larger trends.

Risk Management:

• The Ribbon can help establish protective stops. For example, in an uptrend, placing a stop slightly below a relevant moving average can protect gains while allowing for normal market volatility.

Identification of Consolidations and Ranges:

• If the Ribbon's moving averages are intertwined and do not show a clear direction (neither upward nor downward), and the colors are neutral, the market is likely in a consolidation or range phase.