In the competitive world of trading, leveraging unique strategies through a custom trading indicator can significantly simplify decision-making for traders and make the day to day of trading much more enjoyable.
In this post I’ll outline how I built a custom script for one of my clients and why we did it. A seasoned crypto trader, he already had his own Discord community of traders that followed his lead. He taught leverage, hedging, fibonaccis, swings, and more…all on TradingView.
After we sat down and built his custom trading indicator, it significantly transformed the vibe in his community and got great results for this audience.
Building A Custom Trading Indicator
He brought the strategy, I brought the coding. As a UC Berkeley trained software Engineer, I knew I could build pretty much anything he had in mind in TradingView’s PineScript. The challenge was that I had to learn how to see the markets like he did.
Looking back, the strategy is simple (its based on fibonacci retracements, playing both sides of the market). Entries, take profits, hedge levels, etc, were all precicely calculated. But everyone’s brain works different, and it took a while for us to get to a point of shared understanding where it finally clicked in my head, too.
But hey, that’s how software development planning goes. Of course its not that easy…even once I understood the general idea, we had to battle with the challenges of coding for the markets.
Technical Challenges When Scripting The Market
Creating a custom indicator has a bunch of technical challenges…and most you won’t know until you start building. There are several things to consider
- Is the math accurate to what the trader expects
- Do the visuals align and display as expected
- Does it work on other time frames
- How noisy are the signals?
- How can we reduce noise while maintaining accuracy?
- Are there too many false positives?
- Is the script taking too long to load?
Coding for the market is NOISY. Price could cross and un-cross your specific level several times within one candle. And definitely several times before retests and eventually turns. Capitulation and choppy markets can add lots of noise as well.
With writing custom trading scripts, especially in TradingView with PineScript…here’s the deal: you have to draw the line somewhere. At some point you have to decide there is a signal or there isn’t, a pattern completed or it didn’t, keep looking for an in-progress pattern or start looking for the next one.
The hurdle of mathematical accuracy is no joke. It is imperative that every line of code accurately adds to the logic that the trader is doing automatically in his head. Working very closely with my client ensured that the script operated exactly as he envisioned, offering his traders actionable signals rooted in proven mathematical calculations.
Optimizing For Pivot Point Precision
A critical component of the script was its ability to identify pivot points accurately and timely, avoiding the common pitfall of lagging indicators. Pivots are interesting because they’re easy to recognize looking backwards. But in the moment – you can’t every be sure if something that looks like a pivot is going to stay that way.
Every moment in the market is unique…AND there are patterns.
Developing a way of ensuring strong pivots while looking backwards yet being a little more assumptuous for real-time helped to have a system for our traders that was more accurate to how my client actually traded and viewed the markets.
Of course we had to iterate on the development process. Tuning the script and the math a few times was key to ensuring the indicator provided useful, clear, and simple actionable signals, empowering his community of traders to make informed decisions on their own.
The Community Rallied Behind The Script
When we introduced the script to my client’s community, the indicator became more than just a trading tool everyone used…it brought everyone to rally together behind it. Of course, the strategy had to be good. And it was. And it was visualized on the chart perfectly.
Traders got excited seeing the powerful signals on their own charts. They would shout out in the Discord channels with screenshots of their entrypoints and the price reversals that followed, showing off their profits. Everyone was getting even more excited and passionate about his trading community.
We didn’t see it coming, but the custom indicator really brought everyone together.
(For more insights on community building in trading, check out this article.)
Making A Powerful Custom Trading Indicator
The community’s response to the custom script was overwhelmingly positive, with many members sharing success stories and testimonials. It wasn’t luck. We built the script overtime to be quality from day one. Here are some of the lessons learned in what it takes to make a powerful custom script for your community
- The underlying strategy needs to be strong
- Signals should indicate clear actions to take or have clear meaning
- It needs to be well engineered and visualized simply
- Add customizable settings as a nice to have that traders love
- Have an engaged community who are willing to follow your lead and learn the script
Yea we made financial gains, but it really also provided an opportunity for education, teaching community members about strategic profit-taking and hedging.
(Enhance your trading strategy by incorporating visual aids with these advanced indicator-building tips.)
Every Trading Community Should Have A Custom Indicator
The development process and release of building my client’s script underscores the transformative potential of custom trading indicators. It highlights the invaluable impact of turning sophisticated trading strategies into accessible, visual tools that not only benefit individual traders but also strengthen and educate trading communities at large.
Most traders want a leader. Most leaders do have their own strategy. But the truth is, teaching others the exact way you see the charts is a challenge. Building a custom trading indicator ensures nothing is lost in translation as a leader is teaching their community.
If you run a trading community feel free to hit me up with any questions.