Multi Dimensional Dynamic ICT Trading Strategy with Engulfing Patterns and Supply Demand Zone Analysis System

Pine ScriptTrend following Volatility Multi-timeframe Pivots / S&R

Author: ianzeng123
Complexity: Starter · 49 lines
Parameters: 0
Backtest bar: 1h · intraday
Tested on: ETH/USDT · spot

Jump to code View in vault Original on FMZ

Overview

This strategy is a comprehensive trading system that combines ICT (Internal Trader Concepts), engulfing patterns, and supply-demand zone analysis. It identifies high-probability trading opportunities through multi-dimensional market structure analysis, integrating technical indicators and price action. The strategy operates on a 15-minute timeframe and uses percentage-based stop-loss and take-profit levels for risk management.

Strategy Principles

The core logic is based on three main components:

Establishing supply and demand zones using 20-period high and low prices, which serve as significant support and resistance levels.
Identifying bullish and bearish engulfing patterns by analyzing the relationship between adjacent candles.
Executing trades when price breaks through supply/demand zones and engulfing patterns appear, with consideration for risk management.

The system uses 10% of equity for each trade, with a 1.5% stop-loss and 3% take-profit, providing a 2:1 risk-reward ratio.

Strategy Advantages

Multi-dimensional analysis improves signal reliability
Combination of price action and technical analysis reduces false signals
Percentage-based stop-loss and take-profit adapt to different market conditions
Reasonable money management system using 10% equity per trade reduces risk
Parameters can be adjusted to adapt to different market environments

Strategy Risks

May trigger frequent stop-losses in highly volatile markets
Supply and demand zone identification might be inaccurate in certain market conditions
15-minute timeframe might generate too many trading signals
Fixed percentage stop-loss and take-profit might not suit all market conditions

Risk Control Suggestions:

Adjust parameters under different market conditions
Consider adding confirmation indicators
Dynamic adjustment of stop-loss and take-profit levels based on volatility

Strategy Optimization Directions

Introduce volatility indicators for dynamic stop-loss and take-profit adjustment
Add volume analysis to confirm signal strength
Consider adding trend filters to reduce counter-trend trades
Optimize supply and demand zone identification algorithm, possibly using multiple timeframe analysis
Add market state recognition functionality to use different parameter sets under different market conditions

Summary

This is a well-structured comprehensive trading system that provides reliable trading signals through multi-dimensional analysis. The system's risk management is reasonable but has room for optimization. Traders are advised to thoroughly backtest before live trading and adjust parameters according to specific market conditions. The strategy's modular design provides good scalability, allowing for the addition of new analysis dimensions as needed.

Source Pine Script

/*backtest
start: 2024-02-21 00:00:00
end: 2025-02-18 08:00:00
period: 1h
basePeriod: 1h
exchanges: [{"eid":"Binance","currency":"ETH_USDT"}]
*/

//@version=5
strategy("ICT + Engulfing + Supply & Demand", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=10)

// Input settings
timeframe = input.timeframe("15", title="Backtest Timeframe")
use_snd = input(true, title="Enable Supply & Demand Zones")
stopLossPerc = input(1.5, title="Stop Loss %")
takeProfitPerc = input(3, title="Take Profit %")

// Identify Engulfing Patterns
bullishEngulfing = (close[1] < open[1]) and (close > open) and (close > open[1]) and (open < close[1])
bearishEngulfing = (close[1] > open[1]) and (close < open) and (close < open[1]) and (open > close[1])

// Supply & Demand Zones (basic identification)
highestHigh = ta.highest(high, 20)
lowestLow = ta.lowest(low, 20)
supplyZone = use_snd ? highestHigh : na
demandZone = use_snd ? lowestLow : na

// Entry & Exit Conditions
longCondition = bullishEngulfing and close > demandZone
shortCondition = bearishEngulfing and close < supplyZone

// Stop-Loss & Take-Profit Calculation
longSL = close * (1 - stopLossPerc / 100)
longTP = close * (1 + takeProfitPerc / 100)
shortSL = close * (1 + stopLossPerc / 100)
shortTP = close * (1 - takeProfitPerc / 100)

// Execute trades
if (longCondition)
    strategy.entry("Long", strategy.long)
    strategy.exit("Long Exit", from_entry="Long", stop=longSL, limit=longTP)

if (shortCondition)
    strategy.entry("Short", strategy.short)
    strategy.exit("Short Exit", from_entry="Short", stop=shortSL, limit=shortTP)

// Plot Supply & Demand Zones
plot(use_snd ? supplyZone : na, color=color.red, title="Supply Zone")
plot(use_snd ? demandZone : na, color=color.green, title="Demand Zone")

Published by ianzeng123 on the FMZ strategy square · last modified 2025-02-20. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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