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Strategy vault / Mean reversion

Tom DeMark Sequential Heat Map

This indicator uses Tom DeMark's TD Sequential counting from 1 to 13. Number 9 and 13 usually identify an exhausted trend and mark a trend reversal. The important numbers get displayed as labels (7-13), where 9 and…

Author
ChaoZhang
Complexity
Intermediate · 134 lines
Parameters
5

This indicator uses Tom DeMark's TD Sequential counting from 1 to 13. Number 9 and 13 usually identify an exhausted trend and mark a trend reversal. The important numbers get displayed as labels (7-13), where 9 and 13 are both highlighted as "Long" or "Short".

Besides the numbers the price candles are colored based upon the sequence. Bullish colors are starting from bright yellow ( TD 1 = start of trend) to dark red ( TD 13 = trend exhausted) Bearish colors are starting from bright blue ( TD 1 = start of trend) to dark blue ( TD 13 = trend exhausted)

DeMark recommends to be used for short term price reversals only but as you can see in the chart, it also works for LUNA 1D chart. Also works very well with Heikin Ashi candles.

Use it in combination with for example the "Tom DeMark Pressure Ratio" to find tops and bottoms. You can change the timeframes, disable labels/barcolor and customise colors to your liking.

If you have any idea on how to optimise the code, please feel free to share

backtest

IMG

Parameters

NameDefaultWhat it controls
v_input_1truePaint Bars
v_input_2trueShow labels
v_input_3#32CD32buy_col
v_input_4#F44336sell_col
v_input_5#FFFFFFtext_col

Source Pine Script

////////////////////////////////////////// Tom DeMark heatmap © by Indicator-Jones /////////////////////////////////////////
//
// This indicator uses Tom DeMark's TD Sequential counting from 1 to 13. 
// Number 9 and 13 usually identify an exhausted trend and mark trend reversal.
// The important numbers get displayed as labels (7-13), where 9 and 13 are both highlighted as "Long" or "Short".
// Besides the numbers the price candles are colored based upon the sequence.
// Bullish colors are starting from bright yellow (TD 1 = start of trend) to dark red (TD 13 = trend exhausted)
// Bearish colors are starting from bright blue (TD 1 = start of trend) to dark blue (TD 13 = trend exhausted)
//
// DeMark recommends to be used for short term price reversals only but as you can see in the chart, it also works for LUNA 1D chart.
// Also works very well with Heikin Ashi candles.
// Use it in combination with for example the "Tom DeMark Pressure Ratio" to find tops and bottoms.
// You can change the timeframes, disable lables/barcolor and customise colors to your liking.
//
// If you have any idea on how to optimise the code, please feel free to share :)
// 
// Inspired by "Stochastic Heat Map" from @Violent
//
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

//@version=5
indicator(title='Tom DeMark Sequential Heat Map', shorttitle='TD heatmap', overlay=true, timeframe='')
//A heat map for TD counts. If you find this useful or yank the code, please consider a donation :)

// -------- Inputs --------
paintBars = input(title='Paint Bars', defval=true)
showLabels = input(title='Show labels', defval=true)

buy_col = input(#32CD32,0,'Colors',inline='col')
sell_col = input(#F44336,0,'',inline='col')
text_col = input(#FFFFFF,0,'',inline='col')


// -------- Bearish trend (blue) color selection --------
getBuyColor(count) =>
    if count == 1
        color.new(#11e7f2,0)
    else
        if count == 2
            color.new(#11d9f2,0)
        else
            if count == 3
                color.new(#11cbf2,0)
            else
                if count == 4
                    color.new(#11aff2,0)
                else
                    if count == 5
                        color.new(#1193f2,0)
                    else
                        if count == 6
                            color.new(#1176f2,0)
                        else
                            if count == 7
                                color.new(#105df4,0)
                            else
                                if count == 8
                                    color.new(#1051f5,0)
                                else
                                    if count == 9
                                        color.new(#0f44f5,0)
                                    else
                                        if count == 10
                                            color.new(#0c3de0,0)
                                        else
                                            if count == 11
                                                color.new(#0935ca,0)
                                            else
                                                if count == 12
                                                    color.new(#062eb4,0)
                                                else
                                                    if count == 13
                                                        color.new(#02269e,0)

// -------- Bullish trend (blue) color selection --------
getSellColor(count) =>
    if count == 1
        color.new(#eef211,0)
    else
        if count == 2
            color.new(#efdc11,0)
        else
            if count == 3
                color.new(#f0c511,0)
            else
                if count == 4
                    color.new(#f1af11,0)
                else
                    if count == 5
                        color.new(#f29811,0)
                    else
                        if count == 6
                            color.new(#f28811,0)
                        else
                            if count == 7
                                color.new(#f27811,0)
                            else
                                if count == 8
                                    color.new(#f26811,0)
                                else
                                    if count == 9
                                        color.new(#f25811,0)
                                    else
                                        if count == 10
                                            color.new(#ea420d,0)
                                        else
                                            if count == 11
                                                color.new(#e12c09,0)
                                            else
                                                if count == 12
                                                    color.new(#d81605,0)
                                                else
                                                    if count == 13
                                                        color.new(#cf0000,0)

// -------- Calculate bearish trend sequence --------
buySetup = 0
buySetup := close < close[4] ? buySetup[1] == 13 ? 1 : buySetup[1] + 1 : 0


// -------- Calculate bullish trend sequence --------
sellSetup = 0
sellSetup := close > close[4] ? sellSetup[1] == 13 ? 1 : sellSetup[1] + 1 : 0


// -------- Paint bars --------
barColour = buySetup >= 1 ? getBuyColor(buySetup) : sellSetup >= 1 ? getSellColor(sellSetup) : na
//barcolor(paintBars ? barColour : na, title='Bar colors (heatmap)')


if buySetup == 13
    strategy.entry("Enter Long", strategy.long)
else if sellSetup == 13
    strategy.entry("Enter Short", strategy.short)

Published by ChaoZhang on the FMZ strategy square · last modified 2022-05-08. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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