📊 Complete Technical Indicators & Trading Strategies Guide

IndicatorTS (cinar/indicatorts) Reference Manual

1. 📋 Strategy Framework
2. 🤖 Built-in Trading Strategies
3. 📊 Signal Quick Reference

📋 Strategy Framework

The indicatorts library provides building blocks for building systematic trading strategies.

Core LLM + Trading Books

Chan, E. P. (2024). Generative AI for trading and asset management. Wiley. https://www.wiley.com/en-us/Generative+AI+for+Trading+and+Asset+Management-p-00421846

Noguer i Alonso, M. (2024). Large language models in finance: A hands-on guide to applying LLMs to trading, banking, and risk management. https://www.barnesandnoble.com/w/large-language-models-in-finance-miquel-noguer-i-alonso/1148475633

Applying LLM & generative AI in trading. (n.d.). Hands-On AI Trading. https://www.hands-on-ai-trading.com/chapters/09-applying-llm-generative-ai-in-trading

Essential ML + Quant Foundations

López de Prado, M. (2018). Advances in financial machine learning. Wiley.

Hilpisch, Y. (2020). Python for algorithmic trading (2nd ed.). O'Reilly Media.

Chan, E. P. (2013). Algorithmic trading: Winning strategies and their rationale. Wiley.

🏗️ Core Components

📊 Asset

The Asset interface represents price/volume data:

interface Asset {
  dates: Date[]           // Trading dates
  openings: number[]      // Opening prices
  closings: number[]      // Closing prices
  highs: number[]         // Period highs
  lows: number[]          // Period lows
  volumes: number[]       // Trading volumes
}

🎯 Action

Trading signals:

enum Action {
  SELL = -1              // Exit/short signal
  HOLD = 0               // No action
  BUY = 1                // Entry/long signal
}

🔄 Strategy Function

Converts indicators into actions:

type StrategyFunction = (asset: Asset) => Action[]

Takes price/volume data, applies indicators, returns buy/sell signals for each period.

📈 Backtesting Metrics

• Return: Total % gain/loss
• Win Rate: % of profitable trades
• Profit Factor: Gross profit / Gross loss
• Sharpe Ratio: Risk-adjusted return (higher = better)
• Max Drawdown: Largest peak-to-trough decline
• Avg Trade: Average P&L per trade
• Consecutive Losses: Largest losing streak

🤖 Built-in Trading Strategies

🎯 Trend-Following Strategies (10 strategies)

📊 1. MACD Strategy

• Indicator: MACD (12/26/9 EMA)
• Entry Rules:
  • 🟢 BUY: MACD crosses above Signal line OR above zero line
  • 🔴 SELL: MACD crosses below Signal line OR below zero line
• Market conditions: Best in strong trending markets
• Win rate typical: 40–50% (longer winners)
• Use case: Trend confirmation, momentum entry
• Risk level: Medium

📈 2. Parabolic SAR Strategy

• Indicator: PSAR (dots above/below price)
• Entry Rules:
  • 🟢 BUY: SAR flips from above price to below (uptrend initiation)
  • 🔴 SELL: SAR flips from below price to above (downtrend initiation)
• Market conditions: Excellent in trending, whipsaws in ranges
• Win rate typical: 50–60%
• Use case: Trend following with mechanical stops
• Risk level: Low (built-in trailing stop)

🎪 3. APO Strategy

• Indicator: Absolute Price Oscillator (14/30 EMA)
• Entry Rules:
  • 🟢 BUY: APO crosses above zero
  • 🔴 SELL: APO crosses below zero
• Market conditions: Trend-following, simpler than MACD
• Win rate typical: 45–55%
• Use case: Momentum crossover without signal line lag
• Risk level: Medium

🔷 4. Aroon Strategy

• Indicator: Aroon Up/Down oscillator
• Entry Rules:
  • 🟢 BUY: Aroon Up crosses above Aroon Down, Aroon Up > 70
  • 🔴 SELL: Aroon Down crosses above Aroon Up, Aroon Down > 70
• Market conditions: Trend strength identification
• Win rate typical: 50–60%
• Use case: Trend reversal timing, strength confirmation
• Risk level: Medium

⚫ 5. Vortex Strategy

• Indicator: +VI / -VI (14 period)
• Entry Rules:
  • 🟢 BUY: +VI crosses above -VI, +VI > 1.0
  • 🔴 SELL: -VI crosses above +VI, -VI > 1.0
• Market conditions: Swing trading, trend confirmation
• Win rate typical: 50–65%
• Use case: Trend direction clarity
• Risk level: Low-Medium

🎯 6. BOP Strategy - Balance of Power

• Indicator: BOP ((C-O)/(H-L))
• Entry Rules:
  • 🟢 BUY: BOP crosses above 0 or reaches +0.5
  • 🔴 SELL: BOP crosses below 0 or reaches -0.5
• Market conditions: Short-term momentum
• Win rate typical: 45–55%
• Use case: Quick momentum gauge
• Risk level: Medium-High

🟡 7. CFO Strategy - Chande Forecast Oscillator

• Indicator: CFO (linear regression deviation)
• Entry Rules:
  • 🟢 BUY: CFO crosses above 0 (price above forecast)
  • 🔴 SELL: CFO crosses below 0 (price below forecast)
• Market conditions: Mean reversion tendency
• Win rate typical: 50–60%
• Use case: Forecast-based reversal trading
• Risk level: Medium

🔶 8. Typical Price Strategy

• Indicator: Typical Price ((H+L+C)/3) + Moving Average
• Entry Rules:
  • 🟢 BUY: Price crosses above Typical Price MA
  • 🔴 SELL: Price crosses below Typical Price MA
• Market conditions: Smoothed price trading
• Win rate typical: 50–55%
• Use case: Smooth trend following
• Risk level: Medium

🌊 9. VWMA Strategy - Volume Weighted MA

• Indicator: VWMA (volume-weighted moving average)
• Entry Rules:
  • 🟢 BUY: Price crosses above VWMA with volume confirmation
  • 🔴 SELL: Price crosses below VWMA on declining volume
• Market conditions: Institutional trading flow
• Win rate typical: 50–60%
• Use case: Volume-confirmed trends
• Risk level: Medium

📊 10. KDJ Strategy - Random Index

• Indicator: KDJ (K/D lines)
• Entry Rules:
  • 🟢 BUY: K crosses above D from oversold (< 20), K < 20
  • 🔴 SELL: K crosses below D from overbought (> 80), K > 80
• Market conditions: Mean reversion + momentum confirmation
• Win rate typical: 55–65%
• Use case: Oversold/overbought with confirmation
• Risk level: Medium

⚡ Momentum Strategies (5 strategies)

🔴 1. RSI-2 Strategy

• Indicator: RSI (2 period) - extreme short-term momentum
• Entry Rules:
  • 🟢 BUY: RSI2 < 5 (extreme oversold) bounces above 5
  • 🔴 SELL: RSI2 > 95 (extreme overbought) falls below 95
• Market conditions: Mean reversion, intraday/daily bounces
• Win rate typical: 80%+ (highest win rate indicator)
• Use case: Quick bounce trading, scalping, tight stops
• Risk level: Low (mean reversion has high % winners but small size)

🟠 2. Stochastic Oscillator Strategy

• Indicator: %K/%D (14/3/3)
• Entry Rules:
  • 🟢 BUY: %K crosses above %D from oversold (< 20)
  • 🔴 SELL: %K crosses below %D from overbought (> 80)
• Market conditions: Range-bound, mean reversion
• Win rate typical: 60–70%
• Use case: Momentum bounce trading
• Risk level: Medium

🟡 3. Williams %R Strategy

• Indicator: %R (-100 to 0)
• Entry Rules:
  • 🟢 BUY: %R crosses above -80 (oversold)
  • 🔴 SELL: %R crosses below -20 (overbought)
• Market conditions: Oscillator trading, mean reversion
• Win rate typical: 60–65%
• Use case: Simple overbought/oversold trading
• Risk level: Medium

🔷 4. Awesome Oscillator Strategy

• Indicator: AO (5-SMA vs 34-SMA of median price)
• Entry Rules:
  • 🟢 BUY: AO crosses above zero, bars turn green and rising
  • 🔴 SELL: AO crosses below zero, bars turn red and falling
• Market conditions: Intraday momentum, swing trading
• Win rate typical: 55–65%
• Use case: Momentum divergence, bar color patterns
• Risk level: Medium

🌊 5. Ichimoku Cloud Strategy

• Indicator: Multi-line cloud system (Tenkan/Kijun/Cloud)
• Entry Rules:
  • 🟢 BUY: Price breaks above cloud + Tenkan > Kijun
  • 🔴 SELL: Price breaks below cloud + Tenkan < Kijun
• Market conditions: Complete system for all conditions
• Win rate typical: 50–60% (but risk-reward often 1:2+)
• Use case: Complete trading system, multi-timeframe
• Risk level: Low-Medium (cloud = dynamic S/R)

📊 Volatility Strategies (3 strategies)

🟢 1. Bollinger Bands Strategy

• Indicator: BB (20-SMA ± 2 σ)
• Entry Rules:
  • 🟢 BUY: Price closes above upper band on volume OR bounces off lower band
  • 🔴 SELL: Price closes below lower band on volume OR bounces off upper band
• Market conditions: Breakouts AND mean reversion (context-dependent)
• Win rate typical: 77.8% (one of most reliable)
• Use case: Volatility extremes, band breakouts, squeeze/expansion
• Risk level: Medium

🔷 2. Acceleration Bands Strategy

• Indicator: Acceleration Bands (dynamic volatility bands)
• Entry Rules:
  • 🟢 BUY: Price breaks above upper band with volume
  • 🔴 SELL: Price breaks below lower band with volume
• Market conditions: Volatility acceleration, breakout confirmation
• Win rate typical: 55–65%
• Use case: Volatility-confirmed breakouts
• Risk level: Medium

🟠 3. Projection Oscillator Strategy

• Indicator: PO (projection-based oscillator)
• Entry Rules:
  • 🟢 BUY: PO crosses above zero or bounces from low
  • 🔴 SELL: PO crosses below zero or bounces from high
• Market conditions: Advanced volatility analysis
• Win rate typical: 50–60%
• Use case: Projection-based mean reversion
• Risk level: Medium-High

💰 Volume Strategies (6 strategies)

📊 1. CMF Strategy - Chaikin Money Flow

• Indicator: CMF (14 period money flow index)
• Entry Rules:
  • 🟢 BUY: CMF crosses above 0 (buying pressure > 50%)
  • 🔴 SELL: CMF crosses below 0 (selling pressure > 50%)
• Market conditions: Volume-based confirmation
• Win rate typical: 55–65%
• Use case: Volume trend confirmation, divergence trading
• Risk level: Medium

💪 2. Force Index Strategy

• Indicator: FI (raw volume × price change)
• Entry Rules:
  • 🟢 BUY: FI crosses above 0 (volume supporting up)
  • 🔴 SELL: FI crosses below 0 (volume supporting down)
• Market conditions: Raw volume momentum
• Win rate typical: 55–65%
• Use case: Volume-driven momentum trading
• Risk level: Medium

🎯 3. Money Flow Index Strategy

• Indicator: MFI (20 period, RSI using money flow)
• Entry Rules:
  • 🟢 BUY: MFI < 20 and crosses back above 20
  • 🔴 SELL: MFI > 80 and crosses back below 80
• Market conditions: Overbought/oversold with volume
• Win rate typical: 60–70%
• Use case: Volume-weighted momentum extremes
• Risk level: Medium

🌊 4. Ease of Movement Strategy

• Indicator: EMV (price movement / range / volume)
• Entry Rules:
  • 🟢 BUY: EMV crosses above 0 (ease of upside movement)
  • 🔴 SELL: EMV crosses below 0 (ease of downside movement)
• Market conditions: Relative ease of movement
• Win rate typical: 50–60%
• Use case: Movement difficulty assessment
• Risk level: Medium

🔷 5. Negative Volume Index Strategy

• Indicator: NVI (accumulation on down-volume)
• Entry Rules:
  • 🟢 BUY: NVI rising above its moving average (smart money buying)
  • 🔴 SELL: NVI falling below MA (smart money selling)
• Market conditions: Long-term accumulation/distribution
• Win rate typical: 50–60%
• Use case: Smart money detection, long-term trends
• Risk level: Low (position trading)

📈 6. VWAP Strategy - Volume Weighted Average Price

• Indicator: VWAP (institutional fair price)
• Entry Rules:
  • 🟢 BUY: Price bounces above VWAP with volume
  • 🔴 SELL: Price breaks below VWAP on volume
• Market conditions: Intraday mean reversion, institutional trading
• Win rate typical: 55–65%
• Use case: Intraday support/resistance, institutional levels
• Risk level: Medium

📊 Signal Quick Reference

✅ Good Signal Examples by Category

❌ Bad Signal Examples by Category

🎓 Strategy Selection by Market Regime

📈 Strong Trending Market

Use Trend Strategies: MACD, Parabolic SAR, Aroon, Vortex

• Focus on breakouts and continuation
• Use ATR for volatility-adjusted stops
• Ignore mean-reversion signals
• Expect: 40–50% win rate, large winners (risk/reward 1:2+)

📊 Range-Bound/Ranging Market

Use Momentum Strategies: RSI-2, Stochastic, Williams %R

• Focus on overbought/oversold fades
• Use Bollinger Bands for support/resistance
• Profit from bounces, not breakouts
• Expect: 70%+ win rate, small winners (risk/reward 1:0.5–1:1)

🌊 Volatile/Choppy Market

Use Volume Strategies: CMF, MFI, Force Index, VWAP

• Focus on volume confirmation
• Avoid large positions
• Use tighter stops
• Expect: 55–65% win rate, medium risk/reward

🔄 Reversal/Transition Market

Use Oscillator + Divergence: CCI extremes, CMO divergence, Ichimoku cloud

• Watch for indicators at extremes
• Confirm with volume
• Use multi-timeframe confirmation
• Expect: 50–60% win rate but high risk/reward 1:2–1:3

💡 Implementation Tips

1. Combine Indicators: Don't rely on single indicator

   • Trend (MACD) + Momentum (RSI) + Volume (OBV)
   • Example: "MACD > 0 AND RSI 40–70 AND OBV rising"

2. Use Stops: Position size = Account Risk / (Stop Loss Distance)

   • ATR-based: Stop = Entry ± (2 × ATR)
   • Support/Resistance-based: Stop = Recent swing low + buffer
   • Bollinger Bands: Stop = Outside band + ATR buffer

3. Risk/Reward: Exit targets should exceed stop loss

   • Trend strategies: 1:2 or 1:3 (larger winners)
   • Mean reversion: 1:0.5 to 1:1 (small winners, high frequency)

4. Timeframe Alignment: Confirm across multiple timeframes

   • Daily trend + 4H momentum + 1H entry
   • Weekly ADX > 25 (strong trend) filters out choppy daily

5. Backtest: Always backtest before live trading

   • Use Strategy Stats and Compute Strategy Stats
   • Track: Win Rate, Profit Factor, Sharpe Ratio, Max Drawdown