Delta Trap Breakout

The Delta Trap Breakout indicator identifies significant market movements where large delta imbalances are followed by a breakout, signalling a potential continuation or reversal. This tool is especially useful in markets where delta imbalances indicate potential areas of support or resistance, often leading to a strong price movement once these levels are breached.

Key Features

• Trapped Delta Detection: Identifies bars with a delta exceeding a specified threshold, signalling high buying or selling pressure.
• Breakout Confirmation: Confirms the potential move by requiring the price to break past the high or low of the trapped delta bar, enhancing the reliability of the signal.
• Flexible Adjustment: Allows customization of delta thresholds and the method of calculating the reversal delta to adapt to varying market conditions and trading styles.

Tips for Implementation

• Adjust Parameters: Fine-tune the Min Trapped Delta and Min Reverse Delta Increase to match the volatility and characteristics of the trading instrument.
• Confirmation with Other Indicators: Use in conjunction with other indicators such as volume, moving averages, or RSI to confirm the strength and potential of the breakout.
• Backtesting: Always backtest the indicator under different market conditions to understand its effectiveness and to adjust parameters accordingly.
• Stop Loss and Take Profit: Establish clear stop-loss points just beyond the breakout levels and set take-profit levels at significant resistance or support points to manage risk effectively.

Min Trapped Delta

• Type: Integer
• Description: Minimum delta value that must be trapped within a bar to consider it for a breakout potential.
• Default Value: 1000

Min Reverse Delta Increase

• Type: Integer
• Description: Minimum increase in delta required to validate a breakout after a trapped delta.
• Default Value: 200

Sum Reverse Delta

• Type: Boolean
• Description: Determines whether to sum the deltas of consecutive bars to meet the reverse delta increase requirement.
• Default Value: False

Plot Offset (Ticks)

• Type: Integer
• Description: Distance in ticks to offset the plot from the high or low of the breakout bar, improving visibility and distinction from actual price bars.
• Default Value: 3

IndicatorSignalUp

• Type: Plot
• Style: Triangle Up
• Color: DeepSkyBlue
• Description: Signifies a bullish breakout signal where the closing price moves above the high of the delta trapped bar.

IndicatorSignalDown

• Type: Plot
• Style: Triangle Down
• Color: DeepSkyBlue
• Description: Indicates a bearish breakout signal where the closing price drops below the low of the delta trapped bar.