In the world of algorithmic trading, Pine Script stands out as a powerful tool for creating custom indicators and strategies on TradingView. However, many traders find themselves at a crossroads when it comes to choosing between the indicator format and the strategy format. Let's delve into the basics of both formats and explore how traders can make an informed decision.
Indicator Format:
Definition: Indicator scripts in Pine Script are primarily used to plot graphical elements on the price chart.
Usage: Indicators help traders identify trends, patterns, and potential entry or exit points.
Examples: Moving averages, MACD, RSI, Bollinger Bands, etc.
Key Features: Customizable parameters, visual representations, and alerts.
Strategy Backtest Format (signals only) :
Definition: Program scripts are designed to generate buy and sell signals based on predefined conditions.
Usage: Strategies automate trading decisions by executing trades based on specific rules and criteria and can even perform 'backtesting'
Examples: Moving average crossover with risk-reward based exit, position-sizing, intraday-exits.
Key Features: Backtesting strategy via 'strategy tester' feature of Tradingview.
Choosing Between Indicator and Strategy Formats:
if looking for backtesting the strategy, you have a 'strategy-tester' feature provided by 'Tradingview', for which you will have to get a 'strategy backtesting format' program
if looking for just plotting some data on the charts, you can opt for 'indicator format programs'
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