RSI-Adaptive T3 & SAR Strategy

The RSI-Adaptive T3 & SAR Strategy indicator provides a comprehensive trend-following framework that combines adaptive smoothing with momentum-based trend confirmation. By integrating an RSI-driven T3 moving average with a Parabolic SAR filter, it identifies precise reversal points and provides systematic trade execution with dynamic risk management.

Usage

The Usage section outlines how to interpret the signals generated by the fusion of adaptive moving averages and trend filters.

• Long Entries: Triggered when the RSI-Adaptive T3 curve crosses upward and the price is currently above the Parabolic SAR line, indicating a bullish trend alignment.
• Short Entries: Triggered when the RSI-Adaptive T3 curve crosses downward and the price is below the Parabolic SAR line, confirming bearish momentum.
• Trend Visualization: The T3 line changes color based on its slope (green for bullish, red for bearish), while the Parabolic SAR dots provide a secondary confirmation of the underlying market regime.
• Risk Management: The strategy automatically calculates stop-loss levels based on recent price extremes (highest high or lowest low) within a user-defined lookback period.

Details

The strategy relies on two primary logical pillars:

1. RSI-Adaptive T3: The T3 moving average, originally developed by Tim Tillson, is enhanced here by making its smoothing length dynamic. The script calculates RSI to determine market speed; when RSI is high, the length shortens to increase responsiveness, and when RSI is low, the length increases to filter out noise in sideways markets.
2. SAR Filter: The Parabolic Stop and Reverse (SAR) acts as a structural filter. It ensures that the faster T3 signals are only executed when they align with the broader directional trend, reducing the frequency of whipsaws.

Settings

T3

• RSI Length: The period used to calculate the Relative Strength Index for the adaptive logic.
• Min T3 Length: The minimum smoothing period used by the T3 when the market is highly active.
• Max T3 Length: The maximum smoothing period used by the T3 during low-volatility phases.
• T3 Volume Factor: Adjusts the responsiveness of the T3 calculation (often referred to as the "v" parameter).

SAR Filter

• Start: The initial acceleration factor for the Parabolic SAR.
• Increment: The step by which the acceleration factor increases.
• Maximum: The upper limit for the acceleration factor.

Strategy & Visuals

• Stop Loss Length: The lookback period used to determine the dynamic stop-loss levels based on recent highs or lows.
• Up/Down Color: Customization options for the bullish and bearish visual elements on the chart.
• Strategy Start Date: Defines the point in time when the strategy begins backtesting and signal generation.

FAQ

How do I use the RSI-Adaptive T3 & SAR Strategy?

You can apply it to any timeframe or asset. Look for the crossover markers where the T3 line changes color while being supported by the Parabolic SAR direction for high-probability entries.

Does this script provide alerts?

Yes, the script includes optimized alert messages for both entries and exits, which can be used to automate trading or receive notifications on your device.

How can I access this tool?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.