PMax on RSI with Tillson T3

The PMax on RSI w T3 indicator provides a comprehensive trend-following system that adapts the Profit Maximizer (PMax) logic to the Relative Strength Index (RSI) smoothed by a Tillson T3 moving average. This tool allows traders to identify momentum-based trend shifts within an oscillator framework, offering a unique perspective on overbought and oversold conditions paired with trailing stop-loss logic.

Usage

The Usage section describes how the script can be used, such as identifying trend reversals or momentum shifts. Users typically look for crossovers between the T3 Moving Average and the PMax trailing line to determine entry and exit points.

• Trend Identification: When the T3 line (defaulting to the chart foreground color) crosses above the PMax line (red), it signals a potential bullish trend. Conversely, a cross below suggests a bearish trend.
• Signal Labels: The script includes "Buy" and "Sell" labels that appear at the moment of these crossovers to assist in visual execution.
• Optimization: Because RSI is prone to sudden volatility and divergences, users should optimize the Multiplier and T3 Length for specific assets. High-volatility assets may require a higher Multiplier to avoid premature exits.

Details

The PMax on RSI w T3 is built upon a custom calculation of the RSI. Standard RSI does not provide High and Low values, which are required for the Average True Range (ATR) calculation used in PMax. To solve this, the script calculates synthetic High and Low RSI values based on price movements relative to previous bars.

The indicator integrates the Tillson T3 moving average, known for its ability to reduce lag while maintaining smoothness. The T3 is applied to the RSI values, and the PMax trailing stop logic is then wrapped around this smoothed average. This combination creates a trailing line that adjusts based on the volatility of the RSI rather than just price, helping to filter out market noise.

Settings

• Source: The price input used for calculations (default is HL2).
• ATR Multiplier: Controls the distance between the T3 moving average and the PMax trailing line.
• Tillson T3 Length: The lookback period for the T3 moving average calculation.
• TILLSON T3 Volume Factor: Adjusts the damping effect of the T3 moving average; higher values make it more reactive.
• ATR Length: The period used to calculate the volatility (ATR) of the RSI.
• RSI Length: The lookback period for the underlying RSI calculation.
• Show RSI?: Toggles the visibility of the raw RSI line.
• Show Moving Average?: Toggles the visibility of the T3 moving average line.
• Show Crossing Signals?: Enables or disables the Buy/Sell labels.
• Highlighter On/Off?: Toggles the background shading between the RSI and PMax lines.

FAQ

How do I adjust the sensitivity of the trend signals? You can adjust the "ATR Multiplier" and "Tillson T3 Length" in the settings. A smaller multiplier or shorter length will make the indicator more sensitive to minor fluctuations, while larger values will focus on long-term trends.

Why does this indicator appear in a separate pane? Since this tool is based on the RSI (which scales from 0 to 100), it is designed as an oscillator-style indicator and operates in its own window rather than overlaying the price candles.

How can I access the PMax on RSI w T3? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.