Profit Maximizer PMax

The Profit Maximizer PMax indicator combines the trend-following capabilities of moving average crossovers with ATR-based trailing stops to provide a versatile trend-detection system.

Usage

The Profit Maximizer (PMax) is designed to filter out market noise and identify sustainable trends by merging the logic of the Moving Stop Loss (MOST) and SuperTrend indicators. It is applicable to various asset classes and timeframes, offering two primary methods for signal interpretation:

• Moving Average Crossovers: This is the primary signal method. A bullish trend is indicated when the built-in Moving Average crosses above the PMax trailing stop line. Conversely, a bearish trend is identified when the Moving Average crosses below the PMax line.
• Price Crossovers: Traders can also utilize price action relative to the PMax line. When the price jumps over the PMax line, it may signal a buying opportunity, while falling below the line suggests a sell signal.

The indicator includes a "Highlighter" feature that colors the background or the area between the price and the PMax line to provide immediate visual feedback on the current market bias. During sideways or range-bound markets, the Variable Index Dynamic Moving Average (VAR) option is often preferred to reduce whipsaws.

Details

PMax was developed by KivancOzbilgic as an evolution of existing trend-following tools. It addresses the common weakness of trailing stops in sideways markets by integrating a smoothing mechanism (the Moving Average) with a volatility-based detection system (ATR).

The script calculates a trailing stop similar to SuperTrend but uses a user-selected Moving Average as the basis for the offset rather than just the raw price. This double-filtering process aims to produce fewer false signals than its predecessors. The implementation supports eight different moving average types, allowing for significant customization:

1. SMA: Simple Moving Average
2. EMA: Exponential Moving Average
3. WMA: Weighted Moving Average
4. TMA: Triangular Moving Average
5. VAR: Variable Index Dynamic Moving Average (VIDYA)
6. WWMA: Welles Wilder's Moving Average
7. ZLEMA: Zero Lag Exponential Moving Average
8. TSF: True Strength Force (Linear Regression Forecast)

Settings

• Source: Determines the price data used for calculations (default is HL2).
• ATR Length: Sets the lookback period for the Average True Range calculation.
• ATR Multiplier: Adjusts the distance between the Moving Average and the PMax trailing stop line.
• Moving Average Type: Allows selection between eight different MA calculation methods.
• Moving Average Length: Controls the sensitivity of the internal average; smaller values increase sensitivity, while larger values provide a smoother, lagging trend line.
• Change ATR Calculation Method: Toggles between the standard TradingView ATR and a Simple Moving Average of the True Range.
• Normalize ATR: When enabled, normalizes the ATR relative to price.
• Show Moving Average: Toggles the visibility of the internal Moving Average line.
• Show Crossing Signals: Displays Buy/Sell labels based on MA/PMax crossovers.
• Show Price/Pmax Crossing Signals: Displays Buy/Sell labels based on Price/PMax crossovers.
• Highlighter On/Off: Enables or disables the visual background shading for trend direction.

FAQ

How do I interpret the PMax signals? A bullish trend is generally active when the Moving Average stays above the PMax line, and a bearish trend is active when the Moving Average is below the PMax line. Crossings between these two lines generate the primary trade signals.

Which Moving Average type is best for volatile markets? While settings depend on the asset, the "VAR" (Variable Index Dynamic Moving Average) is often recommended for sideways or highly volatile markets as it adjusts its smoothing based on market volatility.

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