Targets For Overlay Indicators

The Targets For Overlay Indicators tool is an innovative utility that enhances your trading strategy by displaying specific price targets whenever the price crosses external indicators on your chart. This feature provides a dual-target approach, offering one target for crossover events and another for crossunder events, which can boost your trading efficiency significantly. These targets are not only actionable but also come with alerts for newly established and reached targets, ensuring you never miss an opportunity in volatile markets.

How to Trade with Targets For Overlay Indicators?

To utilize the Targets For Overlay Indicators tool effectively, traders need to select a precise input source from the "Source" drop-down in the settings. As seen in the example above, when applied to a volatility stop, the indicator displays clear targets that can guide your trading decisions.

Installing the "Targets For Overlay Indicators" script directly on an indicator, such as the VStop, makes the setup straightforward.

The strategic use of targets helps traders identify potential price limits which could signal deviations from predictions made by one or more indicators. In trading, these predetermined targets are essential for maximizing profits or minimizing losses, positioning this tool as invaluable for setting take-profit or stop-loss levels.

These targets, being essentially horizontal, can also act as support or resistance levels, with breakthroughs likely indicating emerging trends.

For traders eager to capture new targets following the achievement of one, the "New Target When Reached" option in the target logic settings ensures frequent target updates, opening more trading opportunities.

Additionally, traders desiring fewer but potentially more lucrative targets can enable a restriction on new target generation until current targets are achieved, favoring a long-term strategic approach.

Examples

This indicator is adaptable to various overlay indicators known for crossing with prices such as moving averages, bands, or trailing stops.

Utilizing trailing stops like SuperTrend or VStop simplifies the creation of precise targets. Be mindful, though, some SuperTrend scripts split the extremities into two plots that may not be compatible. Below is a compatible SuperTrend script for seamless integration:

//@version=5
indicator("SuperTrend", overlay = true)
factor = input.float(3, 'Factor', minval = 0)
atrLen = input.int(10, 'ATR Length', minval = 1)

[spt, dir] = ta.supertrend(factor, atrLen)

plot(spt, 'SuperTrend', dir != dir[1] ? na : dir < 0 ? #089981 : #f23645, 2)
plot(spt, 'Circles', dir > dir[1] ? #f23645 : dir < dir[1] ? #089981 : na, 3, plot.style_circles)

When using moving averages, traders can generate more targets compared to other overlay indicators.

For band indicators or those yielding dual outputs, apply the tool twice: use crossover targets for the upper band and crossunder targets for the lower band. An example is using the Trendlines with breaks indicator:

Dashboard Overview

The dashboard at the top-right of your chart provides a quick overview of target quantities, alongside reach rates for targets 1 and 2, and the overall total. This information is invaluable for assessing target distances relative to selected conditions, with higher reach rates hinting that the target proximity to market prices facilitates successful hits.

Configuration Options

• Source: Choose the indicator source that will determine target levels when a crossover occurs with the closing price.
• Show Target Labels: Enable this to see target labels directly on your chart.
• Candle Coloring: Activate to color code candles per the latest active target.

Target Settings for Crossover and Crossunder

• Show Target: Opt to display or hide the target.
• Above Price Target: Generates targets above closures if enabled.
• Wait Until Reached: Defers generating new targets until the current one is hit.
• New Target When Reached: Instantly creates a new target upon the existing one being met.
• Evaluate Wicks: Determines target reaching by high/low prices; unselect to use close prices.
• Target Distance From Price: Set the proximity to price in various units such as currency, percentages, ATR, or ticks.

FAQ

How do I access the Targets For Overlay Indicators?

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

What are the benefits of using overlay indicators?

Overlay indicators provide crucial visual guidance on price limit predictions and aid in secure trading through dynamic support and resistance levels.

Can this tool improve trading performance?

Yes, by providing clear target levels, traders can improve their entry and exit strategies, resulting in better-managed trades.