Harmonic
Rotations
Sierra Chart Custom Study by boostyourcharts.com
Harmonic Market Rotations Analysis with Histogram
This study calculates and displays a histogram of market rotations based on a ZigZag study input. It helps identify ‘normal’ and ‘impulsive’ rotations based on statistical calculations – allowing you to spot moves with a higher probability of continuation.
Another practical use case is integrating rotation analysis into your risk management by, for example, placing stop losses beyond typical rotation sizes to reduce the chance of getting stopped out by market noise.
The study supports multiple methods for calculating value areas, including Standard Deviation and Frequency-Based approaches, and offers Winsorization to handle outliers. A fully integrated alert system allows you to define custom thresholds for detecting abnormal rotations across multiple markets. You can also choose to base the calculations on the Mode instead of the Mean. The study includes extensive customization options such as positioning, sizing, and coloring of all elements, and is optimized for smooth performance with OpenGL in Sierra Chart.
What it is about
This study is designed for traders who seek to incorporate a data-driven, statistical foundation into their trading strategies. By analyzing market rotations and identifying patterns in price movements, it provides insights into market behavior that can enhance decision-making and risk management. Whether you’re focused on refining entry points, optimizing stop losses, or adapting to changing market conditions, this study offers a robust toolset to build a more systematic and informed trading approach.
Calculation Methods:
1. Standard Deviation Method
This method calculates key value areas based on the Mean of all rotations. Since markets tend to have a right-skewed distribution, where most rotations are clustered around the Mode but extreme outliers push the Mean higher, we’ve added tools to handle this skewness.
- Winsorization: This optional feature reduces the impact of extreme outliers by capping them at a certain threshold (e.g., 90th percentile). This makes the Mean more representative of the bulk of rotations.
- Mode-Based Calculation: Instead of using the Mean, you can base the calculations on the Mode to better focus on the majority of rotations. This is useful for ignoring extreme outliers that affect the Mean.
When using the Standard Deviation method, the following key areas are calculated:
- Value Area Low (VAL68) = Mean (or Mode) – 1 standard deviation.
- Value Area High (VAH68) = Mean (or Mode) + 1 standard deviation.
- Impulse Area (VAH90) = Mean (or Mode) + 1.666 standard deviations.
2. Frequency-Based Method
This method works similarly to how volume profiles calculate their value areas. It starts from the most frequent rotations around the Mode and accumulates them until 68% of all rotations are included. This approach helps highlight the most frequent market rotations while reducing the impact of outliers.
- Value Area Calculation: The most common rotations (bins) are prioritized until 68% of total rotations are reached, providing a clearer picture of what is considered ‘normal’ market behavior.
- Impulse Area (VAH90): This is calculated based on the 90th percentile, marking rotations considered impulsive.
Additional Features:
- Alerts: Built-in system for notifying users when rotations exceed defined thresholds. (Allows scanning multiple markets for impulse rotations.)
- Customizable Display: Users can adjust the positioning, sizing, and color of histogram bars, borders, and text to their liking.
- OpenGL Compatibility: The study is fully compatible with OpenGL, ensuring a smooth workflow within Sierra Chart.
Plans
Monthly
$24.99/month
✓ Free 7 Days Trial Included
✓ Full Access
✓ Updates Included
Yearly
$229/year
✓ Free 7 Days Trial Included
✓ Full Access
✓ Updates Included
Lifetime
$399.00
✓ Free 7 Days Trial Included
✓ Full Access
✓ Updates Included
✓ One-time Payment