Probability Grid [LuxAlgo]

The Probability Grid tool allows traders to see the probability of where and when the next reversal would occur, it displays a 10x10 grid and/or dashboard with the probability of the next reversal occurring beyond each cell or within each cell.

🔶 USAGE



By default, the tool displays deciles (percentiles from 0 to 90), users can enable, disable and modify each percentile, but two of them must always be enabled or the tool will display an error message alerting of it.



The use of the tool is quite simple, as shown in the chart above, the further the price moves on the grid, the higher the probability of a reversal.

In this case, the reversal took place on the cell with a probability of 9%, which means that there is a probability of 91% within the square defined by the last reversal and this cell.

🔹 Grid vs Dashboard



The tool can display a grid starting from the last reversal and/or a dashboard at three predefined locations, as shown in the chart above.

🔶 DETAILS

🔹 Raw Data vs Normalized Data



By default the tool displays the normalized data, this means that instead of using the raw data (price delta between reversals) it uses the returns between each reversal, this is useful to make an apples to apples comparison of all the data in the dataset.

This can be seen in the left side of the chart above (BTCUSD Daily chart) where normalize data is disabled, the percentiles from 0 to 40 overlap and are indistinguishable from each other because the tool uses the raw price delta over the entire bitcoin history, with normalize data enabled as we can see in the right side of the chart we can have a fair comparison of the data over the entire history.

🔹 Probability Beyond or Within Each Cell



Two different probability modes are available, the default mode is Probability Beyond Each Cell, the number displayed in each cell is the probability of the next reversal to be located in the area beyond the cell, for example, if the cell displays 20%, it means that in the area formed by the square starting from the last reversal and ending at the cell, there is an 80% probability and outside that square there is a 20% probability for the location of the next reversal.

The second probability mode is the probability within each cell, this outlines the chance that the next reversal will be within the cell, as we can see on the right chart above, when using deciles as percentiles (default settings), each cell has the same 1% probability for the 10x10 grid.

🔶 SETTINGS

• Swing Length: The maximum length in bars used to identify a swing
  
• Maximum Reversals: Maximum number of reversals included in calculations
  
• Normalize Data: Use returns between swings instead of raw price
  
• Probability: Choose between two different probability modes: beyond and inside each cell
  
• Percentiles: Enable/disable each of the ten percentiles and select the percentile number and line style
  

🔹 Dashboard

• Show Dashboard: Enable or disable the dashboard
  
• Position: Choose dashboard location
  
• Size: Choose dashboard size
  

🔹 Style

• Show Grid: Enable or disable the grid
  
• Size: Choose grid text size
  
• Colors: Choose grid background colors
  
• Show Marks: Enable/disable reversal markers