Time Session Filter - MACD example

8. Sept. 2023

Time Session Filter in TradingView Strategy: A Comprehensive Guide
Welcome to this educational TradingView blog where we dive deep into the functionality and utility of the time session filter in trading strategies. It's interesting to note that the time session filter is a commonly overlooked feature in Pine Script, often not integrated into overall trading strategies. Yet, when used wisely, this tool can significantly enhance your trading approach. In essence, the session filter ensures that trades are only made within a specific, user-defined time frame. By incorporating this often-neglected building block, you can make your strategy more adaptable to various market conditions and trading preferences.

What is a Time Session Filter?
A time session filter is designed to:

• Select Times of the Day to Trade: The filter allows you to choose specific hours during the day in which trades are allowed to be excecuted.
  
• Toggle Days to Trade: You can decide which days of the week you want to trade, giving you the flexibility to avoid days that are historically not profitable for your strategy.
  
• Close Trade When Session Ends: The filter can automatically close any open trade once the specified time session concludes, reducing the risk associated with holding positions outside your chosen time frame.
  

The user interface is streamlined, taking minimal space for the input sections, making it convenient to integrate with other indicators in your overall strategy script. In addition the script colors the background of the chart green when the timesession filter is on and makes the background red when the filter doesn't allow any trades. This helps you to visualise the selected timeframes in relation to chart patterns.

Best Practices for Time Selection
From my personal trading experience I share some input settings you can try to play around with:

• Stocks: Trading stocks sometimes yield better results if you only trade in the mornings until lunchtime. This is the period when markets are generally more active, and traders are keenly participating.
  
• Cryptocurrencies: For cryptocurrencies, it sometimes makes sense to avoid trading on Fridays, a day when futures contracts often expire. Various other market-moving events also typically occur on Fridays.
  
• Random Selection: Interestingly, sometimes choosing a random selection of times and days can improve the script's performance, adding an element of unpredictability that might outperform more systematic approaches.
  

Strategy Overview
This strategy script incorporates various elements, including risk position size and MACD indicator, to provide a comprehensive trading strategy. For a detailed explanation of risk position sizing, please refer to this article: https://www.tradingview.com/script/HAp1ed0F-Risk-Management-and-Positionsize-MACD-example/

For a complete understanding of the MACD indicator utilized, visit the following explanation: https://www.tradingview.com/script/rQbmGtAx-MACD-HTF-Dynamic-Smoothing/

Additionally, for high time frame trend filters, consult this resource for more info: https://www.tradingview.com/script/WSfUYnNA-HTF-Trend-Filter-Dynamic-Smoothing/

Educational Purposes and Risks
Please note that this script is for educational purposes and serves merely as an example of how to incorporate a time session filter into a trading strategy for pinescript. It is a simplified strategy without a fixed stop-loss, which can result in higher exposure to significant losses. The time session filter can be a powerful addition to your trading strategy, providing you with the tools to tailor your approach according to time-specific market conditions. By understanding its functionalities and best practices, you can make more informed trading decisions, but always remember that trading carries inherent risks.

Happy trading!