The Most Important Tool for Technical Traders

If you’re a technical trader, pine script is something you should definitely use to test your trading strategies. When I first started learning about technical trading, I’ve watched countless videos explaining things like MACD convergence, RSI, Bollinger bands and it’s always around some strategy like trade if this metric hits this number or cross this line.

Where I struggled was if I tested these strategies, how well do they hold up?

Introduction to TradingView

TradingView in my opinion is the best charting program out in the market. There are hundreds pre-built indicators and strategies that’s built in. If that’s not enough, there are user created indicators to choose from.

You can view multiple charts at once, see live prices by the second, get live bid and ask prices, draw custom support and resistance lines and the list goes on.

What is PineScript?

Pinescript is TradingView’s own scripting language. It’s a very easy coding language to pick up and it’s only used for creating custom indicators and strategies on TradingView.

Below is a simple example the power of trading view. One popular strategy is trading on Bollinger bands. If the line crosses up on the lower bband line, then it’s an indicator to buy. When the line crosses down on the upper bband line, then it’s an indicator to sell. The chart below shows if we were to implement the strategy, when we would have bought and shorted the stock.

The most powerful feature is the performance summary tab. It shows a graphical view of how the investment would have done if you used this strategy from a point in time till today. Here we have set the strategy to run from the year 2000 till today.

The blue line represents the equity if we used the strategy and invested $100K from the start. The white line is the equity growth if we just bought and held the stock.

You can further breakdown the performance of the strategy by comparing the long positions vs. short positions, commissions paid and other metrics such as max drawdowns, sharpe ratios and much more. If that’s not enough, you can go into the list of trades to see the performance of each one.

Using this strategy, we would have lost over $76K, but that’s not the point. Using PineScript, you could test any strategy you want in less than 5 minutes.

To get started with PineScript, I would suggest reading through the PineScript documentation and review a few open source strategies in the TradingView library created by users to see some examples.

Closing Thoughts

PineScript was a breakthrough for me when learning to trade technical indicators and rather than just relying on the words of other technical traders strategies, I was able to test them before deploying them in my own portfolio.

To get started with TradingView, click here to sign up and get $30 towards a premium plan. Using TradingView is completely free, and I actually encourage the free plan if you’re just starting out in your investment journey.