Metatrader CalculatorThe “ Metatrader Calculator ” indicator calculates the position size, risk, and potential gain of a trade, taking into account the account balance, risk percentage, entry price, stop loss price, and risk/reward ratio. It supports the XAUUSD, XAGUSD, and BTCUSD pairs, automatically calculating the position size (in lots) based on these parameters. The calculation is displayed in a table on the chart, showing the lot size, loss in dollars, and potential gain based on the defined risk.
Portfolio management
CME Price LimitCalculates the CME Price Limit
The reference price is obtained from the previous day's closing settlement price
(data pulled from the asset's daily chart with settlement enabled)
Percentage limit can be modified in settings
Buffer can be enabled (for example, 2% buffer on a 7% limit, so a line gets drawn at 5% too)
Alert can be enabled for price crossing a certain percentage from reference on the day
You can choose to plot the historical lines on every day, or the current day only
The reference price output can be found in the data window, or in the indicator status line if enabled in the settings.
Before placing real trades with this, you should compare the indicator's reference price to what's shown on CME's website, to double check that TradingView's data matches for your contract.
www.cmegroup.com
Zonas Prohibidas Topstep (NQ) - Auto🛡️ Topstep Restricted Zones (Auto Previous Close) — by Dragonthegood
This script is built for traders using Topstep or other prop firm accounts that enforce risk rules near daily price limits (such as on futures like NQ, the E-mini Nasdaq-100).
🧠 What does this indicator do?
🔹 Automatically fetches the previous day's closing price
🔹 Based on that close, it calculates:
The 7% daily price limit (up and down)
The 2% restricted zone near those limits, where Topstep does not allow trading
🔹 Visually draws two red horizontal zones (upper and lower) on the chart, indicating where you should not open or hold positions
🔹 Optionally displays the previous close as a label on the chart for reference
🔒 Why is it useful?
Helps you avoid violations of Topstep's high-risk zone rules
Prevents you from getting stuck in a trade if the market hits limit up or limit down
Works in real-time, without needing to manually input the previous close
🛠️ How to use it:
Apply the script to your chart (works on any timeframe)
The danger zones will auto-draw based on yesterday’s close
If price is inside the red zone — don’t trade (per Topstep rules)
No daily configuration required
📌 Perfect for:
Futures traders in funded accounts (Topstep, Apex, etc.)
Scalpers and day traders using NQ, ES, RTY, etc.
Anyone managing risk during high-volatility conditions
TP/SL Percentage & RR Visual Tool📈 TP/SL Percentage & RR Visual Tool with UT Bot & EMA Suite
This all-in-one visual trading tool combines powerful precision with clean, dynamic overlays designed to help traders make smarter decisions in real time.
✅ Features:
TP/SL Lines + Zones
Visualize up to 3 Take Profit targets and your Stop Loss level on the chart. Zones are shaded for quick risk/reward perception.
Customizable Risk/Reward
Adjust TP/SL percentages and see real-time percentage distance from price, plus live R:R ratio.
Floating Table Display
A sleek, movable table shows:
Entry & Current Price
TP & SL values
% distance to TP
R:R Ratio
Current Session + Next Session time
Session Awareness
Automatically detects and displays whether you're in the Asian, London, or New York session. Highlights upcoming session transitions.
UT Bot Alerts Integration
Get clear Buy/Sell signals using trailing stop logic powered by ATR and optional Heikin Ashi candles.
Built-in EMAs (20, 50, 100, 200)
Customize and plot key moving averages directly on the chart with color-coded lines.
🔧 Customization Options:
TP/SL levels
Line style, color & thickness
EMA lengths
Table placement
Session timing logic
UT Bot sensitivity (ATR & key multiplier)
💡 Ideal For:
Scalping & intraday trading
Swing traders who use clear entry/exit zones
Anyone who wants clean R:R visuals and precision-based decisions
TP/SL Percentage & RR Visual ToolThis tool is designed to help traders visually and statistically assess their trade setup by calculating Stop Loss (SL), Take Profit (TP), and Risk-to-Reward (RR) based on percentage inputs from the current price.
🔧 How It Works:
Uses the current candle’s close price as your entry.
Calculates TP and SL as percentage-based levels (e.g., 1% SL, 1.5% TP).
Displays horizontal lines and labels on the chart for TP and SL (only on the latest candle to reduce clutter).
Shows a compact table in the top-right corner with all key values:
Entry Price
Current Price
TP Price (+%)
SL Price (-%)
TP Distance from current price
RR Ratio (e.g., 1:1.5)
💡 Use Cases:
Quickly validate if a trade setup meets your desired RR profile (e.g., 1:2).
Perfect for scalpers, swing traders, and position traders who rely on structured risk management.
Combine with your entry signal strategy to visualize targets and stops without manual calculations.
⚙️ Inputs:
Stop Loss % – Sets how far your SL is from the entry.
Take Profit % – Sets how far your TP is from the entry.
ProfitPivotProfitPivot dynamically shows the difference between unit cost and current market price of an asset, both in absolute term and in percentage. Traders can ascertain the profit level of a particular asset at a glance. Traders can input or change unit cost of the asset at any time directly through attribute settings. Previous bar close price will be used by default if the unit cost is not supplied.
ProfitPivot is developed by @isarab with the assistance of Copilot. It is licensed under Mozilla Public License Version 2.0.
Portfolio Monitor - DolphinTradeBot1️⃣ Overview
▪️This indicator unifies the value of all your investments—whether stocks, currencies, or cryptocurrencies—in your chosen currency. This tool not only provides a clear snapshot of your overall portfolio performance but also highlights the individual growth of each asset with intuitive visualizations and an easy-to-understand performance report.
2️⃣ What sets this indicator apart
▪️is its ability to convert values from various currency pairs into any currency you choose. This means you can monitor your portfolio's performance against any currency pair you prefer, offering a flexible and comprehensive view of your investments.
3️⃣ How Is It Work ?
🔍The indicator can be analyzed under two main categories: visual representations and tables.
1- Visual representations ;
The indicator includes three different types of lines:
1. 1 - Reference Line → This represents the cost of all assets we hold, based on the selected date.
1. 2 - Total Assets Line → Displays the real-time value of all assets in our possession, including cash value, in the selected trading pair.
The area between the reference line is filled with green and red. The section above the reference line is represented in green, while the section below is shown in red.
1. 3 - Performance Lines → These visualize the performance of the assets, starting from the reference line and taking into account their weights in the portfolio. (Note: The lines are scaled for visualization purposes, so their absolute values should not be considered.)
"The names of the lines are shown in the image below."⤵️
2- Tables
The indicator includes three different types of tables:
2. 1 - Analysis Table : It provides a superficial overview of wallet statistics and values.
▪️TOTAL ASSETS → The current equivalent of all assets in the target currency
▪️CASH VALUE → The current value of the amount "Cash Value", in the target currency.
▪️PORTFOLIO VALUE → The total value of assets excluding Cash, in the target currency.
▪️POSTFOLIO COST → The cost of assets excluding Cash, in the target currency.
▪️PORTFOLIO ABSOLUTE RETURN → It shows the profit or loss relative to the cost of assets
▪️PORTFOLIO RETURN % →It shows the profit or loss relative to the cost of assets on a percentage basis
2. 2 - Performance Table : It displays the names of assets excluding Cash and their profit amounts, sorted from highest to lowest profit. If "Show as Percentage" is selected in the settings, it shows the percentage profit or loss relative to the cost. Profits are represented in green, while losses are represented in red.
"You can see the visual showing the tables below"⤵️
4️⃣How to Use ?
1- Choose the date on which the visualization will begin (📌The start date only affects the exchange rate used for calculating the reference line in the target currency.)
2- If you have cash holdings, enter the amount and specify the currency.
3- Select the currency in which your portfolio value will be displayed.(Default value is USD)
4- To set up your portfolio;
SYMBOLS - QUANTITY - PURCHASE PRICE
Enter the symbols of your assets - the number of units you hold - and their cost levels.
5- If you have cash, be sure to include your cash balance. If you also hold other currencies, enter them as separate assets with their corresponding quantities and purchase prices.
6- If you want to see the percentage returns of the assets in the performance table relative to their cost, select the "Show as Percent" option.
7- If you want to see the performance visuals of the assets, click on the "Show Asset Performance" option.
You can find an image of the settings section where the numbers above are used as references below.⤵️
📌 NOTE → By default, a few assets and their values have been pre-added in the initial settings. This is to ensure that you don’t see an empty screen when adding the indicator to the chart. Please remember to enter your own assets and values. The default settings are only provided as an example.
Nasan Risk Score & Postion Size Estimator** THE RISK SCORE AND POSITION SIZE WILL ONLY BE CALCUTAED ON DIALY TIMEFRAME NOT IN OTHER TIMEFRAMES.
The typically accepted generic rule for risk management is not to risk more than 1% - 2 % of the capital in any given trade. It has its own basis however it does not take into account the stocks historic & current performance and does not consider the traders performance metrics (like win rate, profit ratio).
The Nasan Risk Score & Position size calculator takes into account all the listed parameters into account and estimates a Risk %. The position size is calculated using the estimated risk % , current ATR and a dynamically adjusted ATR multiple (ATR multiple is adjusted based on true range's volatility and stocks relative performance).
It follows a series of calculations:
Unadjusted Nasan Risk Score = (Min Risk)^a + b*
Min Risk = ( 5 year weighted avg Annual Stock Return - 5 year weighted avg Annual Bench Return) / 5 year weighted avg Annual Max ATR%
Max Risk = ( 5 year weighted avg Annual Stock Return - 5 year weighted avg Annual Bench Return) / 5 year weighted avg Annual Min ATR%
The min and max return is calculated based on stocks excess return in comparison to the Benchmark return and adjusted for volatility of the stock.
When a stock underperforms the benchmark, the default is, it does not calculate a position size , however if we opt it to calculate it will use 1% for Min Risk% and 2% for Max Risk% but all the other calculations and scaling remain the same.
Rationale:
Stocks outperforming their benchmark with lower volatility (ATR%) score higher.
A stock with high returns but excessive volatility gets penalized.
This ensures volatility-adjusted performance is emphasized rather than absolute returns.
Depending on the risk preference aggressive or conservative
Aggressive Risk Scaling: a = max (m, n) and b = min (m, n)
Conservative Scaling: a = min (m, n) and b = max (m, n)
where n = traders win % /100 and m = 1 - (1/ (1+ profit ratio))
A default of 50% is used for win factor and 1.5 for profit ratio.
Aggressive risk scaling increases exposure when the strategy's strongest factor is favorable.
Conservative risk scaling ensures more stable risk levels by focusing on the weaker factor.
The Unadjusted Nasan risk is score is further refined based on a tolerance factor which is based on the stocks maximum annual drawdown and the trader's maximum draw down tolerance.
Tolerance = /100
The correction factor (Tolerance) adjusts the risk score based on downside risk. Here's how it works conceptually:
The formula calculates how much the stock's actual drawdown exceeds your acceptable limit.
If stocks maximum Annual drawdown is smaller than Trader's maximum acceptable drawdown % , this results in a positive correction factor (indicating the drawdown is within your acceptable range and increases the unadjusted score.
If stocks maximum Annual drawdown exceeds Trader's maximum acceptable drawdown %, the correction factor will decrease (indicating that the downside risk is greater than what you are comfortable with, so it will adjust the risk exposure).
Once the Risk Score (numerically equal to Risk %) The position size is calculated based on the current market conditions.
Nasan Risk Score (Risk%) = Unadjusted Nasan Risk Score * Tolerance.
Position Size = (Capital * Risk% )/ ATR-Multiplier * ATR
The ATR Multiplier is dynamically adjusted based on the stocks recent relative performance and the variability of the true range itself. It would range between 1 - 3.5.
The multiplier widens when conditions are not favorable decreasing the position size and increases position size when conditions are favorable.
This Calculation /Estimate Does not give you a very different result than the arbitrary 1% - 2%. However it does fine tune the % based on sock performance, traders performance and tolerance level.
Stop-Loss Buy Orderbuying and selling at a certain value to keep your portfolio never below a certain value. The idea is to make sure for example that if btc falls bellow 100k you sell, and if it goes up you buy. Never mind the small loss for each trade as you are selling fraction below 100k and buying at a 100k.
Trade Ladder Pro: Compounding & Risk ManagerTrade Ladder Pro: Compounding & Risk Manager
Inspired by the popular $20 to $52,000 trading challenge, this tool is designed to help you scale your trading account using systematic compounding and enhanced risk management techniques. Whether you’re aiming for disciplined growth or fine-tuning your risk/reward, Trade Ladder Pro offers a flexible approach to visualizing your trade levels.
How to Use:
Inputs:
Compounding Mode:
Set your starting balance, final balance goal, number of trades, and current trade level. You can move to the next trade after a successful trade in settings. The entries are not signals. They are there to help manage risk.
The script calculates the necessary compounding factor to grow your balance across the defined trades.
Risk Management Mode:
In addition to the above, specify a risk percentage and risk/reward ratio.
Input an entry price (or leave it at 0 to use the current price) to automatically compute the stop loss and take profit levels.
Display Options:
Choose the table’s position on the chart (e.g., Top Right, Top Left, Bottom Right, Bottom Left).
Pick between a vertical or horizontal layout for a display that suits your workflow.
Results:
The table will display the trade level, starting balance, risk amount, entry price, take profit, and (if in Risk Management mode) stop loss along with the projected ending balance.
Community & Feedback:
Your feedback is invaluable! Please share any tips or report any errors you encounter so we can continue to improve this tool. Happy trading!
Smart % Levels📈 Smart % Levels – Visualize Significant Percentage Moves
What it does:
This indicator plots horizontal levels based on a percentage change from the previous day's close (or open, if selected). It allows traders to visualize price movements relative to meaningful thresholds like ±1%, ±2%, etc.
What makes it different:
Unlike other level indicators, Smart % Levels only displays the relevant levels based on current price action. This avoids clutter by showing only the levels that are being approached or crossed by the current price. It's a clean and dynamic way to visualize key price zones for intraday analysis.
How it works:
- Select between using the previous day's Close or Open as the reference
- Choose the percentage spacing between levels (e.g., 1%, 0.5%, etc.)
- Enable optional labels to see the exact percentage of each level
- Automatically filters levels to only show those between yesterday's price and today's current price
- Includes customization for colors, line styles, widths, and opacity
Best for:
Day traders and scalpers who want a quick, clean view of how far the current price has moved from yesterday’s reference, without being overwhelmed by unnecessary lines.
Extra notes:
- The levels are recalculated each day at the market open
- All graphics reset at the start of each session to maintain clarity
- This script avoids repainting by only plotting levels relative to available historical data (no lookahead)
This tool is for informational purposes only and should not be considered as financial advice. Always do your own research before making trading decisions.
Cartera SuperTrends v4 PublicDescription
This script creates a screener with a list of ETFs ordered by their average ROC in three different periods representing 4, 6 and 8 months by default. The ETF
BIL
is always included as a reference.
The previous average ROC value shows the calculation using the closing price from last month.
The current average ROC value shows the calculation using the current price.
The previous average column background color represents if the ETF average ROC is positive or negative.
The current average column background color represents if the ETF average ROC is positive or negative.
The current average column letters color represents if the current ETF average ROC is improving or not from the previous month.
Changes from V2 to V3
Added the option to make the calculation monthly, weekly or daily
Changes from V3 to V4
Adding up to 25 symbols
Highlight the number of tickers selected
Highlight the sorted column
Complete refactor of the code using a matrix of arrays
Options
The options available are:
Make the calculation monthly, weekly or daily
Adjust Data for Dividends
Manual calculation instead of using ta.roc function
Sort table
Sort table by the previous average ROC or the current average ROC
Number of tickers selected to highlight
First Period in months, weeks or days
Second Period in months, weeks or days
Third Period in months, weeks or days
Select the assets (max 25)
Usage
Just add the indicator to your favorite indicators and then add it to your chart.
Trading Capital Management for Option SellingTrading Capital Management for Option Selling
This Pine Script indicator helps manage trading capital allocation for option selling strategies based on price percentile ranking. It provides dynamic allocation recommendations for index options (NIFTY and BANKNIFTY) and individual stock positions.
Key Features:
- Dynamic buying power (BP) allocation based on close price percentile
- Flexible index allocation between NIFTY and BANKNIFTY
- Automated calculation of recommended number of stock positions
- Risk management through position size limits
- Real-time INDIA VIX monitoring
Main Parameters:
1. Window Length: Period for percentile calculation (default: 252 days)
2. Thresholds: Low (30%) and High (70%) percentile thresholds
3. Capital Settings:
- Trading Capital: Total capital available
- Max BP% per Stock: Maximum allocation per stock position
4. Buying Power Range:
- Low Percentile BP%: Base BP usage at low percentile
- High Percentile BP%: Maximum BP usage at high percentile
5. Index Allocation:
- NIFTY/BANKNIFTY split ratio
- Minimum and maximum allocation thresholds
Display:
The indicator shows two tables:
1. Common Metrics:
- Total BP Usage with percentage
- Current INDIA VIX value
- Current Close Price Percentile
2. Capital Allocation:
- Index-wise BP allocation (NIFTY and BANKNIFTY)
- Stock allocation pool
- Recommended number of stock positions with BP per stock
Usage:
This indicator helps traders:
1. Scale positions based on market conditions using price percentile
2. Maintain balanced exposure between indices and stocks
3. Optimize capital utilization while managing risk
4. Adjust position sizing dynamically with market volatility
All Forex Sessions (SAST Accurate) + LabelsFor traders in South Africa
Uses timestamp("Africa/Johannesburg", ...) — this locks the session window to true SAST time
The session now perfectly aligns from 14:00 to 18:00 local time no matter what time zone your TradingView chart is in
Also shows start and end vertical lines only when the session opens and closes
Minimalist Trading Plan ChecklistMinimalist Trading Plan Checklist
A clean, customizable indicator to monitor your trading plan.
Features:
Checklist: Monitor bias, narrative, context, entry.
Timeframes: Set or leave blank (❌).
Risk-Reward Ratio: Display in a neat box.
News Checkbox: Toggle for high-impact events.
Customizable: Adjust colors and layout.
Stay organized and focused on your strategy with this minimalist tool.
Short and sweet! Let me know if you need further tweaks. 😊
Avg.ROC TableThis indicator calculates the average Rate of Change (ROC) for up to 30 user-selected assets over a specified number of candles. It then ranks the assets—assigning rank 1 to the asset with the highest average ROC (strongest momentum) and rank 30 to the asset with the lowest. The results are displayed in a clean, easy-to-read table split into two stacks of 15 assets each, allowing you to quickly see which assets are performing best.
Binance Leveraged Liquidations ApproximationBinance Leveraged Liquidations Approximation (BLLA)
The Binance Leveraged Liquidations Approximation (BLLA) indicator is a tool designed to estimate liquidation levels for leveraged trading on Binance. It calculates the approximate prices at which liquidations could occur for long and short positions, based on the entry price and leverage levels selected by the user.
Key Features:
Liquidation Level Calculation:
Estimates liquidation prices for multiple leverage levels (e.g., 20x, 10x, 5x, etc.).
Supports both long and short positions.
Customization:
Allows the user to manually input the entry price or automatically calculate it as the midpoint between the low and high of a defined period.
Leverage levels are configurable, enabling the indicator to adapt to different trading strategies.
Clear Visualization:
Displays liquidation levels directly on the chart, with labels indicating the corresponding leverage.
Uses distinct colors for long positions (yellow) and short positions (blue).
Recommended Use:
Risk Management: Helps identify liquidation levels to adjust stop-loss orders and manage risk in leveraged trading.
Market Analysis: Provides a quick overview of key levels where significant price movements might occur due to mass liquidations.
Settings:
Entry Price: Enter manually or leave at 0.0 to calculate automatically.
Leverage: Configure desired leverage levels (e.g., 20x, 10x, 5x, etc.).
Transparency and Display: Adjust the transparency of the lines and the number of bars displayed.
Quick Instructions:
Add the indicator to your chart.
Enter the entry price or leave it at 0.0 to calculate automatically.
Configure leverage levels according to your strategy.
Observe liquidation levels on the chart and use them to manage your risk.
Note:
This indicator is an approximation and does not guarantee absolute accuracy of liquidation levels, as these may vary depending on market conditions and exchange policies.
The Investment Clock Orbital GraphThe Investment Clock Orbital Graph is an advanced visualization tool designed to help traders and investors track economic cycles using a dynamic scatter plot of GDP growth vs. CPI inflation rates.
This indicator is a fusion of two powerful TradingView indicators:
LuxAlgo ’s Relative Strength Scatter Plot – A robust scatter plot for tracking relative strength.
The Investment Clock Indicator – A cycle-based approach to market rotation. This indicator contains more information regarding The Investment Clock.
By combining these approaches, the Investment Clock Orbital Graph enables traders to visualize economic momentum and inflationary trends in a unique, orbital-style scatter plot.
Key Features & Improvements
Orbital Graph Representation – Displays GDP growth and CPI inflation as a dynamic, evolving scatter plot, showing how the economy moves through different phases.
Quadrant-Based Market Regimes – Identifies four key economic phases:
1)🔥 Overheating (High Growth, High Inflation)
2)📉 Stagflation (Low Growth, High Inflation)
3)🤒 Recovery (High Growth, Low Inflation)
4)🎈 Reflation (Low Growth, Low Inflation)
Data-Driven Analysis – Utilizes FRED (Federal Reserve Economic Data) for accurate real-world GDP & CPI data.
Trailing Path of Economic Evolution – Tracks historical economic cycles over time to show momentum and cyclical movements.
Customizable Parameters – Set sustainable GDP growth and inflation thresholds, adjust trail length, and fine-tune scatter plot resolution.
Auto-Labeled Quadrants & Revised Accurate Market Guidance – Each quadrant includes newly updated tooltips and annotations (like ETF suggestions) to help traders make informed decisions.
Live Macro Forecasting Tool – Helps traders anticipate future market conditions, rate hikes/cuts, and sector rotations.
How to Use for Trading Decisions
The Investment Clock Orbital Graph helps traders and macro investors by identifying market phases and providing insights into asset class performance during different economic conditions.
📌 Step 1: Identify the Current Quadrant
Locate the most recent point on the orbital graph to see if the economy is in Overheating, Stagflation, Recovery, or Reflation.
📌 Step 2: Forecast Market Trends
The trajectory of the points can predict upcoming economic shifts:
Overheating → Stagflation ➡️ Expect economic slowdowns, bearish stock markets.
Stagflation → Reflation ➡️ Interest rate cuts likely, bonds and defensive stocks perform well.
Reflation → Recovery ➡️ Risk-on rally, technology and cyclicals perform best.
Recovery → Overheating ➡️ Commodities surge, inflation rises, and central banks intervene.
📌 Step 3: Align Trading & Investing Strategies
🔥 Overheating – Favor commodities & energy (Oil, Industrial Stocks, Materials).
📉 Stagflation – Favor defensive assets (Cash, Utilities, Healthcare).
🤒 Recovery – Favor growth stocks (Technology, Consumer Discretionary).
🎈 Reflation – Favor bonds, value stocks, and financials.
📌 Step 4: Monitor Trends Over Time
The indicator visualizes economic movement over multiple months, allowing traders to confirm long-term trends vs. short-term noise.
The Investment Clock Orbital Graph is an essential macro trading tool, providing a real-time visualization of economic conditions. By tracking GDP growth vs. CPI inflation, traders and investors can align their portfolios with major macroeconomic shifts, predict sector rotations, and anticipate central bank policy changes.
CAPM Alpha & BetaThe CAPM Alpha & Beta indicator is a crucial tool in finance and investment analysis derived from the Capital Asset Pricing Model (CAPM) . It provides insights into an asset's risk-adjusted performance (Alpha) and its relationship to broader market movements (Beta). Here’s a breakdown:
1. How Does It Work?
Alpha:
Definition: Alpha measures the portion of an investment's return that is not explained by market movements, i.e., the excess return over and above what the market is expected to deliver.
Purpose: It represents the value a fund manager or strategy adds (or subtracts) from an investment’s performance, adjusting for market risk.
Calculation:
Alpha is derived from comparing actual returns to expected returns predicted by CAPM:
Alpha = Actual Return − (Risk-Free Rate + β × (Market Return − Risk-Free Rate))
Alpha = Actual Return − (Risk-Free Rate + β × (Market Return − Risk-Free Rate))
Interpretation:
Positive Alpha: The investment outperformed its CAPM prediction (good performance for additional value/risk).
Negative Alpha: The investment underperformed its CAPM prediction.
Beta:
Definition: Beta measures the sensitivity of an asset's returns relative to the overall market's returns. It quantifies systematic risk.
Purpose: Indicates how volatile or correlated an investment is relative to the market benchmark (e.g., S&P 500).
Calculation:
Beta is computed as the ratio of the covariance of the asset and market returns to the variance of the market returns:
β = Covariance (Asset Return, Market Return) / Variance (Market Return)
β = Variance (Market Return) Covariance (Asset Return, Market Return)
Interpretation:
Beta = 1: The asset’s price moves in line with the market.
Beta > 1: The asset is more volatile than the market (higher risk/higher potential reward).
Beta < 1: The asset is less volatile than the market (lower risk/lower reward).
Beta < 0: The asset moves inversely to the market.
2. How to Use It?
Using Alpha:
Portfolio Evaluation: Investors use Alpha to gauge whether a portfolio manager or a strategy has successfully outperformed the market on a risk-adjusted basis.
If Alpha is consistently positive, the portfolio may deliver higher-than-expected returns for the given level of risk.
Stock/Asset Selection: Compare Alpha across multiple securities. Positive Alpha signals that the asset may be a good addition to your portfolio for excess returns.
Adjusting Investment Strategy: If Alpha is negative, reassess the asset's role in the portfolio and refine strategies.
Using Beta:
Risk Management:
A high Beta (e.g., 1.5) indicates higher sensitivity to market movements. Use such assets if you want to take on more risk during bullish market phases or expect higher returns.
A low Beta (e.g., 0.7) indicates stability and is useful in diversifying risk in volatile or bearish markets.
Portfolio Diversification: Combine assets with varying Betas to achieve the desired level of market responsiveness and smooth out portfolio volatility.
Monitoring Systematic Risk: Beta helps identify whether an investment aligns with your risk tolerance. For example, high-Beta stocks may not be suitable for conservative investors.
Practical Application:
Use both Alpha and Beta together:
Assess performance with Alpha (excess returns).
Assess risk exposure with Beta (market sensitivity).
Example: A stock with a Beta of 1.2 and a highly positive Alpha might suggest a solid performer that is slightly more volatile than the market, making it a suitable pick for risk-tolerant, return-maximizing investors.
In conclusion, the CAPM Alpha & Beta indicator gives a comprehensive view of an asset's performance and risk. Alpha enables performance evaluation on a risk-adjusted basis, while Beta reveals the level of market risk. Together, they help investors make informed decisions, build optimal portfolios, and align investments with their risk-return preferences.
Nifty/Gold RatioPrice of NIFTY in GOLD. Highs indicate that Gold is getting cheaper, Lows indicate Nifty is getting cheaper.
Average Daily LiquidityIt is important to ensure sufficient stock trading liquidity so that you have sufficient volume to enter the trade and most importantly sufficient liquidity to exit the trade. Because daily trading liquidity can jump around so much by price changes and volume changes, it is important to smooth out the liquidity by using a moving average. Some use a 5 days (trading week) moving average, others use 10 day (2 weeks), 20 day ("month") and some use 65 day (quarter). The default is 10 days based upon the work of Colin Nicholson (The Aggressive Investor and Building Wealth in the Stock Market). Liquidity line changes color dependent upon the chart background luminescence. The amount you are planning to invest in a stock should have a liquidity of 10 (default) times that amount.
