Price Dip Scalping

Definition

During strong bullish trends or bearish trends, the chart have always a set back before continuing the trend direction. By identifying these setback on a small time fram (1 - 5 minutes), user can identify good buying points for scalping trades.

Usage

To identify general trend of a security chart, we use a MA with large smoothing value (for example 50).

For identifying short dips in a bullish trend, we use a medium term MA and a short term MA. When the short Term MA crosses Medium Term MA downwards and then subsequently upwards, then a dip is persent. A dip is confirmed if the overall trend line is bullish.

To identify Dips in a bearish trend, the faster MA should cross above the medium MA and then subsequently below it. If the overall Trend is bearish, then a dip is confirmed.

To collect proifts, a TP should be reasonably set up (typical value 5%). To protect against unepected market movements, a SL of 10% can be applied.

PineScript

  • Short dip in an overall bullish trend

Snippet

//@version=5strategy("Buy on Small Dip in Bullish Trend", overlay=true) // --- Input Parameters for MA Lengths ---// Input for the length of the short Moving Average (e.g., for quick movements/dips)shortMaLength = input.int(10, "Short MA Length", minval=1) // Input for the length of the medium Moving Average (e.g., for intermediate movements/dips)mediumMaLength = input.int(50, "Medium MA Length", minval=1) // Input for the length of the long Moving Average (e.g., for main trend identification)longMaLength = input.int(200, "Long MA Length", minval=1) // --- Risk Management Parameters ---// Stop loss set to 10% as requestedstopLossPercent = input.float(10.0, "Stop Loss %", minval=0.1, step=0.1) / 100// Take profit set to 3% as requestedtakeProfitPercent = input.float(3.0, "Take Profit %", minval=0.1, step=0.1) / 100 // --- Moving Average Calculations ---// Calculate the short-period Simple Moving Average of the closing priceshortMa = ta.sma(close, shortMaLength) // Calculate the medium-period Simple Moving Average of the closing pricemediumMa = ta.sma(close, mediumMaLength) // Calculate the long-period Simple Moving Average of the closing pricelongMa = ta.sma(close, longMaLength) // --- Trend and Dip Conditions ---// Condition for a long-term bullish trend:// Current price is above the long-term MA, and the long-term MA itself is sloping upwards.isBullishTrend = close > longMa and longMa > longMa[1] // Condition for a small dip:// The short MA crosses below the medium MA (indicating a dip starts),// AND then the short MA crosses back above the medium MA (indicating the dip ends and uptrend resumes).// We use `ta.crossunder` to detect the dip initiation and `ta.crossover` for the dip recovery.dipInitiated = ta.crossunder(shortMa, mediumMa)dipRecovered = ta.crossover(shortMa, mediumMa) // A buy signal is generated when the dip recovers AND the overall trend is bullish.buySignal = dipRecovered and isBullishTrend // --- Entry Logic ---// Enter a long position when the buy signal is trueif buySignal strategy.entry("BuyDip", strategy.long) // --- Exit Logic (Stop Loss and Take Profit) ---// Calculate stop loss and take profit prices based on entry pricelongStopPrice = strategy.position_avg_price * (1 - stopLossPercent)longTakeProfitPrice = strategy.position_avg_price * (1 + takeProfitPercent) // Apply stop loss and take profit orders for the "BuyDip" entrystrategy.exit("Exit", from_entry="BuyDip", stop=longStopPrice, limit=longTakeProfitPrice)  // --- Plotting Moving Averages ---// Plot the short MA on the chart (e.g., green for faster movement)plot(shortMa, "Short MA", color=color.green, linewidth=2) // Plot the medium MA on the chart (e.g., orange for intermediate movement)plot(mediumMa, "Medium MA", color=color.orange, linewidth=2) // Plot the long MA on the chart (e.g., blue for main trend)plot(longMa, "Long MA", color=color.blue, linewidth=3) 

  • Short dip in an overall bearish trend

Snippet

//@version=5strategy("Sell on Small Upwards Flip in Bearish Trend", overlay=true) // --- Input Parameters for MA Lengths ---// Input for the length of the short Moving Average (e.g., for quick movements/flips)shortMaLength = input.int(10, "Short MA Length", minval=1) // Input for the length of the medium Moving Average (e.g., for intermediate movements/flips)mediumMaLength = input.int(50, "Medium MA Length", minval=1) // Input for the length of the long Moving Average (e.g., for main trend identification)longMaLength = input.int(200, "Long MA Length", minval=1) // --- Risk Management Parameters ---// Stop loss set to 10% for short positions (above entry price)stopLossPercent = input.float(10.0, "Stop Loss %", minval=0.1, step=0.1) / 100// Take profit set to 3% for short positions (below entry price)takeProfitPercent = input.float(3.0, "Take Profit %", minval=0.1, step=0.1) / 100 // --- Moving Average Calculations ---// Calculate the short-period Simple Moving Average of the closing priceshortMa = ta.sma(close, shortMaLength) // Calculate the medium-period Simple Moving Average of the closing pricemediumMa = ta.sma(close, mediumMaLength) // Calculate the long-period Simple Moving Average of the closing pricelongMa = ta.sma(close, longMaLength) // --- Trend and Flip Conditions ---// Condition for a long-term bearish trend:// Current price is below the long-term MA, and the long-term MA itself is sloping downwards.isBearishTrend = close < longMa and longMa < longMa[1] // Condition for a small upwards flip:// The short MA crosses above the medium MA (indicating a flip starts),// AND then the short MA crosses back below the medium MA (indicating the flip ends and downtrend resumes).flipInitiated = ta.crossover(shortMa, mediumMa)flipRecovered = ta.crossunder(shortMa, mediumMa) // A sell signal is generated when the flip recovers AND the overall trend is bearish.sellSignal = flipRecovered and isBearishTrend // --- Entry Logic ---// Enter a short position when the sell signal is trueif sellSignal strategy.entry("SellFlip", strategy.short) // --- Exit Logic (Stop Loss and Take Profit) ---// Calculate stop loss and take profit prices based on entry price for a short position// Stop loss is above entry price for a shortlongStopPrice = strategy.position_avg_price * (1 + stopLossPercent)// Take profit is below entry price for a shortlongTakeProfitPrice = strategy.position_avg_price * (1 - takeProfitPercent) // Apply stop loss and take profit orders for the "SellFlip" entrystrategy.exit("Exit", from_entry="SellFlip", stop=longStopPrice, limit=longTakeProfitPrice)  // --- Plotting Moving Averages ---// Plot the short MA on the chart (e.g., green for faster movement)plot(shortMa, "Short MA", color=color.green, linewidth=2) // Plot the medium MA on the chart (e.g., orange for intermediate movement)plot(mediumMa, "Medium MA", color=color.orange, linewidth=2) // Plot the long MA on the chart (e.g., blue for main trend)plot(longMa, "Long MA", color=color.blue, linewidth=3)