Have you ever had that feeling you've got this
brilliant trading idea, like a really specific
observation about the market, you know, could
work. But then you think, oh, man, testing this
is going to take months of programming. Yeah,
that exact barrier. It's just gone now. Yeah,
seriously. We're talking about taking that gut
feeling, that intuition and turning it into like
professional automated code for an indicator
and doing it in minutes. OK. Not weeks, using
simple English. Welcome to the deep dive. Today,
we're really going to dig into how artificial
intelligence, we mean the big language models
like chat, GPT, Claude, that kind of thing, how
they're basically becoming a personal coder for
traders everywhere. Yeah, our mission for you
today is pretty straightforward. We'll unpack
how this actually works, you know, the mechanics,
we'll show you the prompts, the actual language
you use, and we'll give you five really powerful
indicators you can build right away. Doesn't
matter if you're a scalper or a swing trader.
And stick around, because at the end, we'll lay
out the exact four steps you can use to turn
any market idea you have into working code. OK,
let's unpack this a bit. I mean, traditionally,
if you wanted custom tools, you had to dive deep
into these specialized coding languages, like
on TradingView, right? That meant learning Pinescript.
Exactly. Which is, you know, a whole thing in
itself. But now... Simple sentences can do the
job. It's pretty wild. And what's really cool
isn't just the time saving though. That's huge.
It's how the AI takes your observation, like
maybe you notice, hey, the price keeps bouncing
hard off the 200 moving average and turns that
into a precise coded signal. It's like having
this tireless assistant who never gets emotional
just executes 24 -7. We should probably clarify
Pinescript quickly. So Pinescript, it's basically
a coding language made specifically for building
charts and strategies, mainly on TradingView.
It's kind of the standard there. But yeah, it's
still code. You got to learn it. Right. And being
able to just sidestep learning all that code.
That's the massive leap forward here. It's almost
like playing with Lego blocks, stacking data
bricks and telling the AI, build me this exact
thing. What's the bottom line here for someone
just trying to turn their unique trading insight
into something real? I think it means the biggest
hurdle to getting your strategy automated, which
was always the coding part, just vanished. Yeah.
Your ability to clearly explain your idea, that's
suddenly way more valuable than being a coding
whiz. OK, let's dive into the first specific
tool. We're calling it the relative momentum
candle detector. See, most traders kind of get
momentum wrong. They just see a long candle and
think momentum. Right, but a long candle only
really matters if it's like unusually long compared
to what's been happening right around it. It
needs context. Exactly. So the logic here is
relative. The AI measures the current candle's
length, just its high minus its low. Simple.
Then it looks back at, say, the last 10 or maybe
14 candles, finds their average length. And here's
the trigger. If the current candle is, let's
say, one and a half times, maybe even two times
bigger than that recent average, boom, the AI
flags it. That's a momentum candle. And that
signal, it usually means serious energy, maybe
institutional buying or selling, just hit the
market. The range expanded way more than normal.
So it's super useful for scalpers, day traders.
Anyone looking for those quick bursts, think
of it like a smoke alarm for volatility. Yeah,
and some of the data we've seen suggest, in liquid
markets anyway, maybe around 60 % of these flag
candles actually lead to price continuing in
that same direction for a bit. That's a decent
starting point for an edge. Quick tip here, when
you're writing the prompt for the AI if you're
trading something really volatile, like certain
cryptocurrencies, you might want to tell the
AI to bump that multiplier up, maybe to 2 .5x
or even 3x, just to filter out the everyday choppiness.
OK, that 60 % continuation rate is interesting.
But why not just trade based on that signal alone
then? Why do we always hear you need to combine
it with something like support and resistance
levels? Because context is king always. beat,
that momentum signal hitting right at a known
support or resistance level. That confirms the
price reaction there is likely real. It's significant.
Not just random market noise. It gives you conviction.
All right, indicator number two. This one's called
the three -line strike pattern. And it tackles
a really common frustration, you know. missing
those massive out of nowhere reversal candles
that just erase several days of price movement
in one go. Yeah, this could be painful to miss.
The power here is in how specific the pattern
is. It needs four exact things to line up. So
first, you need three candles in a row. All the
same color, say, three green candles pushing
the price up. Each one kind of pushing the trend
along. Then, and this is the key part, you get
a single fourth candle. It has to be the opposite
color, so a red one in this case. And it needs
to open beyond where the trend was going and
then close below the low of the very first of
those three green candles. Wow, OK. So that one
candle basically negates all the progress of
the previous three. That signals a huge rejection,
right? A big shift. Totally. It's a powerful
rejection signal. So a smart way to use this.
Find a bullish three line strike. So three reds,
followed by a big green candle happening right
at a major support level you've marked on your
chart. That combination, often a really high
probability entry. And you'd want volume confirmation
too. Oh, absolutely. Always tell the AI. That
fourth candle, the strike candle, it needs high
volume. That's the fuel that confirms the reversal
has power behind it. Now, recognizing these patterns
manually. Yeah. It can be tricky in real time
charts. Things get messy. How does having the
AI do it help reduce just human error? Simple.
Consistency. The AI applies that strict four
part definition perfectly every single time.
Your eyes might get tired. You might second guess.
The AI just executes. It ensures you don't miss
those really potent setups because of noise or
fatigue. Oh. Okay, moving faster now. Indicator
3 is for the scalpers. Tracking hourly opening
range breakouts. Lots of traders watch the daily
open range right, but this drills down to the
hourly range. Much tighter opportunities. Right,
the core idea is pretty straightforward but can
be effective. At the top of every hour, the AI
looks at the very first five -minute candle of
that hour. It takes the high and low of that
specific candle and draws a box. That's your
initial range for the hour. Yeah, the early battleground.
Yeah. Now, the rule for entry, and you've got
to be really clear with the AI on this, is that
you only take a trade when a candle closes fully
outside that box. Not just a wick poking out.
Nope. A wick is just testing the waters. A full
candle close outside means conviction. It means
the market decided to move beyond that initial
range. OK, makes sense. And context matters here
too, right? You wouldn't want to trade this during
quiet hours. Definitely not. You need to tell
the AI to filter by time. The best signals, the
ones with follow -through, usually happen during
the busy London and New York sessions. Forget
the quiet Asian session for this strategy. And
for managing the trade. Maybe stop -loss, just
inside the box? Yeah, that's a common approach.
Stop inside the box. And maybe aim for a target
that's, say, 1 .5 times the height of the box
itself. Gives you a decent risk -reward ratio.
I get why the close is important confirms conviction.
But isn't there still a risk? What if you get
a strong close outside the box, you jump in,
and the very next candle just reverses right
back inside? The classic fake out. That's always
a risk in breakout trading, the fake breakout.
Relying on the close helps minimize it. Like
we said, it shows control was maintained for
that period. But yeah, combining it with the
time filter trading only in liquid hours helps
ensure there's enough volume to potentially sustain
the move. Nothing's foolproof, though. All right,
let's talk pin bars. The standard pin bar indicators
you find on most platforms. Honestly, they often
seem kind of useless. They just highlight every
little candle with a tiny wick. Exactly. They're
way too noisy. To spot what might be, like, real
institutional rejection, you need much stricter
rules. Mathematical proportions. So, indicator
four, the advanced pin bar scanner. What are
these strict rules we tell the AI? Okay, rule
one. The wick has got to be long. At least three
times longer than the candle's body. Not just
a little bit longer, three times. Rule two, the
body itself has to be small and pushed to one
end. It must sit entirely within the top 25 %
or the bottom 25 % of the total candle range,
from the high of the wick to the low of the wick.
Got it. Long wick, small body at one end. But
here's where it gets really clever, right? The
volatility filter. Ah, yeah. This is key. We
use the ATR, the average true range. Let's quickly
define ATR for everyone. ATR. average true range.
It basically just measures how much the price
is typically moving on average over a set period,
kind of gauges the current market energy level.
Perfect definition. So the AI adds this filter.
The pin bar we just defined, its total range
from high to low, must also be at least 1 .2
times the current 20 period ATR. Okay, so it
has to be a proportionally correct pin bar, and
it has to be a relatively large candle compared
to recent volatility. Exactly. This weeds out
all those tiny, insignificant pin bars that form
when the market's just dead quiet. Those don't
usually mean much. We want pin bars that show
a real fight happen, with significant range expansion.
And again, context is crucial. A pin bar meeting
these strict criteria, but forming at, say, a
major round number, like $1 .2 thousand on a
currency pair, or right at a key moving average,
that's where it gets really interesting. That's
the sweet spot. Pattern plus location confluence.
Powerful stuff. But wait, filtering so tightly,
especially using something like ATR, doesn't
that risk curve fitting, like making the indicator
look great on past data, but potentially fail
when market conditions change dramatically? It's
a valid point, a concern with any filter, but
the thinking here is that ATR isn't defining
a fixed price level, it's measuring relative
energy or effort. So a pin bar that's large relative
to recent action suggests strong conviction by
buyers or sellers at that price level, regardless
of the overall volatility regime. It confirms
they defended that barrier decisively with oomph.
But yes, all parameters need occasional review.
Okay, last one. Indicator five. The gap fill
detector. Gaps are pretty simple visually, right?
Just empty space on the chart where today's open
price is way higher than yesterday's high or
way lower than yesterday's low. They leave a
literal gap. And they often act like magnets.
Right. Price seems drawn back to them. Exactly.
It's a well -known market tendency. Some studies
suggest around 70 % of these price gaps eventually
get filled, meaning the price trades back into
that empty gap area later on. That makes them
a pretty reliable phenomenon to build a strategy
around. So how does the AI tool work for this?
It's mainly a visual aid, but a smart one. you
tell the AI to find these gaps on a daily chart.
When it finds one, it draws a box, maybe semi
-transparent, covering that empty price range.
OK. And then it automatically extends that box
horizontally to the right across future price
action. Ah, so it stays on your chart as a reminder
of where that unfilled gap is. Pretty nicely.
Yeah. But here's the neat part. The moment the
live price touches any part of that box, any
part of the gap area, the AI automatically stops
drawing the extension or just removes the box
entirely. Because the gap has been filled, that's
efficient. Yep. Confirms the fill visually, instantly.
OK, if the stats say 70 % of gaps fill, why wouldn't
a trader just automatically fade every gap? Like,
if price gaps up, immediately short it, aiming
for the fill. Seems like easy money, but what's
the catch? What's the big mistake people make?
The big mistake is ignoring the possibility of
a dapp and go. Sometimes, especially in a strong
trend, the market gaps up. and just keeps running
higher, leaving the gap unfilled for ages, maybe
forever. Fading it blindly can blow up your account
fast. Right. So you can't just assume it will
fill immediately. Exactly. You need really tight
risk control if you fade it. Or maybe you wait
for some kind of confirmation signal first, like
a reversal pattern forming after the gap before
you target the fill. Or you adopt a gap -and
-go strategy yourself if the trend context is
strong. mid -roll sponsor, read placeholder.
Okay, so we've covered five cool indicators you
can build, but the real power here isn't just
these specific tools, it's the process. There's
like a recipe, a simple four -step recipe for
creating pretty much any trading tool you can
imagine using AI. Step one, and this is probably
the most critical, you gotta clarify your idea.
In plain English, no code talk. Just describe
what you see, what you want the tool to find,
like you're explaining it to another trader.
Step two. Define the rules. Super important to
be precise here. You need three parts. The trigger,
what specific event makes the signal happen.
The filter, what other conditions must be true.
Think volume or ATR, like we discussed, or maybe
RSI level. And the confirmation, what confirms
the signal is valid, like a candle closing. Step
three, specify the look. Just tell the AI how
you want it to show up on your chart. You want
red down arrows, green boxes, shaded areas. Be
specific. And step four, the one people often
skip but shouldn't. Test and improve. Your first
attempt, your first prompt. It probably won't
be perfect. The AI might misunderstand something.
Vulnerable admission. Oh, yeah. I still wrestle
with prompt drift myself, especially building
more complex things. The AI's first output might...
you know, get the trigger right, but miss the
filter. So you got to test it, see where it messes
up, and then go back to the AI and refine the
prompt. Like saying, hey, the alert is firing
too often. Can you add a filter so it only alerts
if the RSI is below 30? Exactly. That iterative
refinement, that back and forth conversation
with the AI, that's the new skill. And the really
sophisticated traders, they add even more advanced
layers, like always demanding volume confirmation,
seeing volume as the fuel behind the move, low
volume signal. Probably ignore it. Or using time
-based filtering, like we talked about with the
hourly range breakout. Making sure breakout strategies
only trigger during peak liquidity hours, like
London or New York. And multi -timeframe analysis
is huge. You might get a great -looking five
-minute buy signal from your AI tool. But if
you zoom out to the daily chart and see, you're
right under massive resistance. Maybe not such
a great signal after all. It's like, you got
to check the city map before you navigate a single
street. Totally. Context is everything. Whoa.
Hang on. Just thinking, imagine scaling this.
You teach the AI dozens, hundreds of these specific
pattern rules, and then unleash it across thousands
of instruments, multiple timeframes, all running
constantly. The potential for systematic analysis
is kind of staggering, actually. It really is.
So with the AI doing so much of the heavy lifting,
now the coding, the execution, what's the most
crucial skill left for the human trader? What
do we need to keep sharp in this new era? I think
it comes back to observation, the ability to
spot new patterns, new market dynamics, things
that AI hasn't been explicitly told about yet.
And then being able to clearly articulate that
observation, that novel idea to the AI, that's
the human edge. So the big takeaway here, the
core idea from our deep dive today, is that this
AI revolution in trading, it's genuinely leveling
the playing field. Your success is becoming less
about your coding skills and much more about
the quality, the clarity of your market insights.
Yeah, exactly. The AI is your tireless coder,
your emotionless signal detector, working 24
-7 based on your rules. The traders who adapt
now, who embrace AI as this incredibly powerful
assistant, they're going to gain a serious edge,
I think. A lasting one. It makes you wonder,
if AI can build these complex filtered tools
just from us describing them in English, what
happens next? What happens when we start pointing
AI not just at coding tasks, but at the task
of generating the novel trading ideas themselves?
That feels like the next big frontier. Absolutely.
The only real limit now is your imagination.
So go on. Start building that first AI indicator
today. See what you can create.