Repainting indicators are indicators that update their display by changing what has already been shown on the chart. They are a common occurrence in the trading market. It’s estimated that over 95% of indicators repaint, including widely used ones like MACD and RSI, which rely on real-time values. As a result, these indicators update their display as they constantly take new fluctuating data from the market.

While some unscrupulous individuals use repainting signals to promote fake indicators with high ROI, it’s important to note that not all repainting indicators are valueless. By learning the mechanism behind these indicators and understanding how they work, traders can incorporate meaningful information into their trades. In fact, there are repainting indicators that contain insightful market data, such as market pivots.

Types of Repainting Indicators

1. Real-time Recalculation

These indicators recalculate using real-time data, such as high, low, open and close prices. Examples of indicators in this category include MACD and RSI. There’s nothing inherently wrong with using these scripts as long as you understand how they function. They provide users with a more comprehensive view of the market, including buy and sell pressure and price momentum. However, if you plan to use these scripts for issuing alerts or trade orders, it’s crucial to determine if their behavior meets your requirements, as real time recalculation may trigger a lot of redundant alerts or even wrong orders.

2. Replotting

These indicators relocate past events by changing their position on the chart after the event has ended. It is to give a clearer picture to traders, as replotting indicators help visualize the optimal points on entry, exit or support and resistance levels. Popular indicators in this category include Ichimoku and pivot indicators. They rely on price actions and market patterns to determine where to place the indicator. However, due to the volatile nature of the market and the influence of various events, it’s challenging, if not impossible, for these indicators to be non-repainting. Attempting to eliminate repainting would result in significant delays, which is not helpful for traders. Traders using replotting indicators should fully understand their mechanism and use them in parallel with other confirmation indicators to confirm market patterns and trends, enhancing their decision-making process.

3. Unacceptable Practices

It’s worth noting that some fake indicators use future information to replot and generate high backtest ROI results. Additionally, there are strategies that run on non-standard charts or use real-time intrabar timeframes to generate alerts or orders. These indicators are impossible to use in practice and provide little to no useful information for traders.

To effectively identify such indicators, it is advisable to utilize the “Reply” feature on platforms like TradingView to validate the accuracy of their signals. Additionally, it is recommended to put them into test with the TradingView paper trade feature for manual testing. This is crucial as these indicators can sometimes deceive the backtesting system as well.

How to Utilize Repainting Indicators

Understanding the Behavior of Indicators

Repainting indicators can be highly profitable if traders have a thorough understanding of how they work. These indicators spot trends and price actions much earlier than non-repainting indicators, allowing traders to make decisions ahead of the market.

For example, at TradeDots, we provide market pivot indicators used by institutional traders. By analyzing past market patterns and price actions, our indicators identify points where a repeat is likely to occur. This information is invaluable as it allows us to spot similar market patterns and make more accurate trading decisions.

While our aim is to maximize accuracy and profitability by filtering market noise and price disturbance, it’s important to note that indicators can never guarantee 100% results due to market volatility and exceptions. At TradeDots, we strive to minimize uncertainty and make traders more resilient to market changes.

Our indicators plot potential market pivot dots on the chart, indicating a possible trend reversal. If the current price breaks the previous market trend, then our indicator will provide an updated pivot point based on the most recent trend. We also offer a feature that displays past replotting events on the chart, called “shadow alerts”, which allow traders to better analyze the current market pattern.

The TradeDots indicators behave differently across various timeframes to spot the maximum trading opportunities available for traders who have different trading styles and preferences. Lower timeframes tend to generate more signals due to its nature of having higher market volatility, while higher timeframes provide more confidence in the indicator’s accuracy.

Our ultimate goal is to develop a win-rate estimator that can predict the confirmation probability of a market pattern and trade. By incorporating different indicators and price actions into our indicator, we aim to create a highly accurate and reliable tool for traders with any level of trading experience.

Designing Your Own Trading Strategy

As there is no single indicator or solution that can guarantee a 100% trade return, it’s essential for traders to develop their own trading strategy and style. Through constant practice, journaling, and analysis, traders can create a set of strategies that yield promising returns in the long term.

Indicators that work well with the TradeDots indicator include Volume-Weighted Average Price (VWAP), Moving Average Convergence & Divergence (MACD), Relative Strength Index (RSI), Volume, and Bollinger Bands (BB). However, it’s important to remember that there is no one-size-fits-all solution in trading.

Each trader has their own unique approach, and it’s crucial to test different strategies on various timeframes to find the system that works best for you.

Bottom line

Despite their prevalence and the presence of unscrupulous individuals in the field, repainting indicators can offer valuable insights into market trends and price movements.

These indicators, which adjust to the most recent market data, enhance the visualization of market patterns and trends. This clarity and ease of understanding are particularly beneficial for novice traders who are just starting to navigate the complexities of the market.

Moreover, for seasoned traders, the inclusion of “shadow alerts” by TradeDots allows for a comprehensive analysis of the chart, facilitating research and backtesting. This feature proves highly advantageous in comprehending market patterns and trends, enabling experienced traders to make informed decisions.

About TradeDots

TradeDots is a TradingView indicator that identifies market reversal patterns through the implementation of quantitative trading algorithm on price actions. Try our 7-day FREE Trial to level up your trading game.

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Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading involves risk, and it is important to conduct thorough research and seek professional guidance before making any investment decisions. Prospective investors are encouraged to perform their own due diligence or consult a financial advisor before making investment decisions.