How to Create the Balance of Power RSI Indicator on TradingView (No Code)

Trading Guide Dec 04, 2020

If you were looking for a step-by-step guide on how to recreate the Balance of Power RSI indicator on TradingView without resorting to using any PineScript code, then this is the article for you.

This brief article will waste no time in explaining exactly how. So let's get to it.

Starting Off With an Understanding of 'Smoothing'

Before we even get into this, let’s be clear on what I mean by ‘smoothing’ values.

Check out an example of an indicator below:

This is the ‘Balance of Power’ indicator

The default 'Balance of Power' indicator on TradingView (and in just about any other location that provides the indicator) is virtually unreadable.

Why?

The primary reason is indicator "sensitivity".

By 'sensitivity', we're referring to how responsive the values of the indicator are to underlying price data.

Normally this sensitivity can be adjusted by tweaking the 'lookback' period of the indicator (i.e., changing the RSI[14] to the RSI[7] would make it twice as sensitive on the same chart time resolution). However, in certain cases, tweaking this superficial setting is not enough.

The Balance of Power indicator represents one of those cases (especially since there's no adjustable 'lookback' that's accompanied with the indicator since its not considered to be a traditional 'momentum indicator', which may be a fallacy on the part of all charting software that offer the indicator).

No problem though.

When we find ourselves in this position, we just need to extrapolate data from the underlying indicator (Balance of Power). When presented with a situation akin to the one the Balance of Power indicator has given us, the best solution is more than likely to "smooth" over the indicator to provide more 'readable' values.

This will essentially 'iron out' the sensitivity issue that we were dealing with before and also allow us to extract a meaningful read from the values that are presented to us via the Balance of Power indicator without warping / distorting its values (essentially, our goal here is to only make the Balance of Power indicator more readable).

Applying the Hulls Moving Average

Quick Disclaimer: Please note that this demonstration is only an example and not a reenactment of the process used to generate the Balance of Power RSI (that was coded manually using PineScript).

In order to smooth the Balance of Power indicator over with the Hulls Moving Average, we're going to  simplify apply the HMA (Hulls Moving Average) to the indicator itself.

If that sounds difficult, don't worry - it isn't. Just follow along with the guide provided below.

Once you successfully complete this exercise, your Balance of Power indicator should look like the following:

See how much smoother and easier to read this data is? We can tell that BoP has been on a steep downward decline since the 12th (approximately)

Above is an example of how you ‘smooth’ the data.

We do this often in order to assist myself in reading indicators accurately.

Which brings us to the main purpose of this article.

How Do You Smooth an Average in TradingView?

This is actually way easier than you think. We're going to take you step by step through how to do this, assuming that you’re starting from scratch.

Step #1

Go to TradingView. The website is www.tradingview.com

When you get there, you should see a page that looks like this.

Step #2

Adjust your ticker search so that you can look up cryptos.

When you first type in ‘BITCOIN’ you’re going to get a bunch of results for stocks but NOT crypto! We don’t want this.

If you’re like us, you typed in ‘Bitcoin’ on the ticker search. However, the results you came across probably weren’t what you were looking for.

This is because the initial setting on TradingView is set to ‘stocks’.

Luckily, this is a simple adjustment (and you’ll never have to do this again once you do make the adjustment because TradingView remembers this for you).

We’ll get the results we want, once we click on the Cryptocurrency tab.

Once you click on the ‘Cryptocurrency’ tab, this will pop up:

Perfect, just what we were looking for.

Now, we’re going to select the ‘BTCUSD’ ticker for Bitstamp (they have the most data, so we like using this one the most).

We outlined the option for you to make it a bit easier.

Now, once you click on that option, you’ll be taken to this next screen:

Woa! Thought we were going to see charts? What happened?

Relax, we’re almost there.

We'll explain the purpose of this page and its overall benefits in a latter article. But for now, let’s keep it moving.

In order to get to your brand new chart. Click the ‘Interactive Chart’ button on the page!

Once you do, you’ll be taken to this page:

Great.

Step #3

Now, we’re going to bring up the RSI indicator. This stands for the Relative Strength Index and it's the one indicator that we've been asked about the most when it comes to smoothing averages.

Here’s how we do that:

Once we click on the indicator button at the top, we see this screen come up:

From here, we just type in ‘RSI’

Once we do that, we’ll see an entry for the ‘Relative Strength Index’ come up.

Go ahead and click that.

Now, boom! The RSI has been successfully added to our chart.

Before we continue with the rest of this tutorial, let’s expand the RSI graph so that we can see it a bit more clearly. Check out the picture below for directions on how to expand your chart.

Just toggle the button with the two arrows on top of each other pointing in the opposite direction.

These little buttons do not appear until you scroll your mouse over the chart. So, if you can’t find them, try scrolling your mouse over the chart first.

Ah, that’s way better. Now we can clearly see the RSI chart!

Step #4

Now, we’re going to do what we came to do, which is learn how to smooth the RSI by applying a moving average to it.

First thing we do is click that little ‘+’ icon at the top left corner of the indicator page.

When you do that, your screen should look like this picture ^

Similar to before, we’re going to type something in and select. Except instead of the RSI, we’re typing ‘EMA’. This stands for the Exponential Moving Average.

Once you type that in, your screen should look like what you see above. The ‘Exponential Moving Average’ should pop up.

Click on it.

Once you click on it, your screen should look like this.

If it does, hooray! You’ve done it! However, our work is not done. Let’s make this a bit easier for us to view shall we?

To help change this, we’re going to click on the gear icon for this indicator.

Once you click the gear shift, this screen will pop up.

This little panel is great because you can control the features of a specific indicator you’re using with it. This is where you would change the color of the indicator and where you can change its thickness as well.

For brevity's sake, we're only going to only adjust the thickness. The color is of no consequence for us.

As you can see, we moved the little slider all the way to the right.

There goes our finished product!

That’s about it when it comes to smoothing indicators.

Yup, it’s that easy!

Tags

cryptomedication

Happy to serve and help wherever I'm needed in the blockchain space. #Education #EthicalContent #BringingLibretotheForefront

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