Delta Tether System: Trade the Gap Between Price and Volume — Strategy by PinegenAI
By PinegenAI
Performance Metrics
- Author: PinegenAI
- Symbol: NASDAQ:SPCX
- Timeframe: 3 minutes
- Profit Factor: ,
Description
The Core IdeaMost indicators track price. This one tracks the gap between price and the buying or selling pressure behind it.When price runs far ahead of volume weight, it tends to snap back. When price and volume stay close, moves are more likely to continue. The Delta Tether measures that gap and gives you two ways to trade it.What Is Delta?Delta here is an estimate of cumulative buying versus selling pressure. If a bar closes up, its volume counts as buying. If it closes down, that volume counts as selling. These values are summed over the last 80 bars (adjustable), giving a running read on whether buyers or sellers have been in control. No tick data needed. Works on any timeframe and instrument.The Delta LineThe cumulative delta estimate is fitted to price using linear regression. The result is the Delta Line, shown as a white line on the chart. It represents the price level implied by recent volume balance. Optional EMA or SMA smoothing (default: EMA 8) reduces noise without adding significant lag.The TetherThe tether is the distance between the closing price and the delta line, measured in ATR(14) units. A green tether means price is above the delta line (buyers ahead). A red tether means price is below it (sellers ahead).ATR scaling makes the gap comparable across instruments. A 2 ATR gap on Gold means the same thing as a 2 ATR gap on Bitcoin: price is two volatility units away from where volume says it should be.Reference rungs at 1, 2, and 3 ATR above and below the delta line are plotted on the chart and used for stop placement.The RankThe current tether distance is ranked as a percentile against the past 800 bars. A rank near zero means price and volume are aligned. A rank near 100 means the gap is unusually large by recent standards. A color coded table in the top right corner shows the live rank. When the rank stays at or above 90 for two or more consecutive bars, a triangle marker flags a persistent extreme on the chart.Two Strategy ModesSelect the mode from the input dropdown. They use opposite logic.Mode A: Mean ReversionPrice stretched too far from volume tends to return to it. A long entry triggers when price is below the delta line, the rank is at or above 80 (adjustable), and the rank has started falling, meaning the peak is likely in. A short entry is the mirror image. The strategy does not enter just because the rank is high. It waits for the rank to start contracting first, which is a more reliable sign that the extreme has been reached. Exit is when price crosses back through the delta line or the stop or target is hit. Stop goes beyond the 3 ATR rung plus a 0.3 ATR buffer. Default target is 2:1 risk to reward.Mode B: Trend FollowingWhen price crosses the delta line while the tether is small, the move has volume support. A long entry triggers when the tether crosses from negative to positive and the rank is below 25 (adjustable), confirming the breakout is not already overextended. A short is the same in reverse. Exit is when price crosses back through the delta line the other way, or the stop or target is hit. Stop goes just beyond the delta line plus a 0.3 ATR buffer. Default target is 4:1.Confirmation FiltersThree filters are on by default. All must pass for an entry, and each can be turned off individually.The trend filter uses a 100 period EMA to set the directional bias. In Mean Reversion mode, longs require price to be below the EMA and shorts require price above it. In Trend Following mode the logic is reversed. The volume filter requires the entry bar's volume to exceed its 20 period average by at least 1.8x, keeping out low conviction signals. The rank cooldown blocks a new trade in the same direction until the rank has reset below 50 since the last exit, so the strategy does not enter again into a market that is still stretched.Risk and Trade ManagementThe stop is placed beyond the relevant ATR rung plus a 0.3 ATR buffer. The take profit is a fixed multiple of that stop distance: 2:1 for Mean Reversion, 4:1 for Trend Following, both adjustable.Position sizing is risk based. Each trade risks 1% of current equity (adjustable), calculated from the entry to stop distance. A tighter stop means a larger position. A wider stop means a smaller one. The dollar risk per trade stays consistent regardless of market conditions.The trailing stop is on by default. Once the trade is 1 ATR in profit, the stop moves to the delta line, locking in a partial gain if price reverses all the way back. There is no pyramiding. One position per direction at a time.Backtest Defaults$10,000 starting capital, 0.05% commission, 2 ticks of slippage. All signals use confirmed, closed bars only. No repainting, no lookahead bias. Entries fill on the bar after the signal closes.Before You Trust the ResultsResults are not shown here because they depend entirely on the instrument, timeframe, and date range you test.Wait for at least 100 closed trades before judging any metric. Check win rate, profit factor, and max drawdown together, not in isolation. Mean Reversion tends to suit ranging markets. Trend Following tends to suit trending ones. If your broker charges more than 0.05% or you trade futures, update the commission input before drawing any conclusions. The 800 bar rank lookback takes 800 bars to fully populate, so signals early in a backtest are based on incomplete rank data.AlertsFive alert conditions are included: Long Entry, Short Entry, Long Exit, Short Exit, and Extreme Rank Warning (rank at or above 90 for two or more consecutive bars). The Extreme Rank Warning fires whether or not a position is open, so it works as a standalone context alert even without using the strategy entries.DisclaimerThis script is for educational purposes only. It is not financial advice. Treat it as a starting framework to test and adjust, not a finished system. Past backtest results do not guarantee future performance.