Percentile Line Indicator

The Percentile Line indicator is a special indicator from TrendSpider that allows you to set a defined window length and plot a percentile line on it.
In this documentation, we will explore:

• Adding Percentile Line Indicator to the Chart
• How Percentile Line Indicator Works
• Percentile Line Sensitivity
• How to Modify Percentile Line
• Important Notes

Let’s get started 🚀

Adding Percentile Line Indicator to the Chart

Step 1: Click on the vertical ellipsis button (⋮) adjoining the Indicators button.

Step 2: Select Percentile Line from the indicators list and define the following:

• Length
• Percentile
• Price Source
• Line Stroke
• Line Color

Note*: Selecting percentile=50 will allow you to have Median level instead of average (SMA).*

Step 3: Click on the Apply button and the Percentile Line Indicator will be plotted on the chart.

How Percentile Line Indicator Works

The best way to understand how a Percentile Line Indicator works is by comparing it with a Simple Moving Average (SMA) indicator on the chart. The below chart demonstrates a 70 Period 50th Percentile Line (Black) relative to a 70 Period Simple Moving Average (Green).

In the above illustration, the SMA indicator representing a 70-period SMA of the closing price is reflecting a rolling average.

Each time a new candle is formed, the one at the very end of the 70-period range is dropped out of the average making a Simple Moving Average or any other type of moving average laggy because they are always incorporating a number of past data points from the previous candles into the calculation. The larger the series of numbers (bigger the window size) the slower the SMAs will move.

Now, at the same time, you can observe the percentile line moving closely with SMA but not exactly together. The 70 Period 50th percentile line in the black reacts to price more quickly in some cases, and slower in other cases, whereas a simple moving average simply follows the price in a very smooth way.

Since setting up the percentile line to 50 allows you to have a Median level, the black percentile line in the above graph is representing a mid-price among a range of 70 candles on a rolling basis, not an average.

Let’s take another example to understand percentile lines better. In another screenshot below, we have plotted 5 Median lines that are all set to the same 50-period window where:

• 0th percentile represents “the min value for the data set”
• 25th percentile
• 50th percentile represents “the Median”
• 75th percentile
• 100th percentile represents “the max value for the data set”

As you can see in the chart above, there are some interesting patterns to observe. For example, when the trend starts to reverse, the percentile lines seem to flatten out. When the price is trending, it is very clear because of its slope and direction.

100th Percentile and 0th Percentile would have acted just like Donchian Channels, should 0th have a Price Source of “low” and 100th have a price source of “high”.

You can observe how the same chart looks with “length” being 150 instead of 50.

You can also use the Percentile line on RD charts to have a volume-weighted percentile as explained in the table below:

Percentile Line Sensitivity

For a simple moving average, you can only have one way to adjust the sensitivity of your line i.e. the length value. However, for the Percentile Line, you can manipulate with the Percentile parameter, which naturally influences the sensitivity without affecting the degree the indicator lags.

You can refer to the Percentile lines illustrated in the chart below and observe that all of them have the same “Length” value but the “Percentile” values have been set to Fib numbers.

How to Modify Percentile Line

You can change the configurations of a percentile line anytime by clicking on the vertical ellipsis of the Percentile Line from the indicator list on the left-hand side of the chart.

A modal window will appear that will unlock the options for you to modify the Length, Percentile, Price Source, Line Stroke, and Line Color. Click on the Apply button after making the relevant changes.

Important Notes

Note 1: Percentile Line indicator works across the entire TrendSpider platform, including scanners, strategy tester, alerts, smart checklists, backtests, and on charts.

Note 2: Distance between percentile lines i.e. 75th and 25th percentile can be used as a measure of volatility.

Note 3: Percentile line has potential for being anchored