Bill Williams NTD Strategy

// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © Saleh_Toodarvari

//@version=5
strategy("Bill Williams NTD Strategy", overlay=true, 
     default_qty_type=strategy.percent_of_equity, default_qty_value=10,
     initial_capital=100000, currency=currency.USD)

// Create Enable Plot Boolean
showPlot = input.bool(false, title="Enable Plot") 

//------------------------------------------
// 1. Calculate Alligator Lines Using RMA (Smoothed MA)
//    Standard Bill Williams parameters:
//       Jaw   : Period 13, Offset 8
//       Teeth : Period 8,  Offset 5
//       Lips  : Period 5,  Offset 3
//------------------------------------------
jawPeriod    = 13
jawOffset    = 8
teethPeriod  = 8
teethOffset  = 5
lipsPeriod   = 5
lipsOffset   = 3

jaw    = ta.rma(close, jawPeriod)
teeth  = ta.rma(close, teethPeriod)
lips   = ta.rma(close, lipsPeriod)

// Apply offset to the lines (using historical data to compensate for delay)
jaw_val   = jaw[jawOffset]
teeth_val = teeth[teethOffset]
lips_val  = lips[lipsOffset]

//------------------------------------------
// 2. Calculate Awesome Oscillator (AO)
//    Difference between the 5-period and 34-period SMA of the median price ((high + low) / 2)
//------------------------------------------
ao = ta.sma((high + low) / 2, 5) - ta.sma((high + low) / 2, 34)

//------------------------------------------
// 3. Calculate Accelerator Oscillator (AC)
//    Formula: AC = AO - SMA(AO, 5)
//------------------------------------------
ac = ao - ta.sma(ao, 5)

//------------------------------------------
// 4. Identify Fractals (5-Bar Model)
//    - Bull Fractal: When the middle bar (index 2) has the lowest low in the 5-bar window.
//    - Bear Fractal: When the middle bar (index 2) has the highest high in the 5-bar window.
//------------------------------------------
bullFractalLow  = low[2]  == ta.lowest(low, 5) ? low[2]  : na
bearFractalHigh = high[2] == ta.highest(high, 5) ? high[2] : na

// Store the latest fractal levels for stop or signal confirmation
var float lastBullFractalLow  = na  // Suitable as stop loss for long trades
var float lastBearFractalHigh = na  // Suitable as stop loss for short trades

if not na(bullFractalLow)
    lastBullFractalLow := bullFractalLow
if not na(bearFractalHigh)
    lastBearFractalHigh := bearFractalHigh

//------------------------------------------
// 5. Define Market Conditions Based on Bill Williams Indicators
//------------------------------------------
// Alligator Sequence:
// - Bullish: Lips > Teeth > Jaw
// - Bearish: Lips < Teeth < Jaw
bullAlligator = (lips_val > teeth_val) and (teeth_val > jaw_val)
bearAlligator = (lips_val < teeth_val) and (teeth_val < jaw_val)

// Conditions for trade entry (only when there is no active position)
// For a long trade:
//   • Bullish Alligator alignment
//   • AO and AC are positive (signifying upward momentum)
//   • The close is above the last Bear Fractal (serving as a potential breakout level)
longCondition = bullAlligator and (ao > 0) and (ac > 0) and (not na(lastBearFractalHigh)) and (close > lastBearFractalHigh)

// For a short trade:
//   • Bearish Alligator alignment
//   • AO and AC are negative
//   • The close is below the last Bull Fractal
shortCondition = bearAlligator and (ao < 0) and (ac < 0) and (not na(lastBullFractalLow)) and (close < lastBullFractalLow)

//------------------------------------------
// Enter trades only when there is no active position
//------------------------------------------
if (longCondition and strategy.position_size == 0)
    // Set stop loss: Preferably at the last Bull Fractal; if unavailable, use the Jaw line as a fallback.
    long_stop = not na(lastBullFractalLow) ? lastBullFractalLow : jaw_val
    risk      = close - long_stop
    takeProfit= close + risk * 2  // Risk-to-reward ratio of 1:2
    strategy.entry("Long", strategy.long)
    strategy.exit("Exit Long", "Long", stop=long_stop, limit=takeProfit)
    
if (shortCondition and strategy.position_size == 0)
    short_stop = not na(lastBearFractalHigh) ? lastBearFractalHigh : jaw_val
    risk       = short_stop - close
    takeProfit = close - risk * 2
    strategy.entry("Short", strategy.short)
    strategy.exit("Exit Short", "Short", stop=short_stop, limit=takeProfit)

//------------------------------------------
// 6. Plot Alligator Lines and Fractal Markers
//------------------------------------------
// Plot Alligator lines
plot(showPlot ? jaw_val : na,   color=color.blue,  title="Jaw")
plot(showPlot ? teeth_val : na, color=color.red,   title="Teeth")
plot(showPlot ? lips_val : na,  color=color.green, title="Lips")

// Mark fractals (using an offset of -2 to account for a 2-bar delay)
// Bull Fractal (upward triangle) and Bear Fractal (downward triangle)
plotshape(showPlot ? bullFractalLow : na, title="Bull Fractal Low", style=shape.triangleup, location=location.belowbar, color=color.green, offset=-2, size=size.tiny)
plotshape(showPlot ? bearFractalHigh : na, title="Bear Fractal High", style=shape.triangledown, location=location.abovebar, color=color.red, offset=-2, size=size.tiny)