Value areas from a function – Lesson 07

Display value areas from a multiple output function

In the last lesson you learned how to create, call and operate functions. Let’s put this knowledge to use today by taking a look at how to use the function that is part of our free Value Area toolset. If you don’t have a copy installed already, I would suggest to do that now. We need the function that provides the value areas in this lesson.

What are Value Areas?

Value Areas give you the areas where a defined amount of volume was traded or where price stayed in for a certain amount of time. A volume value area is the area where a certain percentage of the daily volume was traded in. While TPO (short for Time Price Opportunity) value areas are the areas where price spent a defined amount of time. You would usually look for areas with a width of about 70% of the total volume or total time (roughly one standard deviation).

In case you want to learn more about value areas, this link is a good start.

A brief function description

In the last session we learned that there is no need to know how a function works internally. As long as you know how to call it, you can use it.

We will make use of this, while we learn how to work with the “ABC_ValueAreas” function. This is a multiple output function and therefore it can return more than one value. As you learned in lesson six, this is done via reference inputs.

We also learned that a function should have a return value, even if it doesn’t return a result. The value areas function uses a “dummy” return value of +1 for that. This means that it just returns the value of +1 when you call the function, while all study results are returned via the “output” inputs.

You have 19 inputs in total to control and receive values from the value areas function. Since you can find a description of all the inputs in the manual of the value areas tool, let’s just briefly look at each of them here. The first seven inputs control the function and affect the results it returns. While the remaining inputs pass the function results back.

Inputs and Outputs

The seven inputs for configuring the function:

  • StartTime  –  the time input (hhmm format) when the study should start with tracking the volume and TPO values
  • EndTime  –  the time input (hhmm format) when the study should stop with the tracking
  • CalcMondayToFridayOnly  –  to exclude/include weekend data
  • ProfileTimeInterval –  bracket interval for each TPO in minutes
  • VolumeVAPercentage –  percentage of the total volume that should fall within the volume value areas
  • TPOVAPercentage  –  percentage of the TPOs that have to fall within the TPO value areas
  • DynArraySize  –  size of the dynamic arrays that store the volume at each price; if you set the dynamic arrays too small, the study will raise an error

The remaining reference inputs that return the results:

  • oDevelopingVolVAHigh  –  the price of the developing Volume Value Area High
  • oDevelopingVolPOC  –  current developing Volume Point of Control (VPOC)
  • oDevelopingVolVALow  –  current developing Volume Value Area Low
  • oDevelopingTPOVAHigh  –  current developing TPO Value Area High
  • oDevelopingTPOPOC  –  current developing Point of Control
  • oDevelopingTPOVALow  –  current developing TPO Value Area Low
  • oYesterdaysVolVAHigh  –  previous session’s Volume Value Area High
  • oYesterdaysVolPOC  –  previous session’s Volume Point of Control (VPOC)
  • oYesterdaysVolVALow  –  previous session’s Volume Value Area Low
  • oYesterdaysTPOVAHigh  –  previous session’s TPO Value Area High
  • oYesterdaysTPOPOC –  previous session’s Point of Control
  • oYesterdaysTPOVALow  –  previous session’s TPO Value Area Low

All inputs that reference developing values, return the value for each bar. The reference inputs starting with oYesterdays return the final value for the previous session (as specified with the Start- and EndTime input).

Create a new indicator

Since you know what the inputs do now, you can take the next step and call the function in an indicator and plot some results.

Open PL Editor and create a new indicator (File -> New -> Indicator and click “OK”). Now choose a name you like and click “OK” again. This will bring up the new indicator.

Maybe you are like me and prefer to be able to change the function outcome easily. In that case I would suggest to create a few inputs. Start with the first seven inputs that control the function. I will stick with the same names as used in the function itself. However you are free in choosing any input name that you like. The function will work exactly the same whether or not you use the same input names.

inputs for value areas

Inputs

With these default inputs the study will track value areas between 9:30 and 16:15 during the week. The value areas would have a width of 70