200 SMA + VWAP + Manual ADX Entry Signal

200 SMA + VWAP + Manual ADX Entry Signal – Indicator Description

This custom indicator is designed for trend-following intraday traders who want a powerful, rules-based entry confirmation system. It combines three proven tools—the 200-period Simple Moving Average (SMA), Volume-Weighted Average Price (VWAP), and a manually coded ADX (Average Directional Index)—to identify high-probability long entries in strong, directional markets.

By filtering trades through a combination of trend direction, mean-reversion reference, and momentum strength, this indicator helps traders avoid false breakouts, whipsaws, and low-quality setups. It’s particularly well-suited for traders using 15-minute charts, leveraged ETFs, or high-beta stocks, where precision entries and trend confirmation are critical to consistent profitability.

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✅ What This Indicator Does

This indicator visually displays:
• The 200-period SMA (orange line) – a long-term trend filter.
• The VWAP (blue line) – a dynamic intraday price average used by institutions.
• A buy signal triangle below the price bar – when all bullish criteria are met.
• It also includes an alert condition so traders can be notified when a new buy signal appears in real time.

Behind the scenes, the indicator calculates trend and strength conditions and plots a BUY signal only when all three tools agree that a bullish move is in play.

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🔍 The Three-Pillar Entry System

1. 200 SMA Filter – Defining Market Bias

The 200 SMA is a widely used institutional benchmark that represents long-term trend direction. In this indicator:
• A trade is only considered valid if price is above the 200 SMA.
• This helps eliminate trades in downtrending or range-bound markets.
• It ensures that entries are aligned with broader directional bias.

By filtering out trades below the 200 SMA, you instantly remove a majority of low-probability setups and whipsaw environments.

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2. VWAP – Institutional Mean Price Anchor

VWAP (Volume-Weighted Average Price) is often used by hedge funds and algorithmic systems to judge whether price is considered “expensive” or “cheap” within a given trading session.
• This version of VWAP is anchored to the current intraday session.
• Trades are only considered valid if price is above the VWAP, which shows market consensus is favoring the upside.
• VWAP provides both confirmation and support levels, helping ensure your entry isn’t into overextended territory.

By combining the 200 SMA and VWAP filters, the indicator ensures that trades are only taken when price is strong on both the macro and micro timeframes.

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3. ADX – Confirming Momentum Strength

ADX (Average Directional Index) is used to measure trend strength without regard to direction. However, TradingView has limited functionality with the ta.adx() call in some environments, so this script includes a custom-coded version of ADX that follows standard Wilder’s smoothing and directional movement logic.
• A BUY signal only triggers if ADX is above a user-defined threshold (default is 20) and rising from the previous bar.
• This means not only is the market trending — but the trend is strengthening.

This final filter prevents entries in chop or decaying rallies, and ensures you’re catching the strongest part of a move, not the tail end.

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⚙️ Logic Summary

A BUY signal is plotted when:
• Price > 200 SMA ✅
• Price > VWAP ✅
• ADX > 20 and rising ✅

Only when all three conditions are true does the indicator plot a green triangle below the price bar.

This visual simplicity makes it ideal for fast trade decisions, and the alert function allows hands-free monitoring during busy sessions.

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🧠 Recommended Use

This indicator works best on:
• 15-minute to 1-hour charts
• Intraday leveraged ETFs (e.g., TQQQ, SPYU, SQQQ)
• Trend-following strategies
• Breakout continuation trades

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📉 Limitations
• This is a long-only system by design. If you want to trade short, you’ll need to invert the logic (e.g., price < 200 SMA, price < VWAP, ADX > threshold).
• It doesn’t generate exit signals. You should pair this with your own take-profit or trailing stop strategy.
• While it works great for momentum entries, it may underperform in range-bound or news-driven chop markets.

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🛠️ Settings Customization
• SMA Length: default is 200; adjust for faster or slower trend confirmation.
• ADX Length: default is 14; shorter periods = more sensitive, longer = smoother.
• ADX Threshold: default is 20; raise to 25 or 30 to only catch very strong moves.

These settings give you flexibility to match the indicator to your trading style.

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🚀 Final Thoughts

The 200 SMA + VWAP + Manual ADX Entry Signal is a battle-tested, rule-based tool to help you:
• Enter only when the trend, mean, and momentum align
• Avoid fakeouts and poor risk-reward entries
• Automate part of your setup process without overcomplication

This is the kind of filter used by professional traders to reduce screen time and improve trade quality. If you’re looking to build confidence in your intraday trading with clear, logical entries — this indicator will help you stay consistent and systematic.

Happy trading!