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IBD Market School [tradeviZion]

IBD Market School Indicator: User Guide and Settings Reference

A comprehensive guide to configuring and using the IBD Market School indicator for TradingView

Introduction

The IBD Market School indicator is an advanced market analysis tool that implements Investor's Business Daily's methodology for identifying optimal trading opportunities. By tracking key market indexes and analyzing price and volume patterns, it provides actionable buy and sell signals based on the CANSLIM investment system.

The indicator offers a comprehensive set of features:

Complete Signal System
10 primary buy signals (B1-B10)
Additional buy-side indicators (HH - Higher High, ED - Expired Days)
14 sell signals (S1-S14)
Index Rise 6% signal for Distribution/Stalling Day expiration
Market Health Tracking
Distribution Day detection and counting
Stalling Day identification and validation
Automatic 25-day signal expiration
6% price rise monitoring for signal clearing
Market Condition Analysis
Rally Day detection (major and minor)
Follow-Through Day confirmation
Dynamic market exposure management (0-100%)
Power Trend analysis with multiple states
Risk Management Features
Circuit Breaker system for major declines
Buy Switch system for exposure control
Customizable volume analysis (Nasdaq/S&P 500)
Distribution day clustering detection
Visual Analysis Tools
IBD-style candle display option
Power Trend state visualization
Signal line drawing system
Customizable tooltips and alerts

Proper configuration of the indicator's settings is essential as it affects:

Signal detection sensitivity and accuracy
Market exposure calculations and adjustments
Volume confirmation requirements
Visual display of market conditions and signals
Alert system behavior and notifications

This guide provides detailed explanations of each component and setting to help you optimize the indicator for your trading strategy while maintaining adherence to IBD's proven methodology.

📊 General Settings

This section controls the indicator's tooltip display, alert behavior, and candle visualization preferences.

The General Settings panel allows you to configure tooltip modes, alert types, and candle appearance.

Tooltip Display Mode

Select how detailed the tooltips should be when hovering over signals and indicators:

The three tooltip display modes: Simple (left), Detailed (center), and Market Analysis (right).

Simple Mode
Displays concise signal definitions
Shows basic entry and exit conditions
Focuses on essential trigger points
Perfect for experienced traders
Detailed Mode
Provides in-depth explanations of each buy/sell signal
Shows complete validation criteria and conditions
Includes volume requirements and percentage thresholds
Explains the context and significance of each signal
Market Analysis Mode
Focuses on broad market health metrics
Shows market exposure percentage and trend
Displays buy switch and power trend status
Tracks distribution days and signal buffers

Note: Choose the tooltip mode based on your needs:
- Simple: Provides quick, essential information on signals for fast decision-making
- Detailed: Breaks down conditions for each buy/sell signal, ideal for users wanting in-depth explanations
- Market Analysis: Focuses on broad market health, including exposure, buy switch, distribution days, and trends

Market Exposure Alert System

The indicator alerts you when market exposure levels change, helping you adjust your positions accordingly.

Alert Types

On Close (Recommended)
Triggers only after bar closes
More reliable signals as price action is confirmed
Real-Time
Triggers immediately when conditions are met
Note: Signals may change by bar close

Setting Up Alerts

Click the "..." (More) button on the indicator label "tradeviZion - IBD Market School"
Select "Add alert on tradeviZion - IBD Market School..."
In the Create Alert dialog:
Settings tab:
Verify the symbol and timeframe (e.g., NASDAQ:IXIC, 1D)
Condition: Select "tradeviZion - IBD Market School"
Alert function: Choose "Any alert() function call"
Expiration: Set to "Open-ended alert"
Alert name will auto-populate
Switch to Notifications tab:
Enable "Notify in app" for push notifications in the mobile app
Enable "Show toast notification" for on-screen alerts
Enable "Play sound" and customize duration (e.g., Thin, 10 seconds)
Optional settings:
Send email (requires profile settings configuration)
Webhook URL for POST requests
Send plain text for alternative email format
Click Create to activate the alert

Alert Messages

Message format: "Market exposure change for [Symbol]: [Direction] Market exposure [Changed] from [Previous]% to [New]%"
Example: "Market exposure change for IXIC: 📈 Market exposure reduced from 100% to 75%"
📈 Arrow indicates exposure increase
📉 Arrow indicates exposure decrease
Messages include previous and new exposure percentages

Note: These alerts specifically track changes in market exposure levels, helping you stay aligned with market conditions. They are essential for maintaining proper position sizing and risk management.

Chart Style Options

IBD-style Candles
Enable to match Investor's Business Daily chart style
For MarketSmith style setup, right-click on chart and go to Settings
Navigate to Symbol tab
Uncheck Body, Borders, and Wicks
Press Alt+R to restore chart view if zoom affects display
To revert to original style, right-click on chart and go to Settings
Navigate to Symbol tab
Check Body, Borders, and Wicks
Color Based on Previous Close
Colors bars based on close vs. previous close
When enabled, determines colors by comparing current close to previous close
Use blue color for closes above previous
Use pink color for closes below previous

📈 Market Exposure Table Settings

Configure how the market exposure information is displayed on your chart.

The Market Exposure Table Settings panel allows you to customize the appearance and layout of the market status display.

Layout Options

• Hide Table
Completely hides the market status display

• Basic (2 Columns)
Shows main indicators in two columns
Compact view without signal list
Ideal for minimalist chart view

• Detailed (2 Columns with Signals)
Displays main indicators plus signal panel
Shows Buy and Sell signals in separate columns
Provides comprehensive market overview

• Stacked (1 Column, Compact)
Vertical layout with single column
Most space-efficient option
Ideal for smaller chart windows

Color Settings

Background: Dark gray background for the table
Text: White text for general information
Buy Signal: Green highlighting for buy signals
Sell Signal: Red highlighting for sell signals

Additional Options

Show Trading Wisdom: Enable rotating trading messages

Displays empowering trading messages
Helps reinforce disciplined trading practices
Updates every 5 bars with new wisdom
Includes tooltips with comprehensive trading guidance
Customizable yellow text color for messages

💹 Buy Signals Settings

This section controls the visibility and behavior of buy signals and related indicators.

The Buy Signals Settings panel allows you to configure signal visibility, volatility calculations, and visual appearance of buy signals.

Signal Display Options

Buy Signals Display: Choose display mode
Show Selected Signals
Hide All
Compact Signals
Individual Signal Toggles
Primary Buy Signals (B1-B10)
Special Indicators (HH, ED)

Understanding Buy Signals

B1: Follow-Through Day (FTD)
Buy on the initial FTD with volume higher than the previous day. You may use an FTD from an index other than the IXIC, but if you do, you must stay within that index for future Buy and Sell Signals.
B2: Additional Follow-Through
Buy on all additional follow-through days within 25 days from a rally day that closes above the low of the initial follow-through day.
B3: Low Above EMA21
Buy on an up or flat day when the intraday low is at or above the EMA21. Note: Once you have a B3 or B4, you can't have another until it is reset by an S5.

Special Buy Indicators

HH: Higher High (No FTD after Rally)
Triggers when current close exceeds highest point since last confirmed rally. Must not have a Follow-Through Day (FTD). Buy switch turns on when close exceeds last rally's high and turns off if close drops below that high.
ED: Expired Days
Tracks Distribution and Stalling days that have aged out. Days are tracked for a specific trading period and expired days are removed from the count.

Index Rise Settings

Index Rise 6% from DD & SD
Toggle to enable/disable monitoring of price rises above Distribution and Stalling Days. Default value of 6% (adjustable) for monitoring rises above these days.

Understanding Index Rise
This feature tracks significant market recoveries by monitoring when the index rises substantially above Distribution Days (DD) or Stalling Days (SD). When the index rises 6% or more above the closing price of any DD or SD, it indicates a strong market recovery. This is an important signal because it helps identify when the market has shown enough strength to potentially overcome previous distribution periods. When triggered, this signal reduces the distribution day count, effectively acknowledging that the previous distribution pattern may no longer be as relevant due to the market's strong recovery.

B1 Signal Configuration

Volatility Settings

B1 Auto Volatility: Calculates FTD price requirement based on 200-day volatility
B1 Manual Volatility: Fixed value (default 1.245) when auto is disabled

Visual Settings

Label Size: Small (options: Tiny, Small, Normal, Large)
Signal Color: Light green background for buy signals
Text Color: Customizable text color for signal labels

Important Notes

Signal visibility affects both chart display and calculations
Auto volatility is recommended for most users
Manual volatility should only be adjusted by experienced users
Visual settings apply to all enabled buy signals

Confirmation Rules

Price Requirements

Follow-Through Day (B1) thresholds based on 200-day volatility:
Below 0.4% volatility: 0.7% gain required
0.4% to 0.55% volatility: 0.85% gain required
0.55% to 1% volatility: 1% gain required
Above 1% volatility: 1.245% gain required
EMA Breaks (S5/S6): 0.2% threshold below 21 EMA
Downside Reversal (B9): 1.75% high-to-low spread required

Volume Requirements

Distribution Days: Volume > previous day, with -0.20% or more price decline
Stalling Days: Volume ≥ 95% of previous day
Follow-Through Days (B1/B2): Volume > previous day
Accumulation Days (B7): Volume > previous day, close in upper 25% range

Sell Signals Settings

This section controls the visibility and behavior of sell signals and market weakness indicators.

The Sell Signals Settings panel allows you to configure signal visibility and visual appearance of sell signals and market health indicators.

Signal Display Options

Sell Signals Display: Dropdown with options to control signal visibility:
Show Selected Signals
Hide All
Compact Signals
Individual Signal TogglesPrimary Sell Signals: S1-S14 and CB (Circuit Breaker)
Market Health Indicators:
Distribution Days (DD): Indicative of institutional selling. Occurs when:
Market closes down by at least 0.2%
Volume greater than or equal to prior day
Tracked for 25 trading days
Stalling Days (SD): Sign of heavy volume without upside progress. Occurs when:
Market at/near new highs
Closes with small gain (0% to 0.4%)
High volume in lower half of day's range

Understanding Sell Signals

S1: Follow-Through Day Undercut
Sell if the index closes below the low of the initial follow-through day.
S2: Failed Rally Attempt
Sell if the index undercuts the major low of the rally attempt. Market exposure is reduced to zero and the Buy Switch is turned off.
S2ml: Minor Low Undercut
Minor Low undercut of rally attempt. Market exposure is reduced by two. This does not turn off the Buy Switch.
S3: Full Distribution Minus One
Sell after the distribution count increases to one less than the full distribution count.
S4: Full Distribution
Sell after reaching the full distribution count.
S5: Break Below EMA21
Sell if the index closes 0.2% or more below the EMA21. Note: Once you have an S5, S6, or S7, you can't have another until it is reset by a B3.
S6: Overdue Break Below EMA21
Sell if the index closes down 0.2% or more below the EMA21 after 30 days have passed since the last B3 without triggering an S5.
S7: Trending Below EMA21
Sell after S5 on the 5th consecutive day that the high is below the EMA21 and a down day.
S8: Living Below EMA21
Sell after S5 on the 10th and every 5th consecutive day after that (15th, 20th, 25th, etc.) that the high is below the EMA21.
S9: Break Below 50-Day MA
Sell if the index closes below the 50-Day Moving Average. Triggers only if a B6 signal was previously printed.
S10: Bad Break
Sell if the close is down 2.25% or greater in the bottom 25% of the range. Close below the MA50 or intraday high below EMA21.
S11: Downside Reversal
Sell after a Downside Reversal Day, which occurs with:
New High within 13 weeks
Close in bottom quartile of range
Close Down for the day
Spread of 1.75% or greater
S12: Lower Low
Sell after closing below the last marked low as defined by MarketSmith.
S13: Distribution Cluster
Distribution and stalling days increase to four up to eight days within a rolling eight-day period.
S14: Break Below Higher High
Sell after closing below the last marked high that printed a B8 (Higher High).
CB: Circuit Breaker
Triggers when the index drops 10% from the highest high since the FTD (B1) and falls 5% or more below the 50-Day MA intraday.

Buy/Sell Undercut Lines

This section controls the visibility and appearance of important price level lines on your chart.

The Buy/Sell Undercut Lines panel allows you to configure which signal lines are displayed and their visual appearance.

Line Visibility

Buy Signal Lines:
B8 Line: First high above the last pivot high
HH Line: Close above the prior high since last confirmed rally without FTD
Sell Signal Lines:
- S1 Line: Close below the initial follow-through day
- S2 Line: Undercut of major low
- S2ml Line: Minor low undercut
- S12 Line: Close below last marked low
- S14 Line: Close below last marked high
Line Appearance
- Color Settings:
  B8: Green (Buy signal)
  HH: Green (Buy signal)
  S1: Red (Sell signal)
  S2: Red (Sell signal)
  S2ml: Orange (Modified sell signal)
  S12: Purple (Pivot low signal)
  S14: Blue (Close below pivot)
- Line Style: Dashed (options: solid, dotted, dashed)
- Line Width: 1 (adjustable)
📈 Rally Signal Settings

The Rally Signal Settings panel allows you to configure Rally Day detection and visualization.
- Rally Day:
  Toggle to enable/disable Rally Day signals. These mark the beginning of potential market uptrends when the market closes higher than the previous day, following a significant decline.
- Visual Settings:
  Label Size: small (options: tiny, small, normal, large)
  Background Color: Customizable background for Rally Day labels
  Text Color: Customizable text color for Rally Day labels
- Distribution Day Settings:
  Use Manual FullDDcount: Option to manually set the minimum combined number of Distribution and Stalling Days
  Count Value: Default is 6 days (adjustable when manual mode is enabled)
  This setting determines how many Distribution/Stalling Days are required to trigger a new rally
Pivot Point Settings

The Pivot Point Settings panel allows you to configure the display of high/low points and percentage changes between pivots.

Display OptionsDisplay H/L Points
Toggle to show or hide pivot levels (high and low points) on the chart

%Change
Toggle to display percentage changes between pivot points

Color Settings
- Positive % Color: Blue (customizable) - Used for positive percentage changes
- Negative % Color: Pink (customizable) - Used for negative percentage changes
Precision Settings
- Decimal Places: Set the number of decimal places (default: 2) for:
  Pivot point price levels
  Percentage change calculations
⚡ Power Trend Settings

This section controls how Power Trend information is visualized on your chart.

The Power Trend Settings panel allows you to configure how trend states are displayed and customize their visual appearance.

Example of Power Trend visualization showing both boxes (green background) and trend lines. The boxes indicate trend state while lines show trend transitions.

Display Options
- Show Power Trend Line: Display trend states as lines on the chart
- Show Boxes: Display trend states as boxes
- Show Background: Display trend states as background colors
Power Trend Color Settings
- On: Light green - Full power trend active
- Resume: Light green - Power trend resuming
- Off: Gray - Power trend inactive
- With Floor: Yellow - Under pressure with support
- No Floor: Orange - Under pressure without support
Power Trend Line Settings
- Line Width: Set line thickness (default: 1)
- Line Offset: Adjust line position (default: 5)
Power Trend Box Settings
- Text Align: Set text alignment (left, center, right)
- Text Position: Set vertical position (top, middle, bottom)
- Size: Set box size (tiny, small, normal, large)
- Color: Customize box background color
Power Trend States
- Full Power (On)
  Represents strongest market condition with maximum exposure of +7
  Base maximum exposure of 5 plus 2 buffer signals
  Buffer allows maintaining high exposure during normal pullbacks
  2 sell signals reduce count from 7 to 5 without affecting base
  Indicates very healthy market that can absorb normal profit-taking
- Resume State
  Shows successful market recovery after pressure period
  Requires 10+ days without S2 minor, S9, or S13 signals
  Must reestablish all initial strength conditions
  Maintains same benefits as Full Power (+7 max, +2 floor)
  Shows as light green in visualization
- Under Pressure With Floor
  First warning stage triggered by S2 minor or S13 signals
  Reduces maximum exposure to +5
  Maintains minimal protection with +1 floor
  Suggests defensive positioning while keeping core positions
  Shows as yellow in visualization
- Under Pressure No Floor
  Severe warning stage triggered by S9 signal
  Maintains +5 maximum exposure but removes floor protection
  Indicates higher risk of continued market decline
  Requires careful position management
  Shows as orange in visualization
- Power Trend Off
  Triggered by EMA/MA crossdowns with declining price
  Can also be activated by S2 or Circuit Breaker signals
  Maximum exposure limited to +5 with no buffer signals
  Suggests focus on capital preservation
  Shows as gray in visualization
Power Trend System Rules
- Each state enforces strict exposure limits with automatic floor and ceiling adjustments
- Power Trend can activate Buy Switch when entering Full Power state
- Restraint Rule limits exposure to +2 until significant progress or B4 signal when starting from zero exposure
- State transitions immediately update exposure limits and Buy Switch status
- Distribution Cluster (S13) can move Power Trend to Under Pressure With Floor state
- System maintains exposure floors to prevent panic selling while allowing flexibility below floor levels
Weekly SMAs SettingsThe Weekly SMAs Settings panel allows you to configure the weekly moving averages display and calculations.
- SMA 1: 10 periods (enabled), Red
  Length: 10
  Optional EMA toggle
  Width: 1
- SMA 2: 20 periods, Pink
  Length: 20
  Optional EMA toggle
  Width: 1
- SMA 3: 30 periods, Green
  Length: 30
  Optional EMA toggle
  Width: 1
- SMA 4: 40 periods (enabled), White
  Length: 40
  Optional EMA toggle
  Width: 1
SMAs SettingsThe SMAs Settings panel allows you to configure the daily moving averages display and calculations.
- MA 1: 10 periods, Optional EMA, Pink
  Length: 10
  Optional EMA toggle
  Width: 1
- MA 2: 21 periods (enabled), EMA, Green
  Length: 21
  EMA enabled
  Width: 1
- MA 3: 50 periods (enabled), SMA, Red
  Length: 50
  EMA disabled
  Width: 1
- MA 4: 200 periods (enabled), SMA, White
  Length: 200
  EMA disabled
  Width: 1
Volume Settings (NASDAQ & S&P 500)

This section controls volume data sources for market analysis. Proper volume settings are crucial for confirming market signals and analyzing institutional participation.

The Volume Settings panel allows you to configure volume data sources and custom ticker options for accurate market analysis.

Important Volume Source Information
- TradingView's default volume data differs from IBD's Yahoo Finance data source
- Current default settings (IXIC and TVOL) provide the most accurate results compared to IBD signals
- Volume differences between TradingView and IBD are expected due to different data sources
- Custom ticker options are provided for future compatibility with Yahoo Finance volume data
Volume Configuration
- Nasdaq Volume Settings
  Default Source: IXIC (Nasdaq Composite Index)
  Custom Ticker Option: USI:TVOL.NQ
  Enable custom source by checking "Use Custom Nasdaq Ticker?"
  Note: Custom ticker must be price-based for accurate volume analysis
- S&P 500 Volume Settings
  Default Source: TVOL (S&P 500 Total Volume)
  Custom Ticker Option: USI:TVOL.NY
  Enable custom source by checking "Use Custom S&P 500 Ticker?"
  Note: Custom ticker must be price-based for accurate volume analysis
- Volume Analysis Impact
  Used for Distribution Day confirmation
  Required for Follow-Through Day validation
  Helps identify institutional buying/selling
  Critical for Stalling Day detection
Recommendations
- Keep default settings for most accurate current results
- Only use custom tickers if you have confirmed price-based volume sources
- Be aware that volume-based signals might slightly differ from IBD due to data source differences
- Future updates may add Yahoo Finance volume compatibility
Market Status Table

The Market Status Table provides a real-time visual overview of current market conditions and signal status. Users can customize the table's appearance through the Market Exposure Table Settings.

The Market Status Table can be displayed in three different layouts: Basic (left), Detailed (center), and Stacked (right).

Layout Options
- Hide Table
- Completely hides the market status display
- Basic (2 Columns)
- Shows main indicators in two columns
- Compact view without signal list
- Ideal for minimalist chart view
- Detailed (2 Columns with Signals)
- Displays main indicators plus signal panel
- Shows Buy and Sell signals in separate columns
- Provides comprehensive market overview
- Stacked (1 Column, Compact)
- Vertical layout with single column
- Most space-efficient option
- Ideal for smaller chart windows
Main Indicators

• Market Exposure
Displayed as colored dots: 🟠 🟢 🟢 🟢 🟢
Shows current exposure level (0-100%)
(⚪ ⚪ ⚪ ⚪ ⚪): 0% exposure
(🟠 ⚪ ⚪ ⚪ ⚪): 30% exposure
(🟠 🟡 ⚪ ⚪ ⚪): 55% exposure
(🟠 🟡 🟢 ⚪ ⚪): 75% exposure
(🟠 🟡 🟢 🟢 ⚪): 90% exposure
(🟠 🟡 🟢 🟢 🟢): 100% exposure

• Key Status Indicators
Buy Switch: Shows ON (forced) or OFF status
Power Trend: Displays current state with floor and maximum values
Restraint Rule: Indicates ON or OFF status
Count / Signals Buffer: Shows current count and available buffer (e.g., "7 / (+0)")
Dist. Days / Cluster: Displays distribution day count and cluster status (e.g., "1 / 0")

• Signal Panel (Available in Detailed layout)
Lists all active Buy and Sell signals
Highlighted signals indicate currently active conditions
Green highlighting shows confirmed signals
Provides quick reference for all available signals

Status Indicator Colors

🟢 indicates "ON" or positive conditions (e.g., Buy Switch ON, Power Trend Full Power)
🟡 indicates "Under Pressure" or caution (e.g., Power Trend Under Pressure With Floor)
🟠 indicates "Under Pressure No Floor" or increased caution
🔴 indicates "OFF" or negative conditions (e.g., Buy Switch OFF, Power Trend OFF)

• Signal Colors
Green background for buy signals
Red background for sell signals
Black text on signal backgrounds for better visibility

• Number Formats
Count / Buffer signals shown as "7 / (+2)"
Distribution Days / Cluster count shown as "1 / 0"
Exposure percentage shown with dots (e.g., "90%")

Trading Wisdom - Market Risk Management
"The key to successful trading is not just knowing when to enter, but managing your exposure based on market health. Always check two critical indicators before any trade:

1. Market Exposure Levels
- 100% (5 dots): Full positions in strong market
- 90% (4 dots): Slightly reduced positions
- 75% (3 dots): Moderate positions, more cautious
- 55% (2 dots): Half positions only
- 30% (1 dot): Small positions only
- 0% (0 dots): Stay in cash
2. Distribution Days Risk Levels
- 1-2 Days: Normal market behavior
- 3 Days: Caution - reduce new positions
- 4+ Days: High risk - defensive positioning
- 5-6 Days: Consider moving to cash
Remember: It's better to miss an opportunity than to catch a falling market. Let the Market Exposure Table be your guide to smart position sizing."
Pro Tip: Make checking these two indicators part of your daily routine. They're your first line of defense against major drawdowns.

Conclusion

The IBD Market School indicator brings William O'Neil's proven methodology to TradingView, providing a comprehensive system for market analysis and risk management. This tool automates the complex task of tracking market signals while maintaining strict adherence to IBD's time-tested principles.

Key Features
- Follows IBD's core methodology for identifying market direction
- Automates tracking of Distribution Days, Follow-Through Days, and market signals
- Provides clear market exposure guidance through the Power Trend system
- Helps maintain discipline through systematic Buy Switch control
- Offers multiple layers of risk management
Best Practices
- Always check Market Exposure and Distribution Day count before making trades
- Let the Buy Switch guide your market participation
- Follow Power Trend states for proper position sizing
- Use the default volume settings for most accurate signal generation
- Monitor all confirmation rules for proper signal validation
Remember: This indicator is designed to replicate IBD's methodology as closely as possible within TradingView's environment. While it automates signal detection and exposure management, successful trading still requires discipline, patience, and strict adherence to risk management principles.

"The goal is not to be right about the market - it's to make money by following the market's signals and managing risk."