Custom Range Indicator Using Z-Score Extremes + Breakouts
u/poplindoing ·
Reddit — r/algotrading
· April 10, 2026 at 18:39
· ⬆ 15 pts
· 💬 7 comments
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AI Summary
Summary
The post describes a custom technical indicator that identifies trading ranges by connecting Z-score extremes in price, with a new range forming upon a breakout close.
The author's thesis is that this indicator helps filter out poor trade entries by avoiding false breakouts, particularly in range-bound markets like crypto altcoins.
Quality assessment: This is a strategy-sharing post based on personal algorithm development and backtesting. It is not traditional due diligence but a quant-focused method discussion.
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Hey everyone,
This is a simple algo I developed a few years ago, but I've recently been able to port it into my backtester with the help of AI.
**How it works:**
Take the OHLC values and use a Z-score algorithm to find extremes. Then connect each extreme high and low until a candle closes above or below the range, at which point a new range is formed. I also require a minimum number of candles for it to be considered a valid range.
In this demo, I draw the ranges using the TradingView Charting Library and recompute/repaint them whenever the visible range changes, using all visible candles. In the backtest, however, I only use the last \~600 candles and recompute on each candle close.
It hasn’t been a game changer, but it has helped. For one of my strategies, I’ve been able to avoid 5-10% of bad entries where a range was breached and the trade would normally enter and get stopped out within an hour.
A lot of altcoins in crypto tend to be trading in ranges, so it can be particularly useful there. I thought I'd share as I've found this sub especially helpful.