Z-Score Fade Script

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-- SPDX-License-Identifier: MIT
-- IQOptionWiki QCS Library
-- IQOW Z-Score Fade v1.0.0
--
-- The z-score measures how many standard deviations the close is from its simple
-- moving average. This script marks the first candle on which the close moves out
-- to 3 standard deviations from the SMA(20) (the outer Bollinger-style band) and
-- expects a snap back toward the average. It is built for 1-minute candles with a
-- 1 to 3 minute expiry. Standard deviation here is the population form, as used
-- in the internal research.
--
-- HIGHER: the close falls to or below SMA(20) minus 3 standard deviations, and the
--         previous close was still above its own lower band.
-- LOWER:  the close rises to or above SMA(20) plus 3 standard deviations, and the
--         previous close was still below its own upper band.
--
-- The script has no clock. Run it only in the time window you choose (the
-- internal research used 16:00 to 20:30 UTC); outside that window it still marks.
--
-- Markers use the previous completed candle: they appear after the next candle
-- opens and are shifted back one bar onto the candle that qualified.
-- Educational chart tool only. It does not place trades, choose an expiry,
-- predict outcomes, or guarantee results. Test on a Practice balance first.

instrument {
    name = "IQOW Z-Score Fade",
    short_name = "IQOW ZFADE",
    overlay = true
}

input_group {
    "1. Z-score bands",
    z_period = input (20, "SMA and deviation period", input.integer, 5, 200),
    z_threshold = input (3, "Standard deviations from the SMA", input.double, 1, 6, 0.1, false)
}

input_group {
    "Display and advice",
    lines_visible = input { default = true, type = input.plot_visibility },
    middle_visible = input { default = true, type = input.plot_visibility },
    signals_visible = input { default = true, type = input.plot_visibility },
    advice_enabled = input { default = false, name = "Enable platform advice", type = input.boolean }
}

input_group {
    "Colors",
    band_color = input { default = "#9B59B6", type = input.color },
    band_fill_color = input { default = rgba(155, 89, 182, 0.08), type = input.color },
    middle_color = input { default = "#FF7700", type = input.color },
    line_width = input { default = 1, type = input.line_width },
    higher_color = input { default = "#25E154", type = input.color },
    lower_color = input { default = "#FF6C58", type = input.color },
    signal_text_color = input { default = "#FFFFFF", type = input.color }
}

-- Bands: SMA plus and minus z_threshold population standard deviations
-- (stdev is the sample form, so it is scaled by sqrt ((n - 1) / n)).
middle_line = sma (close, z_period)
deviation = stdev (close, z_period) * math.sqrt ((z_period - 1) / z_period)
upper_band = middle_line + z_threshold * deviation
lower_band = middle_line - z_threshold * deviation

local close_now = get_value (close, nil)
local close_previous = get_value (close [1], nil)
local upper_now = get_value (upper_band, nil)
local lower_now = get_value (lower_band, nil)
local upper_previous = get_value (upper_band [1], nil)
local lower_previous = get_value (lower_band [1], nil)
local deviation_now = get_value (deviation, nil)

local data_is_ready =
    close_now ~= nil and close_previous ~= nil and
    upper_now ~= nil and lower_now ~= nil and
    upper_previous ~= nil and lower_previous ~= nil and
    deviation_now ~= nil and deviation_now > 0

-- First candle that reaches the outer band (the previous one was still inside).
higher_setup = conditional (
    data_is_ready and close_now <= lower_now and close_previous > lower_previous
)

lower_setup = conditional (
    data_is_ready and close_now >= upper_now and close_previous < upper_previous
)

-- Confirm only a new setup on the previous completed candle.
confirmed_higher = conditional (
    get_value (higher_setup [1], false) and
    not get_value (higher_setup [2], false)
)

confirmed_lower = conditional (
    get_value (lower_setup [1], false) and
    not get_value (lower_setup [2], false)
)

if lines_visible then
    fill (upper_band, lower_band, "Z-score area", band_fill_color)
    plot (upper_band, "Upper z-score band", band_color, line_width)
    plot (lower_band, "Lower z-score band", band_color, line_width)
end

if middle_visible then
    plot (middle_line, "SMA", middle_color, 1)
end

if signals_visible then
    plot_shape (
        confirmed_higher,
        "ZFADE HIGHER",
        shape_style.triangleup,
        shape_size.small,
        higher_color,
        shape_location.belowbar,
        -1,
        "HIGHER",
        signal_text_color
    )

    plot_shape (
        confirmed_lower,
        "ZFADE LOWER",
        shape_style.triangledown,
        shape_size.small,
        lower_color,
        shape_location.abovebar,
        -1,
        "LOWER",
        signal_text_color
    )
end

-- QCS advice is a platform notification state only; it does not place trades.
if advice_enabled and
    get_value (confirmed_higher, false) and
    not get_value (confirmed_lower, false) then
    advise (advice.buy)
elseif advice_enabled and
    get_value (confirmed_lower, false) and
    not get_value (confirmed_higher, false) then
    advise (advice.sell)
else
    advise (advice.neutral)
end