PineScript Indicator vs Strategy

In this tutorial, you will learn the differences between PineScript Indicator and PineScript Strategy.

PineScript Indicator

A PineScript Indicator is a script designed to visualize technical analysis tools on TradingView charts. It does not execute trades but helps traders analyze price movements using custom signals, overlays, and calculations.

Example: Indicator

//@version=5
indicator("Simple Moving Average", overlay=true)
length = input(14, title="SMA Length")
smaValue = ta.sma(close, length)
plot(smaValue, title="SMA", color=color.blue)

PineScript Strategy

A PineScript Strategy is a script that not only analyzes market conditions but also includes logic
for executing trades. Strategies can be backtested on historical data to evaluate performance.

Example: Crossover Strategy

//@version=5
strategy("Moving Average Crossover", overlay=true)
shortLength = input(9, title="Short SMA Length")
longLength = input(21, title="Long SMA Length")
shortSMA = ta.sma(close, shortLength)
longSMA = ta.sma(close, longLength)
plot(shortSMA, title="Short SMA", color=color.green)
plot(longSMA, title="Long SMA", color=color.red)
longCondition = ta.crossover(shortSMA, longSMA)
shortCondition = ta.crossunder(shortSMA, longSMA)
strategy.entry("Long", strategy.long, when=longCondition)
strategy.close("Long", when=shortCondition)

Indicator vs. Strategy

Some of the differences between Indicator and Strategy are as follows:

	Indicator	Strategy
Purpose	Analyzes market trends and provides visual signals.	Includes trading logic and can execute buy/sell orders.
Backtesting	Not designed for backtesting.	Can be backtested to evaluate performance.
Trade Execution	Does not execute trades.	Can execute trades based on conditions.
Overlay on Chart	Yes, can be plotted on price charts.	Yes, but also includes order execution logic.
Best Use Case	Analyzing price action, trends, and indicators.	Testing and executing trading strategies.

 

Disclaimer

This content is for informational and educational purposes only and should not be considered financial or investment advice. Trading stocks, cryptocurrencies, or any financial instruments involves risk, and past performance does not guarantee future results. Always conduct your own research and consult with a licensed financial advisor before making any trading or investment decisions. The author and publisher are not responsible for any financial losses incurred by the use of this information.