Understanding the ta.iii Function in Pine Script

The Intraday Intensity Index (III) is a technical analysis indicator designed to reflect the position of the closing price within the day’s range, factoring in volume. This indicator is particularly useful for traders looking to gauge the buying or selling pressure throughout the trading day. Below, we explore how to implement and interpret the III in Pine Script, the domain-specific language for creating custom indicators and strategies on the TradingView platform.

Implementation in Pine Script

Using the Built-in ta.iii Function

TradingView’s Pine Script language includes a built-in function for the Intraday Intensity Index, ta.iii, allowing for straightforward implementation. Here’s an example of how to plot the III with the built-in function:

//@version=5
indicator("Intraday Intensity Index", shorttitle="III")
plot(ta.iii, color=color.yellow)

In this example, we declare the script version with //@version=5 and create a new indicator titled “Intraday Intensity Index.” We then plot the III using ta.iii, specifying the plot color as yellow.

Custom Implementation of III

To gain a deeper understanding or to customize the III, you can implement the formula directly in Pine Script. The III is calculated as:

III = ((2 * Close – High – Low) / ((High – Low) * Volume))

Here’s how you can implement this formula in Pine Script:

//@version=5
indicator("Custom Intraday Intensity Index", shorttitle="CIII")
cIII() =>
    (2 * close - high - low) / ((high - low) * volume)
plot(cIII(), color=color.red)

In this custom implementation, we define a function cIII() that calculates the III using the provided formula. We then plot this custom III with the color red to distinguish it from the built-in version.

Detailed Walkthrough

• Indicator Declaration: Both examples start with //@version=5, specifying the use of Pine Script version 5, followed by the indicator function to declare a new indicator. The first parameter is the name of the indicator, and shorttitle is an optional parameter to specify a shorter name that appears in the TradingView interface.
• III Calculation: The custom function cIII() calculates the III by applying the formula to the current bar’s price and volume data. The numerator, (2 * close - high - low), calculates the double of the closing price minus the day’s high and low, representing the close’s position within the range. The denominator, ((high - low) * volume), multiplies the day’s range by the volume, integrating volume into the analysis.
• Plotting: The plot function is used to render the calculated III on the chart. You can customize the appearance of the plot through parameters such as color.

Key Features and Takeaways

• Function Usability: The built-in ta.iii function offers a quick and straightforward way to include the III in your analysis, while the custom implementation allows for adjustments and a deeper understanding of the calculation.
• Syntax and Application: Implementing custom indicators in Pine Script involves defining a function for the calculation and then plotting the result. This approach is flexible and can be adapted for various technical analysis indicators.
• Educational Value: By coding your own version of the III, you gain insights into how indicators incorporate volume and price data to provide trading signals.

This walkthrough provides a foundation for utilizing and customizing the Intraday Intensity Index in Pine Script. Whether you opt for the built-in function or a custom implementation, understanding the underlying calculation and its application can enhance your technical analysis and trading strategies.