Strategy Basics in Pine Script

This guide covers the fundamentals of building trading strategies in Pine Script - from simple concepts to complete implementations.

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What is a Strategy?

A strategy is a Pine Script that can:

• Enter trades - Buy/sell based on conditions
• Exit trades - Close positions automatically
• Manage risk - Set stop loss and take profit
• Backtest - Test on historical data

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Basic Strategy Structure

Hello Strategy

//@version=6
strategy("My First Strategy", overlay=true)
 
// Entry
if condition
    strategy.entry("Long", strategy.long)
 
// Exit
if anotherCondition
    strategy.close("Long")
 
plot(ta.sma(close, 20))

Complete Strategy

//@version=6
strategy("Complete Strategy", 
     overlay=true, 
     default_qty_type=strategy.percent_of_equity, 
     default_qty_value=10)
 
// Inputs
maLength = input.int(20, "MA Length")
 
// Calculate
ma = ta.sma(close, maLength)
 
// Entry condition
enterLong = ta.crossover(close, ma)
 
// Exit condition
exitLong = ta.crossunder(close, ma)
 
// Execute
if enterLong
    strategy.entry("Long", strategy.long)
 
if exitLong
    strategy.close("Long")
 
// Plot
plot(ma, color=color.blue)

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Strategy Types

Long Only

//@version=6
strategy("Long Only", overlay=true)
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)
 
plot(ta.sma(close, 20))
plot(ta.sma(close, 50))

Short Only

//@version=6
strategy("Short Only", overlay=true)
 
if ta.crossunder(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Short", strategy.short)
 
plot(ta.sma(close, 20))
plot(ta.sma(close, 50))

Long and Short

//@version=6
strategy("Long/Short", overlay=true)
 
ma20 = ta.sma(close, 20)
ma50 = ta.sma(close, 50)
 
// Long entry
if ta.crossover(ma20, ma50)
    strategy.entry("Long", strategy.long)
 
// Short entry
if ta.crossunder(ma20, ma50)
    strategy.entry("Short", strategy.short)
 
// Exit
if ta.crossunder(ma20, ma50)
    strategy.close("Long")
 
if ta.crossover(ma20, ma50)
    strategy.close("Short")
 
plot(ma20)
plot(ma50)

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Position Sizing

Percent of Equity

//@version=6
strategy("Percent Equity", 
     default_qty_type=strategy.percent_of_equity,
     default_qty_value=10)  // 10% of account
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)

Fixed Quantity

//@version=6
strategy("Fixed Quantity",
     default_qty_type=strategy.fixed,
     default_qty_value=100)  // 100 shares/contracts
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)

Risk-Based Sizing

//@version=6
strategy("Risk Based")
 
atr = ta.atr(14)
riskPercent = input.float(2.0, "Risk %")
 
// Calculate position size
riskAmount = strategy.equity * (riskPercent / 100)
stopDistance = atr * 2
shares = riskAmount / stopDistance
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long, qty=shares)
 
plot(ta.sma(close, 20))

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Order Types

Market Orders

//@version=6
strategy("Market Orders")
 
// Execute immediately at market price
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)

Limit Orders

//@version=6
strategy("Limit Orders")
 
sma20 = ta.sma(close, 20)
 
// Buy at SMA (limit order)
if close > sma20
    strategy.order("Long Limit", strategy.long, limit=close)
 
plot(sma20)

Stop Orders

//@version=6
strategy("Stop Orders")
 
sma20 = ta.sma(close, 20)
 
// Buy on breakout (stop order)
if close > sma20
    strategy.order("Long Stop", strategy.long, stop=close)
 
plot(sma20)

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Multiple Conditions

AND Conditions

//@version=6
strategy("Multiple Conditions")
 
sma20 = ta.sma(close, 20)
rsi = ta.rsi(close, 14)
 
// Both conditions must be true
longCondition = ta.crossover(close, sma20) and rsi < 30
 
if longCondition
    strategy.entry("Long", strategy.long)
 
if ta.crossunder(close, sma20)
    strategy.close("Long")
 
plot(sma20)
plot(rsi, scale=scale.left)
hline(30)

OR Conditions

//@version=6
strategy("OR Conditions")
 
sma20 = ta.sma(close, 20)
rsi = ta.rsi(close, 14)
 
// Either condition
longCondition = ta.crossover(close, sma20) or rsi < 25
 
if longCondition
    strategy.entry("Long", strategy.long)
 
plot(sma20)

Complex Conditions

//@version=6
strategy("Complex Conditions")
 
ma20 = ta.sma(close, 20)
ma50 = ta.sma(close, 50)
rsi = ta.rsi(close, 14)
atr = ta.atr(14)
 
// Trend: price above 200 SMA
trendUp = close > ta.sma(close, 200)
 
// Entry: MA cross + RSI + ATR filter
entry = ta.crossover(ma20, ma50) and rsi < 40 and atr < ta.atr(20)[1]
 
if trendUp and entry
    strategy.entry("Long", strategy.long)
 
// Exit: opposite cross
if ta.crossunder(ma20, ma50)
    strategy.close_all()
 
plot(ma20)
plot(ma50)
plot(ta.sma(close, 200))

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Exit Strategies

Time-Based Exit

//@version=6
strategy("Time Exit")
 
entryPrice = 0.0
entryPrice := nz(entryPrice[1], 0)
 
// Enter
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)
    entryPrice := close
 
// Exit after X bars
barsInTrade = bar_index - entryPrice
if barsInTrade >= 20
    strategy.close("Long")
 
plot(ta.sma(close, 20))
plot(ta.sma(close, 50))

Percentage Exit

//@version=6
strategy("Percentage Exit")
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)
 
// Exit at 5% profit
strategy.exit("Take Profit", "Long", limit=strategy.position_avg_price * 1.05)
 
plot(ta.sma(close, 20))

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Complete Strategy Examples

Simple MA Crossover Strategy

//@version=6
strategy("MA Crossover", 
     overlay=true, 
     default_qty_type=strategy.percent_of_equity,
     default_qty_value=10)
 
// Inputs
fastMA = input.int(12, "Fast MA")
slowMA = input.int(26, "Slow MA")
 
// Calculations
fast = ta.ema(close, fastMA)
slow = ta.ema(close, slowMA)
 
// Plot
plot(fast, color=color.green, title="Fast")
plot(slow, color=color.red, title="Slow")
 
// Long entry
if ta.crossover(fast, slow)
    strategy.entry("Long", strategy.long)
 
// Short entry
if ta.crossunder(fast, slow)
    strategy.entry("Short", strategy.short)
 
// Exit on reverse
if ta.crossunder(fast, slow)
    strategy.close("Long")
 
if ta.crossover(fast, slow)
    strategy.close("Short")

RSI Strategy

//@version=6
strategy("RSI Strategy", 
     overlay=false,
     default_qty_type=strategy.percent_of_equity,
     default_qty_value=10)
 
// Inputs
rsiLength = input.int(14, "RSI Length")
oversold = input.float(30, "Oversold")
overbought = input.float(70, "Overbought")
 
// Calculate
rsi = ta.rsi(close, rsiLength)
 
// Plot
plot(rsi, title="RSI")
hline(overbought)
hline(oversold)
 
// Entry
if ta.crossover(rsi, oversold)
    strategy.entry("Long", strategy.long)
 
if ta.crossunder(rsi, overbought)
    strategy.entry("Short", strategy.short)
 
// Exit
if ta.crossunder(rsi, 50)
    strategy.close_all()

Multi-Indicator Strategy

//@version=6
strategy("Multi Indicator",
     overlay=true,
     default_qty_type=strategy.percent_of_equity,
     default_qty_value=10)
 
// Indicators
sma20 = ta.sma(close, 20)
sma50 = ta.sma(close, 50)
rsi = ta.rsi(close, 14)
atr = ta.atr(14)
 
// Trend
uptrend = close > ta.sma(close, 200)
 
// Entry conditions
longEntry = uptrend and ta.crossover(sma20, sma50) and rsi < 40
shortEntry = not uptrend and ta.crossunder(sma20, sma50) and rsi > 60
 
// Execute
if longEntry
    strategy.entry("Long", strategy.long)
 
if shortEntry
    strategy.entry("Short", strategy.short)
 
// Exit
if ta.crossunder(sma20, sma50)
    strategy.close_all()
 
// Plot
plot(sma20)
plot(sma50)
plot(ta.sma(close, 200))

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Strategy Settings

Commission and Slippage

//@version=6
strategy("With Costs",
     commission_type=strategy.commission.percent,
     commission_value=0.1,  // 0.1%
     slippage=3)  // 3 ticks slippage
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)

Pyramid Settings

//@version=6
strategy("No Pyramid",
     overlay=true,
     max_entries=1)  // Only 1 position at a time
 
if ta.crossover(ta.sma(close, 20), ta.sma(close, 50))
    strategy.entry("Long", strategy.long)

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Strategy Reference

Function	Description
strategy.entry()	Open position
strategy.order()	Place limit/stop order
strategy.exit()	Close with profit/loss
strategy.close()	Close position
strategy.close_all()	Close all positions
strategy.cancel()	Cancel pending order

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Next Steps

• entries-exits - Advanced entry/exit logic
• stops - Stop loss and take profit
• backtesting - Backtesting and optimization

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Start with simple strategies and add complexity gradually.