Projection

The Projection tool draws a forward-extending cone that represents possible future price paths based on the current trend direction, slope, and volatility. The central line represents the median expected path, while the cone boundaries represent upper and lower confidence bands that widen over time to reflect increasing uncertainty. The widening shape is the key visual feature — it communicates visually that the further out you look, the less certain the projection becomes.

Projections are not predictions — they are visual frameworks for scenario planning. The cone widens as it extends forward, helping traders set realistic targets and stop distances. The median line can be linear or curved, and the cone width can be based on ATR or standard deviation. The choice of volatility source affects how the cone responds to recent market conditions: ATR-based cones react faster to volatility spikes, while standard deviation-based cones are smoother and more stable over varying market conditions.

A projection assumes the current trend and volatility regime persist. Regime changes — news events, policy shifts, black swans — invalidate the projection instantly. The cone's widening shape communicates that uncertainty increases with time: near-term projections (1–5 bars) are more reliable than long-term ones (20+ bars). The projection should be updated after each new bar close to incorporate the latest price data into the slope and volatility calculations.

The rebase frequency setting controls how often the projection recalculates. In per-bar mode (default for live charts), the projection updates after each bar close to reflect the latest price data. In manual mode, the projection stays static until you manually trigger a recalculation, which is useful for backtesting and analysis comparisons where you want a fixed reference projection.

1. 1
   Select Projection

   Click the Projection tool from the forecast toolbar.
2. 2
   Set the origin

   Click on the current bar or the point from which to project forward.
3. 3
   Drag to set direction

   Drag in the expected trend direction to set the median angle. A preview line shows the median path.
4. 4
   Release to create the cone

   Release — the cone generates automatically with expanding bounds based on recent volatility.
5. 5
   Adjust parameters

   Modify cone width, source length, projection length, curve type, and volatility source from the settings panel.
6. 6
   Update periodically

   Rebase the projection after each bar close or as needed to keep it aligned with the current trend and volatility.

• Risk management — set stop-loss levels at or just beyond the opposite cone boundary. The cone quantifies how far price is expected to travel in the opposite direction given current volatility, making stop placement systematic rather than arbitrary.
• Target setting — use the median line as a central price target. Take partial profits at the median line and trail the remainder toward the far bound for optimal risk-adjusted returns that account for the widening range of possibilities.
• Scenario planning — the cone shows three zones (median, upper bound, lower bound) for each projection step. Prepare contingency plans for each possible scenario before it unfolds, eliminating the need to make decisions under time pressure.
• Trend confidence assessment — a narrow cone indicates high confidence in the trend direction. A wide cone indicates uncertainty and suggests reducing position size or waiting for better confirmation before entering.
• Volatility monitoring — watch how the cone width changes over time. A rapidly widening cone suggests increasing volatility, while a narrowing cone suggests compression before an explosive breakout in either direction.
• Earnings pre-positioning — draw a projection before an earnings release to see expected price ranges. If the cone suggests a 5% move but options are pricing 10% implied move, there may be a volatility mispricing opportunity.
• Trailing stop framework — use the lower bound of the cone as a dynamic trailing stop for long positions. As price rises and the cone recalculates upward, the trailing stop moves up with the lower bound, locking in profits systematically.

The choice between linear and curved median line extrapolation depends on the market context. Linear projections assume the trend continues at the same slope indefinitely — appropriate for strong, sustained trends in highly liquid markets like major forex pairs during active sessions. Curved projections use polynomial extrapolation that can model trend deceleration or acceleration, which is more realistic for markets that naturally lose momentum over time or exhibit parabolic behavior.

A general guideline: use linear projections for short-term forecasts (5–10 bars ahead) and curved projections for longer-term forecasts (20+ bars). Short-term trends are approximately linear at small scales, while longer-term projections must account for the natural tendency of trends to decelerate. Experiment with both types on historical data to see which better fits the instrument you are trading under different market conditions.

The cone width multiplier is the most important risk parameter. In low-volatility environments (VIX below 15, narrow Bollinger Bands), use 1× ATR for a tight cone that reflects the compressed conditions. In normal volatility (VIX 15–25), use 2× ATR for a standard cone that captures most price action. In high volatility (VIX 25+, during earnings, news events), use 3× ATR so the cone boundaries remain relevant and are not immediately breached.

The source length parameter controls how much history is used for the calculation. A shorter source length (5–10 bars) makes the projection respond quickly to recent price action but also makes it noisy and prone to whipsaws. A longer source length (20–50 bars) produces a smoother, more stable projection that reacts slowly to new information. For most swing trading applications, a source length of 14–20 bars provides a good balance between responsiveness and stability.

• 1.Price projection tools — TradingView Help
• 2.Technical Analysis of Financial Markets — John J. Murphy
• 3.Cybernetic Analysis for Stocks and Futures — John F. Ehlers
• 4.The Profit Magic of Stock Transaction Timing — J.M. Hurst
• 5.The Visual Investor — John J. Murphy
• 6.Average True Range and Position Sizing — Trading reference
• 7.Scenario Planning for Traders — Risk management reference