Scout Alpha

Spread Arbitrage Line is an indicator designed to display the price difference (spread) between:

• the symbol on your current chart
  and
• another symbol that you choose

In simple terms, it helps you see whether the relationship between two instruments is currently:

• wider than usual
• narrower than usual
• returning back toward normal levels

This makes it useful for traders who work with:

• Pair Trading
• Spread Trading
• Statistical Arbitrage
• Mean Reversion setups

The indicator has 3 main parts:

1) The Spread Line

This is the main line of the indicator.

It plots the difference between the current chart symbol and the second selected symbol.

When the line rises, it means the spread is expanding.
When the line falls, it means the spread is narrowing.

This helps traders quickly see when two instruments are moving away from each other or coming back together.

2) Decision Support Levels

The indicator also includes important reference lines to help with trade planning.

Open Level

This is the level used to identify when the spread has moved far enough to consider opening a spread or pair trade setup.

Close Level

This is the level used to identify when the spread has reverted enough to consider closing the setup.

Bollinger Bands

The Bollinger Bands help show whether the spread is:

• near its normal range
• stretched higher than usual
• stretched lower than usual

This is especially useful for traders using a mean reversion approach, where the idea is to wait for the spread to move away from normal and then look for it to return.

Custom Level Lines

These are additional horizontal levels that can be used as personal reference zones.

For example, they can help define:

• mild deviation
• moderate deviation
• strong deviation
• extreme zones

3) The Information Panel

On the right side, the indicator displays a full information panel with key trading statistics.

This includes:

• current spread value
• average spread
• spread volatility
• how far the current spread is from its usual range
• correlation between the two symbols
• ATR of both symbols
• swap values
• estimated daily holding cost

This is very helpful because it allows the trader to evaluate not only the setup itself, but also the real cost of holding the pair.

Step 1: Open the main chart

Open the chart of the instrument you want to use as the main symbol.

Examples:

• XAUUSD
• EURUSD
• BTCUSD
• US30

The chart you open becomes Symbol 1.

Step 2: Choose the second symbol

On the left control panel, you can choose another symbol to compare against.

You can do this by:

• clicking the left/right buttons
  or
• opening the dropdown list and selecting from Market Watch

Once selected, the indicator recalculates the spread automatically.

Step 3: Watch the spread relative to the levels

The basic idea is simple:

• if the spread is near its average, there may be less opportunity
• if the spread moves far away from normal, it may become interesting
• if the spread starts returning, it may be a possible exit zone

Pair

This allows you to select the second symbol used for comparison.

Open/Close ON-OFF

This turns the Open Level and Close Level lines on or off.

Useful for traders who either want:

• a clean spread-only view
  or
• full entry/exit guidance on the chart

BB Band ON-OFF

This turns Bollinger Bands on or off.

When enabled, it helps show whether the spread is inside its normal range or moving into an extreme zone.

Levels ON-OFF

This turns the custom reference levels on or off.

Useful for traders who want multiple decision zones on the indicator.

SPREAD STATISTICS

This section shows the main statistics of the spread.

Current

The current spread value.

Mean

The average spread over the calculation period.

SD

The standard deviation of the spread.

A higher value means the spread has been moving more widely.

%Rank

This shows where the current spread stands compared to its historical range.

For example:

• a high %Rank means the spread is relatively high versus recent history
• a low %Rank means the spread is relatively low

Min / Max

The lowest and highest spread values within the selected lookback period.

ZONE / TIMING

This section helps evaluate timing.

Z-Score

Shows how far the current spread is from its average.

The larger the absolute value, the more unusual the spread currently is.

BB %B

Shows where the current spread sits inside the Bollinger Band structure.

• near the middle = normal
• near the edge = stretched
• beyond the band = extreme

Velocity

Shows how fast the spread is moving over recent bars.

This helps identify whether the spread is accelerating or slowing down.

MR Duration

This is an estimate of how many bars the spread usually takes to revert around its mean.

Correlation

Shows how strongly the two instruments move in relation to each other.

Higher correlation is generally more suitable for spread-style analysis.

Session

Displays the current market session, such as:

• Asia
• London
• New York

This helps traders understand which trading period they are currently in.

SYMBOL 1 / SYMBOL 2

These sections show real-time information for both instruments.

They include:

• Bid
• Ask
• Broker Spread
• ATR
• Swap Long
• Swap Short

This helps traders evaluate each symbol individually in terms of:

• trading cost
• volatility
• overnight holding conditions

DAILY COST

This section is very important for pair traders.

Spread Cost

The estimated transaction cost from the bid/ask spread of both symbols combined.

Swap/Day

The overnight swap impact of holding the pair.

Commission

The commission cost for both sides of the pair.

TOTAL/Day

The estimated total daily holding cost for a 1-lot pair position.

This is useful because even if a spread setup looks attractive, the daily holding cost may still make it less practical.

Case 1: The spread moves far away from normal

If the spread line moves strongly away from its average and approaches or exceeds the Bollinger Band edges, it may suggest that the spread is unusually stretched.

For mean reversion traders, this may be a zone worth monitoring.

Case 2: The spread comes back toward the mean

If the spread starts moving back toward normal levels, this may be considered a possible exit area.

Case 3: Correlation is too low

If the two symbols are not closely related, the spread may be less stable and harder to interpret.

Pairs with stronger correlation are usually more natural candidates for this kind of analysis.

Case 4: Daily cost is too high

Even if the spread setup looks good, high daily cost can reduce the attractiveness of the trade.

This means the setup may require faster mean reversion, otherwise costs may eat into the result.

This indicator is suitable for traders who:

• compare two correlated markets
• trade spread or pair opportunities
• look for mean reversion setups
• want both visual signals and cost analysis in one place

• Easy symbol selection directly from the chart
• Real-time spread visualization
• Open and Close reference levels
• Bollinger Bands for spread extremes
• Correlation, ATR, swap, and cost information included
• Useful for pair selection and spread trade planning

This indicator is not an automatic trading system.

It is a decision-support tool designed to help analyze spread opportunities.

It works best when used together with:

• a clear entry and exit plan
• position sizing rules
• broker cost awareness
• proper pair selection