Market Acceptance Envelope

Market Acceptance Envelope (MAE) is a diagnostic tool that shows where price statistically belongs — not where it might go.

Core Philosophy

"Price belongs somewhere before it moves somewhere else."

What MAE is NOT

• NOT Bollinger Bands — No standard deviation around a mean
• NOT Keltner Channels — No ATR-scaled envelope
• NOT a signal generator — No "touch = signal" philosophy

What MAE IS

The corridor represents ACCEPTANCE — regions where price rotates comfortably. Upper and lower boundaries are calculated INDEPENDENTLY (asymmetric by design).

Acceptance Weighting

MAE weights price by how "accepted" it is, based on three factors:

• Efficiency — Low efficiency (choppy) = high acceptance weight
• Volatility Stability — Stable volatility = high acceptance weight
• Dwell Factor — Price near mean = high acceptance weight

Visual System

• Teal Corridor — The acceptance zone (the filled area IS the object)
• Acceptance Core Glow — Inner bright zone when confidence is high
• Stress Tinting — Amber/red tint when price presses boundaries with low confidence
• Centroid — Optional acceptance-weighted center line
• Explain Mode — Sparse labels (Accepted / Stressed / Re-Entry)

Key Properties

• Asymmetric — Upper and lower boundaries independent
• Non-repainting — Uses closed-bar data only
• Diagnostic only — No trading signals, no performance claims

MAE calculates acceptance-weighted boundaries using three component factors.

Step 1: Compute Primitives (0-1)

A. Efficiency Proxy

NetProgress = |Close - Close[lookback]|
TotalMovement = Σ|Close - Close[1]| over lookback
Efficiency = NetProgress / TotalMovement

// Low efficiency = price rotating, not trending
// High acceptance when efficiency is LOW

B. Volatility Stability

TR_SMA = SMA(True Range, 14)
TR_StDev = StDev(True Range, 14)
TR_CV = TR_StDev / TR_SMA  // Coefficient of variation
VolStab = 1 - (TR_CV / (TR_CV + 1))

// Stable volatility = consistent range behavior
// High acceptance when volatility is stable

C. Dwell Factor

SrcSMA = SMA(HL2, lookback)
SrcStDev = StDev(HL2, lookback)
ZScore = |Price - SrcSMA| / SrcStDev
Dwell = 1 - (ZScore / 3)

// Dwelling near mean = comfortable rotation
// High acceptance when price is near mean

Step 2: Acceptance Weight

Weight = (1 - Efficiency) × VolStab × Dwell

// Weight is high when:
//   - Efficiency is LOW (not trending)
//   - Volatility is STABLE
//   - Price is DWELLING near mean

Step 3: Acceptance Centroid

SumWeights = Σ(Weight) over lookback
SumPriceWeight = Σ(Price × Weight) over lookback
CentroidRaw = SumPriceWeight / SumWeights

// Adaptively smoothed with change-responsive alpha
Centroid = EMA(CentroidRaw, adaptive_alpha)

Step 4: Asymmetric Envelope

// Upper and lower calculated INDEPENDENTLY
DevUp = max(Price - Centroid, 0) × Weight
DevDn = max(Centroid - Price, 0) × Weight

RngUp = Σ(DevUp) / SumWeights
RngDn = Σ(DevDn) / SumWeights

Upper = Centroid + (RngUp × Sensitivity × PresetWidth + BaseWidth)
Lower = Centroid - (RngDn × Sensitivity × PresetWidth + BaseWidth)

Step 5: Confidence Score

AvgWeight = SumWeights / lookback
CentroidStability = 1 - (StDev(Centroid) / TR_SMA)

Confidence = AvgWeight × VolStab × CentroidStability
// Ranges 0-100, controls corridor opacity

Core Settings

• Acceptance Lookback (default: 20, range: 10-100) — Bars to evaluate for acceptance. Higher = smoother, slower response.
• Preset — Scalper / Swing / Position
  • Scalper — Tight/fast (sens 1.3, smooth 0.7, width 0.8)
  • Swing — Balanced (default)
  • Position — Wide/stable (sens 0.7, smooth 1.4, width 1.3)
• Envelope Sensitivity (default: 1.0, range: 0.5-2.0) — Width multiplier. Higher = wider corridor.

Visual Settings

• Show Corridor (default: ON) — Display the acceptance corridor.
• Show Centroid (default: OFF) — Display the acceptance centroid line.

Clarity Layers (v1.1)

• Acceptance Strength Glow (default: ON) — Inner core glow when confidence is high.
• Stress Tinting (default: ON) — Tints corridor when price presses boundaries with low confidence.
• Explain Mode (default: OFF) — Sparse context labels (Accepted / Stressed / Re-Entry).
• Clarity Intensity — Subtle / Balanced / Bold — Controls visibility of clarity layers.

Data Window

• Show Data Window Values (default: OFF) — Export MAE values for analysis.

Preset Behavior Summary

• Scalper — Faster response, tighter envelope, quicker adaptation
• Swing — Balanced response, standard envelope, moderate adaptation
• Position — Slower response, wider envelope, stable adaptation

Position Relative to Corridor

Price Inside Corridor

• Price is in an "accepted" zone
• Rotation and consolidation expected
• Mean reversion strategies work here
• When confidence is high + inside = "Accepted" state

Price at Corridor Edge

• Price testing acceptance boundary
• Watch for rejection or breakthrough
• If confidence low + at edge = "Stressed" state (amber/red tint)

Price Outside Corridor

• Price has left accepted zone
• Either breakout or overextension
• When price re-enters = "Re-Entry" event

Confidence Interpretation

• High confidence (bright corridor) — Strong acceptance, corridor is reliable
• Low confidence (faint corridor) — Weak acceptance, corridor less meaningful
• Confidence dropping — Acceptance breaking down, potential regime change

Corridor Width Interpretation

• Wide corridor — Large acceptance range, volatile rotation
• Narrow corridor — Tight acceptance range, compression
• Asymmetric corridor — Upper/lower have different acceptance (common!)

Clarity Layer Signals

• Core Glow visible — High confidence, strong acceptance
• Amber tint — Moderate stress, caution
• Red tint — High stress, price pressing hard against weak acceptance
• "Re-Entry" label — Price returned to corridor after being outside

Strategy 1: Accepted Zone Rotation

Trade within the corridor when confidence is high.

• Setup — Price inside corridor, high confidence, no stress tint
• Entry — Fade moves to corridor edges
• Target — Centroid or opposite corridor edge
• Stop — Beyond corridor boundary

Strategy 2: Re-Entry Trading

Trade when price returns to the corridor.

• Setup — Price was outside, now re-entering
• Entry — On "Re-Entry" event (if using Explain Mode)
• Target — Centroid
• Stop — If price exits corridor again

Strategy 3: Stress Breakout

Trade breakouts when stress is high.

• Setup — Price at edge, stress tinting visible, low confidence
• Wait — For decisive close outside corridor
• Entry — In direction of break
• Target — Measured move or next structure level

Strategy 4: Asymmetry Edge

Use corridor asymmetry for directional bias.

• Upper wider than lower — Upside has more acceptance room
• Lower wider than upper — Downside has more acceptance room
• Trade — Favor direction with more acceptance space

Strategy 5: Confidence Fade

Reduce exposure when confidence drops.

• High confidence — Trade the corridor normally
• Dropping confidence — Tighten stops, reduce size
• Low confidence — Consider exiting, corridor unreliable

What NOT to Do

• Don't treat corridor edges as automatic signals
• Don't ignore confidence level
• Don't expect symmetric behavior (it's asymmetric by design)
• Don't use MAE for signal generation (it's diagnostic)

MAE Export Contract

When "Show Data Window Values" is enabled, MAE exports:

Corridor Levels

• mae_upper — Upper corridor boundary
• mae_lower — Lower corridor boundary
• mae_centroid — Acceptance-weighted center

Corridor Metrics

• mae_width — Total corridor width (upper - lower)
• mae_asymmetry — Asymmetry ratio (-1 to +1, positive = upper wider)
• mae_confidence — Confidence score (0-100)

State Values

• mae_position — Price position (-1 = below, 0 = inside, +1 = above)
• mae_stress — Stress level (0-100)

Using Export Values

• Position sizing — Scale with confidence
• Directional bias — Use asymmetry for bias
• Risk management — Monitor stress for exit signals
• Alert conditions — Build alerts on position changes

Mistake 1: Treating MAE Like Bollinger Bands

Problem: Expecting symmetric, mean-reverting behavior.

Solution: MAE is asymmetric by design. Upper and lower are independent. Don't apply BB strategies directly.

Mistake 2: Using Corridor Touches as Signals

Problem: Buying lower touch, selling upper touch automatically.

Solution: MAE is diagnostic, not a signal generator. Use it to understand context, not to trigger trades.

Mistake 3: Ignoring Confidence Level

Problem: Trading corridor in low confidence conditions.

Solution: Low confidence = weak acceptance = unreliable corridor. Reduce reliance when confidence fades.

Mistake 4: Not Understanding Stress

Problem: Missing the amber/red tinting significance.

Solution: Stress tint = price pressing against weak acceptance. Either breakout brewing or exhaustion imminent.

Mistake 5: Wrong Preset for Style

Problem: Using Position preset for scalping (or vice versa).

Solution: Match preset to your trading timeframe. Scalper for fast, Position for slow.

Mistake 6: Expecting Centroid to Act as Support/Resistance

Problem: Trading centroid like a traditional MA.

Solution: Centroid is acceptance-weighted center, not a S/R level. It shows where acceptance is centered, not where price will bounce.

Tip 1: Asymmetry Reveals Bias

Check mae_asymmetry in Data Window. Positive = more upside acceptance, negative = more downside acceptance. This often predicts directional resolution.

Tip 2: Confidence as Position Size Multiplier

Use confidence directly for sizing: 80% confidence = 80% of normal size. This automatically reduces risk when acceptance is weak.

Tip 3: Re-Entry is Powerful

When price leaves the corridor and returns, it often means the "breakout" failed. Re-entry events frequently lead to strong moves toward centroid.

Tip 4: Watch Stress Buildup

Stress gradually increasing while price stays at edge = pressure building. Either acceptance will expand (corridor widens) or price will break (leaves corridor).

Tip 5: Use Core Glow for Confidence

When the inner core glow is bright and wide, acceptance is strong. This is the best time to trust corridor-based trades.

Tip 6: Narrow Corridor + High Confidence = Compression

This combination often precedes explosive moves. The market has tight acceptance and is confident about it — until it isn't.

Tip 7: Combine with MSI

Use MSI to know the regime (Compression/Expansion/etc.) and MAE to know where price belongs within that regime. MSI = what state, MAE = what zone.

Tip 8: Explain Mode for Learning

Turn on Explain Mode while learning. The sparse labels (Accepted/Stressed/Re-Entry) help you understand what MAE is seeing without cluttering the chart.