Labels in Pine Script are your secret weapon for creating professional-looking, informative charts. They let you annotate your charts with dynamic text, arrows, and lines, turning basic price charts into rich visual analysis tools. Whether you're marking support/resistance levels, highlighting trade entries, or creating educational content, mastering labels will take your indicators to the next level.

What Are Labels & Why They Matter

Labels are dynamic chart annotations that can display text, show values, and mark important points on your charts. Unlike static drawings, Pine Script labels update automatically with your data, making them perfect for real-time analysis and automated trading systems. They're the bridge between raw data and visual insight, helping traders quickly understand complex market conditions.

Real-World Applications

Technical Analysis

Mark support and resistance levels dynamically
Highlight chart pattern formations
Show trend line breaks and confirmations
Display pivot points with price levels

Trade Management

Mark entry and exit points clearly
Show stop-loss and take-profit levels
Display position size and risk ratios
Highlight trade management zones

Educational Content

Create interactive learning materials
Show pattern identification guides
Display trading rules and conditions
Mark important market events

Basic Usage: Your First Label

Let's start with a practical example that shows how to create smart, dynamic labels for swing points:

//@version=6
indicator("Smart Swing Labels", overlay=true)

// Define swing high/low lookback
lookback = input.int(5, "Lookback Period", minval=1)

// Detect swing points
swingHigh = ta.highest(high, lookback) == high[lookback/2]
swingLow = ta.lowest(low, lookback) == low[lookback/2]

// Function to create formatted price string
formatPrice(price) =>
    str.tostring(price, format.mintick)

if swingHigh and barstate.isconfirmed
    // Create swing high label
    label.new(x=bar_index[lookback/2],y=high[lookback/2],text="Swing High\n" + formatPrice(high[lookback/2]),style=label.style_label_down,color=color.new(color.green, 20),textcolor=color.white,size=size.small)

if swingLow and barstate.isconfirmed
    // Create swing low label
    label.new(x=bar_index[lookback/2],y=low[lookback/2],text="Swing Low\n" + formatPrice(low[lookback/2]),style=label.style_label_up,color=color.new(color.red, 20),textcolor=color.white,size=size.small)

Let's break down what this label system does:

We detect swing highs and lows using a lookback period
We create labels only on confirmed swing points
Labels include both text and price information
We use different styles for highs and lows
Labels are positioned automatically at the correct price levels

Common Patterns and Best Practices

Pattern 1: Dynamic Support/Resistance Labels

This example shows how to create and manage dynamic support and resistance labels:

//@version=6
indicator("Dynamic S/R Labels", overlay=true)

// Parameters
sr_period = input.int(20, "S/R Period")
sr_threshold = input.float(0.2, "Price Change %", minval=0.1)

// Track significant levels
var label[] sr_labels = array.new_label()
max_labels = 5  // Maximum number of labels to show

// Function to clean old labels
cleanOldLabels() =>
    while array.size(sr_labels) > max_labels
        old_label = array.shift(sr_labels)
        label.delete(old_label)

// Function to check if price level is significant
isSignificantLevel(price) =>
    price_change = math.abs(close - price) / price * 100
    price_change >= sr_threshold

// Detect new levels
newHigh = ta.highest(high, sr_period) == high
newLow = ta.lowest(low, sr_period) == low

if barstate.isconfirmed
    // Clean old labels first
    cleanOldLabels()

    // Add new high level
    if newHigh and isSignificantLevel(high)
        new_label = label.new( x=bar_index, y=high, text="Resistance\n" + str.tostring(high, format.mintick), style=label.style_label_down, color=color.new(color.red, 60), textcolor=color.white)
        array.push(sr_labels, new_label)

    // Add new low level
    if newLow and isSignificantLevel(low)
        new_label = label.new( x=bar_index, y=low, text="Support\n" + str.tostring(low, format.mintick), style=label.style_label_up, color=color.new(color.green, 60), textcolor=color.white)
        array.push(sr_labels, new_label)

This advanced pattern demonstrates:

Managing a collection of labels using arrays
Implementing automatic label cleanup
Using significance thresholds
Creating visually distinct support/resistance markers
Maintaining chart clarity with label limits

Pattern 2: Trade Entry Labels with Risk Information

Here's how to create informative trade entry labels with risk metrics:

//@version=6
strategy("Trade Entry Labels", overlay=true)

// Risk parameters
risk_percent = input.float(1.0, "Risk %", minval=0.1)
atr_period = input.int(14, "ATR Period")

// Calculate ATR for stop distance
atr = ta.atr(atr_period)

// Function to calculate position size
calcPositionSize(entry, stop) =>
    risk_amount = strategy.equity * (risk_percent / 100)
    pos_size = risk_amount / math.abs(entry - stop)
    pos_size

// Function to create detailed entry label
createEntryLabel(long_entry) =>
    stop_level = long_entry ? close - atr * 2 : close + atr * 2
    pos_size = calcPositionSize(close, stop_level)
    risk_reward = long_entry ? (ta.highest(high, 20) - close) / (close - stop_level) : (close - ta.lowest(low, 20)) / (stop_level - close)

    label.new( x=bar_index, y=long_entry ? low : high, text=long_entry ? "LONG ENTRY\n" : "SHORT ENTRY\n" +     "Size: " + str.tostring(pos_size, "#.##") + "\n" +     "Stop: " + str.tostring(stop_level, format.mintick) + "\n" +     "R:R: " + str.tostring(risk_reward, "#.##"), style=long_entry ? label.style_label_up : label.style_label_down, color=long_entry ? color.green : color.red, textcolor=color.white, size=size.normal)

// Example entry conditions
longCondition = ta.crossover(ta.sma(close, 10), ta.sma(close, 20))
shortCondition = ta.crossunder(ta.sma(close, 10), ta.sma(close, 20))

if longCondition and barstate.isconfirmed
    createEntryLabel(true)

if shortCondition and barstate.isconfirmed
    createEntryLabel(false)

This pattern shows:

Creating detailed trade information labels
Including risk metrics and position sizing
Calculating risk-reward ratios
Using conditional formatting
Implementing professional layout

Performance Tips

Memory Management

Delete unused labels with label.delete()
Maintain a maximum number of visible labels
Use arrays to track and manage labels
Clean up old labels periodically

Visual Optimization

Group related labels logically
Use consistent colors and styles
Avoid overlapping labels
Implement smart label positioning

Processing Efficiency

Cache repeated calculations
Use functions for common label formats
Update labels only when needed
Implement label throttling

Common Issues and Solutions

Issue 1: Label Crowding

Problem: Too many labels making the chart unreadable
Solution:

// Implement smart label management
var max_labels = 10
var label[] active_labels = array.new_label()

manageLabelCount() =>
    if array.size(active_labels) > max_labels
        old_label = array.shift(active_labels)
        label.delete(old_label)

// When creating new label
new_label = label.new(/*... label properties ...*/)
array.push(active_labels, new_label)
manageLabelCount()

Issue 2: Label Positioning

Problem: Labels overlapping with price action
Solution:

// Smart label positioning
calcLabelY(base_price, label_height) =>
    space_needed = ta.tr * 1.5  // Use true range for dynamic spacing
    above_crowded = high > base_price - space_needed
    below_crowded = low < base_price + space_needed

    base_price + (above_crowded ? space_needed :
                 below_crowded ? -space_needed : 0)

// Use in label creation
y_pos = calcLabelY(close, 5)
label.new(bar_index, y_pos, "My Label")

Issue 3: Label Updates

Problem: Labels not updating correctly with new data
Solution:

// Implement proper label lifecycle management
var label current_label = na

updateLabel(condition, price, text) =>
    if not na(current_label)
        label.delete(current_label)
    if condition
        current_label := label.new(
            bar_index, price, text,
            color=color.blue,
            style=label.style_label_down
        )

// Use in your code
updateLabel(
    condition=crossover_detected,
    price=high,
    text="Crossover: " + str.tostring(close)
)

Chart Annotations Made Easy: The Definitive Pine Script Labels Guide