How to identify a trend – collection of trend indicators

0 353

First of all, let’s define what a trend is and how to take it into account in our trading. The problem is that the trend on the 5 minute M5 chart will be a minor spike on the 1 hour H1 chart and a subtle market noise on the daily D1 chart. The trend must be correlated with the time period in which you are trading, and with the trading style – the holding time of the position . 

If you are a short-term scalper – pipsist, you are unlikely to be interested in the global trend on the daily chart, and if you are a long-term investor, you do not care what happens on the minute chart. If you are an intraday trader, you need to analyze the trend in several time periods, both above and below the main working one. Many classic trading strategies are based on this principle, for example, the 3-screen method by Alexander Elder .

Let us explain what has been said with an example. The figure shows the same fragment of the GBPUSD chart in three different time periods: 1st chart M5, 2nd chart H1 and 3rd chart D1.

 

 

On the first M5 chart, throughout the day, we see a bearish (downtrend) trend, on the H1 hourly chart, the same day is represented as part of a flat, fluctuations with rebounds from the channel boundaries, in which the downward movement of the previous day is replaced by an upward movement. And finally, on the 3rd, daily chart, this day we see only a bearish candle, a slight correction as part of a long-term bullish trend.

When building your own trend trading system, in any case, it is advisable to take into account trends on neighboring timeframes. But you should not get too carried away with this, a large number of additional conditions reduce the number of transactions and the reliability of testing results. The optimal number of periods taken into account is 2-3.

 

Best trend indicators without redrawing

 

Trend Filter indicator

The indicator is a 3-colored line, it opens in an additional window. The algorithm determines the rate of price change and shows whether there is an uptrend, downtrend or sideways movement in the market. If the line turns yellow, it means that a trend has begun in the market. The indicator is not redrawn, i.e. does not change its previous values.

Download Trend Filter indicator

 

Trend Filter indicator

 

After installation, in the indicator window you will observe a single line, which during the operation of the algorithm can change its color to green – an upward trend, red – a downtrend, yellow – a state of uncertainty.

Input parameters:

  • Nbars – indicator period (the number of bars taken into account in the calculation);
  • MA_Period – moving average period;
  • Nbars determines the sensitivity of the indicator, the larger it is, the less sensitive it becomes in relation to market fluctuations;
  • Ma_period defines the period of the moving average that smoothes the indicator values.

With an aggressive trading style, it makes sense to decrease the indicator period, so it will be more sensitive to market movement and give more signals. It should be borne in mind that quantity affects quality.

 

Strategy for using the Trend Filter indicator:

  • the indicator line changed color from red to yellow (an uptrend started) – open a long position (buy);
  • the line changed color from yellow to green – close the long position;
  • the line changed color from green to yellow – open a short position (sell);
  • the line changed color from yellow to red – close the short position;
  • the line is colored green or red – we do not trade, there is a sideways movement in the market.

A stop order must be placed at a local minimum / maximum, and a position can be exited at a given profit equal to a stop order or when a signal appears in the opposite direction.

It is important to enter a trade immediately when the line color changes (at the opening of a new bar) so as not to miss the beginning of the trend.

An alternative trading strategy for the TrendFilter indicator is based on the use of levels:

  • crossing the level from below -0.95 upwards – buy;
  • crossing the 0.95 level from top to bottom – sell.

It is also possible to combine levels with color signals.

It is necessary to take into account some of the features that this strategy of trading on the Trend Filter indicator implies:

  • you can not trade at a time when important news comes out;
  • you cannot trade when the Trend Filter indicator signal appears on candles with excessively large bodies;
  • it is necessary to close positions if the Trend Filter returns back to the flat area.

 

TrendWave indicator

The indicator opens in a separate window and looks like the standard Stochastic indicator, with the difference that this indicator indicates the moments for making deals with colored dots of blue and yellow. Allows you to work on any currency instrument and on any timeframe. The indicator algorithm is rather complicated, it helps to calculate real changes in the situation in the foreign exchange market.

Download TrendWave Indicator

 

Trading strategy for the TrendWave indicator

  • As you can see in the picture above, when the lines cross below a certain level, a point to enter the market appears. Therefore, a signal to enter to buy is an exit from the oversold zone and the appearance of a blue dot.
  • A stop order must be placed at a local minimum, and a position can be exited at a given profit equal to a stop order or when a signal appears in the opposite direction.

You can see an example in the picture below:

TrendWave indicator

  • A sell signal appears when the indicator line breaks out of the oversold zone and a yellow dot appears.
  • The stop order is set at the local maximum, and the profit is set equal to the stop order. You can also exit on the opposite signal. 

Input parameters:

  • WavePeriod – the period of the indicator itself, it must be selected based on the selected currency pair and timeframe;
  • AvgPeriod – averaging period: the larger it is, the more smoothed the indicator lines (main and signal);
  • SoundAlert – sound notification when a buy or sell signal is received from the indicator. The value “true” enables the notification, the value “false” disables it;
  • EmailAlert – notification of the appearance of trading signals by e-mail (the email address specified by you when opening an account with a broker is used).

In the MT4 terminal, you can additionally configure signal levels (in the figure it is ± 60), and use them as additional conditions for opening positions.

The indicator can give many false signals in a protracted trend, so that this does not happen, select the parameters so that the fluctuations of the indicator line correspond to the maximum duration of the trends on the selected timeframe.

 

Bbands stop indicator

The indicator is displayed on the working chart; it draws two-color dots along the chart, connected by lines. This trend indicator is technically a modified Bollinger Bands. The appearance of green dots signals the presence of a trend. The appearance of orange dots indicates a flat.

Download Bbands stop indicator

 

It can be an excellent assistant for determining the moment of a trend change, and also, in view of the construction features very similar to the Parabolic SAR indicator, when a buy signal occurs when jumping under the price chart and a sell signal, respectively, on the contrary, is well suited for placing stop orders for a breakout of a certain level and trailing of an open position.

Signals for entering the market are based on the price crossing the extreme lines of the Bollinger Bands, which may indicate a possible trend change. 

Bbands stop indicator

Since the indicator is conceived as a tool for determining the trend, it can give false signals during a flat. Until the candlestick is formed, the indicator can change values, so you need to enter at the beginning of the next candle, after the signal appears.

 

Trading strategy for the Bbands stop indicator

  • when a green dot appears, open a long position (buy) at the current price;
  • set stop loss at the level of the green point;
  • at each new bar, we rearrange (trailing) stop loss to a new formed green point;
  • exit by take profit or trailing stop

For a short (sell) position, everything is mirrored.

Input parameters:

  • Lenght – the period of the moving average, this parameter determines the sensitivity of the indicator, with a decrease in this value, the signals will be earlier and vice versa, with an increase in later ones. If it becomes necessary to slightly adjust the sensitivity, then it is better to change this particular parameter;
  • Deviation – standard deviation, this parameter has the same meaning as standard Bollinger bands, it determines volatility, divergence of lines on the chart, the optimal value is 2, there is no need to change this parameter;
  • Money Risk – the level of risk when trading, a change in this parameter will affect how close the indicator will approach the price, with a decrease it is closer and vice versa with an increase they will move away, while it does not affect the appearance of the signals themselves. It will be useful if in your trading you use trailing of an open position along the indicator line with an indentation of several points, if you want to reduce the risk and accompany the transaction closer to the current quotes, then we decrease this value and vice versa;
  • Signal – the parameter sets the mode of displaying signals (points) on the chart, 1 – signals and stops, 0 – only stops, 2 – only signals
  • Line – sets the mode of displaying the line on the chart, 1 – there is a line, 0 – there is no line (only points)
  • Nbars – the depth of history in bars at which the indicator will be displayed

It is important to enter exactly when a signal (large) point appears, so as not to miss part of the trend and not to enter when it has already played out. If you missed the moment of the trend change, it is better to wait for the next reversal.

 

Auto Trend Forecaster Indicator

The indicator opens in a separate window and is displayed as a multi-colored line, it shows the current market trend, colored blue – an uptrend, red – a downtrend. Can be used on any pair and timeframe. Not redrawn. There is an alert and a sound signal to warn of a trend change. The alert displays the direction of the singal (buy / sell) and the value of the level at which the stop loss should be set.

Download Auto Trend Forecaster Indicator

 

Auto Trend Forecaster Indicator

It should be noted that all indicator signals should be taken into account only on already formed bars in order to avoid false entries.

 

Auto Trend Forecaster Indicator Trading Strategy

Purchase

  • when the line color changes from red to blue, open a long position (buy).
  • stop loss is set 5-10 points below the local minimum.
  • as the price moves, we rearrange the stop loss at new local minimums (trailing stop).
  • exit by take profit, trailing stop or by an opposite signal.

Sale

  • when the line color changes from blue to red, open a short position (sell).
  • stop loss is set 5-10 points above the local maximum.
  • as the price moves, we rearrange the stop loss at new local maximums (trailing stop).
  • exit by take profit, trailing stop or by an opposite signal.

Input parameters:

  • TMperiod – indicator period, determines the number of bars used in the calculation;
  • Intensity – parameter of indicator indicators smoothing;
  • SL_distance_pips – stop loss value in points, used to calculate the stop loss level, which is issued in the alert when a buy / sell signal appears.

 

CCI_RSI indicator

The indicator opens in a separate window and is a multi-colored histogram, the color of which changes when the trend changes. It combines the following indicators:

  • CCI with a period of 34
  • CCI with a period of 140
  • RSI with a period of 8

Both indicators are widely used in Forex to find trends, price impulses and pivots, so a combination of these indicators can be a powerful tool in your trading arsenal.

Download CCI_RSI indicator

The colors of the indicator signal a different state of the trend, namely:

  • Light green – RSI> 55, both CCI> 0 and both CCI> 100, strong uptrend
  • Dark green – RSI> 55, both CCI> 0 and one or both CCI <100, weak uptrend, possible reversal
  • Red – RSI <45, both CCI <0 and both CCI <-100, strong downtrend
  • Burgundy – RSI <45, both CCI <0 and one or both CCI <-100, weak uptrend, possible reversal
  • Yellow – all other situations, no trend.

CCI_RSI indicator

 

In addition, the indicator draws signal points for opening long and short positions:

  • Blue dot – Buy signal – when RSI> 55, long CCI with a period of 140 is greater than 0, and a short CCI with a period of 34 crosses the zero level upwards.
  • Raspberry point – Sell signal – when RSI <45, long CCI with a period of 140 is less than 0, and a short CCI with a period of 34 crosses the zero level from top to bottom.

Several interpretations of the indicator signals are possible depending on your trading preferences. It also matters how you use it – as an independent indicator, as a main or additional one.

 

Trading strategy for the CCI_RSI indicator

Purchase

  • when the color of the histogram changes from yellow to green (or when a blue dot appears), open a long position (buy).
  • stop loss is set 5-10 points below the local minimum.
  • as the price moves, we rearrange the stop loss at new local minimums (trailing stop).
  • when the color of the histogram changes from green to yellow or red, close the long position.
  • the exit is also possible by take profit, trailing stop.

Sale

  • when the color of the histogram changes from yellow to red (or when a raspberry dot appears), open a short position (sell).
  • stop loss is set 5-10 points above the local maximum.
  • as the price moves, we rearrange the stop loss at new local maximums (trailing stop).
  • when the color of the histogram changes from red to yellow or green, close the short position.
  • the exit is also possible by take profit, trailing stop.

 

Input parameters:

  • CCI1 = 34 – period of the first (fast) CCI
  • CCI2 = 170 – period of the second (slow) CCI
  • RSI = 8 – RSI period
  • valeur1 = 55 – upper RSI level
  • valeur2 = 45 – lower RSI level
  • FxPrimeEntry – enables or disables indication of signal points.

 

Filter ADX indicator

The Filter ADX indicator is a modification of the popular ADX indicator , which greatly simplifies the search and perception of market trends. Thanks to the redesign of the visual display of the signals of the algorithm, the trader does not need to peer into the chart and follow the changing curve, which allows identifying the optimal moment to open an order. The Filter ADX indicator is displayed in its own window directly below the price level. The indicator chart looks like columns of histograms, which have different thicknesses and colors. The strength of the market trend is determined by the thickness of the bars.

Download Filter ADX indicator

The Filter ADX indicator generates the following signals:

  • thin blue bar – an uptrend (+ DI> -DI), but the ADX value is less than the previous one (weak trend);
  • thick blue bar – an uptrend (+ DI> -DI), and the ADX value is higher than the previous one (strong trend);
  • thin red bar – downtrend (+ DI <-DI), but the ADX value is less than the previous one (weak trend);
  • thick red bar – downtrend (+ DI <-DI), and the ADX value is higher than the previous one (strong trend).

Filter ADX indicator

 

The key difference between the considered algorithm and the ADX instrument is that it can be calculated using data from any time interval, not just the current one. The Filter ADX indicator can be used to track a trend that is present in an older time frame. Thanks to this advantage, the trader does not need to constantly switch between different time frames.

 

Filter ADX indicator trading strategy

 

Before trading, set 3 Filter ADX indicators on the M5 chart with different settings TF = 0, TF = 15, TF = 60. Thus, we will see and control the trend at once on 3 time periods – M5, M15 and H1.

Purchase

  • when a thick blue column appears on all 3 charts, open a long position (buy).
  • stop loss is set 5-10 points below the local minimum.
  • as the price moves, we rearrange the stop loss at new local minimums (trailing stop).
  • exit by take profit, trailing stop or by an opposite signal – the appearance of a red column on one of 3 charts (early exit) or on all 3 charts (late exit).

Sale

  • when a thick red column appears on all 3 charts, open a short position (sell).
  • stop loss is set 5-10 points above the local maximum.
  • as the price moves, we rearrange the stop loss at new local maximums (trailing stop).
  • exit by take profit, trailing stop, or by an opposite signal – the appearance of a blue bar on one of 3 charts (early exit) or on all 3 charts (late exit).

 

Input parameters:

  • TF – sets the time frame, the data from which will be used for all necessary calculations. In order for the algorithm to apply data from the current time interval for all necessary calculations, you need to enter 0 in this field. For the algorithm to use the M1 time interval, enter the number 1 in this field, to use the M5 interval, enter the number 5 in this field. the same principle is set for any other period of the schedule. You must specify the number of minutes:
    • 1: Period_M1
    • 5: Period_M5
    • 15: Period_M15
    • 30: Period_M30
    • 60: Period_H1
    • 240: Period_H4
    • 1440: Period_D1
    • 10080: Period_W1
    • 43200: Period_MN1
  • ADXPeriod – this parameter defines the period of the ADX indicator, which is used in the indicator calculation algorithm.
  • PRICE – the parameter is responsible for the type of price level that will be used to calculate the value of the ADX instrument. To apply the closing price level, enter the number 0 in this field, for the opening price to be applied, then the number 1. To use the maximum, minimum, average, typical or weighted price level in this field, enter the number 2 in this field, 3, 4, 5, or 6, respectively.

 

In conclusion, we will give some general recommendations.

  • When using trend indicators, it is advisable to choose more active pairs, for example EURUSD or GBPUSD. Pronounced long-term trends are also present in gold (GOLD, XAUUSD). 
  • It is advisable to use trend indicators during the European and American sessions, i.e. during strong movements, because in a flat they will not be so effective. 
  • In conjunction with a trend indicator, use some kind of oscillator to avoid trading in a sideways market, and an indicator or strategy that shows a clear exit from the position so as not to miss out on profits.
Leave A Reply

Your email address will not be published.

5 × 2 =