Total Power Indicator is based on two standard indicators: Bears Power and Bulls Power.
The indicator calculates the number of bullish and bearish trend bars within a certain amount of time and then determines proportional relation of bears, bulls and the total one for the current bar (the total relation is calculated as the difference between bulls and bears).
Therefore, we get continous lines of the relative average bullish and bearish power for a certain time period without the major drawback of the original indicators - the absence of long-term perspective. MetaTrader 4 version of Total Power Indicator was created by Daniel Fernandez (Asirikuy.com).
- LookbackPeriod (by default = 45) - basic indicator period. Determines the number of bars for calculation of bullish/bearish prevalence.
- PowerPeriod (by default = 10) - Bears Power and Bulls Power original indicators period.
The indicator is presented in two versions.
There are several different ways to use this indicator:
- The most reliable (though also the most slow) method is to wait while the Bullish (or Bearish in case of selling) and Total lines indicate 100 and then open a long position (or a short one if it was the Bearish line).
- Bearish and Bullish lines crossing can also be used for trading. In case the Bullish line is located above the Bearish one after the crossing, then it is time to buy, in case of a reverse situation, a short position must be opened.
- Crossing of Bullish and Bearish lines with the Total one can be used both for market entry and exit. If the Bullish line crosses the Total one from below, it is time to open a long position, if the Bearish line crosses the Total one from below, a short position must be opened. If the lines cross the Total one from above, it is the very time to close the appropriate position.
- The alternative way is to use some definite indicator levels instead of the lines crossings. For example, a long/short position can be opened, if the Bullish/Bearish line moves above level 66.