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MetaQuotes Software Corp.
MetaQuotes Software Corp. 2016.02.10 12:56 

New article Rope Indicator by Erik Nayman has been published on

The article reveals how the "Rope" indicator is created based on "The Small Encyclopedia of Trader" by Erik L. Nayman. This indicator shows the direction of the trend using the calculated values of bulls and bears over a specified period of time. The article also contains principles of creating and calculating indicators along with the examples of codes. Other subjects covered include building an Expert Advisor based on the indicator, and the optimization of external parameters.

This article and the indicator are based on the book of Erik L. Nayman - The Small Encyclopedia of Trader — K . VIRA-R Alfa Capital, 1999. —236 p.). It covers the basics of technical and fundamental analysis of financial markets from which a method, called "Rope" indicator, is chosen. To describe it briefly, it is worth noting that the indicator is based on the ratio of price change speed over the selected period to the amount of these changes.

In his book the author gives an overview of analysis, providing tables and charts used for writing this article. He performs the market analysis based on the interaction between bulls and bears using price change speed, number of transactions and mass of changes as the objects of analysis. Speed is measured by a number of trades, and mass is calculated as a difference between two adjacent quotes (current and previous). The last known price is considered a quote in the book (more information is provided in the first chapter using the example of calculation).

The purpose of market analysis is to calculate force and to determine the direction of the trend, where bulls and bears simultaneously affect the market. Finding value of this force can be used to evaluate whose position is currently stronger. The author identifies this action as a tug-of-war between two opposing forces, as expressed in the book through the "rope" value calculated using a total force of bulls and bears:

The indicator can be used as a separate strategy based on the example of the EARopebyEricNaiman Expert Advisor, and a filter for finding the direction of the trend. The author considers several approaches for using data calculated by the indicator in this book. The following were selected among them in the Expert Advisor:

  • Main line intersection with 0 (main line cross zero). Above intersection — buy deal, below intersection — sell deal.

Author: Alexander Puzikov

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