Help turn home-made trend strength indicator in trading strategy - EA and indicator are open source

[Adrian Sproule]

Hi,

 

I am looking for help see if an indicator I’ve developed can be created into a trading strategy.

 

The basic concept of the indicator is to gauge the strength of the trend in relation to the previous number of X bars. For example, if the indicator is set to look at the previous 50 bars, it will find the highest high and lowest low, and then use the close of the current bar to calculate a number between +50 and -50, where +50 is a bullish trend making higher highs, and -50 is bearish and making new lower lows.

 

As a basic example, if the price for the highest high in the last 50 bars is 200.0 and the price for the lowest low is 100.0 and the current close is 150.0, the trend strength would be 0. If the current price moved up to 175.0, then the indicator reading would be +25, or if the price moved down to 125.0, then the indicator would be -25, so on and so forth.

 

So basically, if the indicator is above zero there is a bullish trend, and below zero it is a bearish trend. A bit like a slow moving average, but reacts immediately rather than waiting for the price to move.

 

To try and get better signals, I’ve added a trend line to the indicator as well. I have been playing with a few other modifications to the indicator but I want to show everyone the basic indicator first so I don’t sway any ideas.

 

I have attached the indicator and a screenshot with the indicator on a GBPUSD chart.

 

If anyone comes up with a trading strategy idea on how to use the indicator, I will code it into an MT4 first of all and backtest and also forward test on a real money account, and the indicator and EA will also be open source so anyone can use it. If successful, I will re-code it into MT5.

 

Thanks in advance.