Trend Corridors builds several price channels simultaneously using Moving Average and ATR.
You can also set your own ratios for each price channel to expand or narrow it.
The channel lines can be made broken or smooth depending on how you are going to use the channel. When volatility is growing, the channel is expanded. Otherwise, it is narrowed. This allows you to find better entry/exit points and take the maximum amount of points.
- PeriodsATR – ATR period, standard ATR parameter;
- MA_Periods – period of the Moving Average used as a central line of all channels;
- MA_type – method of averaging:
- 0 – Simple Moving Average (SMA),
- 1 – Exponential Moving Average (EMA),
- 2 – Smoothed Moving Average (SMMA),
- 3 – Linear Weighted Moving Average (LWMA);
- Mult_Factor1 – inner channel ratio;
- Mult_Factor2 – medium channel ratio;
- Mult_Factor3 – outer channel ratio.
Increasing the PeriodsATR parameter makes the channel lines more smooth, while increasing the ratios expands the lines making the channels wider.
Application in Trading
The indicator is versatile enough and can be used to open and close/partially close positions, as well as to set a stop loss and a trailing stop.
In manual trading, the indicator is good enough for trading inside a channel. A market entry is performed when the price approaches a certain level. The target level is the opposite channel boundary, while a stop loss is set at the nearest line of other channel.
You can also partially open positions when the price touches each of the channel lines at the one side of the Moving Average, while it is possible to partially close positions on the opposite borders at the other side of the Moving Average.