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MW Direction by Candle Body Analysis

The Martinware™ Direction by Candle Body Analysis indicator is a trend indicator that shows the current asset direction, up or down, by checking if previous candle bodies' bases were respected or broken. It works similarly to a moving average, but it's more objective due to its lesser amount of configuration parameters.

The algorithm assumes the theory that although the highs and lows of candles have their value, it is the body that shows the conclusive market sentiment over that asset in the given period. Such sentiment includes not only the information of direction but also its strength. Thus, a breaking of a previous candle body indicates the market has decisively rejected the previous movement and is now going after creating a new one in the opposite direction.

This algorithm makes the DCBA indicator to behave similarly to a moving average: it indicates the start and direction of a new trend with a lagging factor that will inevitably result in some delayed entry and exit signals. Its advantage resides in being more objective, less subject to overoptimization and curve-fitting, and grounded on a sound reading of the market instead of a generic mathematical formula. The only input parameter required serves to filter excessively small candle bodies, a situation when two candles are considered instead of just one. 

As with moving averages, it's recommended not to use this indicator alone, but combined with some filtering system.

Input parameters:
  • Candle body factor: the percentual size of the body relative to the its entirety used to determinate if the body is small
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Version 1.5 2020.09.22
Warning with "Alert" message and support for custom warning sound files
Version 1.4 2020.09.14
Adding support for warning by email
Version 1.3 2020.08.13
Minor code improvements
Version 1.2 2020.07.06
Adding sound alarm for manual traders
Version 1.1 2020.07.03
Bug fix