This is a trend indicator. Its main purpose is detecting a price tendency as fast as possible and following it until its end with a maximum precision. The color of the indicator shows the current price direction. The indicator is based on the Dow Jones Theory, which states that the prices on financial markets move in a certain direction. At that each minimum/maximum is higher than the previous one during an ascending tendency, and is lower than the previous one during a descending tendency.
The advantages of the indicator for a trader are:
- Absence of external parameters. A user doesn't need to thoroughly investigate the indicator specifications. As a result of a huge number of optimizations and test, the indicator has optimal parameters for searching for extremums; and it has three modes: scalping, mid-term trend nad long-term trend.
- The scalping mode (short-term trend) should be used by traders preferring M1-M5 and setting the stop orders for profit and loss at no more than 20 points (4 digit quotes). In some situations this mode detects mid-term (intraday) trends (>100 points). The recommendation for a short take profit only implies that most of the deals (>90%) in this case will be statistically profitable.
- The mid-term trend mode (intraday trend) should be user by traders preferring M5-M15 and setting the profit/loss targets at 20 - 50 points (4 digit quotes).
- The long-term trend should be used for confirming the tendencies on H1-D1. In this mode, the profit targets are >100 points (4 digit quotes).
- The extremum calculation function considers volatility of a symbol what provides maximum precision of detection of a trend during a high volatility.
- The indicator doesn't freeze the chart. The current trend direction is shown by the color of candlesticks, thus a trader can use an additional set of other indicators.
- The indicator is not redrawn even on a zero bar. If the indicator has changed its color (trend direction has changed), then the next change of the trend is possible only with triggering a stop loss. Stop orders are calculated according to a specific algorithm, which considers the current volatility.
- It automatically draws an equidistant channel, which shows the current direction of the tendency and approximates the current trend in the best way. The channel direction always matches the trend direction. The channel can be used for determining the points of opening and closing the positions.
- The stop loss line is always displayed on the chart for the risk management. The indicator always shows a clear signal (BUY or SELL). The trend can be changed only if the stop loss is reached.
- The indicator has very flexible settings of visualization.
This indicator is a result of a more than five years experience of programming and trading on the currency market. The basic idea of the indicator has proven its viability and efficiency in practice.
In the current version, the indicator was optimized in terms of speed and precision of trend identification, though the fundamental ideas remain unchanged.
Price patterns and volatility models were optimized for better trend identification.
Certain inaccuracies within the main model were fixed.