Movement of the price
Movement Of The Price calculates the average range for intraday bars for a specified period of time.
The indicator operation principle is simple enough. It calculates the price movement ranges by intraday candles (bars) for a certain time interval and then calculates their average value. The resulting histogram is displayed under the chart. The smaller the timeframe, the more efficient the indicator. A timeframe less than H1 is the best option.
- PERIOD – amount of candles used for the average range calculation;
- HISTORY_DEPTH – amount of bars in history used for the indicator calculation.
Parameters: the PERIOD parameter is equal to 480 by default. This is the amount of bars in a week for H1. The "weaker" your computer, the lesser value should be set in the HISTORY_DEPTH parameter, since the indicator calculation may take considerable time causing the crash of the platform or the entire computer. If 0, the indicator is calculated for the entire available history.
Application in Trading
The indicator acts as follows: when the market starts going flat or forms a "channel", the histogram falls down to minimum values. When the price starts moving in definite direction, the histogram bars go up as well reaching their maximum values near the trend end or reversal point.
The indicator can be used in three ways:
- when the histogram is going down and a market flat begins, set a buy order above the price and a sell one below it. An opposite order may serve as an initial stop loss.
- wait till the histogram goes down. As soon as it starts rising again, open a trade in the current trend direction and keep it till the histogram goes down again.
- the opposite version: wait till the histogram reaches its maximum for the period. The higher, the better. This behavior usually shows the market extreme levels. Therefore, we should trade on the reversal in this case.