Paran Oscillator M4
Paran Oscillator is a sensitive indicator to find each trend direction change. It emulates price variations and shows up or down trends.
At first, indicator passes the price curve through some filters to eliminate sharp and fast changes that make ripples and unnecessary noises. The procedure is making two price functions by using high-frequency and low-frequency filters separately. Then add them together to create a smoothed price curve. The final stage of indicator is converting this smoothed curve to an oscillator by calculating its standard variable.
The indicator has two different colors for uptrend and downtrend. Therefore, all trends are separated of each other and we can use it to trend trading simply. Each trend begins with color change and continues to next color change.
It mainly oscillates between -10 to +10. The indicator value of -10 shows overbought and +10 shows oversold condition. When indicator crosses one of these lines, we expect to trend change and we can open a limit order and wait to reach the limit price.
There are also some small circles on indicator which I named them Bollinger Crossing! They appear when price cross over upper or lower Bollinger bands. Now we have additional indicator on Paran Oscillator to control end of a trend. If you are familiar with Bollinger Bands indicator, you can use these little circles as well. If you are not, just ignore them!
There are just two input parameters; period and Softness. With higher value of SOFTNESS, indicator ignores little price changes and low trends. Therefore, the indicator stays at its state longer as an uptrend or downtrend.
Trading with Paran Oscillator indicator is simple. It becomes parallel to time axis before trend direction change. It's an alarm to close the last position or open a new one. First, choose the right period for your currency pair and timeframe. Small periods show every change, but big periods show main trend. You need both to find the best point of trend direction change and eliminate false rapid changes from real trends.
You can use two separate indicator window with different periods, one fast and one slow (for example 11 and 33). The slow period indicator assures you about trend existence in near future. When the slow period shows a powerful trend, it's better to wait to reach new trend with same direction of powerful one. In powerful trend, modification waves are small and not worth to open a new position. With Bollinger circles, you can assure about beginning or end of cycle in a channel.
When using two separate indicators at the same time, keep in mind that you have to select different H_Align for each indicator. Deviations of slow and fast periods are more useful. Compare fast period deviation with slow one. Bigger value of fast period shows a sudden and sharp trend. Small deviation represents consolidation and quiet condition of market. It's safer to trade in low volatility conditions.
No matter what timeframe you choose, it works at M5 as well as H1 or H12.
New Versions Changes
Version 2.0: Bollinger Crossing circles are added. They appear when price cross over upper or lower Bollinger bands.
Version 1.7: New feature is added to new version. Deviation of current period is placed on the chart screen (point scale) and can be used to estimate stop loss and take profit of new orders.
- Period: Number of bars for calculation
- Softness: Softness of Indicator 1<S<10
- H_Align: Deviation value location on chart screen
- Bollingers: Show/Hide Bollinger Circles