Spread 2 Pair
The Spread 2 Pair indicator visualizes moments of two instruments' convergence (collapse) start. Signals are not delayed so you can timely enter and exit the market.
This indicator is developed for pairs trading and creation of your own trading system based on difference in movements of trading instruments.
Unlike most of multi-currency indicators, the Spread Pair indicator does not load CPU, calculations are immediately performed, it is non-redrawable.
Settings of every currency pair provide better adjustment of the indicator. "Mirrored" pairs can also be displayed. Instruments' volatility is taken into account. Lots of pairs being traded are visualized.
Attach the indicator to one of the pairs used for pairs trading. Specify settings for the current symbol and enter a name of the second instrument in the symbol2 field. Adjust parameters. The volatile_period parameter is meant for lot calculation by the second instrument and depends on its volatility. Number of bars for volatility calculation is specified there.
Activate reverse = true if pairs are "mirrored" towards each other (negative correlation).How to use the indicator? It's easy! Wait until the histogram column becomes red. This indicates beginning of instruments convergence. Open trades when a new bar appears and look at the indicator's lines. If the blue line is located above the green one, sell the instrument corresponding to the blue line, and buy the second instrument. In case of mirrored pairs buy or sell both instruments depending on a position on the histogram (sell if above zero, buy if below zero).
Close trades if the histogram crosses the zero line. Or trail total equity to the bitter end in case of a profit.
Each instrument pair requires its own parameters. Further optimization is not required. Or it might be necessary within a small range from already adjusted parameters.
A simple EA made for the indicator testing shows good results even when the indicator's settings are not optimized.