FF Tunnel Chart MT4 Indicator

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Moving Average (MA)

Moving averages (Moving Average), are the most frequently used indicators of technical analysis. The well-known adage states that: «At the moving average traders earn hundreds of times more money than all the other indicators together».

On the schedule moving averages are the following:


Properties window:


Moving averages vary the method of averaging.
Simple Moving Average - simple moving average
Exponential Moving Average - exponential moving average
Smoothed Moving Average - smooth moving average
Linear Weighted Moving Average - linear-weighted moving average

* Moving average. R - averaged value.



* Weighted Average (Weighted Moving Average)
P1, P2, P3 - averaged values



* Exponential Average (Exponential Moving Average)
P1, P2, P3 - averaged values



Moving average smooths fluctuations in the study of currency, with an average of a certain historical period. The advantage of this technical indicator is the ability to visually cut off the small fluctuations, and clearly see the direction of movement.

The disadvantage of moving averages is the average lag in relation to the rate of the study variables. It follows that the larger the averaging period, the more important signals they give, but at the same time, and more late. The value of the moving average - that it gives the general direction of motion. Moving averages, as sotsopros crowd, where will the price. If they rise, the expectations of a good crowd. Fall, respectively, bad.

Systems based on moving averages

The most simple system, based on the moving average, buy it while it's growing and selling, as it decays.

Plus Strategy: simplicity.

Less: Due to the delay of one bar, spike, making this strategy maloprimenimoy.


The interaction of price and AI

The most famous of these strategies is as follows:
Buy when the MA increases and the closing price is higher than MA;
Sell when the price closing below the MA;
Sell when the MA is reduced, and prices closed below MA;
Cover the sale, when prices closed above MA.


This strategy gives the money, although it is rarely used, because there is much more efficient system.

The intersection of the middle

Buy when the price crosses the average upward. Sell when the price crosses the average down.

Perhaps the oldest of the currently used strategies. Nevertheless, we have sold tens (if not hundreds) of traders, who successfully apply this simple strategy.


In this strategy there is only one negative: it is usually to add a «Filter volatility». Say, do not sell it when the RSI is near zero. And also, it is not applicable to trade in nizkovolatilnye (holiday) days and at night.

For beginners this is probably the best strategy. Suppose you do not earn money on it, all the world, but through it you can feel the taste of money in the market Forex!

The degree of directional movement (ADXR)

At the top of the charts submitted to the daily schedule for "Brooks Automation Inc." (BRKS). The middle panel shows ADXR black line, which was built together with the indicator of the average thrust (ADX), displayed a blue line. In the lower part we see a direction indicator that shows the line DI + green line and the DI-red.

Formula

ADXRi = (ADXi + ADX (i - n)) / 2
Where n - interval ADXR

Description

The degree of directional movement quantitatively determine the change in momentum in the ADX. It is calculated by adding the two values of ADX (current value and the value n periods ago), then divided by two. This additional smoothing makes ADXR slightly less sensitive than ADX. Interpreting it is the same as that of the ADX: the higher the value, the stronger the trend. ADXR is a smoothed version of ADX and can be used like the ADX.
ADXR measures the difference between the direction indicator (+ DI and-DI). When ADXR decreasing, this implies that one should not use the system are following the trend. However, increasing ADXR signals that the dominant trend is likely to continue. Rising ADXR, for ADXR and DI +, DI-being above points to the strengthening of bovine market. This condition can be written as follows:

ADXR> DIMINUS AND DIPLUS> DIMINUS AND ADXR> ADXR.1 rising ADXR, for ADXR and DI-, DI + located above points to the growing bearish trend. This condition can be written as follows: ADXR> DIPLUS AND DIMINUS> DIPLUS AND ADXR> ADXR.1

If ADXR was below the DI + and below the DI-, but began to rise, it indicates the emergence of a new market trend. This condition can be written as follows:
ADXR ADXR.1

The use of graphics programs

This indicator is presented in most graphics programs. To construct a set the following parameters:

. DX Period - the period used for calculating the index
. ADXR Interval - The interval used for averaging the current value with the value of ADX ADX n periods ago, to get ADXR
. Smoothing Period - the period of smoothing that is used to apply smoothing Vélez Vayldera to the direction of movement (DX) to obtain values ADX
. Line Color - color of line on the graph ADXR However, some programs during the index period and smoothing ADXR period can be adjusted directly from the keyboard, without opening a special window. To do this, first select an indicator, then use the arrow "up" and "down" to change the index by one. To control the Period of smoothing the same procedure done with pressing "ctrl". To adjust the period ADXR arrow "up" and "down" are pressed, while pressing "shift".

Forex Magazine
based on www.linnsoft.com

The fundamental behavior of Relative Strength Index

To understand the behavior of RSI indicator in greater depth, is to look at the theoretical aspects of formation of waves Elliott. Often, the study was postponed to a schedule, by adjusting the parameters, while not understanding how there are some trading signals. Advanced traders can go further and deeper into the mathematical formula tool. But the fundamental behavior of the indicator is not understood well enough. This article will help you understand the RSI indicator is better thanks to the original approach.

The basic concept of Elliott wave theory is that market action is accompanied by reaction, and there are 5 waves of the main trend, followed by a 3 wave correction. Since this model has been repeatedly observed in the markets, there will be a theoretical schedule, based on these principles, to be able to analyze the relative strength index, without interference from the market «noise», obscures its fundamental behavior.

Different characteristics can be found in the study of 7-periodnogo Relative Strength Index (RSI), applied to the academic schedule.

Analysis of 5-wave trend lower (blue 1-2-3-4-5 small number):

1. RSI moves above 50, to a lesser level of wave 1, but remains below the level of 70.

2. The smaller wave 2 may cause RSI briefly back down below 50.

3. The smaller wave 3 RSI is higher, often up to the values in the region of 80. In the real market value of the indicator will often reach a level of 80, but rarely 90. It is important to understand that the smaller wave 3 is RSI in its highest peak!

4. The smaller wave 4 causes RSI moved below 70 from its high peak, but remain above the value 50. This intersection is a false signal to traders who are too often come across. The opening short position due to the spread of the peaks of wave 3 is premature, and a stop order placed immediately above the top of wave 3 will be vulnerable when the final push to the summit, to a lesser wave 5. The psychological tendency is that most traders ignore the signal in the 5 wave because of the unsuccessful attempts made in wave 3.

5. The smaller wave 5 is yet another reason for increasing the RSI, which often crosses the back to level 70, but the market is short of the length of the trend to raise the RSI to a higher maximum. When the RSI turns and crosses the 70 level for the second time, then it is a signal for opening a short position. Important note: look for divergence, where the price of the new peaks, but the indicator fails to do so. Divergence between the RSI and the price is a very strong indicator of a turning point. Marked divergence in the theoretical graph short blue lines.

Analysis of 3-wave correction lower (blue abc letters):

Yes. A smaller wave of returning to a previous level of support for smaller wave 4. But reducing RSI significantly - from a high peak values below 40. This rapid drop like a rapid raise that occurred in the lower wave 1.

b. The smaller wave b is the restoration of a Fibonacci back to 5. In the example, the price stops at the top of wave 3. As a result, RSI has risen back above the level of 50, possibly to about 60.

with. The smaller wave c RSI is the new minimum in the region of 30. This shows decline slightly below 30. Important note: this time, the divergence does not occur. Therefore, the signal to go a long way come at the first intersection of RSI of 30 upwards. This is shown in the example for the large waves 2 and 4 (red numbers), where the market meets the long-term support trend line (shown in red).

Summarize:

The process begins again, as the Relative Strength Index is behaving this way for big waves 3 and 5, as it did for the big wave 1. abc correction of a large wave 4 will be like a big wave 2. An ideal place to open a short position after the completion of wave 5, which would lower the wave 2 of the first movement of the new big trend correction.

Important Note: RSI Indicator has three turns to the divergence at the end of big waves 1, 3 and 5, marked in red. Facing RSI at the end of the two corrective waves 2 and 4 had no divergence. Look for a model that will help you identify the 5th great wave Elliott. Divergence signals the end of wave 5 of an ideal place to open a short position after the main bottom-up trend or a long position after the main downward trend.

Options bar

Now that the fundamental behavior of Relative Strength Index, as the Elliott waves develop in the market, understand the theoretical timetable will be used to observe the effects of various parameters on the behavior of the period RSI. Setting the period used in the formula for RSI, to calculate the average increase and decrease. Changing this parameter affects the variability of the indicator, as shown below. Important: use the period in which the maximum RSI reaches approximately 80, a minimum of approximately 20.

Howard Arington
www.ensignsoftware.com