Introduction to the Trend Arrows Sign Indicator
Trend reversal trading strategies are some of the most basic trading strategies that traders use to make money from the forex market. There are many ways traders identify trend reversals. Some use price action and price patterns. Some use moving average crossovers. Another method would be with the use of a trend reversal signal indicator. The Trend Arrows Sign Indicator is a trend reversal signal indicator which is geared towards long-term trend reversals.
What is the Trend Arrows Sign Indicator?
The Trend Arrows Sign Indicator is a trend following indicator which provides trend reversal signals. It plots arrows pointing the direction of the trend as soon as a new trend develops.
This indicator plots a blue arrow pointing up whenever it detects a bullish trend reversal and a red arrow pointing down whenever it detects a bearish trend reversal.
How the Trend Arrows Sign Indicator Works?
The Trend Arrows Sign Indicator uses an algorithm which incorporates the Semaphore as well as the Average True Range (ATR). It then plots an arrow pointing the direction of the new trend as soon as it detects a trend reversal moving against the prior trend direction.
How to use the Trend Arrows Sign Indicator for MT5
The Trend Arrows Sign Indicator has three variables within its indicator settings which can be used to modify its responsiveness to price action.
The first variable refers to the number of periods used for its calculations. The higher the input number, the less responsive the signal becomes.
The second variable also modifies the sensitivity of the signals slightly.
The third variable shifts the signals forward delaying the signals towards the later candles.
This indicator is more attuned towards the mid- to long-term trends. As such, it can be used as a trend direction filter. Traders can opt to trade exclusively in the direction indicated by the signal arrows.
It can also be used as a trend reversal signal indicator as it was designed for this purpose. Traders can use the arrows as trend reversal entry signals. However, traders should also observe the market structure and price action and trade in confluence with other technical indications.
Buy Trade Setup
When to Enter?
Open a buy order as soon as the Trend Arrows Sign Indicator plots a blue arrow pointing up. Set the stop loss on the support below the entry candle.
When to Exit?
Close the trade as soon as price action shows signs of a possible bearish reversal.
Sell Trade Setup
When to Enter?
Open a sell order as soon as the Trend Arrows Sign Indicator plots a red arrow pointing down. Set the stop loss on the resistance above the entry candle.
When to Exit?
Close the trade as soon as price action shows signs of a possible bullish reversal.
Conclusion
The Trend Arrows Sign Indicator can be a decent trend reversal signal indicator. However, since these signals tend to be long-term trend reversals, the trend reversal signals might sometimes be delayed. As such, it is best to trade these signals in confluence with a long-term technical analysis. It is also preferrable to exit trades based on price action as waiting for the appearance of a reversal signa arrow might be too late due to lag.
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