Introduction to the Trend Signal Indicator
Traders are often adamant to open a trade because they do not know how to time their trades correctly. Sometimes they would either find themselves too early or too late when opening a trade.
The Trend Signal indicator might just be the tool for that.
What is the Trend Signal Indicator?
The Trend Signal indicator is a custom technical indicator that provides trend reversal entry signals. The trend reversal signals that this indicator produces are mostly geared towards the short-term trends.
How the Trend Signal Indicator Works?
The Trend Signal indicator uses an underlying computation which incorporates the average range of price movements in order to detect trend reversals which are geared towards the short-term.
It plots arrows to point the direction of the trend reversal. Bullish trend reversals are indicated by an arrow pointing up, while bearish trend reversals are indicated by an arrow pointing down.
The main variable that can be modified within its inputs is the “Risk”. This is preset at 3.
The lower the number, the faster this indicator detects probable trend reversals and the more signals it produces. Higher numbers would mean slower detection of signals and lesser signals produced. Lower Risk number would also mean less lag on the signals but it would also be less accurate. Higher Risk number would mean more lag but could also provide more accurate trend reversal signals.
How to use the Trend Signal Indicator for MT4
As mentioned earlier, this indicator is a short-term trend reversal signal indicator. As with most short-term trend reversal signals, the signals it produces would not always be accurate. As such, the Trend Signal indicator is best used as an entry trigger which should be used in confluence with another long-term trend indicator filter.
It can also effectively be used as an entry trigger for other price action-based trade setups such as price patterns or market flow support and resistance reversals.
Traders should identify a trade setup and use the arrows plotted by the Trend Signal indicator as a basis to open the trade.
Buy Trade Setup
When to Enter?
Identify a bullish trade setup based on a bullish price pattern or support level reversal. Open the trade as soon as the Trend Signal indicator plots an arrow pointing up. Set the stop loss on the support below the entry candle.
When to Exit?
Set a take profit target based on the trade setup and allow price to reach it.
Sell Trade Setup
When to Enter?
Identify a bearish trade setup based on a bearish price pattern or resistance level reversal. Open the trade as soon as the Trend Signal indicator plots an arrow pointing down. Set the stop loss on the resistance above the entry candle.
When to Exit?
Set a take profit target based on the trade setup and allow price to reach it.
Conclusion
The Trend Signal indicator is an excellent tool that could help traders objectively identify entry signals. However, it should not be used as a standalone trading strategy. Instead, it should be used in conjunction with a clear trade setup or in confluence with other technical indicators.
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