Introduction to the Trigger Line with Arrow Indicator
Moving average crossovers can be good trend or momentum reversal signals. The question is which pair of moving average lines should we use.
Let us take a look into the Trigger Line with Arrow indicator which uses a pair of modified moving averages as a basis for trade signals.
What is the Trigger Line with Arrow Indicator?
The Trigger Line with Arrow Indicator is a custom technical indicator which provides trend or momentum reversal signals using a modified moving average line. It plots a pair of fast moving average lines, as well as arrows indicating the direction of a momentum reversal. The color of the lines also changes depending on the direction of the trend.
How the Trigger Line with Arrow Indicator Works?
The Trigger Line with Arrow indicator uses an underlying pair of moving average lines. One is a modified moving average line which is weighted, and the other line is a Least Square Moving Average (LSMA) line.
The Trigger Line with Arrow indicator identifies momentum reversals whenever the weighted moving average line and the LSMA line crosses over. It the changes the color of the lines and plots an arrow pointing the direction of the momentum reversal. A violet line indicates a bullish momentum, while a crimson line indicates a bearish momentum.
How to use the Trigger Line with Arrow Indicator for MT5
The Trigger Line with Arrow is exactly as its name suggests. It is an indicator which provides trend or momentum reversal signals. As such, we can use these signals as a trade entry trigger.
Being an entry trigger, the Trigger Line with Arrow signal should not be the main basis for a trade setup. Instead, it should merely be a confirmation of a trade setup and a signal to open the trade. So, it would be best to use this indicator in confluence with a bigger picture trade setup or with a long-term trend.
This indicator has a few variables that can be modified within its settings.
“Period” refers to the number of periods in which the weighted moving average line is based on.
“LSMA_Period” refers to the number of periods in which the LSMA line is based on.
The arrows can also be toggled on and off through the “ShowArrow” option.
Buy Trade Setup
When to Enter?
Identify a market with an uptrend or a bullish trade setup. Open a buy order as soon as the Trigger Line with Arrow indicator identifies a bullish momentum reversal coming from a deep retracement. Set the stop loss below the entry candle.
When to Exit?
Close the trade as soon as the Trigger Line with Arrow indicator plots an arrow pointing down.
Conclusion
The Trigger Line with Arrow indicator is a trend or momentum reversal signal indicator which can be incorporated into a trading strategy as an entry trigger. However, it should be used only as a confluence or a confirmation. This is because the signals it produces can sometimes be very erratic and should not be used as a standalone trade rationale.
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