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The Average Trend is an indicator that helps to determine the current trend or its absence in the market. Thus, the indicator allows finding the best moment to enter the market after determining the trend. The indicator determines the presence or absence of a trend after its moving average turns into one of three colors , the first of which indicates an uptrend, the second a downtrend, and the third the absence of both of them. Trading with this indicator should only be made during a trend, since during the period of its absence trades are most often managed with a minimum profit. The indicator can be used with any currency pair on any timeframe, which creates convenience in own trading.
Input parameters
The Average Trend indicator includes in its settings four input parameters that are responsible for its technical operation, that is, changing the parameter values will affect the calculation of the indicator. For own comfort, the color gamut and the width of the moving average can also be changed in the indicator settings, as well as to build own strategy additional signal levels can be added.
- Average Period - indicator moving average period. The default value is 35.
- Average Method - parameter that determines the type of moving average used in indicator calculations. By default, it has the Exponential value.
- Price - price to which the indicator's calculations will be applied. By default, it is set to Close price.
- Acceleration factor - parameter responsible for the acceleration factor of the indicator values. The default value is 1.05.
Indicator signals
The scheme of the Average Trend indicator is identical to other indicators based on moving averages. That is, trades should be opened taking into account the direction of the line, and this indicator should also take into account its color. If the color indicates an upward movement, then it should be opened buy trades if downward trades to sell, and if the line is painted in a neutral color, then all current trades should be closed and new ones should not be temporarily opened.
Signal for Buy trades:
- In the current market, an uptrend is determined. That is, the indicator line should be directed upwards and colored in color with a growth value.
After the appearance of such conditions, namely, after the line turns into a color with a growth value, a long position can be opened. It is logical that such a trade should be closed after it changes its direction and color.
Signal for Sell trades:
- The moving average of the indicator is colored with the value of growth, while heading down. This means that the market is in a downtrend.
When coloring the line in a color with a growth value, a short position can be opened, which should be closed after the opposite conditions are received, that is, a different color and direction of the line.
Conclusion
Average Trend is a very simple and useful indicator that can be used both separately and in combination with other indicators, creating an effective strategy. Trading conditions using the indicator practically do not differ from using a standard moving average, but the addition in this indicator is the presence of three colors, thanks to which it can be easily determined the current trend. And for complete confidence in trading, it is recommended to use a demo account.
