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ADX VMA Histogram is a trading algorithm that is based on the interaction of calculations and the general functioning of two forex indicators, namely ADX and a modified version of the moving average. The indicator is used to trade during a certain trend in the market, so its calculations are used to determine its direction and forces. ADX VMA Histogram is displayed in the lower window of the price chart as a histogram, which, under certain market conditions, is painted in a color that characterizes the current trend. At the same time, taking into account the current trend, a certain trade can be opened.
The ADX VMA Histogram indicator is suitable for trading any currency pairs on any timeframe.
Input parameters
The settings of the ADX VMA Histogram indicator consist of several sections. The input parameters are used to change the values of its technical work, while the Colors section is used to change the color scheme of the indicator, and the Levels section is used to add signal levels to its window.
- Period - indicator period value. The default value is 14.0.
- Price - price type used to calculate the indicator values. By default, it has the Median Price value.
Indicator signals
The algorithm for using the ADX VMA Histogram indicator is very simple. To open a certain trade, it is needed to determine the direction and strength of the current market trend, that is, take into account the color and number of histogram columns painted in it. If the indicator detects an uptrend, long positions are opened, while short positions are opened during a downtrend. When the direction of the current trend changes, trades are closed.
Signal for Buy trades:
- At least three bars of the histogram have a color with a falling value.
Upon receipt of such conditions on a signal bullish candle, a buy trade can be opened, due to the presence of an uptrend in the current market. When the trend direction changes, namely when the histogram color changes, the trade closes. At this moment, it should be considered opening new trades.
Signal for Sell trades:
- At least 3 bars of the indicator's histogram must have a color with a falling value.
A sell trade can be opened immediately upon receipt of such conditions on a signal bearish candle, since at this moment the presence of a downtrend is determined in the market. Such a trade should be closed upon receipt of a reverse signal, that is, when the histogram color changes. At this moment, a change in the current trend is possible, which will allow considering the opening of new trades.
Conclusion
The ADX VMA Histogram indicator is a very effective trading algorithm, since its calculations are based on the use of indicator calculations, the accuracy of which has been proven by time. To improve the accuracy of trading signals, it is recommended to use the indicator with additional filters, advisers and other indicators. At the same time, to improve trading skills and correct application of the algorithm is recommended to practice on a demo account.
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