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The Laguerre RSI indicator is a small trading system based on the use of calculations of two Laguerre and RSI indicators at once. Each of these indicators is effective in its own way, and therefore they are often used in trading. For example, Laguerre is a trend indicator that determines the direction of the trade, which should be opened during the current trend period, and the RSI indicator, which is included in the standard Forex set, is used to identify the current trend and its strength. Thus, combining these indicators allows creating an algorithm that helps determine the current trend and identify the best time to enter the market. Laguerre RSI is represented in the lower window of the price chart as a solid line, which, taking into account the market situation, changes direction relative to its levels.
The indicator can be used on any convenient currency chart and timeframe.
Input parameters
Despite the fact that the Laguerre RSI indicator includes two indicators at once, there is only one input parameter in its settings. However, this does not affect its performance in any way. But in the indicator settings, there are parameters that change the visualization of the line, namely its color and width. And also any signal levels can also be added to the indicator window.
- Gamma - parameter responsible for the coefficient for calculating the line levels. Keep in mind that the higher the value of this parameter, the smoother the indicator line will be. The default value is 0.7.
Indicator signals
Using the Laguerre RSI indicator in practice will not be difficult, especially if it is had an idea about the Laguerre and RSI indicators separately. That is, in fact, the indicator is used on the principle of similar Laguerre or RSI. There is a line in the indicator window with default levels of 0 , 0.15, 0.45, 0.75 and 1. After this line crosses these levels in a certain direction, a position can be opened in the direction with the current trend, which is also determined by the direction and crossing of its levels by the line.
Signal for Buy trades:
- After finding the line below level 0, it begins to change its direction, moving higher towards level 0.
After the line crosses the level of 0.45 upwards, while not changing its direction, a long position can be opened. It should be closed after the line reaches level 1, since in this case the line can change direction. And in this case, it should be prepared to open a new trade.
Signal for Sell trades:
- After the line reaches its level 1, it will start moving down to level 0.
A sell trade should be opened if the line falls below the level of 0.45 without changing its direction. It should be closed when the line reaches the level of 0. In this case, it should be prepared for a change in the direction of the trend, at which it will be possible to open a new position.
Conclusion
The Laguerre RSI indicator is very simple, but effective in use, even due to the fact that it is based on the functioning of excellent indicators. Before using the indicator in practice, it should be prepared in advance, that is, study the indicators, the calculations of which are used in the work of Laguerre RSI, and also use the demo account before trading on a real deposit.
