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Laguerre Stripped of Double Stochastic is a trading indicator whose calculations are based on the interaction of two indicators, namely Laguerre and Stochastic with double smoothing, which in turn allows not only increasing the accuracy of signals, but also expanding the range of application of the algorithm. So, in addition to identifying the direction and the strength of the current trend, the indicator can also be used to determine support and resistance levels and the stop loss level. The indicator is presented in the lower window of the price chart as several colored Laguerre and Double Stochastic lines with a signal level. Taking into account their direction, color and intersection with each other and level 0, the direction of the trend is determined, and at the same time the moment of opening a trade.
The Laguerre Stripped of Double Stochastic is suitable for use on any time frame, with any currency pair.
Input parameters
There are several sections in the settings of the Laguerre Stripped of Double Stochastic indicator, so the Input Parameters section is responsible for its technical operation and setting the indicators included in it. The Colors section is used to change its color scheme and visualization, and the Levels section is used to add to the indicator window signal levels.
- Stochastic period - value of the period of the Stochastic indicator. The default value is 55.
- Smoothing period - indicator value smoothing period. The default value is 15.
- Laguerre gamma - calculation value of the Laguerre indicator. The default value is 0.77.
Indicator signals
To use the Laguerre Stripped of Double Stochastic indicator in a classic application, that is, to determine the direction and strength of a trend, as well as opening trades during this period, one should take into account such indicator values as the direction of its lines, color and intersection with each other, as well as with a signal level 0. If conditions characterize the presence of an uptrend on a certain candle, long positions are opened, in a downtrend, short positions are opened. When the current trend direction changes, in both cases, trades are closed.
Signal for Buy trades:
- The indicator lines are located above level 0 and move up. At the same time, the Stochastic line is above the Laguerre line, which have a color with a growth value.
Upon receipt of a combination 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 at the moment of the reverse intersection of the lines and the Laguerre color change. At this moment, it should be considered opening new trades.
Signal for Sell trades:
- Indicator lines are directed from top to bottom and are located above the signal level. Laguerre lines are above the Stochastic line. Laguerre lines have a color with a falling value.
Upon receipt of a combination of such conditions characterizing a downtrend, a sell trade can be opened. Such a trade is closed upon receipt of the opposite conditions from the indicator, namely, when the lines cross and change their color. At this moment, a change in the current trend is expected, which in turn will allow considering the opening of new trades.
Conclusion
The Laguerre Stripped of Double Stochastic indicator is a very effective algorithm that allows not only trading during a certain trend, but also to be used as an additional filter or indicator in various strategies. In order to gain the necessary trading skills and correctly apply the trading algorithm, preliminary practice on a demo account is recommended.
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