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The PWMA Trend Envelopes Histo, or Trend Envelopes-Parabolic Weighted Moving Average Histogram, is a trading indicator that is a small strategy based on two indicators, a modified moving average and the Trend Envelopes indicator. This algorithm is used in trading to identify the current market trend, the definition of which will allow opening a certain trade. The indicator is presented in the lower window of the price chart in the form of a histogram, the columns of which, upon receiving certain conditions, are painted in one of two colors. And depending on its color, a trend is determined, after which a position is opened in its direction.
The PWMA Trend Envelopes Histo indicator is equally effective with any currency pairs, on any timeframe, so any parameters of these values can be selected.
Input parameters
In the settings of the PWMA Trend Envelopes Histo indicator, there are only three input parameters, changing the values of which affect its overall operation. The Colors section in its settings is responsible for the color gamut and thickness of its values.
- Trend envelopes deviation % - parameter responsible for the deviation of the values of the Trend Envelopes indicator as a percentage. The default value is 0.1.
- PWMA period (< = 1 for no smoothing) - PWMA indicator period. By default, it has a value of 14, while if a value less than or equal to 1 is selected, then its values are not smoothed.
- PWMA power - PWMA indicator strength value. Default value is 2.0.
Indicator signals
The use of the PWMA Trend Envelopes Histo indicator does not bring any particular difficulties, so it can be used by traders with different levels of preparedness, even beginners. In the concept of the indicator, it is important to understand that when determining any market trend, it begins to form columns characterizing this trend. That is, if the columns are colored with a growth value, then the trend is up, and if vice versa, with a fall value, the trend is down. And thus, after determining the current trend, a trade can be opened in its direction.
Signal for Buy trades:
- At least three bars of the indicator's histogram are colored with growth value.
After receiving such a condition, a buy trade can be opened on the signal candle due to the presence of an uptrend in the market. It should be closed after at least one bar of the histogram turns into a color with a fall value, since at this moment a change in the current trend is possible, or its significant weakening. This will allow considering the possibility of opening new trades.
Signal for Sell trades:
- The histogram of the indicator is colored with the value of the fall over three columns.
Upon receipt of such a condition, a short position may be opened on the signal candle. Such a position should be closed immediately after at least one of the histogram columns turns into a different color, this will indicate a possible change in the current downtrend, which will allow opening new positions in its direction .
Conclusion
The PWMA Trend Envelopes Histo indicator is a very efficient algorithm designed to work with the trend. In addition to the fact that the indicator is distinguished by its accuracy in signals, it is very easy to use. However, for best results, it is recommended to use the indicator with additional tools, advisors or other indicators, and also pre-use a demo account.
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