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MACD on DEMA Four Colors is a modification of the classic forex indicator MACD, with the addition of the Double Exponenial Moving Average indicator, created for the MT5 forex platform. Thanks to the improvement, it has a more accurate calculation method and shows excellent results in practice.
The indicator is a histogram and a moving line , located in the lower window of the price chart. With its help, it can be quickly determined the optimal point for creating positions and make profitable trades in one trading day. The indicator is universal and can be used on any timeframe, with any currency pair.
Input parameters
The MACD on DEMA Four Colors indicator consists of a sufficient number of parameters for its full functioning. Its installation will not be difficult, and therefore even a beginner can handle the installation.
- -MACD period for Fast average calculation - the period of the calculation of the fast curve included in the indicator. The default value is 12.
- -MACD period for Slow average calculation - the period of the calculation of the slow curve included in the indicator. The default value is 26.
- -MACD period for Difference average calculation - parameter for setting the period of the signal curve. The default value is 9.
- -MACD type of price - type of price to which the indicator's calculations will be applied. The default value is Close.
In the indicator settings, the color scheme and width of the indicator can be changed, and additional levels can be set in the window where the indicator is located.
Indicator signals
To open a trade, it is needed to wait for a signal from the MACD on DEMA Four Colors indicator. And its main signal will be a change in the color of the histogram. That is, when the color changes, the indicator signal will also change. The next signal is the histogram crossing a certain level.
Signals for Buy trades
- - The color of the histogram characterizes the growth value.
- -The bars of the indicator are above level 0 and are directed upwards.
When these signals are formed, it can be opened a buy tarde, and it should be closed if:
- -Histogram color no longer has a growth value, even though the indicator bars are pointing up.
- - The indicator bars fall below level 0, that is, they are directed downwards.
Signals for Sell trades
- - The histogram is colored in color, characterizing the value of the fall.
- -Columns cross level 0 from top to bottom.
The trade should be closed when the following conditions are formed:
- - The color of the columns no longer has a fall value, despite the fact that they are pointing down.
- -Columns crosses level 0 and head up.
Conclusion
The MACD on DEMA Four Colors trading indicator is suitable not only for professional traders, but also for beginners, since it is very easy to determine the entry points to any trades using this indicator. The most important thing is to follow the color change and direction of the histogram bars. And also, before gaining experience in using the strategy, it is recommended to practice on a demo account.
