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The XO indicator is an algorithm, thanks to which it is easy to determine the optimal moment to open a position. The indicator is presented in the lower window of the price chart in the form of a histogram, which, when determining a trend, is painted in one of three colors, while being above or below its zero level. If the histogram is colored with a value of growth or fall, it means that the market is currently in an upward or downward movement, and if the histogram acquires a neutral hue, then the presence of a sideways movement is determined, that is, the indicator gives a signal about the undesirability of opening positions or closing all current ones.
Despite the fact that the use of the indicator with any currency pairs is not denied, in order to get more profit it is recommended to use pairs with high volatility, however, any timeframe can be used.
Input parameters
The XO indicator in its settings has two input parameters, taking into account which the indicator makes its calculations, displaying them on the chart in the form of a histogram. The rest of the parameters and sections are responsible for the visualization of the indicator, that is, the color of its histogram, as well as adding additional levels to the indicator window.
- Box size - indicator parameter that is responsible for its period. The default value is 6.5.
- Price - price to which the indicator's calculations will refer. By default, it has the Close price value.
Indicator signals
The XO indicator, as well as histogram indicators identical to it, generates a signal when the histogram turns into a certain color or crosses its zero level. Therefore, positions should be opened taking into account these values. It is recommended not to open trades at all if the histogram acquires a neutral hue, since in this way the indicator determines a sideways movement, in which trades will bring minimal profit and a large loss.
Signal for Buy trades:
- Histogram crosses its zero level so that it is above it.
- It is important that at least three of its columns are colored with the growth value.
After receiving such conditions, a long position is opened on a certain candle. It should be closed after the histogram changes its location in relation to the zero level, while turning into a different color. Under such conditions, one should consider opening new positions.
Signal for Sell trades:
- The indicator crosses the zero level down.
- Several columns of the indicator are colored with the fall value.
After such conditions are formed on a certain candle, sell trades can be opened. They should be closed after the opposite conditions are received, namely, the histogram will change its position or color, since in this case, opening new trades should be considered.
Conclusion
The XO is an easy to use indicator but very effective trading assistant, thanks to which it is easy to determine the current trend or its absence, which can be very useful in strategies. At the same time, for own confidence in the correct use of the indicator, preliminary practice on a demo account is recommended.
