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AMACD is a trading algorithm whose calculations are based on a modification of the standard MACD forex indicator. Its calculations, like the standard version, are aimed at determining the current trend, namely its direction and strength in the current market, which in turn is taken into account when opening certain trades. The indicator is presented in the lower window of the price chart in the form of a histogram with a signal line that changes its direction, color and location relative to the signal level depending on the current market conditions. Taking into account the values of the indicator, the current trend is determined, and at the same time the trade that opens during this period.
The AMACD indicator is suitable for trading on any timeframe using any currency pairs.
Input parameters
Several sections in the AMACD indicator settings are responsible for its general functioning. The Input parameters section is responsible for its technical work, the Colors section is used to change its visualization and to add signal levels to the indicator window, the Levels section is used.
-Period of the Fast AMA - the period of the fast moving average. The default value is 6.
-Fast EMA of the Fast AMA - the period of the fast exponential moving average of the AMA indicator. The default value is 2.
-Slow EMA of the Fast AMA - slow exponential moving average of the fast AMA. The default value is 13.
-Period of the Slow AMA - the period of the slow moving average of the indicator. The default value is 13.
-Fast EMA of the Slow AMA - fast exponential moving average of the slow AMA. The default value is 6.
-Slow EMA of the Slow AMA - slow EMA of the slow AMA indicator. Default value is 30.
-The signal line period - the period of calculation of the signal line of the indicator. The default value is 5.
-Applied price - type of price to which indicator calculations are applied. Close price by default.
Indicator signals
The AMACD indicator is very easy to use since the algorithm of its application is similar to using similar histogram indicators. To open a certain trade, the direction and strength of the current trend should be taken into account. For this, in turn, the color, direction and location of the histogram columns relative to the signal level are taken into account. If the indicator determines an upward trend, long positions are opened, if the trend is downward trend, short positions are opened. At the moment of a change in the current trend, in both cases, trades are closed.
Signal for Buy trades:
- The indicator's histogram is colored with the growth value and rises above level 0. At the same time, its new columns are higher than the previous ones.
Upon receipt of such conditions that characterize an uptrend, a buy trade can be opened. The current trade should be closed and a new one should be considered when the current trend changes, that is, at the moment the reverse conditions are received from the indicator.
Signal for Sell trades:
- At least three columns of the histogram have a color with a falling value and are directed downwards. In this case, a new column is formed below the previous one.
A sell trade, due to the presence of a downtrend, can be opened immediately upon receipt of such conditions on a signal candle. When receiving reverse conditions from the indicator, the trade should be closed. At this moment, a change in the current trend is possible, which will allow considering the opening of new trades.
Conclusion
The AMACD indicator is very accurate since its calculations are based on a modification of an already very effective forex indicator. To improve the quality of trading, it is recommended to use the indicator with additional filters, advisers and other indicators.
