Aidy Sproule's Trend Strength Indicator

Trading Systems Free Forex Trading Systems
1

Hi Everyone,

I have attached an indicator that I have developed that shows the strength of a currency pair. It is based on the current price, compared to the highs and lows based on a trend period that can be defined in the settings on the indicator. This is effectively a price action indicator.

So for example, the default settings in the indicator, the ‘TrendPeriod’ setting is set to 50. The indicator then looks at current price on the 50 day SMA to find the overall trend, current price above the 50SMA - we look for long positions, current price below the 50SMA - we look for short positions.

Now we know the overall trend, the indicator now looks for the highest and lowest prices within the last 50 days and based on where the current price is in relation to the highest and lowest prices, it calculates an value between +50 and -50, were +50 is a strong trend and -50 is a weak trend. The closer the value is to the +50, the better the chances are for positon in the direction of the overall trend.

The indicator then looks at the 4 hour chart, find the highest and lowest prices in the previous 50, 4 hours periods and again calculates a trend strenght based on the current price.

The process is repeated 2 more times for the H1 and M5 periods.

Once the indicator has ran through the above calculations, it displays on the chart, the direction of the overall trend along with the trend strength value for the D1, H4, H1 and M5 periods.

How can this be used for trading?
When the indicator is displaying a strength value greater the zero, the price is heading in the general direction of the overall trade.

Personally, I enter trades in the direction of the trend when the trend strength value is greater than following default values - D1: 25, H4: 31.25, H1: 37.5, M5: 43.75. When the trend strength values are above these default values, new highs\lows are being created and the overall trend is strong.

When the trend strength values move above the default settings for each time period, the indicator will display whether to trade or not, and in which direction to trade.

In the attached images, the EURGBP is showing strong short trending signals, the D1 is at 49.46 (>25), H4 is 48.28 (>31.25), H1 is 46.75 (>37.5) and M5 is 33.78 (wait until greater than 43.75).

On the other hand, the GBPUSD shows weak short trending signals, the D1 is 14.99 (<25), H4 is -20.54 (<31.25), H1 is 6.88 (<37.5) and M5 is -27.88 (<43.75). This shows the price is ranging and a reversal is possible if the price breaks above the 50SMA the overall trend will be long and the trend strength values go above the default settings.

I hope this makes sense, if you have any questions\comments, please let me know by posting below.

Here is the link to the indicator: Aidy Sproules Trend Strength Indicator.zip (8.74 KB)

Aidy

2

Below is the indicator running on the pairs that I trade.

As I work 9-5, I have an EA that does the calculations and enters the trades with a dynamic stoploss and trailing stop. I don’t set any take profits, I just let the trades run and let the trailing stop get hit which closes the trades. All open trades are closed on Friday evening @ 21:00GMT.

Overall.jpg700×391 52 KB

3

How do you exit the trade? Do you exit the trade when the strength value drops below the entry threshold? Do you groom the stop to some systematically concluded point when the strength drops? Do you…??

4

You exit on Friday even if the strength of trend is still above the entry threshold? How does the stop trail?

5

Yes, all trades get closed on Friday night even if still trending. I just don’t like to hold trades over the weekend where the price may gap on a Sunday night.

The initial stop is half the daily ATR. The ATR period is what is defined in the indicator. For me I use the the 50 period daily ATR.

If half the ATR is a 25pip SL, I wait until the trade has moved 25pips into profit and then the SL gets moved to breakeven. The stoploss than trails the current price by 25pips.

6

Half the daily ATR trailed dynamically from the price would probably take you out of most trades before the Friday close anyway. Am I right?

7

Personally, I let the current price hit the trailing stop. It is possible for traders to wait for one of the strength values to drop below a certain value and then close their trade.

8

If the stop is just half the 50-day ATR, taking it out would automatically mean a drop in the trend strength anyway. Am I right?

9

Some do, some don’t. I have had trades were the currency pair is in a strong trend and the trades stays open for 2-3days before hitting the SL. Most trades are open for about a day. Days were there is strong fundamental news release the trades opens with the trend and there is a strong rally for a few minutes were the SL gets moved to breakeven and trails before the price corrects itself and hits the SL for a small profit.

I’m really looking for high probability trades so the tight stoploss isn’t tight enough to close the trade quickly.

10

That is what I would have expected with that type of stop-loss set-up. It looks like you are trying to build a system that is in the market only during quick moves and out of the market during lines.

I think you are shooting for something like this:


The green lines would represent trades (in and out).

Why not use the same set-up on much longer term trades with 2X 50-day ATR stops and smaller position sizes? (If a trader could have traded the series of trades in this pic, he would have done even better staying short the whole chart).

11

True. It’s just my personal trading method. I’m looking to enter a strong trend, take a piece of the move, and let the price move back and close my trade. Then when the next strong trend comes, I re-enter at the start of the trend (or as close to the start), and take another bite of the trend.

I just keep repeating the process.

12

May you drink from the holy grail in the chapel of your mind and prosper!

I on the other hand am back to my Tank 7.

13

Based on my indicator\EA, I’ve entered 2 short trades - EURGBP @ 0.74184 & EURUSD @ 1.12958.

Download the indicator from the 1st post and let me know what you think!

14

Thank you aidysproule for sharing your indicator. it is possible to have a dashboard of the indicator to have a view on all pairs in one chart?
Best regards

15

Hi Resclub,

Yes, I have an indicator that listed the currencies I trade on each chart the indicator is on with an overall strength of each pair. I will tidy it up and upload it shortly.

What do you think of the indicator so far?

16

Sell signals coming through think and fast for EURUSD and EURGBP.

17

thanks aidysproule for your help ,
i took sell trade EURUSD in 1.13120 and and get out at 25 pips benefice (i don’t want to be greedy) perhaps i will enter again if all the condition are here again ,and as you say i’m waiting for EUR GBP also .I find your indicator very helpful to confirm my trade entry with others indicators.
One thousand times thank you again once.

18

Just got a sell on both EURGBP @ 0.74177 and EURUSD @ 1.12956.

19

Hi aidysproule;
i would like to change the color of the indicator text but i can’t do it in the color parameters?

20

GBPCAD buy at 1,91870