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Forex trend filter indicator

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forex trend filter indicator

Win cash prizes and community reputation in our unique, intelligenty moderated forex trading contests where every participant gets a fair chance. Our suite of trend affiliate tools is available to every registered member to refer other traders up to filter tiers deep and earn up to Join now it's free User Name: Receive Important Email Updates? We Will Beat Any Competitor Rates! Compare Forex Brokers with Rebates. Support Contact our support team any time during the business week with any questions you forex. Trading Contests Win cash prizes and community reputation in our unique, intelligenty moderated forex trading contests where every participant gets a fair chance. Promotions Exclusive promotions and general forex promotions. IC Markets Demo Trading Contest. RoboForex - coupons for MQL5 signals. Dukascopy - Equity Bonus. Dukascopy - Anniversary Bonus. Lite Forex - Non-stop Bonus. EasyMarkets - First Deposit Bonus. IC Markets - Free VPS Service. Global Prime - Free VPS Service. 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This is an indicator that looks at recent price action and determines whether the overall trend is up, down, or neutral. A trend filter is a way for the system to trade in the direction of the overall trend, filtering out trades that are contrary to the trend with the hope proven from back testing that the trend filter is filtering out more losing trades than winning filter. We system traders often find or create an interesting trending system on a smaller time frame chart like the M30, and we can see through back testing that the system can profitably exploit many trend opportunities on this relatively smaller time frame. However, we may also see from visual back testing that the system, though ultimately profitable, takes a lot of unnecessary losses whenever it trades contrary to the larger trend. When we see this, it behooves us to look for a trend filter of the same or alternate indicator, set on a larger time frame or period, that can help the system identify the lager trend of the market and only trend trades to occur in the direction of that larger trend. We will look at the construction of a simple trend filter, the Moving Average Trend Filter, in order to give you an idea of the process of creating and implementing a trend filter. Once you know how to code up this one trend filter, you can easily code up many alternative ones based on different indicators, until you finally discover the right set of trending filters to test upon all your trending strategies. Moving Average Trend Filter We are going to code up a moving average filter that when set to true only trades longs when the closing price is above the moving average and only trades shorts when the closing price is below the moving average. When close is above moving average. When close is below moving average. Indicate whether indicator not you want the Moving Average Filter on or off. Trades from primary entry system are only taken in the direction of the moving average: Indicate whether or not you want the Moving Average Filter Reversed on or off. Trades from primary entry system are only taken in the opposite direction of the moving average: Though this reversed filter is not often used, it can be useful if you discovered through back testing that applying the MAFilter above severely diminished your strategy. You may then want to see if applying the MAFilterRev can then super charge it. This is the time frame of your moving average. Default is 0, which means same time frame of the chart. You should test the same time frame first, and then move upwards in your tests, testing on each larger time frame. For instance, if your primary strategy was set on a M30 chart, you would test your Moving Average with the default of 0, which would be your M30, then you would test it with 60, which would be H1, thenwhich would be H4, andwhich would be D1. This is the period of your moving average. Default is 50, which is a common longer indicator for the Moving Average to determine trend direction. Another common longer period is I would advise setting an optimization between 50 towith a step interval of 25 or 50, to see which of the longer MA periods can best identify the trend for that currency on each of the time frames you test upon. This is the method or mode of the moving average, which is defaulted to 1, the exponential moving average. I think 1 or exponential is the best type of moving average. The other good one to test with is 0, the simple moving average. Both are very popular and effective modes of the moving average. MT4 Code Snippets The block of code below is placed in the external variables section. We earlier detailed how to construct a moving average cross strategy, so it should be familiar. One might imagine that a MAFilter added to a moving average cross tehnique would be redundant; however, there is a case to be made for how it can act as a compliment. For instance, if the moving average cross were to take trades based on period of 30 on a M30 time frame, it may be enhanced if it were complimented with a period MAFilter on a H4 time frame. It may benefit by taking trades on the trends of the shorter time frame and period that are ultimately in the direction of the longer time frame and period. In the first block of code I create a bool for BuyCondition and a bool for SellCondition, and default them both to false. I set them to false initially because I only want them to true when the logic I subscribe to them becomes true. The second and third blocks of code set out to identify the buy and sell conditions based on the moving average crossover. We have already gone over these conditions in the Basic Expert Advisor: The only difference is that I have subsumed these conditions into the bools of BuyCondition and SellCondition instead of the bools of OpenBuy and OpenSell, which I make reference to in the fourth and fifth blocks of code. It is the fourth and fifth blocks of code that implement the MAFilter. Each one starts with an "if " condition that has three conditions set within the brackets. The first condition, the BuyCondition or SellCondition, subsumes the entry logic of the moving average crossover. The second condition, the MAFilter condition, is a compound statement within parenthesis separated by filter "or" operator. The third condition, the MAFilterRev condition, is also a compound statement within parenthesis separated by a "or" operator. The second part of the statement after the indicates that if the MAFilterRev is set to true, then it can proceed to the MAFilterRev rule. As you can see the MAFilterRev rule is the opposite of the MAFilter rule. Conclusion The above MAFilter is just one of one many possible trend filters one can construct and implement. I have chosen the MAFilter because it is perhaps one of the simplest and most effective for identifying trend direction. Other good indicators that can act as trend filters are variations of the moving average: JMA, Hull, NonLagMA, and Slope Directional Line. I have used all four indicators as reliable trend filters. One can also experiment with momentum oscillators like RSI and Stochastics. With whatever indicator used, one should experiment with different periods and time frames to see which ones can best filter for the larger trend. Trend is only relevant in conjunction to the time frame, and once you identify the time frame, there is nothing fancy about the concept of trend. It is not necessary to try to find or construct super fancy, mathematical trend filters. Many traders attempt to over complicate the problem of trend identification. They invent all kinds of fancy mathematical equations and methods of massaging past price action to more precisely determine whether the trend is up or down, and most attempts at such are pointless. The simplest and most popular approaches to trend identification are often the best. Not every EA can benefit from having a trend filter. Some EAs incorporate trending indicators that work well forex without additional trending filters. Other EAs try to predict trend reversals or counter trend conditions, and therefor enter the trade when the trend is against them at the time. Bear in mind that all filters prevent trades from occurring and we want the trades prevented to be be mostly losing ones. It is often best to back test one filter at a time and to try not to use too many. Your strategy should be good enough to stand on its own, without the need for a filter. The trending filter applied to a good strategy should be tested out as an optional enhancement. If we discover that the filter is preventing a good number, or even an equal number of winning trades, it is not a good filter to have working for you. It is only acceptable if it can prevent a greater percentage of losing trades under a lengthy year back test. forex trend filter indicator

MT4 Tests for Forex - SnakeForce, Schaff, TopTrend, FMSignal Filter Indicators

MT4 Tests for Forex - SnakeForce, Schaff, TopTrend, FMSignal Filter Indicators

2 thoughts on “Forex trend filter indicator”

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