Today I want to offer you a technical analysis tool – DOT MMS . Moving averages form the basis of its algorithm. There are many similar indicators, but this one has its own characteristics. It generates signals based on the analysis of the slope of the MA lines. Thus DOT MMSevaluates the strength of the trend movement. And the moment of its weakening is considered as a signal of a possible change in the existing trend. In addition, the calculations take into account the distance between the opening and closing of candles. A rather complicated calculation formula makes this indicator a quality tool for technical analysis. Another feature is the use of an additional filter. It allows you to ignore some signals that appear on the chart. You need to use only those of them that are likely to allow you to open a profitable trade. The indicator also displays a window on the chart, in which the signal statistics are displayed.
There are a lot of parameters in the settings, but you shouldn’t be afraid of that. In fact, they are grouped into three groups. The first of them suggests specifying parameters for generating buy signals, the second – for selling. Well, the third group of parameters concerns the information window, which I wrote about above.
There are a few more parameters, but they are not of fundamental importance, since they relate to the design of the indicator – the color and size of the line and icons. Now let’s move on to the most important thing.
To make it easier to perceive the conditions for opening deals, let’s look at the chart
The decision to enter the market is made as follows.
First, we are interested in the appearance of a point on the chart (green – for purchases, red – for sales). But this is not yet a signal for action. An arrow of the same color should appear on the next candle. However, you can open an order only if a small yellow triangle appears in the indicator window.
If you look at my screen, you can see three buy signals. But only one of them was really the real signal. It fulfills all three conditions (point, arrow and triangle). The other two should have been ignored. And this is good. If we believed them, we would have suffered losses.
After opening a trade, be sure to set a stop loss. I recommend focusing on local extremes. As for fixing a profit, there may be different options. For example, it can be a take profit placed near an important level. And you can close the order after receiving a return signal.
Preliminary testing of the DOT MMS indicator on a demo account is a prerequisite for using it in trading.