For quite some time I was working on a trend indicator. The trend is derived from high and lows with stop loss based on ATR. This is quite common and I just combined these two techniques.
Using highs and lows price as trend is reduces lag and the stop loss gets adjusted as per the volatility. The ATR is the one of the best indicator for gauging the volatility.
Now the major change I did was to use multi time frame indicator with base time frame. For example with 1 hour trend I use the 4 hour vales and then look for confirmation. When confirmation then its one side otherwise trade less.
A simple screenshot. The Blue line is 4 Hour indicator while the green and red is of 1 hour.
Trading based on multiple time frames is a good technique and can be quite useful in choppy markets.
The best use is to detect what is larger trend is and then position the trades based on that. The smaller timeframe then gives the entry point.
In the above chart the the profit booking sign came at 5850 and has been in sell mode based on 1 Hour time frame. The 4 Hour time frame indicator is still bullish with stop at 5750.
The strategy for traders would be to go short 50% at 5850 and then book profits at 5750. That is for short time frame traders and for institutional traders would be to go short on break of 5750 levels.
The same kind of strategy can be applied for any indicator. More on this particular indicator later.
Related Post: Nifty Trend Indicator with multi timeframe update
Using highs and lows price as trend is reduces lag and the stop loss gets adjusted as per the volatility. The ATR is the one of the best indicator for gauging the volatility.
Now the major change I did was to use multi time frame indicator with base time frame. For example with 1 hour trend I use the 4 hour vales and then look for confirmation. When confirmation then its one side otherwise trade less.
A simple screenshot. The Blue line is 4 Hour indicator while the green and red is of 1 hour.
Trading based on multiple time frames is a good technique and can be quite useful in choppy markets.
The best use is to detect what is larger trend is and then position the trades based on that. The smaller timeframe then gives the entry point.
In the above chart the the profit booking sign came at 5850 and has been in sell mode based on 1 Hour time frame. The 4 Hour time frame indicator is still bullish with stop at 5750.
The strategy for traders would be to go short 50% at 5850 and then book profits at 5750. That is for short time frame traders and for institutional traders would be to go short on break of 5750 levels.
The same kind of strategy can be applied for any indicator. More on this particular indicator later.
Related Post: Nifty Trend Indicator with multi timeframe update
No comments:
Post a Comment