RMA VertexFX Indicator

[Verde Solution 0]

The RMA (Relative Moving Average) is a powerful VertexFX client-side indicator based on the Simple Moving Average indicator.
The Simple Moving Average (SMA) indicator is useful to identify the start and reversal of a trend. When the price closes above the SMA it is considered bullish signal, and when it closes below the SMA it is considered bearish signal. However, one of the major drawbacks of the SMA is lag and whipsaws. The SMA is a lagging indicator, and as a result the signals are late thereby reducing profit opportunities. Similarly in sideways markets, the SMA generates whipsaws which can result in too many trades and losses. The RMA indicator attempts to remove the drawbacks of the SMA by reducing the lag period.
The RMA is calculated using three moving averages, namely long term, medium term and short term. The long term period is computed as three times the RMA_PERIOD. The medium term is computed as twice the RMA_PERIOD, and the short term is computed using the RMA_PERIOD.
We subtract the medium term SMA from the long term SMA and then add the short term SMA.
Thus, RMA = SMA(3 x PERIOD) - SMA(2 x PERIOD) + SMA(PERIOD)
The RMA reduces the lag of the SMA, by subtracting the medium term SMA and then adding the long term SMA. Any movements that occurred over the longer period are automatically filter out thereby reducing the lag.
BUY / EXIT SHORT - Enter LONG (or exit SHORT) at the close of the candle when the RMA indicator turns GREEN and the price is above the RMA indicator. The stop-loss can be set to the nearest Swing Low.

SHORT / EXIT LONG - Enter SHORT (or exit LONG) at the close of the candle when the RMA indicator turns RED and the price is below the RMA indicator. The stop-loss can be set to the nearest Swing High.

 

RMA (4).rar