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brownturtle

Price Action Only

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The day my trading really started to improve was the day I started removing them one by one. The finer improvements have included better and better observation plus gradually honing my key trading tool - me!

This has definitely been the case for me as well. I used to spend thousands of hours studying various indicators trying to devise the perfect trading setup. Unfortunately,I never could translate that hard work into a consistent profit, and I feel like I came away from that knowing very little about the market.

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The indicator phase is something that probably everybody probably has to go through, whether it's MAs, stochastics, MACD, %R, VWAP, MP (if you're looking only at the form), Pivot Points, Fibonacci, Bollinger Bands, chart patterns of one sort or another, candles, or even the price bars themselves (range bars, CVBs, tick bars, VSA, etc). And if one can make that endeavor successful by going through the necessary testing and developing the necessary plan, then there's absolutely nothing wrong with settling into that phase for the rest of one's successful trading life.

 

Since all of this depends on its existence on the movement of price, however, it is all "price action", hence the confusion over what is meant by "price action". But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of indicator or any sort of bar or even any kind of chart. Is it superior? Yes, if it makes more money than an indicator-based approach. If it doesn't, then no. Does it get one into moves earlier than an indicator-based approach (including those which focus on bars)? Yes, if one understands the buying-selling dynamics mentioned above. But getting in early is only part of what is required to make a profit. Otherwise, all counter-trend traders would be rich.

 

Though there are undoubtedly price action people who look down their noses at indicator people, the PA people have no reason to feel superior. And contrary to the beliefs of some indicator people, the PA people do not fail to understand indicators; they just don't see the point (other than perhaps scanning a database for price movements). In most cases, the latter have in fact gone through all this, as mentioned earlier, and had insufficient success with it, just as they've been dissatisfied with the chat room phase and the newsletter phase and the advisory service phase and the red-green arrow software phase and the seminar-course-workshop-DVD phase and the trade-the-news phase and the chart pattern phase and have instead found a more comfortable fit with a focus on price flow.

 

It's all about the money and how one chooses to go about getting it. There is no inherently better way, particularly if the trader doesn't care to do the work. A good fundamentalist, after all, will beat a bad technician any day. Therefore, if one is using indicators but has no idea how they're calculated, much less done the testing necessary to make the most of them, he is unlikely to reap the full -- or any -- benefit. If one is trading price flow but embraces irrational views of what constitutes support and resistance, he is similarly unlikely to reap the full benefits of that approach. Either way, it's all about study and testing and screen time. Without that, it makes absolutely no difference how one goes about the process of entering and exiting a position.

 

Those who are interested in how price action is traded would do well to visit the TL chat room as there are several people there who do just that. And it's free.

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Guest MRC & Co
But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of chart.

 

What do you mean, a chart alone shows pure price action........

 

Order flow shows the imbalance between buyers and sellers that moves that price.

 

BTW, I would say 99% of successful intraday traders, simply use these two. The order book and price.

 

:confused:

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This famous quote by Bruce Lee summarize my attitude toward indicators perfectly:

 

"Before I studied the art, a punch to me was just like a punch, a kick just like a kick. After I learned the art, a punch was no longer a punch, a kick no longer a kick. Now that I've understood the art, a punch is just like a punch, a kick just like a kick. The height of cultivation is really nothing special. It is merely simplicity; the ability to express the utmost with the minimum "

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What do you mean, a chart alone shows pure price action........

 

Price flow is independent of the means chosen to illustrate it. Unless one is following a one-tick chart, everything he's looking at is to some degree a summary of the flow, not the flow itself.

 

Order flow shows the imbalance between buyers and sellers that moves that price.

 

It can, but price does not move until there's been a transaction. If a buyer and seller cannot come to an agreement, then there's no transaction, regardless of how much of an imbalance there may be.

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It's strange how I have yet to meet a professional chart trader in person (and I have met many) that trades with absolutely no laggers. Of course a few of them only have a couple moving averages here and there. However, that doesn't mean they aren't out there. I have never been to Australia in person but I hear they are nice people :). While the pure Price/Volume guru may claim "you don't need it"...one who uses them would respond "yeah, I know...but why not". In other words, they know how the market moves and know exactly what information they can extract from indicators to simplify and expedite the discovery process. Yes, the majority of indicator junkies put the cart before the horse, but that doesn't mean you need to get rid of one of them. Once one goes through the indicator stage and finally learns how to read the market, many (that I know of) go back and get the tools needed to show the specific information they want. Also, the fractal nature of the market actually helps remove much of this so called "lag" if used correctly and if the limitations are known (like everything else). As for trading via comparing large and small volume...imo it lags as much as your standard indicators. If big volume comes in, the longer time frames have already taken their positions. If you get a restest on smaller volume is that not just the smaller time frame playing since the larger one already has their position. Of course you have to wait to be sure that larger volume doesn't step in (ie lag). However, I am probably in the minority that don't believe reading volume is necessary in a 'efficient' liquid market. But of course me saying it's not needed doesn't mean someone can't find it useful. Just like with indicators, you have to know it's limitations.

 

To summarize...indicators (including volume) are not needed to trade successfully. The important thing is that one spends the time watching the market and learning the all important ebb and flow. After enough time and understanding is gained, if one wants to simplify the gathering of information via indicators then whos to stop them. :2c:

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It's because the guys who trade off price action are the ones who are LOADED!

 

Yet to meet anybody close to them yet!

The facts don't change and I believe most of these PA traders do no better than others--that is, 95% of them also lose money.

 

If you believe that the elite 5% who extract the money out of the markets are predominatly PA traders, I have a bridge in Brooklyn I want to sell you.:rofl:

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Or one can play hammers,pin bars,key reversals, double tops or a variety of other 'patterns' at levels of potential support or resistance. For a price level to be rejected price has to move away from that level when all is said and done. How long you decide to wait for confirmation determines 'lag'. (whether watching price itself or a derivative).

 

There a couple of interesting threads in other corners of the interweb where people have demonstrated (in real time) trading S/R with simple easily recognisable 'PA patterns' ('pinocchio' bars seem to be a favourite).

 

I think that something along these lines is probablly the simplest, least ambiguous way to get a pretty decent edge in the markets.

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The facts don't change and I believe most of these PA traders do no better than others--that is, 95% of them also lose money.

 

If you believe that the elite 5% who extract the money out of the markets are predominatly PA traders, I have a bridge in Brooklyn I want to sell you.:rofl:

 

How much do you want for it:question:

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The facts don't change and I believe most of these PA traders do no better than others--that is, 95% of them also lose money.

 

If you believe that the elite 5% who extract the money out of the markets are predominatly PA traders, I have a bridge in Brooklyn I want to sell you.:rofl:

 

I can't prove it but I think you'd be wrong about that.

 

Most people start trading with a variety of indicators. Only after time do they abandon them and move towards price action. This move seems to take a number of years in most cases that I am personally across. If we say that 95% of people who start trading will fail then under any reasonable statistical distributions a large proportion will take place before indicators are abandoned. I seem to recall a 90% in six months figure once but lets say thats too dramatic - 90% in 2 years. And if its even and most PA traders took a year to wake up then well over 45% of traders will have dropped out by then. Of those left the survival rate will thus be much higher than 5%.

 

The other group of PA traders that would skew the distribution are those who were trained in PA trading either at a prop shop or by a mentor. I don't know what the failure rate at the shops is but I suspect that personal training reduces the failure rate.

 

 

Thus, if one believes that PA trading is usually an evolution from indicator trading or a result of training the failure rate will be substantially under 95%. One doesn't have to believe that PA is better than IA to accept this - belief that PA is superior would further improve ratios.

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The facts don't change and I believe most of these PA traders do no better than others--that is, 95% of them also lose money.

 

If you believe that the elite 5% who extract the money out of the markets are predominatly PA traders, I have a bridge in Brooklyn I want to sell you.:rofl:

 

I think there is a bit of semantics involved here.

 

* The vast majority of the elite are going to be price action only type traders.

 

* A smaller amount of this group, do in fact use indicators to trade.

 

* And a group that is larger than the second but smaller than the first do have MACD or RSI or a moving average on their screens. However, they do not base their trading decisions on the indicators. The indicators are only there to show the traders where/when/why the uninformed (read vast majority of indicator traders) are entering the market. The fact that they have an indicator on the chart does not mean they are not price action only traders.

 

Therefore the largest majority of the elite are price action only traders. Despite the fact that some in this group would actually still have an indicator or two on their charts.

 

The next issue with semantics is what you are calling an indicator.

 

Is volume an indicator?

Are market profile lines indicators?

Are floor pivots indicators?

What about trend lines and channels?

Is Pyrapoint an indicator?

What about horizontal fib lines?

 

certainly all the above are used to indicate various elements of price movement in time , space, or in price itself. But isn't that what Williams blau's Ergodic does? Or woodies CCI? I consider myself a price action only trader, but I use volume and do not believe it is an indicator. At the same time, I believe volume is the indicator.

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Indicators aren't evil, they just engender laziness IMHO. To me trading price only makes complete sense, but Im sure there are other ways to skin this trading cat. For whatever reason, all the successful traders I know understand PA first and foremost. About the 95% thing, I think that has more to do with discipline than anything else...and to me, not bothering to learning how the markets move and instead hoping you can just rely on what an indicators says is a form of non-discipline.

 

BTW Im just a noob, and I never went through the indicator phase...at least in the traditional sense. I looked at ADX for a day or so, that quickly became pointless. The only indicators I have now are volume and a script that plots the opening range high and low. Those are indicators sure, but I could trade the same way I do now without them.

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Guest MRC & Co
Price flow is independent of the means chosen to illustrate it. Unless one is following a one-tick chart, everything he's looking at is to some degree a summary of the flow, not the flow itself.

 

 

 

It can, but price does not move until there's been a transaction. If a buyer and seller cannot come to an agreement, then there's no transaction, regardless of how much of an imbalance there may be.

 

Yes, but you can still see tick by tick movement on a chart. As you can see it in the order book. Hence, you can trade pure price action through either.

 

If no trades take place, then there is no imbalance between supply and demand regardless of what is 'shown' in the order book. That's why only what hits market and when is the crucial part of the price ladder/order book. The rest is just noise, mainly created by algo bots or traders stacking and pulling orders.

 

Hlm, I don't know which 'professionals' you have met, but I've met many, including some of the most recognised ones in the world, and they don't even have a moving average on their screen, let alone MACD or RSI. HH and HLs are enough to tell trend, multiple timeframes will give a better indication of important levels.

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Hlm, I don't know which 'professionals' you have met, but I've met many, including some of the most recognised ones in the world, and they don't even have a moving average on their screen, let alone MACD or RSI. HH and HLs are enough to tell trend, multiple timeframes will give a better indication of important levels.
Yes, I am sure that there are a large amount that do. My comment was mainly based on the idea that I know professionals that use them. Not so much as there are non out there that don't. Also, many times one finds themselves surrounded by what they themselves preach. I would agree that the majority of professional traders are able to trade successfully to a certain extent via the simplest definition of a trend. But the benefits between leaving it at that and automating certain aspects are very muddy and can be argued til the cows come home.

 

Also, a quick note that's a little off topic...I find it interesting that you use the phrase "some of the most recognized ones in the world". From my experience, it seems like a big portion of the extremely successful traders out there try their very best to stay out of any spot light. Now I am not putting down any of the so called "most recognized", but one should not get confused and assume that they are the norm in the professional field. :2c:

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Hlm, I don't know which 'professionals' you have met, but I've met many, including some of the most recognised ones in the world, and they don't even have a moving average on their screen, let alone MACD or RSI. HH and HLs are enough to tell trend, multiple timeframes will give a better indication of important levels.

 

If I meet one of the world-renown professional traders that you are talking about, I would not be surprised if they say we are just trading "market noise", as most of us are intraday Index Futures traders looking at 1-min, 5-min, or tick charts charts. :o

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Hello to those just starting out . If I was to start all over I would just use price , as volume on the ES does nothing for me intraday. I would study price movement in such a way to identify what is happening on days that price moves and what is happening on days that price does not move. Then try to identify what has happened when price begins to retrace. Also what constitutes a reversal. Study price at these junctures and find out what occurs over and over again to give you an edge. Print out the charts for each day and mark them up. Higher high, lower high, lower low, higher low, last swing low, last swing high, retracements, reversals, and trendlines. Write down what you are seeing as price is moving throughout the day and match that up to your marked up charts afterward. Find out what works for you as everyone seems to see things differently, therefore make your own definitions and structure. As one gets these basics down , other opportunities will fall into place on their own. First learn , then trade, the market will be there when you are ready. Anyway hope that helps some.

erie ( always learnin' )

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Yes, but you can still see tick by tick movement on a chart. As you can see it in the order book. Hence, you can trade pure price action through either.

 

Yes, that's what I said. Price flows regardless of how -- or whether -- one chooses to detect or illustrate that flow.

 

If no trades take place, then there is no imbalance between supply and demand regardless of what is 'shown' in the order book. That's why only what hits market and when is the crucial part of the price ladder/order book. The rest is just noise, mainly created by algo bots or traders stacking and pulling orders.

 

There can be an imbalance between supply and demand leading to a failure to complete a transaction regardless of what's posted where. And I'm sure there's lots of noise in your book. But there is no such thing as noise amongst completed transactions. Every transaction means something to somebody and contributes to price flow.

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Since someone here mentioned what "professionals" are watching, I want to add a comment that applies to that group who daytrade futures directionally. The vast majority are scalpers who trade size. They make their money asap and then stop trading for the day. This is how they make their living. Trade 50+ ES cars for 2-4 ticks and see ya.

 

All the talk of HH/LL/ABC/123, and indicators mean nothing to these traders as they are rarely around to watch these formations and patterns and nor do they care to. They watch the DOM and then pounce when the probabilities are in their favor.

 

I dare say none of those types are posters on TL.

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All the talk of HH/LL/ABC/123, and indicators mean nothing to these traders as they are rarely around to watch these formations and patterns and nor do they care to. They watch the DOM and then pounce when the probabilities are in their favor.

 

.

 

If they do have one minute chart or something on their desk, they probably wouldn't have anything on it except candlestick, same is true with floor brokers. But to suggest that a blank chart is the key to success for a screen trader is absurd.

It is like saying the two richest men in the world Bill Gates and Warren Buffet both wear glasses, and if you wear glasses, then you will have a better chance of becoming filthy rich. :rofl:

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If they do have one minute chart or something on their desk, they probably wouldn't have anything on it except candlestick, same is true with floor brokers. But to suggest that a blank chart is the key to success for a screen trader is absurd.

It is like saying the two richest men in the world Bill Gates and Warren Buffet both wear glasses, and if you wear glasses, then you will have a better chance of becoming filthy rich. :rofl:

I didn't say they have blank charts. Of course they have charts, but whats on those charts is not what drives their decision to take a trade.

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Guest MRC & Co
If I meet one of the world-renown professional traders that you are talking about, I would not be surprised if they say we are just trading "market noise", as most of us are intraday Index Futures traders looking at 1-min, 5-min, or tick charts charts. :o

 

To an extent. The ones I am talking about are intraday futures traders, but also run spreads of any duration of time. Most of the big money comes from the recognition of when the paper is hitting market and getting onboard with huge size and then finding a way to get out.

 

You would probably know though, as you are one yourself.

 

Someone said they keep a low profile, absolutely.

 

Zoso, I work with these 'scalpers' and have been one myself for a little while, after finishing up trading off daily charts. They don't just scalp a few ticks, it all depends on price action. If it's flicky and in a range, they will take flicks. But generally, they are looking to run HUGE size for as long as they can. Most scale in and out of positions. Nearly all note trend structure, HH, HL etc. Yes, most use the order book mainly and also look at charts for important levels and simple price patterns (usually not the ones you read in books, but the patterns that relate to your given market(s)). But don't talk of how scalpers trade or what they do when you admit yourself you are not one.

Edited by MRC & Co

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We all have what works for us. This method is my bread and butter. I love learning. The market offers an unlimited supply of methods to learn. But don't confuse learning with what works for you. If you find your style, use it. For me, as Zoso qouted, 2 or 3 trades averaging one minute in/out. Walk away so I will be clear the next day. I know what it takes to live my lifestyle and I am happy with that. And yes, it is a very simple lifestyle.

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Since someone here mentioned what "professionals" are watching, I want to add a comment that applies to that group who daytrade futures directionally. The vast majority are scalpers who trade size. They make their money asap and then stop trading for the day. This is how they make their living. Trade 50+ ES cars for 2-4 ticks and see ya.

 

All the talk of HH/LL/ABC/123, and indicators mean nothing to these traders as they are rarely around to watch these formations and patterns and nor do they care to. They watch the DOM and then pounce when the probabilities are in their favor.

 

I dare say none of those types are posters on TL.

 

Of course 'professionals' would watch different things depending on the nature of their profession. There is an extraordinary level of naivety shown by many retail traders when it comes to recognising the diversity of participants in today's markets. Actually the same could be said about many 'pros'.

 

I wonder what you mean by "daytrade futures directionally"? I guess you are seeking to exclude traders that are not profit motivated like hedgers, or maybe arbitragers both who might be happy to be 'on the wrong side' of directional moves. Kind of confused everyone trades directionally though some participants are not bothered about market direction.

 

Also I wonder your source for "the vast majority are scalpers that trade size"? I guess that is simply your contention as little (beyond the CoT) is known about the volume traded by different types of participant. You would still have to discount the lions share of volume as non "directional" to arrive at that conclusion though. Still as I am not sure who you are excluding this might well be moot.

 

Even scalpers trading momentum are aware of highs and lows in the tick flow, well the good ones are :) You could argue that scalping is the purest form of trading 'price action'. Put another way 'tape reading' is based on 'price action' and momentum.

 

I guess I may as well go for the clean sweep and question all your points :D I think you might be surprised by the background of some of the posters here.

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Also I wonder your source for "the vast majority are scalpers that trade size"?

 

Its even worse than that..how can anyone at retail even have a clue about the markets and call themselves a "scalper"???..Retail scalpers are morons taking extremely small "positions" profit target wise, probly don't even know they are being front ran numerous times by algo market makers before the quote even hits their eyes..I guess the whole few years I've been into this game makes me old school that to be a scalper you buy the bid, sell the ask, make a market with your capital and collect the difference...

what an original idea that is.

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Guest taskyneem

Price is our most direct link to supply and demand. Supply and demand are fueled by 2 immutable human behaviors: fear and greed. So in essence, by trading PA you are attempting to read and anticipate the natural reoccurring human behaviors that drive the market every day. Please don't make any mistake, I am no expert...Im just a noob, but when you get into PA the market starts to make sense in so many ways, its nothing short of amazing.

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Low line color [defaults to: MediumSeaGreen]. Low line style [defaults to: Solid]. Low lien width [defaults to: 4]. Low minus 25% line color [defaults to: Lime]. Low minus 25% line style [defaults to: Solid]. Low minus 25% line width [defaults to: 4]. Local market open line color [defaults to: DodgerBlue]. Local market open line style [defaults to: Dashed]. Local market open line width [defaults to: 1]. Local market middle lines color [defaults to: DarkOrchid]. Local market middles lines style [defaults to: Dashed]. Local market middles lines width [defaults to: 1]. Local market close line color [default: Red]. Local market close line style [Dashed]. Local market close line width [1]. Local market open price color [White]. Local market open price style [Dot dashed with double dots]. Local market open price width [1].
    • A custom Logarithmic Moving Average indicator for MT5 is now available for MT5 on the Metaquotes website and directly in the MT5 platform. https://www.mql5.com/en/market/product/99439 The Logarithmic Moving Average indicator is a moving average that inverts the formula of an exponential moving average. Many traders are known to use logarithmic charts to analyze the lengths of price swings. The indicator in this post can be used to analyze the logarithmic value of price on a standard time scaled chart. The trader can set the following input parameters: MAPeriod [defaults to: 9] - Set to a higher number for more smoothing of price, or a lower number for faster reversal of the logarithmic moving average line study. MAShift [defaults to: 3] - Set to a higher number to reduce the amount of price crossovers, or a lower for more frequent price crossovers. Indicator line (indicator buffer) can be called with iCustom in Expert Advisors created by Expert Advisor builder software or custom coded Expert Advisors: No empty values; and No repainting.
    • A custom Semi-Log Scale Oscillator indicator is now available for MT5 on Metaquotes website and directly in the MT5 platform. https://www.mql5.com/en/market/product/114705 This indicator is an anchored semi-logarithmic scale oscillator. A logarithmic scale is widely used by professional data scientists to more accurately map information collected throughout a timeframe, in the same way that MT5 maps out price data. In fact, the underlying logic of this indicator was freely obtained from an overseas biotech scientist. A log-log chart displays logarithmic values on both the x (horizontal) and y (vertical) axes, which generally produces a straight line that points up, down, or remains flat. A straight line is not very useful for trading markets because such a straight line is so smoothed that actual price values that appear over time are very far away from the line study. In contrast, a semi-log chart is only logged on one axis--generally, the y axis. Such a semi-log chart is well suited for trading markets because the time (x) axis is preserved in its original form while at the same time, providing a graduated y scale where the distance between price increments progressively increases as price rises higher (and decreases as price falls lower). This allows us to establish a zero level for a low price, clearly view trends on straighter angles, and clearly observe amplified price spikes at high prices. Accordingly, this indicator employs a semi-log scale on the y axis only. This indicator is anchored because it allows you to specify a start time for calculation of price bars. The settings are as follows: Year.Month.Day Hour:Minute - defaults to 1970.01.01 00:01 - if left on default setting, the indicator automatically detects the earliest price bar in chart history--even where the year 1970 is not in history. Notes appear in the indicator settings window. Size of first pip step to log - defaults to 135 - this default is suitable for higher timeframes such a MN1 (monthly), while 5 is suitable for lower timeframes such as M1 (minute). Ultimately, optimal settings will depend on the timeframe that you attach the indicator to, the level of price volatility within that timeframe, and start time that you choose. Remember... The semi-log formula calculates from low to high, so your start time must always be a major swing low. Again, notes appear in the indicator settings window. The standard (built-in) MT5 indicators that can be applied to the "Previous indicator's data" can be applied to this indicator. Indicator lines (indicator buffers) can be called with iCustom in Expert Advisors created by Expert Advisor builder software or custom coded Expert Advisors. The log scale Open, High, Low, and Close prices are buffers: No empty values; and No repainting.
    • A custom Gann Candles indicator is now available for MT5 on the Metaquotes website and directly in the MT5 platform. https://www.mql5.com/en/market/product/126398 This Gann Candles indicator incorporates a series of W.D. Gann's strategies into a single trading indicator. Gann was a legendary trader who lived from 1878 to 1955. He started out as a cotton farmer and started trading at age 24 in 1902. His strategies included geometry, astronomy, astrology, times cycles, and ancient math. Although Gann wrote several books, none of them contain all of his strategies so it takes years of studying to learn them. He was also a devout scholar of the Bible and the ancient Greek and Egyptian cultures, and he was a 33rd degree Freemason of the Scottish Rite. In an effort to simplify what I believe are the best of Gann's strategies, I reduced them into one indicator that simply colors your preexisting price bars when those strategies are in-sync versus out-of-sync. This greatly reduces potential chart clutter. Also, I reduced the number of input settings down to only two: FastFilter, and SlowFilter Both FastFilter and SlowFilter must be set to 5 or more, as noted in the Inputs tab upon attaching the indicator to your chart. Gann Candles works on regular time-based charts (M5, M15, M20, etc.) and custom charts (Renko, range bars, etc.). The indicator does not repaint. When using the default settings, blue candles form bullish price patterns, gray candles form flat (sideways) price patterns, and white candles form bearish price patterns. The simplest way to trade Gann Candles is to buy at the close of a blue candle and exit at the close of a gray candle, and then sell at the close of a white candle and exit at the close of a gray candle.
    • A custom Anchored VWAP with Standard Deviation Bands indicator for MT5 is now available on the Metaquotes website and directly through the MT5 platform. https://www.mql5.com/en/market/product/99389 The volume weighted average price indicator is a line study indicator that shows in the main chart window of MT5. The indicator monitors the typical price and then trading volume used to automatically push the indicator line toward heavily traded prices. These prices are where the most contracts (or lots) have been traded. Then those weighted prices are averaged over a look back period, and the indicator shows the line study at those pushed prices. The indicator in this post allows the trader to set the daily start time of that look back period. This indicator automatically shows 5 daily look back periods: the currently forming period, and the 4 previous days based on that same start time. For this reason, this indicator is intended for intraday trading only. The indicator automatically shows vertical daily start time separator lines for those days as well. Both typical prices and volumes are accumulated throughout the day, and processed throughout the day. Important update: v102 of this indicator allows you to anchor the start of the VWAP and bands to the most recent major high or low, even when that high or low appears in your chart several days ago. This is how institutional traders and liquidity providers often trade markets with the VWAP. This indicator also shows 6 standard deviation bands, similarly to the way that a Bollinger Bands indicator shows such bands. The trader is able to set 3 individual standard deviation multiplier values above the volume weighted average price line study, and 3 individual standard deviation multiplier values below the volume weighted average price line study. Higher multiplier values will generate rapidly expanding standard deviation bands because again, the indicator is cumulative. The following indicator parameters can be changed by the trader in the indicator Inputs tab: Volume Type [defaults to: Real volume] - Set to Tick volume for over-the-counter markets such as most forex markets. Real volume is an additional setting for centralized markets such as the United States Chicago Mercantile Exchange. VWAP Start Hour [defaults to: 07] - Set according to broker's or broker-dealer's MT5 server time in 24 hour format. For example, in the New York, United States time zone, 07 is approximately the London, United Kingdom business open hour. VWAP Start Minute [defaults to: 00] - Set according to broker's or broker-dealer's MT5 server time in 24 hour format. For example, 00 is on the hour with no delay of minutes within that hour. StdDev Multiplier 1 [defaults to: 1.618] - Set desired standard deviation distance between the volume weighted average price line study and its nearest upper and lower bands. For example, 1.618 is a basic Fibonacci ratio. Some traders prefer 1.000 or 1.250 here. StdDev Multiplier 2 [defaults to: 3.236] - Set desired standard deviation distance between the volume weighted average price line study and its middle upper and lower bands. For example, 3.236 is 1.618 (above) + 1.618. Some traders prefer 2.000 or 1.500 here. StdDev Multiplier 3 [defaults to: 4.854] - Set desired standard deviation distance between the volume weighted average price line study and its furthest upper and lower bands. For example, 4.854 is 1.618 (above) + 3.236 (above). Some traders prefer 3.000 or 2.000 here. VWAP Color [defaults to: Aqua] - Set desired VWAP line study color. This color automatically sets the color of the start time separators as well. SD1 Color [defaults to: White] - Set desired color of nearest upper and lower standard deviation lines. SD2 Color [defaults to: White] - Set desired color of middle upper and lower standard deviation lines. SD3 Color [defaults to: White] - Set desired color of furthest upper and lower standard deviation lines. Just to clarify, popular standard deviation bands settings are: 1.618, 3.236, and 4.854; or 1.000, 2.000, and 3.000; or 1.250, 1.500, and 2.000. Examples of usage *: In a ranging (sideways) market, enter a trade at the extremes of the standard deviation bands (SD3) and exit when price returns to the VWAP line study. Trade between SD1Pos and SD1 Neg, alternately buying and selling from one standard deviation line to the other. In a trending (rising or falling) market, enter a buy when a price bar opens above the VWAP line study, and exit at the nearest standard deviation band above (SD1Pos). Optionally, repeat the same trade but substitute SD1Pos for the VWAP, and SD2Pos for SD1. Reverse for sell; or Trade all lines (VWAP, SD1Pos, SD2Pos, and SD3Pos) in the same way. Again, reverse for sell. Indicator lines (indicator buffers) can be called with iCustom in Expert Advisors created by Expert Advisor builder software or custom coded Expert Advisors: No empty values; and No repainting.
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