Modified Moving Average (for Scalping purposes)

Dear traders,
Hi.

I have an idea about a modification of moving average indicator and want to share it here. I hope it will be helpful and by your help we improve its performance. The simple idea is described as follows.

Modified MA:

In MA we sum up last p price and divide the summation to the p (number of samples). Instead, if we divide the summation to the value of last price (e.g. close price of the last candle), then we have an oscillating MA:

OSC_MA(i) = c0 - [x(i+p) + x(i+p-1) + ... + x(i+1) + x(i)] / x(i) , i = 0 : Bars;

where c0 is a constant to shift the result toward zero (c0 is set to p).

I have written the MQL4 script for this indicator and attached it.

Notes:
1) For the best accuracy and utilization, it is suggested to use this indicator in 1-Minute time frame and for the purpose of scalping or day trading.

2) The indicator is best to use in divergence condition. When indicator shows divergence, then I find that 1-Minute trend (and sometimes hourly trend) reverse soon or price holds at that level (i.e. waiting for divergence and trading in the direction of hourly trend are vital).

3) Regions between 0.1 ~ 0.15 (selling region) & -0.1 ~ -0.15 (buying region) are of concern when default options are set (period = 90 in 1-Minute time frame). Rarely the indicator approaches 0.2 and -0.2 and beyond.

4) Attention to the support and resistance zones and trend lines would help the trader for better entry and exit points.

5) In a short trend, pullbacks from level "0" may be the initial of consequent waves to reach higher highs or lower lows and trade the pullback (from 0) in a trend seems a safer trade.

6) Suggested currency pair: EUR/USD.


I have attached an image which shows the action of the indicator in 1-Minute time frame.

Please note that the indicator alone is not enough to trade, one should use his/her knowledge of trading. Please check the indicator on a demo account!

Your opinions and ideas would improve the indicator and are appreciated.

Testing, thank you for sharing.....

Rafei

Thnx a lot for sharing. It seems very helpfull.

Regards

Have you checked this man's work?

Ha has every MA invented

https://www.mql5.com/en/users/mladen

Wow, he has created a bank of indicators. I looked for MAs & oscillators and found some other versions of MA. Please if you find same version of MA, then let me know and I refer the readers to that post.
Thanks.

Rafei,

Your thinking is outside the box and I personally appreciate that. Other MA's are just moving averages with a lot of fancy looks and most of them does not serve any purpose other than the looks.

Thank you for sharing your idea...

Thanks for your replies, I am waiting for your new ideas and challenging them.

Here is an example of some situations based on pullbacks from "0" when a 1-minute time frame trend is initialized. I invite you to suggest other and better trade setups.

Sometimes indicator hit level "-0.1" (or "+0.1") and then pulls back (with little divergence)! Here is an example.

I am wonder if we can find that times!

I see that in an up-trend, indicator hit level "+0.1" several times or exceeds that level toward "+0.15" and rarely "+0.2" (until divergence), and vice versa in down-trend ("-0.1" and sometimes toward "-0.15" or "-0.2").

But:

* When does indicator hit level "-0.1" or "+0.1" just once ?!

A quick answer is: when trend is up, then if indicator hit level "-0.1", it immediately pullbacks from that level toward "0" and then "+0.1" .

Any idea?

Another example which shows reaction of -0.1 and +0.1 levels. But, there is a percentage of uncertainty about these cases!

We are looking for another filter or definition to eliminate such uncertainties!

Any idea?

He's like the Genesis of indicators... Most of my coding framework/structures are patterned from his ─ not limited to formula/algorithms... and in combination with known coders like mrtools and lukeb. I truly learned a lot from them.

Thanks a lot for sharing! We really need MTF version with alerts!