3colorMACD_001
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This custom trading indicator for MetaTrader 4 is designed to provide a more visual and intuitive way to analyze market momentum by expanding upon the traditional Moving Average Convergence Divergence (MACD) tool. While a standard MACD often uses a single histogram, this version utilizes a "Three Colour" logic to make changes in price direction and velocity much easier for a trader to identify at a glance.
Core Methodology
The script begins by calculating the relationship between two different types of moving averages: a "Fast" average (which reacts quickly to price changes) and a "Slow" average (which tracks the broader trend). By subtracting the slow value from the fast value, the indicator determines the momentum of the market.
Visual Differentiation Logic
The primary innovation of this script is how it renders that momentum. Instead of showing one uniform bar, it categorizes the movement into three distinct visual categories based on the relationship between the current bar and the previous one:
- Positive Momentum: When the momentum is increasing (moving upwards), the indicator highlights this specific movement in one color.
- Negative Momentum: When the momentum is decreasing (moving downwards), it highlights the shift in a different color.
- Neutral/Stable Momentum: If there is no change in the momentum between bars, it applies a third distinct color.
By separating these movements into different colors, the tool helps traders distinguish between accelerating trends and slowing ones, which can be difficult to see on a standard single-color histogram.
Signal and Baseline Components
In addition to the multi-colored histogram, the script calculates two essential reference lines:
- The Signal Line: This is a smoothed average of the entire momentum data. It helps traders identify "crosses"—points where the rapid momentum shifts enough to potentially signal a trend reversal.
- The Zero Level: A steady baseline that acts as the anchor for the indicator. It allows the trader to see whether the overall market sentiment is currently leaning toward the positive or negative side.
Summary of Use
For a user viewing this on a chart, the logic serves to simplify trend analysis. Rather than just seeing "up" or "down," the three-color system allows you to see the strength and consistency of those movements. It effectively filters out market noise by visually categorizing whether the current price action is gaining speed, losing speed, or remaining steady.
//+------------------------------------------------------------------+
//| Three Colour MACD.mq4 |
//| Copyright © 2004, MetaQuotes Software Corp. |
//| http://www.metaquotes.net/ |
//| Nikolay Kositsin |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2004, MetaQuotes Software Corp."
#property link "http://www.metaquotes.net/"
//---- indicator settings
#property indicator_separate_window
#property indicator_buffers 5
#property indicator_color1 Blue
#property indicator_color2 Red
#property indicator_color3 Gray
#property indicator_color4 Red
#property indicator_color5 Silver
//---- indicator parameters
extern int FastEMA=12;
extern int SlowEMA=26;
extern int SignalSMA=4; //9;
extern int CountBars=300;
extern int Line=2;
extern double Zero_level=0.0;
//---- indicator buffers
double ind_buffer1[];
double ind_buffer2[];
double ind_buffer3[];
double ind_buffer4[];
double ind_buffer5[];
double ind_buffer6[];
double minuse;
double Vol;
double Zml;
double Color1;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicator buffers mapping
IndicatorBuffers(6);
if(!SetIndexBuffer(0,ind_buffer1) &&
!SetIndexBuffer(1,ind_buffer2) &&
!SetIndexBuffer(2,ind_buffer3) &&
!SetIndexBuffer(3,ind_buffer4) &&
!SetIndexBuffer(4,ind_buffer5) &&
!SetIndexBuffer(5,ind_buffer6))
Print("cannot set indicator buffers!");
//---- drawing settings
Color1= C'128,0,255';
SetIndexStyle(0,DRAW_HISTOGRAM,STYLE_SOLID, Line, Color1);
SetIndexStyle(1,DRAW_HISTOGRAM,STYLE_SOLID, Line);
SetIndexStyle(2,DRAW_HISTOGRAM,STYLE_SOLID, Line);
SetIndexStyle(3,DRAW_LINE,0,2);
SetIndexStyle(4,DRAW_LINE,2,1);
SetIndexDrawBegin(0,Bars-CountBars);
SetIndexDrawBegin(1,Bars-CountBars);
SetIndexDrawBegin(2,Bars-CountBars);
SetIndexDrawBegin(3,Bars-CountBars+SignalSMA);
SetIndexDrawBegin(4,Bars-CountBars-100);
SetIndexShift(4,100);
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS)+1);
//---- name for DataWindow and indicator subwindow label
IndicatorShortName("MACD("+FastEMA+","+SlowEMA+","+SignalSMA+")");
SetIndexLabel(0,"MACD+");
SetIndexLabel(1,"MACD-");
SetIndexLabel(2,"MACD0");
SetIndexLabel(3,"Signal");
SetIndexLabel(4,"Zero");
//---- initialization done
return(0);
}
//+------------------------------------------------------------------+
//| Moving Averages Convergence/Divergence |
//+------------------------------------------------------------------+
int start()
{
//---- drawing settings
SetIndexStyle(0,DRAW_HISTOGRAM, STYLE_SOLID,Line);
SetIndexStyle(1,DRAW_HISTOGRAM, STYLE_SOLID,Line);
SetIndexStyle(2,DRAW_HISTOGRAM, STYLE_SOLID,Line);
SetIndexStyle(3,DRAW_LINE, 0,2);
SetIndexStyle(4,DRAW_LINE, 2,1);
int limit;
int counted_bars=IndicatorCounted();
//---- check for possible errors
if(counted_bars<0) return(-1);
//---- last counted bar will be recounted
if(counted_bars>0) counted_bars--;
limit=Bars-counted_bars;
//---- macd counted in the 1-st buffer
for(int i=0; i<limit; i++)
ind_buffer6[i]=iMA(NULL,0,FastEMA,0,MODE_EMA,PRICE_CLOSE,i)-iMA(NULL,0,SlowEMA,0,MODE_EMA,PRICE_CLOSE,i);
//---- Three Colour MACD mapping
for(i=0; i<limit; i++)
{
ind_buffer5[i]=Zero_level;
Vol = ind_buffer6[i]; minuse = Vol - ind_buffer6[i+1];
if(minuse>0.0){ind_buffer1[i]=Vol; ind_buffer2[i]=0.0; ind_buffer3[i]=0.0;}
else {if(minuse<0.0){ind_buffer1[i]=0.0; ind_buffer2[i]=Vol; ind_buffer3[i]=0.0;}
else {ind_buffer1[i]=0.0; ind_buffer2[i]=0.0; ind_buffer3[i]=Vol;}}
//----
}
//---- signal line counted in the 2-nd buffer
for(i=0; i<limit; i++)
ind_buffer4[i]=iMAOnArray(ind_buffer6,Bars,SignalSMA,0,MODE_SMA,i);
//---- done
return(0);
}
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