This tool is designed to simplify market analysis by identifying the underlying trend of a price movement through smooth visual signals. Rather than focusing on the erratic "noise" of minute-by-minute price fluctuations, the script calculates the curvature and angle of price action to determine which direction the momentum is heading.
Core Logic and Methodology
The script operates by analyzing historical price data over a specific period to create a smoothed representation of market movement. It achieves this through several key logical steps:
- Weighting and Smoothing: The system applies a mathematical weighting formula to recent prices. By giving different "importance" to certain points in time, it creates a curved trajectory that reflects the organic flow of the market rather than just a straight average.
- Trend Detection: The script constantly compares its current calculated value against its previous value. It looks for a significant enough change to confirm a move. If the value increases beyond a specific threshold, it identifies an upward trend; if it decreases significantly, it identifies a downward trend.
- Noise Filtering: To prevent the signals from becoming erratic or "jittery," the logic includes a filtering mechanism. This ensures that minor, insignificant price wobbles do not trigger a change in the signal, keeping the indicator steady until a clear move is established.
Visual Representation
The result of these calculations is displayed on your chart as two distinct types of dots:
- Upward Trend: Represented by Blue dots, indicating that the calculated momentum is moving higher.
- Downward Trend: Represented by Red dots, indicating that the calculated momentum is moving lower.
How to Interpret the Signals
The logic is designed for a straightforward trading approach based on color confirmation:
- Entry: A trade is considered when you see two consecutive dots of the same color (e.g., two Blue dots in a row).
- Exit: A position is closed when the dots change color (e.g., the sequence switches from Blue to Red).
Essentially, this script acts as a visual "trend compass," stripping away the complexity of raw price data to show you clearly whether the market's current path is leaning upward or downward.
Indicators Used
Miscellaneous
12
Views
0
Downloads
0
Favorites
dots
//+------------------------------------------------------------------+
//|Based on NonLagDOT.mq4 by TrendLaboratory |
//|http://finance.groups.yahoo.com/group/TrendLaboratory |
//|igorad2003@yahoo.co.uk |
//| Dots.mq4 |
//| Copyright © 2011, EarnForex.com |
//| http://www.earnforex.com |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2011, EarnForex"
#property link ""
/*
Uses price curve angle calculations to come up with simple price indication.
Simple strategy: enter when 2 dots of same color appear; exit, when different color dot appears.
*/
#property indicator_chart_window
#property indicator_buffers 2
#property indicator_color1 RoyalBlue
#property indicator_width1 2
#property indicator_color2 Red
#property indicator_width2 2
//---- input parameters
extern int Length = 10;
extern int AppliedPrice = 0;
extern int Filter = 0;
extern double Deviation = 0;
extern int Shift = 0;
//---- indicator buffers
double UpBuffer[];
double DnBuffer[];
//---- global variables
double Cycle=4;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
IndicatorBuffers(2);
//---
SetIndexStyle(0,DRAW_ARROW);
SetIndexBuffer(0,UpBuffer);
SetIndexStyle(1,DRAW_ARROW);
SetIndexBuffer(1,DnBuffer);
//---
SetIndexEmptyValue(0,EMPTY_VALUE);
SetIndexEmptyValue(1,EMPTY_VALUE);
//---
SetIndexArrow(0,159);
SetIndexArrow(1,159);
//---
SetIndexLabel(0,"Up");
SetIndexLabel(1,"Dn");
//---
SetIndexShift(0,Shift);
SetIndexShift(1,Shift);
//---
SetIndexDrawBegin(0,Length*Cycle+Length);
SetIndexDrawBegin(1,Length*Cycle+Length);
//---
IndicatorShortName("Dots("+Length+")");
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS));
//---
return(0);
}
//+------------------------------------------------------------------+
//| Dots |
//+------------------------------------------------------------------+
int start()
{
int i,shift,counted_bars=IndicatorCounted(),limit,trend=0;
double alfa,beta,t,Sum,Weight,g,price,MABuffer_prev=0,MABuffer=0;
double pi=3.1415926535;
//---
double Coeff = 3 * pi;
double Phase = Length - 1;
int Len=Length*Cycle+Phase;
//---
if(counted_bars < 0) return(0);
if(counted_bars>0) limit=Bars-counted_bars;
else limit=Bars-Len-1;
//---
for(shift=limit; shift>=0; shift--)
{
Weight=0; Sum=0; t=0;
//---
for(i=0; i<=Len-1; i++)
{
g=1.0/(Coeff*t+1);
if(t<= 0.5) g = 1;
beta = MathCos(pi * t);
alfa = g * beta;
price= iMA(NULL,0,1,0,MODE_SMA,AppliedPrice,shift+i);
Sum+=alfa*price;
Weight+=alfa;
if(t<1) t+=1.0/(Phase-1);
else if(t<Len-1) t+=(2*Cycle-1)/(Cycle*Length-1);
}
//---
MABuffer_prev=MABuffer;
if(Weight>0) MABuffer=(1.0+Deviation/100)*Sum/Weight;
//---
if(Filter>0)
if(MathAbs(MABuffer-MABuffer_prev)<Filter*Point) MABuffer=MABuffer_prev;
//---
if(MABuffer-MABuffer_prev>Filter*Point) trend=1;
else if(MABuffer_prev-MABuffer>Filter*Point) trend=-1;
//---
if(trend>0) UpBuffer[shift]=MABuffer;
else if(trend<0) DnBuffer[shift]=MABuffer;
}
//---
return(0);
}
//+------------------------------------------------------------------+
Comments