LSMA_Dots
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This tool is designed to provide traders with a clear visual representation of price momentum and trend direction on a trading chart. By analyzing historical price data, the script identifies shifts in market sentiment to help users distinguish between upward, downward, and neutral movements.
Core Logic Overview
The primary function of the script is to calculate a specialized moving average based on the closing prices of assets over a specific timeframe (defined by the "Rperiod" setting). Unlike standard averages that might smooth out data too much, this logic applies a weighted calculation to emphasize the significance of price changes over time.
How It Works
The script processes market history through the following steps:
- Weighted Data Analysis: Instead of looking at prices in isolation, the script performs a loop that calculates a cumulative sum of historical closing prices. It assigns specific weights to these prices, ensuring that the resulting value reflects a structured trend rather than just a simple average.
- Momentum Detection: Once the weighted values are calculated, the tool compares the current value against the preceding one. This comparison is what determines the visual output on your chart.
- Trend Identification:
- Downward Movement: If the current weighted value is lower than the previous one, it indicates a downward trend.
- Upward Movement: If the current weighted value is higher than the previous one, it signifies an upward trend.
- Neutral/Flat Movement: If there is no change between the current and previous values, it indicates a neutral or sideways market state.
Visual Representation
The script translates these mathematical findings into three distinct visual signals on the chart, represented by dots:
- Red Signals: Highlight instances where the trend is moving downward.
- Green Signals: Highlight instances where the trend is moving upward.
- Yellow Signals: Highlight moments of price stability or lack of directional momentum.
By providing these immediate visual cues, the tool helps traders quickly identify whether the market is gaining strength in a specific direction or if it is currently consolidating without a clear bias.
/*-----------------------------+
| |
| Shared by www.Aptrafx.com |
| |
+------------------------------*/
//+------------------------------------------------------------------+
//| Copyright © 2004, MetaQuotes Software Corp. |
//| http://www.metaquotes.net/ |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2004, MetaQuotes Software Corp."
#property link "http://www.metaquotes.net"
#property indicator_chart_window
#property indicator_buffers 3
#property indicator_color1 Yellow
#property indicator_color2 Green
#property indicator_color3 Red
#property indicator_width1 2
#property indicator_width2 2
#property indicator_width3 2
double ExtMapBuffer1[];
double ExtMapBuffer2[];
double ExtMapBuffer3[];
extern int Rperiod = 34;
int width;
int Draw4HowLong;
int shift;
int i;
int loopbegin;
int length;
double lengthvar;
double tmp;
double sum;
double wt[];
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
IndicatorBuffers(4);
SetIndexBuffer(2,ExtMapBuffer1);
SetIndexBuffer(1,ExtMapBuffer2);
SetIndexBuffer(0,ExtMapBuffer3);
SetIndexBuffer(3,wt);
// Start line => dot changes
SetIndexStyle(0,DRAW_ARROW);
SetIndexStyle(1,DRAW_ARROW);
SetIndexStyle(2,DRAW_ARROW);
SetIndexArrow(0,159);
SetIndexArrow(1,159);
SetIndexArrow(2,159);
SetIndexLabel(0,"MAnone");
SetIndexLabel(1,"MAup");
SetIndexLabel(2,"MAdown");
// End line => dot changes, Start old code:
/*
SetIndexStyle(2,DRAW_LINE,STYLE_SOLID);
SetIndexStyle(1,DRAW_LINE,STYLE_SOLID);
SetIndexStyle(0,DRAW_LINE,STYLE_SOLID);
*/
// End old code
return(0);
}
int start()
{
Draw4HowLong = Bars - Rperiod - 5;
length = Rperiod;
loopbegin = Draw4HowLong - length - 1;
for(shift = loopbegin; shift >= 1; shift--)
{
sum = 0;
for(i = length; i >= 1 ; i--)
{
lengthvar = length + 1;
lengthvar /= 3;
tmp = 0;
tmp = ( i - lengthvar)*Close[length-i+shift];
sum+=tmp;
}
wt[shift] = MathFloor(sum*6/(length*(length+1))/Point)*Point;
if (wt[shift+1] > wt[shift])
{
ExtMapBuffer1[shift] = wt[shift]; //red
}
else if (wt[shift+1] < wt[shift])
{
ExtMapBuffer2[shift] = wt[shift]; //green
}
else
{
ExtMapBuffer3[shift] = wt[shift]; //yellow
}
}
return(0);
}
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