LSMA_ind_04_v1
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This technical tool is designed to analyze price trends and provide visual cues for potential trading opportunities by calculating a specific type of moving average known as the Linear Weighted Moving Average (LWMA). Below is a breakdown of how the logic functions:
Trend Smoothing and Calculation
The script processes historical price data to calculate a weighted trend line. Unlike standard averages that treat all days equally, this logic applies more weight to recent price actions. This allows the tool to react more quickly to current market shifts while still filtering out minor "noise" or random price fluctuations. The resulting value is plotted on your chart as a primary trend indicator.
Dynamic Trend Detection
The core of the script monitors the direction of this weighted average. It constantly compares the current calculated value against the previous one:
- Downward Movement: When the current value is lower than the previous one, the system identifies a downward trend.
- Upward Movement: When the current value is higher than the previous one, the system identifies an upward trend.
To make this visually clear, the script dynamically changes the color of the trend lines on your chart (switching between green and red) based on which direction the market is currently leaning.
Signal Validation Logic
The script does not simply provide a signal every time the trend flips; it includes a "quality" filter to ensure that signals are more reliable. It tracks how many consecutive bars the price has moved in a single direction:
- Consecutive Tracking: It counts how many times the trend has stayed consistent without reversing.
- Threshold Requirements: The script requires a specific number of consistent movements before it considers a trend "high quality." This means it waits for a sustained momentum to build up before confirming a signal.
Visual Notifications
Once the momentum meets the required threshold, the script places visual markers on the chart:
- Buy Signals: When the upward momentum reaches the required count, it places a specific symbol (a box with an X) at the high price point.
- Sell Signals: When the downward momentum reaches the required count, it places the same symbol at the low price point.
In summary, this tool acts as a momentum-based filter. It smooths out price action to see the "big picture" trend, tracks the strength of that trend over time, and only alerts you when the market shows significant, sustained movement in one direction.
//+------------------------------------------------------------------+
//| LSMA |
//+------------------------------------------------------------------+
#property copyright "Copywrong 2005 RonT"
#property link "http://www.lightpatch.com/forex/"
//---- indicator settings
#property indicator_chart_window
#property indicator_buffers 7
#property indicator_color1 Yellow
#property indicator_color2 Green
#property indicator_color3 Red
#property indicator_color4 White
#property indicator_color5 White
#property indicator_color6 Green
#property indicator_color7 Red
//---- buffers
double ExtMapBuffer1[]; //Yellow
double ExtMapBuffer2[]; //Green
double ExtMapBuffer3[]; //Red
double XBuffer[]; //White
double ZBuffer[]; //White
double ExtMapBuffer6[]; //Green
double ExtMapBuffer7[]; //Red
extern int extRperiod = 32;
extern int extDraw4HowLong = 500;
int flip=0;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
SetIndexBuffer(0,ExtMapBuffer1); //Yellow
SetIndexStyle(0, DRAW_LINE, STYLE_SOLID, 2);
SetIndexBuffer(1,ExtMapBuffer2); //Green
SetIndexStyle(1, DRAW_LINE, STYLE_SOLID, 2);
SetIndexBuffer(2,ExtMapBuffer3); //Red
SetIndexStyle(2, DRAW_LINE, STYLE_SOLID, 2);
// 233 up arrow
// 234 down arrow
// 158 little dot
// 159 big dot
// 168 open square
// 120 box with X
SetIndexStyle(3,DRAW_ARROW);
SetIndexBuffer(3, XBuffer); //White
SetIndexArrow(3,120);
SetIndexStyle(4,DRAW_ARROW);
SetIndexBuffer(4, ZBuffer); //White
SetIndexArrow(4,158);
SetIndexBuffer(5,ExtMapBuffer6); //Green
SetIndexStyle(5, DRAW_LINE, STYLE_SOLID, 2);
SetIndexBuffer(6,ExtMapBuffer7); //Red
SetIndexStyle(6, DRAW_LINE, STYLE_SOLID, 2);
return(0);
}
//+------------------------------------------------------------------+
//| Custor indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
int i;
for( i=0; i<Bars; i++ ) ExtMapBuffer1[i]=0;
for( i=0; i<Bars; i++ ) ExtMapBuffer2[i]=0;
for( i=0; i<Bars; i++ ) ExtMapBuffer3[i]=0;
for( i=0; i<Bars; i++ ) XBuffer[i]=0;
for( i=0; i<Bars; i++ ) ZBuffer[i]=0;
for( i=0; i<Bars; i++ ) ExtMapBuffer6[i]=0;
for( i=0; i<Bars; i++ ) ExtMapBuffer7[i]=0;
return(0);
}
int start()
{
//----- variables
int c;
int i;
int length;
double lengthvar;
int loopbegin;
int pos;
double sum;
double tmp;
int width;
double wtp; //previous value
double wt; //current value
int rc=0;
int gc=0;
int qualcount;
double p=Point;
length = extRperiod;
loopbegin = extDraw4HowLong - length - 1;
for(pos = loopbegin; pos >= 0; pos--)
{
sum = 0;
for(i = length; i >= 1 ; i--)
{
lengthvar = length + 1;
lengthvar /= 3;
tmp = 0;
tmp = ( i - lengthvar)*Close[length-i+pos];
sum+=tmp;
}
wtp=wt;
wt = sum*6/(length*(length+1));
ExtMapBuffer1[pos] = wt; //yellow
ExtMapBuffer2[pos] = wt; //green
ExtMapBuffer3[pos] = wt; //red
//ExtMapBuffer6[pos] = wt-(p*3); //green
//ExtMapBuffer7[pos] = wt+(p*3); //red
if (wtp > wt)
{
ExtMapBuffer2[pos] = EMPTY_VALUE; //remove GREEN
//ExtMapBuffer6[pos] = wt-(p*10); //remove GREEN
rc++;
// Close any orders
if (gc>0) {gc=0; flip++;}
ZBuffer[pos]=Low[pos];
}
else
{
ExtMapBuffer3[pos] = EMPTY_VALUE; //remove RED
//ExtMapBuffer7[pos] = wt+(p*10); //remove RED
gc++;
if (rc>0) {rc=0; flip++;}
ZBuffer[pos]=High[pos];
}
//Comment("wtp=",wtp,"\nwt=",wt,"\nRed=",rc,"\nGreen=",gc);
if (flip==1) {qualcount=6;}
if (flip>1) {qualcount=9;}
if (gc==qualcount)
{
// indicate buy order
XBuffer[pos]=High[pos];
flip=0;
}
if (rc==qualcount)
{
// indicate sell order
XBuffer[pos]=Low[pos];
flip=0;
}
}
return(0);
}
//+------------------------------------------------------------------+
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