RWM

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Author: Copyright � 2006 Maloma
RWM

This technical script is designed as a market analysis tool that identifies specific price trends and potential reversal points by calculating a weighted momentum value. It functions by smoothing out market volatility to highlight underlying price movements, providing the user with visual cues (arrows) based on significant shifts in this momentum.

Core Logic Overview

The logic operates through three distinct layers of calculation:

1. The Smoothing Mechanism Instead of reacting instantly to every minor price flicker, the script uses a mathematical smoothing process. It takes the "Weighted Percentage Price" (WPR)—a standard measure of where the current price sits relative to its high and low range over a specific period—and passes it through multiple consecutive filters. This creates a stabilized "momentum curve." By layering these filters, the script ignores "noise" and focuses on more meaningful trend changes.

2. Trend Detection and Identification The script evaluates this smoothed momentum curve against predefined thresholds:

  • Sell Signals: It monitors for instances where the momentum falls below specific negative limits, indicating a bearish sentiment.
  • Buy Signals: It monitors for instances where the momentum rises above specific positive limits, indicating a bullish sentiment.

The system is designed to recognize not just any change, but significant structural shifts in how the price is moving relative to its recent history.

3. Visual Signaling (Arrows) The final output of the script is the placement of visual arrows on the trading chart:

  • Trend Confirmation: The script checks for "breaks" in the momentum curve. If the smoothed value changes direction while remaining above or below certain thresholds, it places an arrow to signal a potential entry or trend continuation.
  • Exhaustion/Reversal Alerts: It also monitors for instances where the momentum crosses a critical boundary (crossing from "overbought" to "oversold" territory or vice versa). When these boundary crossings occur, the script provides additional signals to alert the user of possible price exhaustion or a reversal in the current trend.

Summary for the User

Essentially, this tool acts as a filter that simplifies complex price action into a smoother movement path. It then watches that path for specific "snaps" or "crossings." When the momentum moves sharply enough to suggest a new trend is forming or a current one is failing, it marks those moments on your chart with arrows, allowing you to see potential trading opportunities more clearly.

Indicators Used
Larry William percent range indicator
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RWM 
//+------------------------------------------------------------------+
//|                                                          RWM.MQ4 |
//|   Èäåè âçÿòû ìíîé èç èíäèêàòîðîâ ÒÐÒÀÍà, çà ÷òî ÿ åìó áëàãîäàðåí |
//|                           Copyright © 2006, HomeSoft Tartan Corp |
//|	                                           spiky@transkeino.ru |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2006 Maloma"
#property link      "maloma@datasvit.net"

#property indicator_chart_window
#property indicator_buffers 8
#property indicator_color5 Blue
#property indicator_color6 Red
#property indicator_color7 Blue
#property indicator_color8 Red

double W_Buffer0[];
double W_Buffer1[];
double R_Buffer0[];
double R_Buffer1[];
double S_Buffer0[];
double S_Buffer1[];
double E_Buffer0[];
double E_Buffer1[];
int    R_t3_period=21;
double R_b=0.8;
extern int    R_mBar=0;
double W_e1, W_e2, W_e3, W_e4, W_e5, W_e6, W_c1, W_c2, W_c3, W_c4, W_n, W_w1, W_w2, W_b2, W_b3;
double W_t3, W_shift, W_wpr, W_trig, W_t3_period, W_b, W_per, W_psel, W_pbuy;
bool   R_ft=True;
double R_e1, R_e2, R_e3, R_e4, R_e5, R_e6, R_c1, R_c2, R_c3, R_c4, R_n, R_w1, R_w2, R_b2, R_b3;
double R_t3[];
int    R_LoopBegin, R_shift;

int init()
  {
//---- indicators
  SetIndexStyle     (0,DRAW_NONE);
  SetIndexBuffer    (0,W_Buffer0);
  SetIndexEmptyValue(0,EMPTY_VALUE);
  
  SetIndexStyle     (1,DRAW_NONE);
  SetIndexBuffer    (1,W_Buffer1);
  SetIndexEmptyValue(1,EMPTY_VALUE);
   
  SetIndexStyle     (2,DRAW_NONE);
  SetIndexBuffer    (2,R_Buffer0);
  SetIndexEmptyValue(2,EMPTY_VALUE);
  
  SetIndexStyle     (3,DRAW_NONE);
  SetIndexBuffer    (3,R_Buffer1);
  SetIndexEmptyValue(3,EMPTY_VALUE);
  
  SetIndexStyle     (4,DRAW_ARROW,EMPTY,2);
  SetIndexArrow     (4,241);
  SetIndexBuffer    (4,S_Buffer0);
  SetIndexEmptyValue(4,EMPTY_VALUE);
  
  SetIndexStyle     (5,DRAW_ARROW,EMPTY,2);
  SetIndexArrow     (5,242);
  SetIndexBuffer    (5,S_Buffer1);
  SetIndexEmptyValue(5,EMPTY_VALUE);
  
  SetIndexStyle     (6,DRAW_ARROW,EMPTY,2);
  SetIndexArrow     (6,251);
  SetIndexBuffer    (6,E_Buffer0);
  SetIndexEmptyValue(6,EMPTY_VALUE);
  
  SetIndexStyle     (7,DRAW_ARROW,EMPTY,2);
  SetIndexArrow     (7,251);
  SetIndexBuffer    (7,E_Buffer1);
  SetIndexEmptyValue(7,EMPTY_VALUE);
  
//----
   return(0);
  }
//+------------------------------------------------------------------+
//| Custom indicator iteration function                              |
//+------------------------------------------------------------------+
int start()
  {
   W_t3_period=8;
   W_b=0.8;
   W_per=21;
   W_psel=-30;
   W_pbuy=-70;
   W_b2=W_b*W_b;
   W_b3=W_b2*W_b;
   W_c1=-W_b3;
   W_c2=(3*(W_b2+W_b3));
   W_c3=-3*(2*W_b2+W_b+W_b3);
   W_c4=(1+3*W_b+W_b3+3*W_b2);
   W_n=W_t3_period;

   if (W_n<1) W_n=1;
   W_n = 1 + 0.5*(W_n-1);
   W_w1 = 2 / (W_n + 1);
   W_w2 = 1 - W_w1;
   
   if (R_mBar==0) R_LoopBegin=Bars;
   else R_LoopBegin=R_mBar;
   R_LoopBegin=MathMin(R_LoopBegin, Bars);
   for(int i=0; i<R_LoopBegin; i++)
   {
      W_wpr=iWPR(NULL,0,W_per,i);
 
      W_e1 = W_w1*W_wpr + W_w2*W_e1;
      W_e2 = W_w1*W_e1 + W_w2*W_e2;
      W_e3 = W_w1*W_e2 + W_w2*W_e3;
      W_e4 = W_w1*W_e3 + W_w2*W_e4;
      W_e5 = W_w1*W_e4 + W_w2*W_e5;
      W_e6 = W_w1*W_e5 + W_w2*W_e6;
      W_t3 = W_c1*W_e6 + W_c2*W_e5 + W_c3*W_e4 + W_c4*W_e3;
      
      if (W_t3>=-50) W_trig=W_psel; 
      
      if (W_t3<-50) W_trig=W_pbuy;
      
      W_Buffer0[i]=W_t3;
      
      W_Buffer1[i]=W_trig;
   }
   
  if (R_mBar==0) R_LoopBegin=Bars-R_t3_period-1;
  else R_LoopBegin=R_mBar;
  R_LoopBegin=MathMin(R_LoopBegin, Bars-R_t3_period-1);

  ArrayResize(R_t3, R_LoopBegin);

  if (R_ft) {
    R_b2=R_b*R_b;
    R_b3=R_b2*R_b;
    R_c1=-R_b3;
    R_c2=(3*(R_b2+R_b3));
    R_c3=-3*(2*R_b2+R_b+R_b3);
    R_c4=(1+3*R_b+R_b3+3*R_b2);
    R_n=R_t3_period;

    if (R_n<1) R_n=1;
    R_n=1+0.5*(R_n-1);
    R_w1=2/(R_n+1);
    R_w2=1-R_w1;
    R_ft=False;
  }

  for (R_shift=R_LoopBegin; R_shift>=0; R_shift--) {
    R_e1=R_w1*Close[R_shift]+R_w2*R_e1;
    R_e2=R_w1*R_e1+R_w2*R_e2;
    R_e3=R_w1*R_e2+R_w2*R_e3;
    R_e4=R_w1*R_e3+R_w2*R_e4;
    R_e5=R_w1*R_e4+R_w2*R_e5;
    R_e6=R_w1*R_e5+R_w2*R_e6;

    R_t3[R_shift]=R_c1*R_e6+R_c2*R_e5+R_c3*R_e4+R_c4*R_e3;
    if (R_t3[R_shift+1]<=R_t3[R_shift]) R_Buffer0[R_shift]=R_t3[R_shift]; else R_Buffer0[R_shift]=0;
    if (R_t3[R_shift+1]>R_t3[R_shift]) R_Buffer1[R_shift]=R_t3[R_shift]; else R_Buffer1[R_shift]=0;
  }

  if (R_mBar==0) R_LoopBegin=Bars-R_t3_period-1;
  else R_LoopBegin=R_mBar;
  R_LoopBegin=MathMin(R_LoopBegin, Bars-R_t3_period-1);
  for (int cnt=0;cnt<=R_LoopBegin;cnt++)
   {
    if(R_Buffer0[cnt]>0 && R_Buffer1[cnt+1]>0 && W_Buffer0[cnt]>W_Buffer0[cnt+1] && W_Buffer0[cnt+1]>W_psel) S_Buffer0[cnt]=Low[cnt]-6*Point; else S_Buffer0[cnt]=0;
    if(R_Buffer1[cnt]>0 && R_Buffer0[cnt+1]>0 && W_Buffer0[cnt]<W_Buffer0[cnt+1] && W_Buffer0[cnt+1]<W_pbuy) S_Buffer1[cnt]=High[cnt]+6*Point; else S_Buffer1[cnt]=0;
   }
  
  if (R_mBar==0) R_LoopBegin=Bars-R_t3_period-1;
  else R_LoopBegin=R_mBar;
  R_LoopBegin=MathMin(R_LoopBegin, Bars-R_t3_period-1);
  for (cnt=0;cnt<=R_LoopBegin;cnt++)
   {
    if(W_Buffer0[cnt]<W_psel && W_Buffer0[cnt+1]>W_psel) E_Buffer0[cnt]=High[cnt]+6*Point; else E_Buffer0[cnt]=0;
    if(W_Buffer0[cnt]>W_pbuy && W_Buffer0[cnt+1]<W_pbuy) E_Buffer1[cnt]=Low[cnt]-6*Point; else E_Buffer1[cnt]=0;
   }

   return(0);
  }
//+------------------------------------------------------------------+

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