1. Fast MA Length
2. Slow MA Length
3. Signal Length
Trading with MTT
1. MTT > 0 and increasing (Lime) : Long position
2. MTT > 0 and decreasing (Green) : entry/exit long position, take profits or plan an entry
3. MTT < 0 and decreasing (Red) : Short position
4. MTT <0 and increasing (Maroon) : entry/exit short position, take profits or plan entry
This shows the market waves, it's a good indicator for swing trading since it shows the change of direction of the trend, signals profit areas and entry/exit regions. Change in the direction of the trend can be spotted by the cross over the zero line or by trend divergences, H-H in the trend and L-H in the MTT indicator means a downtrend is close. L-L in the trend and H-L in the indicator means an uptrend is forming.
There is a bar in the zero line that shows the momentum direction, simple, green it's increasing, red, it's decreasing.
This indicator is meant to be a companion of the MTS indicator. When combined MTS shows the direction and strength of the trend, meanwhile MTT shows if the trend is weakening, gaining strength, confirms continuation or warns a reversal.
What I look from my indicators is to create a tool that filters out as much noise as possible without losing much sensitivity, they have to be easy to tune and simple to analyze, so I normally use contrasting colors, using cold colors for long positions and warm colors for short positions. I try to use the least possible number of parameters and the defaults have been set after several months of testing in Beta mode against hundreds of charts before publishing them.
I hope this effort can help you to have a simpler point of view of the market.
// Madrid : 6/SEP/2014 10:57 : TrendStrengthBuySell : 2.0 // Buy Sell based on the trend Strength // http://madridjourneyonws.blogspot.com/ study(title="Madrid Trend Trading", shorttitle="MTT", precision=2) src = hl2 // Input parameters fastMALength = input(34, minval=1, title="Fast Length") slowMALength = input(89, minval=1, title="Slow Length") signalMALen = input(13, title="Signal MA") fastMA = ema(src, fastMALength ) slowMA = ema(src, slowMALength ) trendStrength = (fastMA - slowMA)*100/slowMA signalMA = sma(trendStrength, signalMALen) momentum = trendStrength-signalMA momColor = momentum>0 and change(momentum)>0 ? lime : momentum>0 and change(momentum)<0 ? green : momentum<0 and change(momentum)>0 ? maroon : momentum<0 and change(momentum)<0 ? red : gray plot(momentum, style=histogram, linewidth=2, color=momColor) plot(0, color=change(momentum)>=0?green:red, linewidth=3)