Skip to main content

KalmanFilterVelocity VertexFX indicator

The KalmanFilterVelocity (KFV) is a powerful VertexFX client-side indicator based on the Kalman Filter (KF) algorithm.
The KalmanFilterVelocity indicator employs the Kalman Filter to estimate the direction and strength of the trend. It is particularly useful in identifying reversal or trends. It enhances the standard Kalman Filter but detecting the velocity (the rate of change) of the base Kalman Filter. A change in the direction of the velocity implies a change a trend.
In the first step we calculate the Kalman Filter also known as Linear Quadratic Estimation for all the prices. We use the change in the closing price of each candle and its predecessor to estimate whether this change is sustainable. Hence, if prices are rising, but at a slower rate it implies that the trend is ending. Likewise, if the price is falling, but at a slower rate it implies that the bearish trend is ending.
When the KFV changes from RED to BLUE below the zero level it implies that a strong bullish trend has started and the trader can enter LONG positions. On the contrary, when the KFV changes from BLUE to RED above the zero level it implies that a strong bearish trend has started and the trader can enter SHORT positions. A change from RED to BLUE above the zero level, or from BLUE to RED below the zero level is ignored because it is identified as weakness or whipsaws. 
BUY / EXIT SHORT - In TREND mode, enter LONG (or exit SHORT) at the close of the candle when the KFV indicator turns BLUE below the zero level. In KALMAN mode, enter LONG (or exit SHORT) when the KFV indicator turns BLUE. The stop-loss should be placed at the nearest Swing Low.
SHORT / EXIT LONG - In KALMAN mode, enter SHORT (or exit LONG) at the close of the candle when the KFV indicator turns RED above the zero level. In KALMAN mode, enter SHORT (or exit LONG) when the KFV indicator turns RED. The stop-loss should be placed at the nearest Swing High.

Comments

Post a Comment

Popular posts from this blog

Double Smoothed AMA VertexFX Indicator

Double Smoothed Adaptive Moving Average (DSAMA) is a VertexFX indicator based on the Simple Moving Average (SMA) indicator. One of the biggest drawbacks of the SMA is the presence of lag which delays trade entries and exits. The DSAMA indicator offers three advantages of the SMA indicator. First and foremost, unlike the fixed period of the SMA, the period of the DSAMA is adaptive and is calculated based on a fast and slow period range. As a result, it shows a better response than normal SMA. Secondly, by using a smoothing algorithm, the lag is reduced thereby allowing traders to enter and exit trades faster before the price has moved too far away. Building the Indicator: In the first step, we calculate the greatest and smallest value of the price over the recent PERIOD candles. Based on the greatest, smallest, and the current value, the smoothing coefficient is calculated. Finally, the two levels of smoothing are applied, one using the FAST_PERIOD and then using the SLOW_PERIOD to red...
Post a Comment
Read more

RSIofPSAR VertexFX Indicator

RSIofPSAR is a VertexFX indicator that identifies trend reversals, it is based on two underlying indicators namely the Parabolic Stop-And-Reverse (PSAR) and the Relative Strength Index (RSI). The PSAR indicator is very useful in trend-following techniques when the trend is clear. However, it leads to whipsaws in sideways markets leading to losses. The RSI indicator is useful in identifying trend reversals and sideways markets. RSIofPSAR is created by combining these characteristics from the two indicators providing use with a composite indicator the identifies trend reversals. In the first step, we calculate the Parabolic Stop-And-Reverse (PSAR) of the price series. In the next step, we calculate the Relative Strength Index (RSI) of the PSAR calculated in the previous step. Instead of calculating the RSI using the standard technique, we use a smoothing co-efficient to eliminate the lag. The RSIofPSAR is a bounded oscillator ranging between 0 and 100. It turns BLUE when it is rising an...
Post a Comment
Read more

Pattern VertexFX Indicator

Pattern indicator is a powerful multipurpose VertexFX client-side script indicator that identifies and displays various candlestick patterns. Candlestick patterns are a powerful ancient Japanese method of identifying interesting occurrences in the price behavior. When the price exhibits certain characteristics, there is a high probability that the market will exhibit certain predictable behavior. For example, a Doji pattern occurs when the opening and the closing prices are very close, and the candle is short in height. It implies that the market is trading in a close range and is undecided about the future course, or has exhausted the current course. For example, a Doji pattern after a long bear market can imply change in direction and a bullish trade can be initiated. This indicator identifies 13 patterns. It is recommended to refer to the candlestick patterns for more details on trading opportunities. The candlestick patterns detected by this indicator are : 1) Hanging Man. ...
Post a Comment
Read more