Skip to main content

MACD OSMAX VertexFX Indicator

is a powerful VertexFX client-side indicator based on the Moving Average Convergence Divergence (MACD) indicator.

The Moving Average Convergence Divergence (MACD) indicator is provides information about the current trend and its strength. When the MACD bottoms out and starts rising it implies the market is in bullish mode, whereas when it tops out and starts falling it implies that the market is in bearish mode. However, one of the drawbacks of the MACD indicator is that it introduces lag and introduces whipsaws when the market turns sideways. The primary reason for the lag is the use of Simple Moving Average (SMA) in the calculation of the MACD.
The MACD OSMAX indicator overcomes the drawbacks of the MACD indicator by using Exponential Moving Average (EMA) instead of SMA. In addition to using the EMA, it also uses a weightage co-efficient OSMAX to give more weightage to the recent signal.
In the first step we calculate the EMA of the PERIOD_FAST and the PERIOD_SLOW. The MACD is calculated by subtracting the slower EMA from the faster EMA. The MACD signal is derived by computing the EMA of the MACD using the PERIOD_SIGNAL. Finally the OSMAX is calculated by subtracting the Signal from the MACD and multiplying it by the OSMAX co-efficient. The OSMAX is plotted as an histogram.
When both the OSMAX and MACD are rising the histogram is plotted BLUE. When both OSMAX and MACD are falling the histogram is plotted RED. The histogram is plotted GRAY when OSMAX and MACD are diverging. When the OSMAX turns BLUE from RED or GRAY it implies that the trend has turned bullish. Likewise, when the OSMAX turns RED from BLUE or GRAY it implies the trend is bearish. It has been studied that OSMAX generates better results when traders enter LONG when OSMAX turns BLUE below the zero level, and enter SHORT when OSMAX turns RED above the zero level.
As compared to the standard MACD, the MACD OSMAX indicator reduces the lag and responds to price movements quickly, thus enabling the trader to enter trades earlier and exit trades before it is too late.

BUY / EXIT SHORT - Enter LONG (or exit SHORT) at the close of the candle when the indicator histogram turns BLUE below the zero level either from RED or GRAY. The stop-loss can be placed below the nearest Swing Low.
SHORT / EXIT LONG - Enter SHORT (or exit LONG) at the close of the candle when the indicator histogram turns RED above the zero level either from BLUE or GRAY. The stop-loss can be placed above the nearest Swing High.

Comments

Popular posts from this blog

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...

SVEStochastic RSI VertexFX Indicator

The SVEStochasticRSI is a powerful VertexFX client-side indicator that identifies market cycles and the strength of a trend. As the name implies, it is an enhancement of the Stochastic RSI and was originally created by Sylvain Vervoort. The main advantage over the traditional StochasticRSI is that the method of calculating the RSI in this indicator is more responsive to price changes. As a result the lag is minimal. In the first step we calculate the RSI using the enhanced SVE method. We use a smoothing co-efficient ALPHA, which is the square-root of the reciprocal period for calculating the RSI. The price changes used to calculate the normal RSI are multiplied by the smoothing co-efficient to derive the SVE RSI. In the next step we calculate the Stochastic value of this RSI which is called the SVEStochasticRSI. The advantage of applying the Stochastic indicator to the RSI is that is when the price starts trending the indicator starts moving upwards or downwards very quickly thereby h...

VolatilityRatio VertexFX Indicator

The VolatilityRatio is a powerful VertexFX client-side indicator based Volatility and trend reversal. Volatility is a measure of fast market movements. When volatility increases the markets are moving fast and making big ranges. However, we cannot predict the direction of the market based on the volatility. The VolatilityRatio (VR) determines the direction and the end of the trend thus providing a valuable tool to traders. When VR is above 1 it indicates a bullish trend, and similarly when VR is below 1 it indicates bearish trend. By waiting for the bullish and bearish trends to top out and bottom out respectively traders can exit at the earliest their LONG and SHORT positions respectively. BUY / EXIT SHORT - Enter LONG (or exit SHORT) when the Volatility Ratio is RED and bottoms out. The stop-loss can be placed below the nearest Swing Low. Use short term EMA to ensure that current price is above the EMA. SHORT / EXIT LONG - Enter SHORT (or exit LONG) when the Volatility Ratio is BLUE...