There are various variations of the moving average line, and the LSMA (Least Squares Moving Average) is a particularly interesting moving average line.
Also called the minimum square moving average line, this "LSMA_Colored" makes it simple and easy to use this LSMA indicator.
Look at the image above and you will see that LSMA is changing its color. Basically, this MT4 indicator colors the LSMA as follows:
- Uptrend = green
- Downtrend = red
- Range (no trend) = yellow
Tips for using:
The LSMA is good for catching trends. This makes it a great tool for trend-following. On the other hand, the LSMA may have a weak point that it does not function so well in a range market.
This indicator is colored which makes it much easier to notice and trade changes in trend. For example, you can place a buy order when the LSMA turns green. If it turns from green to yellow, you may want to close the trade (see image below). Conversely, if the LSMA turns red, then that is a signal to take a sell order.
One of the problems when using an LSMA indicator may be dealing with a ranging market.
For example, on the left side of the above image, you can see that there is a ranging market. If you trade with the LSMA during such a ranging market, it may be difficult to find high-probability trades. In order to solve this problem, you may want to combine the LSMA with the ADX or some long-term moving average. Feel free to try different combinations in order to find one that will suit your trading style.
- Period - Defines the period used for indicator calculation
- Bars - Defines how far the indicator will be displayed
Download the "LSMA_Colored" indicator from the button below
Do you need help with installing this indicator into MT4 for Windows or Mac OS? Our guide HERE will help you.