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Parabolic Weighted MA Velocity can be considered a full-fledged trading strategy, since in making calculations it combines three indicators at once. Its main goal is to determine the current market trend, and thereby identify points for opening positions in the direction of the current movement. The indicator is displayed in the lower window of the price chart in the form of a moving average, which, when determining a trend, changes its color and direction in general and relative to its level 0. Thus, taking into account these conditions, a trade can be opened and a trend can be easily determined.
The Parabolic Weighted MA Velocity indicator is suitable for use with any currency pair, as well as with any timeframe.
Input parameters
Despite the vastness of the work performed, as well as the presence of several indicators in one, the Parabolic Weighted MA Velocity indicator in its settings has only three input parameters that, to one degree or another, affect the performance of the indicator's calculations. Its Colors section affects the color gamut and the width of the indicator values, and the Levels section for adding additional levels to the indicator window, in addition to the already added level 0.
- Period - indicator period value parameter. The default value is 27.
- Power - indicator power value. The default value is 1.0.
- Price - parameter responsible for the type of price to which the indicator's calculations will be applied. The default value is Median price.
Indicator signals
Trading with the Parabolic Weighted MA Velocity indicator is based on the use of a moving average, so its signals will be directly related to the principle of using moving averages. That is, if the line moves up, then the trend is up and it should be opened buy trades, and vice versa, if the line moves down, then the trend is down, and short positions are opened. In this indicator, taking into account the circumstances, the moving average is painted in a certain color, while being above or below the 0 level. Thus, when trading, one should take into account not only the direction of the line, but also its color and location relative to the signal level.
Signal for Buy trades:
- The moving average, colored with growth value, moves up, crossing its level 0.
After these conditions match on a certain candle, an uptrend will be determined and a buy trade can be opened. It should be closed upon receiving the opposite conditions, since it is already possible to consider opening new positions.
Signal for Sell trades:
- The indicator line, crossing level 0, moves down. At the same time, it should have a color with a falling value.
Upon receipt of such conditions, a downtrend is formed, which allows opening a short position. It is needed to close it when the moving average changes its direction or rises above the 0 level. In this case, it can be considered opening new trades.
Conclusion
Parabolic Weighted MA Velocity is a very smart and logical indicator whose calculations are as accurate as possible due to the combination of effective forex indicators. In order to understand the algorithm of the indicator, it is needed practice on a demo account, which will allow correctly identifying signals also it gives all the skills for trading.
