Accurately grasping trends is the foundation for profitable trading. There is a saying among traders "The trend is your friend", and for good reason because it can be very dangerous to trade against the trend.
The Simple Harmonic Index (SHI) is useful tool for trend analysis. By using the SHI, you can easily see whether the market is in an up-trend or in a down-trend.
Let's introduce such an SHI indicator here.
Using the SHI is simple. If the SHI is above the center line, that market can be regarded as an uptrend, and if it is below, then it is considered that the market is in a downtrend.
However, trading with the SHI alone is not recommended. The SHI is perfect for trend determination, however, it is impossible to judge entry timing by SHI alone. Therefore, it is better to combine it with other indicators and tools that will provide timing signals.
How to use:
The SHI should be used for trend analysis as introduced above. This is the best use of this indicator. It is also recommended that you close any open trades, either completely or a part of the position, when the SHI goes above / below the center line.
It’s also important to note that it is better to combine the SHI with other indicators as shown in the image below. In the example below, it is combined with the RVI. It is also compatible with indicators such as the CCI, so feel free to try different indicators to find the best combination.
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