There are a lot of technical analysis tools that help a trader to determine the optimal entry points to the market. Today I will tell you about one of them - the Taotra indicator . The algorithm of its work includes the indications of moving averages. But unlike other similar tools, it has many settings that allow you to consider different options for using the indicator and choose the best one. As the trading statistics show, this technical analysis tool can become the basis of a profitable trading strategy.
It looks somewhat unusual on the price chart, but it is convenient to perceive its readings.
Now let's look at the main parameters of the indicator.
The Taotra indicator has several important variables, on the value of which the trading result will depend.
As I wrote above, it includes several MAs. In the settings, you should specify the period of only the first of them. And this is done using the Starting Period parameter. The periods of other movings will be calculated automatically. But for this you need to set the step of changing the period of each subsequent moving average. This is done using the appropriate parameter - Period Step.
Next, you should decide on the method of forming the MA readings. There are two options: Add and Multiply. If we select Add, then movings will more sensitively react to price changes. There will be many signals, but the proportion of false ones will also be large. If we set the Multiply method, the curves will be smoother. The number of signals will decrease, but their quality will increase.
The Average metod and Price parameters are used to select the type of moving averages and the type of price that will be used in the calculations.
The number of movings you want to see on the chart is set using the Numbers of Averages parameter.
The remaining three parameters concern the color and thickness of the lines. They do not matter for trade.
You can search for a market entry point after the moving averages have narrowed on the price chart. It indicates consolidation, which usually precedes strong moves. Also, these areas can be used to place stop losses. I would not recommend trading only based on the signals of this indicator. Trading efficiency will increase if you filter them using an additional technical analysis tool.
Taotra indicator is available in two versions. It can be displayed on the price chart itself (as in my screenshot), or located under the chart. In the archive, the link to which I am giving you, there are two files. Which one to use is up to you.
And, as always, I would like to warn you that you cannot use it in real trading without testing the indicator on a demo account.