That is, when the moving average is increasing in value, staying flat, or decreasing. When we buy on strength and sell on weakness, in the second test in the table above, the best strategy is to use many days in the average. The 100-day moving average returns 8.43%, which is pretty decent. Our backtests show that a moving average slope can be used profitably for both mean-reversion and trend-following strategies on stocks. It allows traders to take trades with tight stop losses and hold on to a trade that could yield several times more than the risk on the stop loss.

It plots a modified moving average line which is relatively smooth yet responsive at the same time. TMA Slope Alert Indicator for MetaTrader 5 is a plugin that allows you to set up alerts for TMA Slope histogram crossing the zero line on your MT5 chart. It has exactly the same features as the version of the indicator for MT4. The slope of TMA is an indicator of the momentum of TMA’s movement. The value of the Triangular Moving Average is smoothed moving average of the smoothed moving average of the price.

How can you use the slope of a moving average in trading?

For anyone who is even remotely interested in forex trading, knowing and understanding Moving Averages is a must. This is an essential tool that traders can use to make investment decisions, and only when you have complete knowledge of it will you be able to use it to your best advantage. Using the Moving Average indicator on your MT4 platform to help with decision-making can take your trading game through the roof.

• The indicator is a great attempt at spotting when the price might be about to change direction by studying the strength (momentum) of the moving average.
• We aims to be a place where every forex traders can gain resources about trading.
• The longer the time period over which the Moving Average is calculated, the more will be the lag.

The trade is then exited when the TMA slope starts to rise back above the 0-level. Short positions here could result in a profitable trend following system being employed, making use of the TMA slope indicator. Open a sell order as soon as the Slope Direction Line changes to red.

Disadvantages of the TTM Slope Indicator

It is well-suited for spotting a buy or sell signal or observing how a price bar’s current closing price develops with respect to your chosen moving average. So, the shorter the time span over which the Moving Average is calculated, the more sensitive it will be to stock price changes. Whereas if the time span is longer, it will be less sensitive to changes. The most preferred MAs that traders use in general are the 50-day and the 200-day Moving Average.

Of course, it could not be predicted with 100% certainty, but there are ways to logically predict the forex market. These techniques help traders understand what the market is doing and allow traders to anticipate market movements with a high degree of probability. We consider the market trend as bullish when the Slope Direction line color transforms to blue. The indicator curve remains blue until the price keeps moving in an upward direction. Whenever the price makes a bearish move and moves below a significant level, the indicator changes its color from blue to red for addressing a bearish market trend.

Traders utilize forex indicators as instruments for market analysis and to… I have been actively trading the financial markets since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund that has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends. The Moving Average indicator comes as a core tool with the MT4 download. In the Moving Average indicator on the MT4 trend indicator menu, you can choose between simple, exponential, smoothed, and linear weighted MA.

Candle Closing Time Remaining Indicator for MT4

The Slope Direction Line is a trend following technical indicator which is based on a modified moving average line. Also, the moving average can be used to find a timely buy or sell signal. All you have to do is select a simple moving average slope indicator mt4 moving average, exponential moving average, or smoothed moving average, then apply it via MT4’s automated framework. Read on to learn more about how you can set up moving averages on the powerful MetaTrader 4 (MT4) platform.

How to Download and Use MT4 TMA Slope Alert Indicator?

This indicator can also be used to determine the divergence in prices among other things. The Slope Direction Line indicator detects trend direction based on the concept of using the slope of a moving average line as a basis for identifying the trend direction. As such, the Slope Direction Line indicator changes the color of the modified moving average line as soon as its slope changes. It plots a blue line whenever the moving average line is in an upward slope, and a red line whenever the moving average line is in a downward slope. All you need to use the moving average indicator is a basic charting package, which most trading platforms offer.

If you like to learn how to anticipate market movements and stop using lagging indicators , then you will absolutely LOVE our Sniper Trading System. Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.

Other things should be considered before placing a trade, such as the direction of the trend from a higher timeframe. The essence of this forex strategy is to transform the accumulated history data and trading signals. Trend Following System’s goal is to share as many Forex trading systems, strategies as possible to the retail traders so that you can make real money. The most commonly used Moving Averages by traders are 20 Period EMA, 5 EMA, 10 EMA, 21 EMA, 50 SMA, 100 SMA, and 200 SMA. The numbers here indicate the number of days over which the MA is calculated.

There are also many instances when trades could be held very long since some of the trade setups that this strategy produces could result in a strong trend. But at the same time, it also helps you stay ahead of inflation as the average annual returns of stocks are much higher than average annual inflation rates. The forex market has the highest liquidity as the daily trading volumes here are the largest.

As seen on the chart, the trends are established and offer a stronger level to trade from when the TMA rises above the 0.5 level. The Moving Average Slope (MAS) subtracts the moving average level n-periods ago from the current moving average level. This way, the trend of the moving average can be drawn on the moving average line.