So, without wasting time, we can already look for a point to exit a trade. ![]() In general, if we know how this indicator is constructed in such cases, as it is demonstrated in the chart above, when the low is much lower than the previous ones, we can already understand that the lows of the next three bars will hardly exceed the highest low of the last 12 bars. Therefore, as soon as there are four bars complete, there is a reversal signal at the fourth bar and the bullish trend extinguishes. You see that the low of June 27 is lower than the previous 12 lows and the next three bars can’t consolidate their lows above the 12 previous ones. The chart above provides a good example of the rule when the moving average is extinguished, i.e. It is clear from the above figure that once there is a bar whose low is greater than 12 previous lows, there starts a bullish TD Moving Average starting from the 12th bar. If during one of these four bars, the low is higher than 12 previous lows, TD Moving Average I will be active during at least four next bars. If during the period of these four bars, the low isn’t higher than the 12 previous lows, the line disappears. If this condition is met, the indicator analyzes the current price bar and three more in future. It occurs when the current bar’s low is greater than all previous 12 lows. Let us study the case when a moving average signals a bullish trend So, in order to avoid a time-lag, you just need to track the indicator on shorter timeframes.īefore I start explaining the indicator, I want to thank who made this indicator available to everyone in the tradingview library. At the same time, like all other TD indicators, TD Moving Average I is drawn based on relative price movements, rather than absolute values, and therefore, no separate settings for each timeframe are required. However, the indicator in fact has become very efficient in identifying the trends in the market and finding out not only the right exit levels, but the entry points as well. TD Moving Average I was originally designed as a trailing stop, and it was to indicate the level to exit a trade. That is how there appeared two indicators: TD Moving Average I and TD Moving Average II. He tried to maintain the advantages of the indicator but eliminated its drawbacks. Thomas DeMark invented a new kind of the Moving Average indicator. If you significantly reduce the MA period, the lag from the price will be minimal, however, the number of false signals will sharply increase. Of course, you can increase the period of the Moving Average to reduce the number of false signals, but in this case the lag will be even greater and there will not be much sense in such signals. In addition, the moving average is a lagging indicator, therefore relying on its signals alone in its usual form is not the most effective trading strategy. Anyone, who has ever employed this indicator, knows that it, on the one hand, is rather simple to use and sends quite clear signals on the other hand, it has a number of significant drawbacks, as it is ineffective in high volatility markets or nontrending markets. This is the moving average MA, but it is not just a usual MA, it is Thomas DeMark Moving Average (TD Moving Average). Today, I am going to deal with one of the most commonly used indicators in the trading world. TD DeMarker 1 and 2, TD Pressure, TD ROC, TD Alignment ( see here).TD Sequential and TD Combo ( see here). ![]()
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