DOCS / INDICATORS

SUMMARY

GETTING STARTED

x

GETTING STARTED

x

INDICATORS

1. Let’s talk about Indicators.

The indicators are one of the most important parts of the Bot. Through its configurations and combinations it is how a strategy is born. They are the keys to make the bot work and conduct successful operations.

All indicators are based on Moving Averages, click here to learn more about these averages.

We can find the different indicators under the tab: .

Today we have some of the key indicators available for you to put together your strategies, click on the indicator to know more about them:

  • Ichimoku Cloud


    The Ichimoku Cloud is a chart used in technical analysis that shows support and resistance, and momentum and trend directions for a security or investment. It is designed to provide relevant information at a glance using moving averages (tenkan-sen and kijun-sen) to show bullish and bearish crossover points. The "clouds" (kumo, in Japanese) are formed between spans of the average of the tenkan-sen and kijun-sen plotted six months ahead (senkou span A), and of the midpoint of the 52-period high and low (senkou span B) plotted six months ahead.


    The Ichimoku cloud was developed by Goichi Hosoda, a Japanese journalist, and published in the late 1960s. It provides more data points than the standard candlestick chart. While it seems complicated at first glance, those familiar with how to read the charts often find it easy to understand with well-defined trading signals.

    Here's an example of an Ichimoku Cloud generated on StockCharts.com:

    There are five calculations used to generate the Ichimoku Cloud:

    1. Tenkan-sen = (9-day high + 9-day low) / 2
    2. Kijun-sen = (26-day high + 26-day low) / 2
    3. Senkou Span A = (Tenkan-sen + Kijun-sen) / 2
    4. Senkou Span B = (52-day high + 52-day low) / 2
    5. Chikou Span = Close plotted 26 days in the past


    The overall trend is up when prices are above the cloud, down when prices are below the cloud, and flat when they are in the cloud itself. When senkou span A is rising above senkou span B, the trend is stronger upward, and is typically colored green. When senkou span B rises above senkou span A, the trend is stronger downward and is denoted with a red-colored cloud.

    Traders will often use the Senkou "cloud" as an area of support and resistance depending on the relative location of the price. In the chart above, the Senkou "cloud" provides support levels that can be projected into the future. This sets the Ichimoku Cloud apart from many other technical indicators that only provide support and resistance levels for the current date and time.

    Traders should use the Ichimoku Cloud in conjunction with other technical indicators to maximize their risk-adjusted returns over time. For example, the indicator is often paired with the Relative Strength Index (RSI), which can be used to confirm or disconfirm momentum in a certain direction. It's also important to look at the bigger trends to see how the smaller trends fit within them.

    Fonte: https://www.investopedia.com

  • EMA Cross


    An exponential moving average - EMA is a type of moving average that places a greater weight and significance on the most recent data points. The exponential moving average - EMA is also referred to as the exponentially weighted moving average. Exponentially weighted moving averages react more significantly to recent price changes than a simple moving average, which applies an equal weight to all observations in the period.


    The 12- and 26-day exponential moving averages (EMAs) are often the most popularly quoted or analyzed short-term averages. The 12- and 26-day are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50- and 200-day EMAs are used as signals of long-term trends.

    Traders who employ technical analysis find moving averages very useful and insightful when applied correctly but create havoc when used improperly or are misinterpreted. All the moving averages commonly used in technical analysis are, by their very nature, lagging indicators. Consequently, the conclusions drawn from applying a moving average to a particular market chart should be to confirm a market move or to indicate its strength. Very often, by the time a moving average indicator line has made a change to reflect a significant move in the market, the optimal point of market entry has already passed. An EMA does serve to alleviate this dilemma to some extent. Because the EMA calculation places more weight on the latest data, it “hugs” the price action a bit tighter and therefore reacts quicker. This is desirable when an EMA is used to derive a trading entry signal.


    Like all moving average indicators, they are much better suited for trending markets. When the market is in a strong and sustained uptrend, the EMA indicator line will also show an uptrend and vice-versa for a down trend. A vigilant trader will not only pay attention to the direction of the EMA line but also the relation of the rate of change from one bar to the next. For example, as the price action of a strong uptrend begins to flatten and reverse, the EMA’s rate of change from one bar to the next will begin to diminish until such time that the indicator line flattens and the rate of change is zero.

    Because of the lagging effect, by this point, or even a few bars before, the price action should have already reversed. It, therefore, follows that observing a consistent diminishing in the rate of change of the EMA could itself be used as an indicator that could further counter the dilemma caused by the lagging effect of moving averages.


    Like all moving average indicators, they are much better suited for trending markets. When the market is in a strong and sustained uptrend, the EMA indicator line will also show an uptrend and vice-versa for a down trend. A vigilant trader will not only pay attention to the direction of the EMA line but also the relation of the rate of change from one bar to the next. For example, as the price action of a strong uptrend begins to flatten and reverse, the EMA’s rate of change from one bar to the next will begin to diminish until such time that the indicator line flattens and the rate of change is zero.

    Because of the lagging effect, by this point, or even a few bars before, the price action should have already reversed. It, therefore, follows that observing a consistent diminishing in the rate of change of the EMA could itself be used as an indicator that could further counter the dilemma caused by the lagging effect of moving averages.


    EMAs are commonly used in conjunction with other indicators to confirm significant market moves and to gauge their validity. For traders who trade intraday and fast-moving markets, the EMA is more applicable. Quite often traders use EMAs to determine a trading bias. For example, if an EMA on a daily chart shows a strong upward trend, an intraday trader’s strategy may be to trade only from the long side on an intraday chart.


    Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades in a virtual environment before you start risking your own money. Practice trading strategies so that when you're ready to enter the real market, you've had the practice you need.

    Fonte: https://www.investopedia.com

  • Relative Strength Index


    The Relative Strength Index - RSI is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.


    The relative strength index (RSI) is calculated using the following formula:

    RSI = 100 - 100 / (1 + RS)

    Where RS = Average gain of up periods during the specified time frame / Average loss of down periods during the specified time frame

    The RSI provides a relative evaluation of the strength of a security's recent price performance, thus making it a momentum indicator. RSI values range from 0 to 100. The default time frame for comparing up periods to down periods is 14, as in 14 trading days.

    Traditional interpretation and usage of the RSI is that RSI values of 70 or above indicate that a security is becoming overbought or overvalued, and therefore, may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below is commonly interpreted as indicating an oversold or undervalued condition that may signal a trend change or corrective price reversal to the upside.





    Sudden large price movements can create false buy or sell signals in the RSI. It is, therefore, best used with refinements to its application or in conjunction with other, confirming technical indicators.

    Some traders, in an attempt to avoid false signals from the RSI, use more extreme RSI values as buy or sell signals, such as RSI readings above 80 to indicate overbought conditions and RSI readings below 20 to indicate oversold conditions.

    The RSI is often used in conjunction with trendlines, as trendline support or resistance often coincides with support or resistance levels in the RSI reading.

    Watching for divergence between price and the RSI indicator is another means of refining its application. Divergence occurs when a security makes a new high or low in price but the RSI does not make a corresponding new high or low value. Bearish divergence, when price makes a new high but the RSI does not, is taken as a sell signal. Bullish divergence, which is interpreted as a buy signal, occurs when price makes a new low, but the RSI value does not. An example of bearish divergence can unfold as follows: A security rises in price to $48 and the RSI makes a high reading of 65. After retracing slightly downward, the security subsequently makes a new high of $50, but the RSI only rises to 60. The RSI has bearishly diverged from the movement of price.

    Fonte: https://www.investopedia.com

  • MACD

    The MACD is another popular tool many traders use. The calculation behind the MACD is fairly simple. Essentially, it calculates the difference between a currency's 26-day and 12-day exponential moving averages (EMA). The 12-day EMA is the faster one, while the 26-day is a slower moving average. The calculation of both EMAs uses the closing prices of whatever period is measured. On the MACD chart, a nine-day EMA of MACD itself is plotted as well, and it acts as a signal for buy and sell decisions. The MACD generates a bullish signal when it moves above its own nine-day EMA, and it sends a sell sign when it moves below its nine-day EMA.

    The MACD histogram provides a visual depiction of the difference between MACD and its nine-day EMA. The histogram is positive when MACD is above its nine-day EMA and negative when MACD is below its nine-day EMA. If prices are in an uptrend, the histogram grows bigger as the prices start to rise faster, and contracts as price movement begins to slow down. The same principle works in reverse as prices are falling. Refer to Figure 1 for a good example of a MACD histogram in action.

    The MACD histogram is one of the main tools traders use to gauge momentum, because it gives an intuitive visual representation of the speed of price movement. For this reason, the MACD is commonly used to measure the strength of a price move rather than the direction or trend of a currency.


    A classic trading strategy using a MACD histogram is to trade the divergence. One of the most common setups is to identify points on a chart where the price makes a new swing high or a new swing low but the MACD histogram doesn't, which signals a divergence between price and momentum. Figure 2 depicts a typical divergence trade.

    Trading MACD divergence is often a long-term strategy. It is not uncommon for prices to have several final volatile bursts up or down that trigger stops and force traders out of position just before the move actually makes a sustained turn and the trade becomes profitable. Stop-loss placement is critical to the success of trader’s who rely on MACD divergence as the basis for their strategy. Knowing when trends are about to reverse is tricky business, learn more about spotting the trend in Spotting Trend Reversals With MACD.)

    One of the primary reasons that traders often lose money when using divergence as a trading signal is because they enter a position based on a signal from the MACD, but find themselves in the position of exiting it based on a move in price. Since the MACD histogram is a derivative of price and not a price itself, this approach mixes the signals used to enter and exit a trade, which is incongruent with the strategy.

    Using the MACD Histogram for Both Entry and Exit
    To resolve the inconsistency between entry and exit signals, a trader can base both their entry and exit decisions on the MACD histogram. To do so, if the trader was trading a negative divergence then he would continue to take a partial short position at the initial point of divergence, but instead of using the nearest swing high as the stop price, he or she can instead stop out the position if the high of the MACD histogram exceeds the swing high it reached previously. This tells the trader that price momentum is actually accelerating and the trader was wrong on the trade. On the other hand, if a new swing high isn't reached on the MACD histogram, the trader can add to his initial position, continually averaging a higher price for the short position.

    Fonte: https://www.investopedia.com

  • HMA Cross

    There are many types of moving averages, the most basic being the Simple Moving Average (SMA). Of all the moving averages the SMA lags price the most. The Exponential and Weighted Moving Averages were developed to address this lag by placing more emphasis on more recent data. The Hull Moving Average (HMA), developed by Alan Hull, is an extremely fast and smooth moving average. In fact, the HMA almost eliminates lag altogether and manages to improve smoothing at the same time.


    A longer period HMA may be used to identify trend. If the HMA is rising, the prevailing trend is rising, indicating it may be better to enter long positions. If the HMA is falling, the prevailing trend is also falling, indicating it may be better to enter short positions.

    A shorter period HMA may be used for entry signals in the direction of the prevailing trend. A long entry signal, when the prevailing trend is rising, occurs when the HMA turns up and a short entry signal, when the prevailing trend is falling, occurs when the HMA turns down.




    1. Calculate a Weighted Moving Average with period n / 2 and multiply it by 2
    2. Calculate a Weighted Moving Average for period n and subtract if from step 1
    3. Calculate a Weighted Moving Average with period sqrt(n) using the data from step 2

    Fonte: https://www.fidelity.com

  • Bollinger Bands

    Bollinger Bands® are a technical chart indicator popular among traders across several financial markets. On a chart, Bollinger Bands® are two "bands" that sandwich the market price. Many traders use them primarily to determine overbought and oversold levels. One common strategy is to sell when the price touches the upper Bollinger Band® and buy when it hits the lower Bollinger Band®. This technique generally works well in markets that bounce around in a consistent range, also called range-bound markets. In this type of market, the price bounces off the Bollinger Bands® like a ball bouncing between two walls.

    Perhaps a better way to trade with Bollinger Bands® is to use them to gauge trends.


    One common cliché in trading is that prices range 80% of the time. There is a good deal of truth to this statement since markets mostly consolidate as bulls and bears battle for supremacy. Market trends are rare, which is why trading them is not nearly as easy as one might think. Looking at price this way we can then define trend as a deviation from the norm (range).

    At the core, Bollinger Bands® measure and depict the deviation or volatility of the price. This is the reason why they can be very helpful in identifying a trend. Using two sets of Bollinger Bands® - one generated using the parameter of "1 standard deviation" and the other using the typical setting of "2 standard deviation" - can help us look at price in a different way.

    In the chart below we see that whenever the price channels between the two upper Bollinger Bands® (+1 SD and +2 SD away from mean) the trend is up. Therefore, we can define the area between those two bands as the "buy zone". Conversely, if price channels within the two lower Bollinger Bands® (–1 SD and –2 SD), then it is in the "sell zone". Finally, if price wanders around between +1 SD band and –1 SD band, it is basically in a neutral area, and we can say that it's in "no man's land".

    Another great advantage of Bollinger Bands® is that they adjust dynamically as volatility increases and decreases. As a result, the Bollinger Bands® automatically expand and contract in sync with price action, creating an accurate trending envelope.


    As one the most popular trading indicators, Bollinger Bands® have become a crucial tool to many technical analysts. By improving their functionality through the use of two sets of Bollinger Bands®, traders can achieve a greater level of analytical sophistication using this simple and elegant tool for trending. There are also numerous different ways to set up the Bollinger Band® channels; the method we described here is one of the most common ways. While Bollinger Bands® can help identify a trend, in the next section we'll look at the MACD indicator which can be used to gauge the strength of a trend. (To look at other types of bands and channels, take a look at Capture Profits Using Bands And Channels.)

    Fonte: https://www.investopedia.com

  • Stochastic Oscillator


    The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result.



    The stochastic oscillator is calculated using the following formula:

    Where:
    C = the most recent closing price
    L14 = the low of the 14 previous trading sessions
    H14 = the highest price traded during the same 14-day period
    %K= the current market rate for the currency pair
    %D = 3-period moving average of %K

    The general theory serving as the foundation for this indicator is that in a market trending upward, prices will close near the high, and in a market trending downward, prices close near the low. Transaction signals are created when the %K crosses through a three-period moving average, which is called the %D.


    The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result.


    Lane also expressed the important role the stochastic oscillator can play in identifying overbought and oversold levels, because it is range bound. This range – from 0 to 100 – will remain constant, no matter how quickly or slowly a security advances or declines. Considering the most traditional settings for the oscillator, 20 is typically considered the oversold threshold and 80 is considered the overbought threshold. However, the levels are adjustable to fit security characteristics and analytical needs. Readings above 80 indicate a security is trading near the top of its high-low range; readings below 20 indicate the security is trading near the bottom of its high-low range.

    Fonte: https://www.investopedia.com

Into Gimmer, these indicators are divided into 2 types.

Entry Indicators:

Entry indicators, as the name itself suggests, are used to enter operations. If your strategy does not have any exit indicators, the bot will use the entry indicator for long operations, entry and exit

If your strategy has 2 or more entry indicators and no out indicator, the bot will only make the purchase when all indicators indicate a purchase, and will only sell when all indicators indicate the sale.

Click here to better understand the exact moments of buying and selling.

Out Indicators:

Out indicators are used to exit an operation.
If you set the same indicator, for example, EMA CROSS as ENTRY and the same EMA CROSS as OUT, the bot will use the same indicator to enter and exit operations.
You can also set one type of input indicator (ENTRY) and another indicator for exit (OUT).

In this way, the bot will for example use the EMA CROSS to enter, and the RSI to exit the operations.

If you have more than one indicator set to OUT, the bot will only exit when all those indicators are in SELL.

It It is very important that this information is totally clear at the time of creating the bot so that you don’t confuse your strategy and don’t expect the bot to perform an operation different from the one you created. If you choose to work with more than 1 strategy on your bot, it will still only make a decision to buy or sell, when all indicators at that moment simultaneously show either BUY or SELL.

LATEST NEWS

About Gimmer

Follow Us

Subscribe

Join our newsletter!