A Trading Strategy Using a Combination of Technical Indicators
How to Code a Trading Strategy Using the Cyclical Indicator and Moving Averages
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Indicators are there to help you trade through guidance of historical price action. This article discusses a new strategy that gives out bullish signals using simple calculations and filtered by moving averages.
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Creating K’s Cyclical Indicator
The indicator has been created mostly to search for bullish signals and is based on simple comparisons between the OHLC values. It is a hybrid indicator in the sense that it can be used in a bullish trend or in a sideways market, however, I absolutely recommend that you do not use it in a bearish trend.
To create K’s cyclical indicator, follow these steps:
- Whenever the current close price is greater than the current open price, a value of 1 is stored.
- Whenever the current high price is greater than the previous high price, a value of 1 is stored.
- Whenever the current high price is greater than the close price from 2 periods ago, a value of 1 is stored.
- Sum the previous results with their respective numbers using a lookback period of 13 and divide by 13 so that you get a percentage of the 1’s relative to the total (which is 1’s and 0's)
- Multiply the results of the previous step together which should give you a weighted percentage reading.
