This indicator is programmed to show the market price swings. It shows the prevailing trend of the market. It also shows when the trend strength is gaining ground and when the trend strength is reducing.
The FX Cash Extreme is displayed on a separate chart below the main trading chart. It displays red and green bars on either sides of a neutral zero line. The length of the bars vary depending on the market price movements. As the bars transit from red to green or vice versa, their length decreases to zero. For the red bars their length is negative.
The bars are displayed according to the market price trend. The side of the neutral line on which the bars form shows the general trend of the market prices. If the bars are green (above the neutral line), then the general trend that is indicated is an upward trend. On the other side, if the bars are red (below the neutral line), then the trend that is indicated is a down ward trend.
Fig.1. FX Cash Extreme indicator.
For a long term trader, he or she should use the transition between the green and red bars to open trades. However, after the market prices have identified a general trend, there are trend reversals and also a time when the general trend changes. These two are very important for the intraday and scalpers. Since this indicator is not a good choice for the scalpers, let’s consider the intraday traders.
For the intraday traders, once the green or red bars are being displayed, there are changes in the length of the bars. When the length of the red bars increases downwards, then it means that the general downward trend is still on. If the length of the green bars increases upwards, then it means that the general upward trend is still on.
But when the length of the red bars decreases towards the zero line, this means that the general trend is either having a retracement or it has changed to an upward trend. For you to determine whether the trend has changed to an upward trend, you have to wait until the bars becomes green.
Similarly, when the length of the green bars starts to decrease towards the zero line, then the general trend may be having a retracement or it may have changed to a downward trend. The change of the general trend to a downward trend is confirmed when the bars become red.
Using the FX Cash Extreme to open and close trades.
A trader is supposed to open a buy order when the bars that are being formed in the indicator’s chart are green. The order should be opened at the second or third green bar if the length of the bars increases. If the length of the second or third bar is smaller than that of the previous bar, do not open a buy order since the trend is still not that strong.
Fig.2. placing a buy order using the FX Cash Extreme indicator.
On the other hand, a trader is supposed to open a sell order when the bars that are being formed in the indicator’s chart are red. The order should be opened at the second or third red bar if the length of the bars increases downwards. If the length of the second or third bar is smaller than that of the previous bar, do not open a sell order since the trend is still not that strong.
Fig.3. Placing a sell order using the FX Cash Extreme indicator.
You should close your order when the bars start decreasing in length when you have an open order.
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