Laguerre_RSI MT4 indicator
Laguerre_RSI Indicator is just an alteration of the relative strength indicator (RSI).
This indicator eliminates the effects of delay and whipsaws produced by the indicators that apply the smoothing technical. The Laguerre_RSI MT4 indicator achieves this by using a filter and also incorporating some more changes to the usual relative strength indicator.
Its data calculations uses the previous recent four bars.
This is an indicator that a trader can use in technical trading. It is more responsive and has lesser noise as compared to the RSI indicator.
Features of Laguerre_RSI
Laguerre_RSI Indicator combines the use of two parameters. These parameters are the array and the gamma. The array is the series of close time that is used in calculating the indicator (drawing the outline of the indicator). On the other hand the gamma is a filter that is used in conjunction with the array for the indicator to be effective.
The gamma is actually used as a price damping factor which if a better aggressive signal is desired it is lowered accordingly or on the other hand raised in order to encourage more antagonistic signals. The gamma input’s scale has a range of -0.5 to 1.05.
Fig.1. main features of Laguerre_RSI
Interpreting the Laguerre_RSI indicator in connection with the market prices.
When using the Laguerre_RSI what is most important is looking at the RSI position in respect to the gamma levels (0, 0.15, 0.45, 0.85, and 1). The most important levels to check on are the 0.15 and the o.85.
When the Laguerre_RSI indicator starts to rise and crosses the o.15 level then a trader is 90% guaranteed that there is a possible uptrend. If the trend continues and the indicator gets flats at a level above 0.85, then you get an assurance that the current uptrend is persistent.
When the Laguerre_RSI indicator starts to drop and crosses the o.85 level then a trader is 50% guaranteed that there is a possible downtrend. That is if the previous uptrend had caused the indicator to cross the 0.85 level. If the trend continues and the indicator gets flats at a level below the 0.15, then you get an assurance that the current downtrend is persistent.
Fig.2. interprating the market using laguerre_RSI
Therefore you have to practice a lot of patience before opening a trade.in so doing you have to also consider the Laguerre Filter line that is plotted directly on the chart like a moving average.
Trading using Laguerre_RSI
Buy orders: place a buy order when during an uptrend the indicator crosses the 0.15 level. But you should also ensure that by the time you are opening the position, the price (bars on the chart) is above Laguerre Filter line.
Fig.3. placing a sell order
Sell order: place a sell order when during a downtrend the indicator crosses the 0.85 level. But you should also ensure that by the time you are opening the position, the price (bars on the chart) is below Laguerre Filter line.
Then when trading it advisable to ensure that you have a specific target of pips you are targeting for profit making and if the market misbehaves for stop loss. Hence use stop levels for the sake of risk management. Open demo account to test this indicator.
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