Moving averages are one of the best ever custom indicators that the forex market will ever get. This indicators are also used in many other indicators and also in most of the automated trading. The moving average just as the name suggests, is a dynamically changing average of the previous market prices. It is dynamic since it changes with time as new market prices are brought into the market. With these averages of the market prices, the trader can be able to get the trend of the market and even know when to trade and when not to.
Unlike the way the Moving averages are usually drawn on the main trading chart as a line that follows the market prices, the Multi Moving Average indicator is displayed on a separate screen below the main trading chart as several dotted lines with the dots changing their color from red to aqua.
The type of moving averages that are used in this indicator are the exponential moving averages (EMA). Their periods is indicated within the brackets. The EMAs used are of the periods of 13,34,55,89. Then all the EMA are by default programed to work on the H1 timeframe.
With this indicator the trend of the market trend is indicated by the color rather than a line that follows the market prices. When the EMA color is red, the trend that is indicated is a down trend. On the other hand if the color of the EMA is aqua, then the trend that is indicated is an uptrend.
Fig.1. The Multi Moving Average indicator.
This indicator is not restricted to specific currency pairs but it can be used on any of the currency pair of your choice. You are also at liberty to use any timeframe of your choice. When you change your timeframe, it will be indicated before the EMAs. It has a very high efficiency due to the fact that several EMAs are used.
Using the Multi Moving Average indicator to trade.
When using the Multi moving average indicator, there are specific things that the trader should always keep in mind. These include:
- The red color indicates a down trend while the aqua color indicates an uptrend.
- Trading should be done when all the indicators indicate a similar color. If it is aqua all should have aqua and if it is red all should be red.
- Never trade even if three of the indicators displays a similar color but only one doesn‘t.
- After placing a trade, the trader should close it when one of the EMAs change its color from the color used to place the trade to an opposite color.
- Every order should be placed after the second or third dot of the EMA.
Placing a sell: a sell is placed on the second or third red dot if all the EMAs are red color.
Placing a buy: a buy is placed on the second or third aqua dot if all the EMAs are aqua in color.
Fig.2. Placing trades using the Multi Moving Average indicator.
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