Description of deviation indicator “Price deviation MA”
«Price deviation MA» – oscillator indicator in a separate window, showing deviation as a percentage of a given moving average. It does not give signals to buy or sell, but shows how people relate to the price.
I will draw an analogy with purchases in the store. Every day 3 boxes of apples are brought to the store for sale. With a 30% discount on them from the average price in the city, all apples are bought from the seller, and when the average is above 20%, no one buys. So “Price deviation MA” shows, that at a discount, in how much % there will be no more goods left, or at what % markup there are no buyers for the goods.
«Price deviation MA» good for opening and closing transactions at a “reasonable” price. Suitable for trading on time frames above 1 hour, with a moving average value greater than 20. In the default settings, the value is 50, which works well on all instruments. Important to understand, that deviations in the negative direction are not equal to deviations in the positive direction. I.e if purchases are made at a 10% discount, this does not mean that at 10% markup, sales will stop. For each instrument, the upper and lower border will be different. I recommend using it when opening and closing deals.
MA_Period – period to calculate the moving average.
MA_Method – averaging method: simple, exponential, smoothed, linear weighted.
MA_AppliedPrice – price used: close, open, high, low, etc.
The calculation formula is as follows.
Examples of using
Example 1. The chart shows the price of the index Dow Jones on the hourly timeframe. The main information about the stock market is that there is always an uptrend, except for the crisis years. С момента создания (боел100 лет) индексы растут. Therefore, I recommend short positions only in exceptional cases. More often you have to look for cheap purchase prices. In other words, try to define the global trend and look for cheap purchases or expensive sales.
Note that with a deviation (discount) of -1.3%, the index is actively bought up and not allowed to fall further. When buying at 1 point, the market grew for a long time, however, at points 2 and 3 you can take profit or breakeven. Because they bought at a reasonable price.
Example 2. The chart shows the Bitcoin price on a four-hour timeframe. Bitcoin has an upward trend. Therefore, as in the stock market, they should not be short, except in rare cases. Therefore, we try to find favorable prices for the purchase.
On the chart it is visible that at a mark of the indicator of deviations about -6 % of sale stop and the most courageous buy cheaply. «Price deviation MA» does not allow to make a mistake of shopping on highs.
Example 3. The chart shows the currency pair EUR/USD on a four-hour timeframe. With currency pairs, things are different. They’re based on refinance rates from national banks. Therefore, one currency will not go from ten times from another. Therefore, they are traded in a kind of channel. For channels or flat, you can use both the upper and lower borders.
On the example of EUR/USD, the indicator channel value turned out to be – 0,8. When buying or selling from a given border, you could always close a deal when you reach MA or take more movement. The main thing is to act clearly on your strategy. If there is no strategy, then it is worth taking a closer look at this indicator so as not to buy expensive and sell cheap.
Where to download the virus-free indicator “Price deviation MA”
You can download the deviation indicator in the MetaTrader 4 and 5 terminal in the market section or go to the developers website using the links below.
At the same time, paid indicators are downloaded in the demo version. They cannot be attached to the chart, but can be opened in the strategy tester, in which all closed candles are present. Therefore, it is easy to use for analysis for free, by making a few additional clicks.