Trendiness Index

Trendiness Index

"The trend is your friend" is one of the best known sayings in investing, because capturing large trendy price movements can be extremely profitable. However, trading with the trend is often easier said than done, because many indicators are based on price reversals not trends. These aren't very effective at identifying trendy periods, or predicting whether trends will continue.

We developed the Trendiness Index to help address this problem by indicating the strength and direction of price trends. Increasing values indicate a stronger trend, and bar color indicates trend direction (green = upward, red = downward). Bar color darkens when the trend strength begins to fade, and turns grey when the trend is over.

Trading Strategy (see screenshots)

Short Term:

• Enter trade when Trendiness Index indicates a strong trend and direction (colored bar)
• Be careful when Trendiness Index indicates a fading trend (darkened bar color). Can exit trade here to be conservative, or remain in the trade to increase profits if price action supports continued movement
• Exit the trade when the Trendiness Index indicates end of trend (grey bar)

Long Term:

• Enter trade when Trendiness Index indicates a strong trend and direction (colored bar)
• Remain in trade until an opposite colored bar appears (red if call, green if put), then exit

Additional Details

• Trendiness Index sensitivity can be adjusted using standard deviation and percentile threshold parameters
• For optimal results, combine the Trendiness Index with trend lines and traditional pattern recognition

Alerts

Email, message, and sound alerts can be turned on/off for the following events. Please note that email recipient and SMTP information should be specified in MetaTrader 4/options before using email alerts.

• Trendiness Index indicates strong upward or downward trend
• Trendiness Index trend is decreasing in strength (fading)
• Trendiness Index is moving from a trendy period to no trend

Parameters

• Calculation period (Default=14): number of bars used for indicator calculations
• Use smoothing: If true, applies smoothing to indicator bars
• Calculation period for standard deviation (Default=14): number of bars used to calculate stdev for trend thresholding
• Standard deviation threshold (Default=1.5): number of standard deviations used for identified trend threshold
• Calculation period for percentile (Default=50): number of bars used to calculate percentiles, to identify trends
• High percentile threshold (Default=0.75): percentile of values used to identify a trend
• Allow alerts: True = alerts are allowed, false = all alerts are paused
• Alert on beginning of trend: If true, alerts when Trendiness Index value indicates trend onset (colored bar)
• Alert when trade fades: If true, alerts when Trendiness Index value indicates a fading trend (darkened colored bar)
• Alert when trend over (below trendy threshold): If true, alerts when trend falls below threshold (not trendy, gray bars)
• Turn on alerts message: Message box alert
• Turn on alerts sound: Sound alert
• Turn on alerts email: Email alert