Hey fellow traders! Today, I want to introduce you to an interesting tool that can enhance your trading strategies – the OBTR (On Balance True Range) indicator, which was conceptualized by Tom Bierovic. This nifty indicator addresses some of the limitations associated with the traditional volume indicator.
After scouring the internet for an MT4 version without any luck, I decided to create this indicator myself. And let me tell you, it’s packed with features that can be customized to fit a variety of trading strategies.
One of the standout features of the OBTR is how well it complements other standard indicators. It’s especially effective when used alongside MACD signals and a 9 EMA smooth of the OBTR. Now, let’s break down some key settings:
The proximity parameter is crucial. This setting determines how close the OBTR line needs to be to the Slow MA (moving average) before a crossover signal appears. For example, if you set it to 11 pips, it will gray out a range of 22 pips. This can serve as a breakout point. Conversely, a smaller value might indicate the end of a retracement in a trend.
The maximum setting allows you to gray out areas where the difference between the MA and the OBTR exceeds your specified value. For instance, if you set it to 126 pips, this might indicate a potential exhaustion point for a breakout, making it a good time to take profits.
Here are some basic rules to keep in mind:
- Gray: If the MA is close to the OBTR, look for a breakout or trend continuation.
- Gray: If the MA is far from the OBTR, consider taking profits or reversing your position.
- Blue: This signals a good opportunity to go long.
- Orange: Look for reasons to short.
It’s important to note that the Slow MA is represented by a tri-color line. If the line is gray for over two bars while not being lime or red, it may indicate the end of an upswing in a downtrend.
I hope this OBTR indicator becomes a valuable addition to your trading toolbox!
Cheers,
Brooky
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