If you're looking to elevate your trading game, the Rainbow WMA indicator is a tool you won't want to overlook. Based on Mel Widner's Rainbow Average, which shares similarities with the Guppy MMA, this version offers a more versatile approach with several enhancements.
The Rainbow WMA is a single-value indicator, just like any other average, but it allows for calculation depths of up to 50. Now, you might be wondering what 'depth' means in this context. Essentially, it refers to the recursive method used to calculate the Rainbow WMA. The original version by Mel Widner was limited to a depth of 10, which could be a bit restrictive. Thankfully, this updated version lets you experiment with variable calculating depths. Generally, the larger the depth, the smoother the average. But here’s the kicker: significant trend changes aren't lagging too far behind, which can give you a timely edge in your trades.
Before jumping into live trading with the Rainbow WMA, it's a good idea to play around with the parameters. Every trader has their unique style, and finding the right settings for your strategy can make a world of difference.
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