Download the indicator
- Trading View Version: Trend Background by Alejandro P
- MT4 Version: (This filter is built into Desire To Trade Algos too)
Use in Desire To Trade Algos Advanced Filters #
In order to visualize the version of the indicator used in the Advanced filters of Desire To Trade made algos you will need to enable the SMA trend filter and make sure the Aroon Trend Filter is disabled (if present).
After that, you can enable or disable the slope option as well as change the SMA period as desired.
Once that is done you will be able to see the trending background showing you the uptrend, downtrend, and no trend conditions which the algo filter uses as reference.
Supplementary lesson from Martyn Tinsley's algorithmic trading series: Using Trend-Following Indicators (SMA, EMA,…) in Systematic Trading Strategies
This indicator is a comprehensive trend indicator designed to help traders filter market conditions for their trading.
The indicator has the option to use a classic Simple Moving Average as a trend filer or a more advanced Simple Moving Average Slope.
The indicator can also use the Aroon indicator as the trend filter and both the SMA and Aroon can be used together to only trade in strong trends.
The Simple Moving Average Slope and the Aroon filters can allow you to filter our 3 market conditions. 1- Upwards Trend, 2- Downwards Trend, 3- Ranging
By tuning these filters to your strategy you can make sure you are only taking trades when the trend is on your side and you can even filter out ranging market conditions to trade the best strategies depending on the market conditions.
If the Simple Moving Average filter is on and the Slope filter if off the indicator will determine the trend by where the price is relative to the moving average. If the price is higher than the SMA then the trend will be bullish, if the price is below the SMA the trend will be bearish.
If the SMA filter and Slope FIlter are both on then the trend es defined by the slope of the SMA, this means that if the SMA slope is increasing then the trend will be bullish, if the slow is negative then it will be bearish, but if the slope is within a certain percentile that is classified as neutral then there will be no trend or a neutral market.
If the Aroon filter is enabled this will calculate the trend by the percent of candles with new highs or lows in a similar way as the SMA slope filter works
If both filters are enabled then both filters will have to coincide for a bull or bear trend to be determined.