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Half Trend indicator

July 20, 2023 by Ali Muhammad

Introduction NEED A STREAMLINED BUSINESS

Introduction NEED A STREAMLINED BUSINESS
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A half‐trend indicator is a technical analysis tool that uses moving averages and price data to
find potential trend reversal and entry points in the form of graphical arrows showing market
turning points.

The salient features of this indicator are,

It uses the phenomenon of moving averages.

It is a momentum indicator.
It can indicate a trend change.
This indicator is capable of detecting a bullish or bearish trend reversal.
It can signal to sell/buy. 
It is a real‐time indicator.

Principle of the Half Trend indicator

This indicator is based on the moving averages. The moving average is the average of the
fluctuation or change in the price of an asset. These averages are taken for a time interval. 

So, a half‐trend indicator takes the moving averages phenomenon as its principle for working.
The most commonly used moving averages in a half trend indicator are,

Relative strength index ﴾RSI﴿

EMA ﴾estimated moving average﴿

Components of a Half Trend indicator

There are two main components of a half trend indicator. 

Half trend line

Arrows

Half trend line 

Half trend line represents this indicator on a candlestick chart. This line shows the trend of a
chart in real‐time. A half‐trend line is based on the moving averages.

There are two further components of a half‐trend line.

Redline
Blue line
 Blue line

A red line represents a bearish trend. When the half‐trend line turns red, a trend is facing a
dip. It is time for the bears to take control of the market. A bearish control of the market
represents the domination of sellers in the market. 

On the other hand, the blue line represents the bullish nature of the market. It tells a trader
that the bullish sentiment of the market is prevailing. A bullish market means the number of
buyers is significantly greater than the number of sellers. 

Moreover, a trader can change these colors to his choice by customization.

Arrows 

There are two types of arrows in this indicator which help a trader with the entry and exit
points. These arrows are,

Blue arrow
Red arrow

A blue arrow signals a buying trade; on the other hand, a red arrow tells a trader about the
selling of the assets. These arrows work with the moving average line to formulate a trading
strategy.

The color of these arrows is changed if a trader desires so. 

Pros 
There are the following advantages to using a half‐trend indicator.

It is a very easy to eyes indicator.

This is a very useful friendly indicator.
It provides sufficient information to beginner traders.
It provides sufficient information for entry points in a trade.
A half‐trend indicator provides a good exit strategy for a trader.
It provides information about market reversals.
It helps a trader to find a bullish and bearish sentiment in the market.

Cons
It is a real‐time indicator. So, it can lag.
The lagging of this indicator can lead to miss opportunities.
The most advanced and professional traders may not rely on this indicator for crucial
trading decisions.
The lagging of this indicator can predict false reversals of the market.
It can create false signals.
It requires the confluence of the other technical tools for a better success ratio.

Best Settings for Half Trend indicator

The best settings for half trend indicator includes:

Amplitude = 2
Channel deviation = 2

The other settings depend on your choice. However the major settings amplitude and channel
deviation.
Trading strategy
It is an effective indicator in terms of strategy formation for a trading setup. The new and
beginner trades can take benefit from this indicator for the formulation of a good trading
setup. This indicator also helps seasoned and professional traders formulate a good trading
setup with other technical tools.

The trading strategy involving a half‐trend indicator is divided into three parts.

Entry and exit

Risk management
Take profit

Entry and exit

It is an effective indicator that provides sufficient information about the entry and exit points
in a trading setup. The profit of a trader is directly proportional to the appropriate entry and
exit points. So, it is a crucial step in any trading setup. 

The blue and red arrows provide information about the entry and exit points in a trading
setup. Furthermore, the entry and exit for the bullish and bearish setups are as follows.

Entry and exit for a bullish setup

If a blue arrow appears under the half‐trend line, it means the bullish sentiment of the market
is getting stronger in the future. So, it is a signal for entry in a bullish setup.

As the red arrow appears on the chart, it is a signal to exit your trade. The red arrow
represents a reversal in the market, so it is a good opportunity to close your trade in a bullish
setup.
Entry and exit for a bearish setup

Suppose a red arrow appears above the red moving average line. It is a good opportunity to
enter a trade in a bearish setup. The red line represents that sooner the sellers are going to
take control and the value of the asset is about to face a dip. So it is the best time to make
your move.

As the opposite arrow appears in the chart, it is time to exit from a bearish trade setup. 

Note: the exit signal of this indicator is less reliable as compared to the entry. 
Risk management

Risk management is an integral part of a trading setup. It is an important step to protect your
potential profits and losses. 

When trading in a bullish market, place the stop loss at the prior low point. It will help
you to cut your losses in case the prices move to the lower end.
In the case of a bearish market, place your stop loss above the prior high. 

The new trader often makes mistakes in the placement of the stop loss. If you don’t place the
stop loss at an appropriate point. It can drain your bank account and ruin your trading
experience.

Take profit

A half‐trend indicator is a decent indicator for formulating a good trading strategy. I

recommend you use this indicator with a confluence of other trading tools and strategies to
maximize your profits. 

Conclusion
A half trend indicator is a decent indicator that can transform your trading experience. It is a
dual indicator that is based on the moving averages as well as helps you to form a trading
strategy. If you are a new trader, this indicator can help you to learn and flourish in the trading
universe. If you are a seasoned trader, I recommend you use this indicator with other technical
analysis tools to enhance your success ratio. 

Click here to get access to Half Trend Indicator

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