Hey traders, and welcome to another software update from your friends at TrendSpider. In this update, we have added an exciting new indicator to the platform; TW Pivot by our dear friend, Theta Warrior. Details after the jump!
The TW Pivot Indicator seeks to provide traders with a clear signal when it is time to take profits on a trade. The backbone of the indicator lies in the fact that the price tends to revert back to the mean. Regardless of the time frame or trend, the price will inevitably correct when it is stretched too far. The TW Pivot indicator uses a few different elements that, when everything is aligned, try to predict that the price is about to correct. Let’s talk through the elements that the pointer contains.
As you can see in the image below, there are red and green histogram bars. The red histogram bars represent the count up and a potential sell signal that could come at the end of the count. The green histogram bars represent the countdown and, conversely, the potential buy signal that could come at the end of the count. Both darken as the count approaches completion.
There is an oscillator in the middle that turns from red to green and follows the price movement. When the price decreases, the oscillator becomes red, and as the price increases, the oscillator becomes green.
Finally, note the red and green “highlighted” vertical bars that occur at specific points. These represent buy and sell signals, and will only occur when all the factors included in the indicator are aligned. These signals won’t happen very often, by design.
In the parameters of the indicator in the image below, you will see the value “Length” 9. This value represents the number of bars of the histogram. The ‘high’ and ‘low’ values represent standard deviation values, and they are meant to give traders an idea of how much the price deviates from its mean. We can understand this by using the wobbly line and noting its position relative to the horizontal standard deviation lines.
How to read the indicator
As can be seen in the image below, when a sell signal appears, it is marked with a red vertical bar. In the opposite direction, when a buy signal appears, it is marked with a green vertical bar.
Traders will notice cases where the count is complete but there is no vertical distinction. These instances simply mean that not all the criteria that must be met for a buy or sell signal to occur have been met and that the trader should still avoid trading the count bias.
If the chart bars are missing, traders can think of those areas as extensions of the previous chart bars. In essence, the price continues to extend in the direction it was going according to the previous set of chart bars.
Finally, in the image below, you will see an instance where the oscillator changes color immediately after the signal is produced. This indicates that the signal is no longer valid.
If you’re more of a visual learner, we’ve sat down with Theta to discuss exactly how to use the indicator. In the video below, he discusses the individual parameters inside, as well as showing some use cases and examples of trades!
We hope you find this new indicator useful, and as always, if you have any questions feel free to reach us via chat via the “Contact Us” button in the lower right corner of your chart!