Trend Range Indicator

The Trend Range Indicator is a distinct indicator that monitors the volatility of the market’s trend. It varies from conventional trend-following indicators as it focuses on the trend’s strength and weakness instead of its direction. The Range indicator for MetaTrader may be a useful instrument for traders attempting to spot periods of high and low market volatility, hence revealing possible trading opportunities. In this article, we will take a closer look at the workings of the Trend Range Indicator and explore its potential uses and benefits in trading.

What is the Trend Range Indicator?

The Trend Range Indicator is an oscillator indicator for the MetaTrader 5 platform that assists traders in determining the current market’s volatility. In contrast to trend-following indicators, the Trend Range Indicator utilizes built-in variables to watch price dynamics and assess the market’s volatility.

This indicator generates a histogram that displays three market conditions: trending, moderate or fading trend, and flat market. The histogram is followed by two moving averages on it, which act as market state boundary levels. Traders can determine the direction and strength of the market trend by analyzing the histogram and boundary levels. If the blue histogram bar is located above the upper level (shown by the blue line), this indicates that the market is undergoing strong movement. If the red histogram bar falls between the higher and lower levels (between the blue and red lines), it shows a trend that is either moderate or fading. If the gray histogram bar is located below the lower level (below the red line), market movement is weak and flat.

Trend Range Indicator Strategy

The Trend Range Indicator is a useful indicator for traders seeking to determine market volatility. A buy signal is produced by the indicator when the blue histogram of the Trend Range indicator rises above the upper level (blue line), after bullish confirmation from other technical indicators such as the MACD. In contrast, a sell signal is produced when the blue histogram of the Trend Range indicator falls below the lower level (red line) in response to a bearish signal from other indicators such as the MACD or moving averages.

It is essential to keep a careful watch on the gray histogram, which represents the trend’s strength. During a bullish trend, traders may close all buy positions if the gray histogram falls below the lower level (red line). Similarly, traders can cancel all sell trades if the gray histogram drops below the lower level (red line) during a bearish trend. Traders should never use the Trend Range indicator alone but should combine it with other trend indicators, such as the MACD or moving averages, for a more efficient trading strategy. Scalpers can employ this indicator with ease while developing an effective trading strategy.

Buy Signal

Trend Range Indicator Buy Signal
Trend Range Indicator Buy Signal
  • Wait for the blue histogram bar of the Trend_Range MT5 forex indicator to rise above the upper level (blue line).
  • You may open a long position upon confirmation of the bullish signal using other technical indicators like the MACD.
  • Traders can set a stop-loss order at the recent swing low or according to their money management strategy.
  • You may exit your long position when the gray histogram of the Trend Range indicator falls below the lower level (red line) during a bullish trend.

Sell Signal

Trend Range Indicator Sell Signal
Trend Range Indicator Sell Signal
  • Wait for the red histogram of the Trend Range indicator to rise above the lower level (red line).
  • You may enter a short position upon confirmation of the bearish signal using other technical indicators like the MACD.
  • You can set a stop-loss order above the entry candle or according to your money management strategy.
  • Traders may exit their trades when the gray histogram of the Trend Range indicator falls below the lower level (red line) during a bearish trend.

Trend Range Indicator Pros & Cons

Pros

  • The Trend Range Indicator identifies the market’s volatility and may signal likely trend changes or continuations.
  • It is simple to use and understand, particularly when paired with other technical indicators.
  • It may be used over several timeframes, making it appropriate for various trading strategies.

Cons

  • The Trend Range Indicator is a lagging indicator, which means that it may not be useful in identifying trend changes in real-time.
  • It does not give specific entry and exit points for trades and if applied in isolation might result in losses.
  • The indicator may produce false signals, particularly in choppy or flat markets, resulting in losses if not paired with other indicators.

Conclusion

The Trend Range Indicator is a valuable tool for traders who need to evaluate market volatility. In contrast to other trend-focused indicators, the Trend Range Indicator assists traders in determining the strength of a trend, whether it is moderate, waning, or flat. By combining this indicator with other technical analysis instruments such as the MACD or moving averages, traders can develop a more effective trading strategy. It is essential to remember that this indicator should never be used alone but as part of a larger, balanced trading strategy.

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