Trend Trigger Factor (TTF) Indicator

M.H. Pee created the Trend Trigger Factors to assist traders in detecting uptrends and downtrends and so better positioning themselves in a with-trend manner. Its author contends that markets are primarily random, but there is a minor trend component that is the most important portion of trading success. Knowing if the market is in a bull or bear trend and how strong that trend is will allow you to stay on the right side of the market for longer, capitalizing on its trending behavior as much as possible. M.H. Pee explained the computations in his essay using a 15-period trackback span. The TTF formula is based on the concept of Buy and Sell Power. Pee identified today as day 1, yesterday as day 2, the day before as day 3, and so on.

What is the Trend Trigger Factor Indicator?

The Trend Trigger Factor Indicator (TTF) is similar to the RSI. Originally, this stock indices indicator was used to trade and evaluate stock indices price changes in the stock exchange and commodities market. The TTF Index technical indicator is used to identify indices trends. It calculates the direction of the trend using an “n” number of stock indices price periods, whether it is an upward or downward indices trend, using the bears power or bulls power indicator. The Trend Trigger Factor is interpreted similarly to the Relative Strength Index. It is plotted on a scale with the most noticeable values at +100 and -100, with crosses indicating prospective trading entries. The indication enables the trader to stay in the market for the majority of the time.

Setting up the Trend Trigger Factor Indicator
Setting up the Trend Trigger Factor Indicator

Trend Trigger Factor Strategy

The Trend Trigger Factor Strategy is a traditional trading method that, according to the indicator’s author, is to always be on the long side when the indicator is above +100 (which indicates a bull trend is in motion). If you were short and the TTF rose above +100, you could change your position. If the indicator value is less than -100, indicating a bear trend, you could enter short. If you have opened a position and the TTF remains between +100 and -100, you could maintain it open.

Furthermore, if the TTF makes a reversal move, you could modify your position one more. For example, suppose you were long and the indicator dropped below -100, this indicates that you could switch to a short position. You could go long as soon as the TTF reverses and rises over that level. When the indicator is above +100 but reverses below that level, a short entry signal is generated.

Buy Signal

The following could be your checklist for a buy trade:

  • When a bullish trend is ongoing.
  • When, in the Trend Trigger Factor indicator, you find a light brown cloud below the bottom reference line.

Once these two events occur:

  • You could open a buy position once you spot the light brown cloud and after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when a light green cloud appears above the top reference line in the indicator.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Trend Trigger Factor Indicator Buy Setup
Trend Trigger Factor Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When a bearish trend is ongoing.
  • When, in the Trend Trigger Factor indicator, you find a light green cloud above the top reference line.

Once these two events occur:

  • You could open a sell position once you spot the light green cloud and after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when a light brown cloud appears below the bottom reference line in the indicator.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Trend Trigger Factor Indicator Sell Setup
Trend Trigger Factor Indicator Sell Setup

TTF Indicator Pros & Cons

Pros

  • The Trend Trigger Factor Indicator helps traders identify trends quickly so they could place trades accordingly.
  • The signals given by the indicator could help the trader stay longer in the market, particularly trending markets, without exiting too quickly.
  • This indicator also shows traders possible overbought and oversold levels.

Cons

  • The Trend Trigger Factor Indicator could be confusing sometimes due to the fact that the signal line crossing above the high 100 level still indicates a buy and the signal line crossing below the -100 level still advises a sell.
  • Using this indicator in a narrow-ranging market on smaller timeframes may not meet the trader’s expectations.

Conclusion

Successful traders will never recommend relying solely on Trend Trigger Factor indicators. True, the colored clouds in the indication will assist you in preparing prior to the development of the setup, but there is no assurance that the trade will create profit. As a result, fundamental guidelines such as money management, the risk-to-reward ratio, and so on must be followed.