BB Trend Flat. Flat detection in seconds
Trading financial assets always involves building positions in the direction of a certain trend.
However, the market is not as straightforward as we would like it to be, and it is characterized by range movements, accumulations and price movement into the so-called flat on forex.
The flat state for most trend strategies is comparable to losses, since the price can repeatedly disrupt the trader’s protective order, and repeated entry into the market from almost the same point forces the trader to constantly revise his signals.
Once caught in a flat saw, the strategy can give a huge number of false signals, and in the best case, the position will simply hang around with variable profits, accumulating a negative swap.
In order to avoid falling into such situations, it is necessary to correctly identify a flat, and the special BB Trend Flat indicator will help us with this.
The indicator is inherently a universal tool, so the choice of a currency pair, as well as a time frame, depends purely on the trader’s tasks that he sets for this tool.
Installing the BB Trend Flat indicator
As noted at the very beginning of the article, the BB Trend Flat indicator is a custom tool, so in order to use it you will need to download the file and then install it.At the time of writing, the BB Trend Flat indicator can be set in two ways. The first method is to enter BB Trend Flat in the “Market” tab of your terminal and then download it, and the indicator will appear in your platform automatically.
If this method turns out to be irrelevant, you can install it the old fashioned way, namely, download the indicator file at the end of the article, and then place it in a folder called indicators.
Accessing the system indicators folder is very easy. To do this, in the running terminal, in the upper left corner, go to the “File” menu and then select the “open data directory” item. After resetting the indicator file, close all data directory folders and restart your platform.
The BB Trend Flat indicator will appear in the list of custom indicators, and in order to use it, just drag the tool onto the chart of the currency pair.
The principle of constructing the BB Trend Flat indicator. Signals
The BB Trend Flat indicator is based on the long-loved standard Bollinger Bands indicator. So, at the moment when the Bollinger Bands narrow as much as possible, the indicator interprets this market state as a flat and draws a gray bar.
The central line of Bollinger Bands is the main indicator of a flat, namely, if the price crosses the central line from bottom to top and is above it, the indicator draws a green bar.
If the price crosses the center line of the Bollinger Bands from top to bottom and is below it, the indicator draws a red bar. You can see an example of BB Trend Flat working in unison with Bollinger Bands in the picture below:
If we consider BB Trend Flat as a signal tool, then it should be used after exiting the flat. So, we enter a buy position if the color of the bar has changed from gray to green, and a sell position if the color of the bar has changed from gray to red. Example:
Indicator settings
If we look at the indicator settings, it turns out that they are completely similar to the settings of the standard indicator Bollinger Bands.
So in the BB Period line you can indicate the period of the Bollinger Bands, and in the BB Deviation line their divergence.
The only parameter that differs from the standard analogue is the Flat factor, which is responsible for determining the flat in the market.
In conclusion, it is worth noting that the BB Trend Flat indicator fully copes with its mission. This is why BB Trend Flat can be a great addition to any trend strategy.
Download the BB Trend Flat indicator