LeMan Variation. Source of market signals
Any trading strategy cannot do without its most important element – a signal indicator.
For this role, as a rule, all kinds of oscillators or custom tools based on them are used.
The LeMan Variation indicator is a technical analysis tool that belongs to the category of oscillator indicators.
It is worth noting that the LeMan Variation indicator is a unique development, since in the process of its creation the author did not use standard tools, but implemented his idea from scratch.
Like all indicators belonging to the oscillator group, LeMan Variation can be safely used on absolutely all time frames, and it demonstrates especially high efficiency on small time frames, which are most often used for scalping.
Installing the LeMan Variation Indicator
Unfortunately, not all custom indicators, which are in great demand and popularity among traders, are included in trading platforms by default.
The LeMan Variation indicator is no exception, so in order to use it in practice you will need to download the indicator file at the end of the article, and then install it directly into your trading platform.
The procedure for installing the LeMan Variation indicator is no different from installing any other custom indicator in the MT4 trading terminal, namely, you will need to dump the previously downloaded indicator file into the appropriate folder in the terminal data directory.
You can find more detailed instructions for installing custom technical analysis tools by clicking on the link http://time-forex.com/praktika/ustanovka-indikatora-ili-sovetnika.
After updating the trading terminal in the navigator panel or restarting it, LeMan Variation will appear in the list of custom indicators, and in order to use the tool in practice, just drag the indicator name onto the chart.
After applying the tool you will receive the following work schedule:
The principle of using the LeMan Variation indicator
The author of the LeMan Variation indicator pointed out that this oscillator is a trend instrument, and therefore it can perform two functions, namely a signal and a filter.
If we talk about the filter function, we can note that the indicator line moves in two trend planes, and the central line is a kind of equator. If the line is above the 0 mark, the trend is bullish, and if the indicator line is below the 0 mark, the trend is bearish.
If we talk about the signal function of the instrument, then signals to enter the market occur when it crosses the zero mark, which marks a change in the global trend.
So, if the indicator line crosses level 0 from bottom to top, we open a buy position. If the indicator line crosses level 0 from top to bottom, we open a sell position. Example:
The second type of signal, which is a harbinger of a premature price reversal, is called divergence. Divergence refers to the discrepancy between the readings of the indicator lines and the actual price movement.
So, if the price has updated a new price maximum, and the indicator line fixes it as lower than the previous one, we open a sell position.
If the price has updated a new minimum, and the indicator line fixes it as higher than the previous one, we open a buy position. You can see an example of divergence of the LeMan Variation indicator below:
In conclusion, I would like to note that the LeMan Variation indicator is a universal tool, however, to use it effectively it is necessary to combine the indicator with other tools technical analysis.
Download LeMan Variation indicator.