Before we go deep in magic trend indicator let us first understand the trend. Success in trading is all about making large profits and taking small losses. Stocks or any tradeable markets follow trends because it is a natural behavior of mass.
“People are inherently habituated to follow mass, this sustained following creates what is called trend”
What Is Trend In Stock Market?
Well there are numbers of answers, but the classical definition of trends from The Dow Theory is as follows:
If each successive rally tops are on the higher level and each successive bottoms of corrective moves are also on higher levels then this is said an uptrend.
Conversely, If each successive rally tops are on the lower level and each successive bottoms of corrective moves are also on lower levels then this is said a down trend.
Why Magic Trend Indicator?
The Classical definition of trend requires at least two consecutive rally tops and bottoms to be established before we can correctly call the trend up or down. It also depends on the interpretation of rally tops and corrective bottoms, those can be different for traders as per their perceptions.
So ultimately you can make mistake in identifying the correct trend, or you may be late in the trade after identifying correct trend direction. So how to identify a trend without delay and good accuracy? The solution is Magic Trend Indicator.
Golden Rule Of Trading: “Let your profits run, grow to big one and cut your losses at the earliest people do exactly opposite”
What Is Magic Trend Indicator?
It is a line overlaid on the price chart, like conventional moving average. Though it is far more fast, accurate and reliable than any other conventional trend following indicators. The calculation of indicator is based on average true range, current price direction and some complex logic. This is for keeping us in the position as long as the existing trend sustain.
How To Use Magic Trend Indicator?
Magic Trend indicator changes its color based on the direction of the trend, so if the line is light green then the trend is up and if it is red then the trend is down. The exact value of Magic Trend indicator is used as trend reversal trigger on closing basis i.e. if you are on long position and on any bar price closes below the indicator value then the indicator turns red from the next bar to indicate the reversal of trend, so trader should exit his long position and take short position at the same time. The opposite rules apply to the short positions.
We can also say that a buy signal triggers when closing price crosses above the Magic Trend line and short signal triggers when closing price crosses below the Magic Trend line. This is also indicated by the small arrow above and below the bar when a signal is triggered.
What To Trade With Magic Trend Indicator?
Magic Trend indicator is good for any type of market including stock, index, forex, commodity, ETF etc. which are most liquid and frequently trending. It is also good for any type of trading style you select ranging from intraday, swing or positional trading.
For illiquid markets where trading volume is low and when the market is non-trending. Magic Trend indicator gives frequent false signals. To know how to identify trending or sideways market watch this.
Where To Find Magic Trend Indicator?
Magic Trend indicator is not classical indicator so you won’t find it anywhere else. This is custom coded for Amibroker trading software. So it can only be used through Amibroker Trading Software only. But the good news is that Amibroker Trading Software can be used free of cost for 30 days. Hence you can check the Magic Trend indicator just by applying the Magic Trend Indicator Code in Amibroker trading software.
To Get The Code Of Magic Trend Indicator Please Click Here
Watch Live Trading With Magical Trend Indicator Signal In Amibroker In The Following Video: