The Simple Moving Average Slope indicator (SMAS) is a technical analysis tool designed to help traders detect the direction and strength of the current trend in the price of an asset. It is also a great tool for identifying sideways markets. The indicator plots the slope of a simple moving average (SMA) of the closing prices over a specified time period. The slope is normalized by dividing it by the standard deviation of the slope over a longer time period.
HOW TO USE Traders can use the Simple Moving Average Slope indicator in various ways. One common way is to look for bullish or bearish signals. A bullish signal occurs when the normalized slope rises above a predetermined threshold, resulting in the indicator turning green, indicating an upward trend in the market. Conversely, a bearish signal is generated when the normalized slope falls below the negative value of the threshold, causing the indicator to turn red, signaling a downtrend in the market. When the normalized slope falls between the positive and negative threshold values, a neutral signal is generated, indicating that the market is moving sideways. This can help traders avoid false trend signals from other indicators and strategies that may occur when the market is in a sideways regime. Additionally, traders can use the Simple Moving Average Slope indicator in conjunction with other technical indicators to confirm the trend direction.
SETTINGS Window - specifies the number of bars used to calculate the SMA slope. The default value is 20. Threshold - specifies the threshold value used to generate the bullish and bearish signals. The default value is 0.6. Traders can adjust these settings based on their trading strategy and the asset being analyzed.
Hi ! Thanks for the work and sharing. The unit of the slope is % ? Threshold is comparing the magnitude of the slope with the threshold input ?
AstrideUnicorn
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@tuunbaq, Hello, thank you! I'm glad you like the indicator. The slope is measured in units of its own standard deviation (so-called sigma units). This allows you to use the same settings for different markets with different dynamics and volatility. For example, a slope of 1.2 means that this value is one standard deviation above the zero slope (you can call it a 1.2-sigma slope) and so on. You are absolutely correct in interpreting the threshold value. It is also measured in units of sigma and the slope is compared to it. It is used to screen out small random fluctuations in slope.
bolsa2023TV
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Thanks. Great indicator, thanks for sharing the code, that way we can use it inside an strategy
AstrideUnicorn
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@bolsa2023TV, Thank you so much for the nice review
The unit of the slope is % ?
Threshold is comparing the magnitude of the slope with the threshold input ?