AG Market Quality

2019年3月23日

Given that we are primarily focussed on trend-following, we built this indicator in a quest to assess the "quality" of a market. It was adapted primarily from methods that trading coach Dr. Van Tharp popularised, namely to do with his SQN.

This indicator has 5 zones that act to classify the market:
Strong Bull - Dark Green
Bull - Green
Neutral - Grey
Bear - Red
Strong Bear - Dark Red

The black line is an SMA(20) of Market Quality (indicating average quality over a period).

The simplistic theory is to look for long trades when the quality is indicating bull or strong bull conditions (green or dark green), and look for short trades when the quality is indicating bear or strong bear conditions (red or dark red). When the quality is in neutral territory (grey bars), the market is choppy/sideways/rangebound, and it's generally best to stay out in these conditions (for trend-followers).

We like to look for long trades when the quality is bull or strong bull, and above the average quality (black line), and look for short trades when the quality is bear or strong bear, and below the average quality.

So, not only does this indicator help you decide when to get in the market, it also tells you when to stay out of the market - really handy!

You can change the periods of the Market Quality, and also the SMA measuring average quality.