This indicator is the culmination of various other indicators and attempts to help traders assess the actual current trend and filter out all the noise.
In reality, this indicator is extremely similar to the Traders Dynamic Index in concept and the overall results of the indicator across any time frame. The differences though are that while TDI uses just RSI, this uses RSI, CCI, MFI, and TSI, and also includes an assessment of the momentum associated with the move, to better enable traders to detect divergence.
The default settings generate the best returns across any time frame, however can be ultra sensitive and generate too many trade signals on high resolution time frames (i.e., the 15M or 30M). If one desires less sensitive results, one can use (14,12,9) for the first 3 inputs. This generates consistent signals, but is not as sensitive as the default.
In general:
GO LONG: - Scalp: Wt1 crosses over Wt2 - Short Term: Wt1 crosses over Wt2 and the middle band. Wt2 is above the middle band as well - Medium Term: Same as short term, but there are extended oversold trading signals (yellow dots) - Long term: Same as medium term, but there is divergence in the momentum as well (i.e. it is increasing while price decreases)
GO SHORT: - Scalp: Wt1 crosses under Wt2 - Short Term: Wt1 crosses under Wt2 and the middle band. Wt2 is below the middle band as well. - Medium Term: Same as short term, but there are extended overbought trading signals (yellow dots) - Long term: Same as medium term, but there is divergence in the momentum as well (i.e., it is decreasing while price increases)
hey frac how are the red and green waves built, which indicator do you use?
friedrice683
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@rodriguezum, hey there!
There are two sets of red and green waves:
1) Delta between the Slickwater and its MA line
2) The momentum of the Slickwater signal itself
In reality, both of these should be rather similar to one another. Personal preference on which one you prefer.
In a nutshell though, both of these can help identify bullish/bearish divergences. In a downtrend, if the momentum of the current price action is not as strong (so negative in a downtrend), or even positive (green), then this could suggest bullish divergence. Opposite for bearish divergence.
I suggest practicing using the indicator without the wave inclusions, and just using the slickwater signal and its MA, as well as possibly the Bollinger band basis one as well.
MRodr
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@friedrice683, ok still dont get it, I was looking at awesome oscilator and momentum squeezes (bollinger/keltner channels) but i guess from what you tell me its a delta between your other two waves, good job anyways, I think you got something here just needs to clear out some false positives.
friedrice683
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@rodriguezum, this might help clear the confusion: whereas awesome oscillator and momentum squeezes measure the momentum of price action, the momentum in the Slickwater strategy is the momentum of the actual Slickwater signal. So it helps show momentum divergences to price action more effectively than if you are looking at a typical momentum indicator.
friedrice683
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Think of it like a second derivative. If the traditional awesome oscillator / momentum squeezes are based off of price action, and Slickwater is based on some variation of price action + volume, then the Slickwater momentum is a second derivative measurement to price action.