This script combines the usage of the SMMA indicator in order to provide signals for opening and closing trades, either buy or sell signals. It uses two SMMA , a fast and a slow one, both configurable by the users.
The trigger of Buy and Sell Signals are calculated through the SMMA crosses:
Buy Signals: The fast SMMA crosses over the slow SMMA . They are highlighting by a green area and a "B" label.
Sell Signals: The fast SMMA crosses under the slow SMMA . They are highlighting by a red area and a "S" label
The trigger of Close Buy and Close Sell Signals are calculated through the close price crosses with the fast SMMA:
Close Buy Signals: The fast SMMA crosses under the close price and at the same time the trend is bullish , so the fast SMMA is greater than the slow SMMA . They are highlighted by a lighter green area
Close Sell Signals: The fast SMMA crosses over the close price and at the same time the trend is bearish , so the fast SMMA is lower than the slow SMMA . They are highlighted by a lighter red area
Few important points about the indicator and the produced signals:
This is not intended to be a strategy, but an indicator for analyzing the SMMA conditions. It gives you the triggers depending on the real time analysis of the SMMA and prices, but not being a proper strategy, pay attention about "fake signals" and add always a visual analysis to the provided signals
Following this indicator, the trade positions should be opened only when a cross happens. Either in this case, analyse the chart in order to see if the signals are a "weak" ones, due to "waves" around the SMMA . In these cases, you might wait for the next confirmation signals after the waves, when the trend will be better defined
The close trade signals are provided in order to help to understand when you should close the buy or sell trades. Even in this case, always add a visual analysis to the signals, and pay attention to the support/resistance areas. Sometimes, you can have the close signals in correspondence to support/resistance areas: in these cases wait for the definition of the trend and eventually for the next close trade signals if they will be better defined
If I understand correctly, smoothed sma should be smoothed with each new value (so sma at the first candle and smoothed at each new candle). I'm not a pine script expert so I'm not sure, but doesn't it smooth the sma only once? Meaning, initialized with the sma then smoothed with the current value?
I'm not a pine script expert so I'm not sure, but doesn't it smooth the sma only once? Meaning, initialized with the sma then smoothed with the current value?