Using the signal candle wick
If you're familiar with all the components of the TrendMaster indicator you will know that it consists of both green and red signal candles, which indicate a shift in trend towards bullish or bearish. These signal candles by themselves are just that; an indication of a possible trend change. When entering a trade using TrendMaster we want to be able to enter only when that trend change is actually confirmed. So how do we do that?
On most exchanges you can set up a stop-limit buy order. This means that the buy order is only executed when a specific price level is reached. We can use this to our advantage to verify that a trend confirmation has occurred by putting our stop-limit buy order above the wick of the signal candle (or below when shorting). If that wick is subsequently broken by a higher high we can assume that a trend change will occur. The following chart shows some examples where you would put your order.
Where a trend is entered when using TrendMaster.
Last modified 4yr ago