VertexFX Indicators

Inside Bar Outside Bar is VTL Client Side indicator to identify the Inside Bar and Outside Bar candle patterns. Inside Bar is a price bar with its high less than previous bar’s high and low greater than previous bar’s low. They are marked by the red arrows in chart. Outside Bar is a price bar with its high greater than previous bar’s high and low less than previous bar’s low. They are marked by the blue arrows in chart.
Inside Bar Trading Strategy
An Inside Bar means a contraction in price range or volatility. It is a pause in price movement and does not show any strength in price direction. This will lead to a breakout from this trading range.
Identify the trend direction and place a stop buy order few pips above the high of the inside bar if the trend is up. In down trend place a stop sell order few pips below the low of the inside bar. Stoploss is placed few pips beyond the opposite end of the inside bar.
Outside Bar Trading Strategy
An Outside Bar means a short term expansion in price range or volatility. It shows strength in both directions. Look for outside bar at a resistance or support level. When outside bar is formed at a resistance level, sell breakdown of the low of the outside bar. When outside bar is formed at a support level, buy breakout of the high of the outside bar. Stoploss is placed few pips beyond the opposite end of the inside bar.
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Price Action is a Client Side VTL Indicator to display the important price action candle stick patterns; Pin Bars, Inside Bars and Engulfing Bars. The patterns are marked in chart by vertical lines below the candle chart in a new pane.
·         Red – Pin Bars
·         Green – Engulfing Bar
·         Yellow – Inside Bar
The height of the vertical line shows the strength of each pattern with a scale 1 to 4. The pattern strength is calculated based on how the pattern is formed in relation to its adjacent four bars. The higher the line the stronger the pattern. Pattern Name and whether the pattern is bullish or bearish and pattern strength is displayed in the Data Window tab of the terminal.
Trading Strategies:
Pin Bars – Pin bars usually indicate trend reversal. When they are formed at support resistance levels, they generate strong signals. A bullish pin bar is formed at a support level and the pattern strength is 3 or 4, odds favor a price reversal. Trades can be opened above the high of the pin bar. When Bearish Pin bar is formed at resistance level and pattern strength reads 3 or 4, then short position can be opened on a break of the low of the Pin Bar.
Engulfing Bar: Similar to Pin bars, strong Engulfing bars formed at support or resistance levels are good trading signals. Open trades on breakout of the engulfing bar in the direction of the Engulfing Bar.
Inside Bar: Inside Bars represent consolidation. They are suitable for breakout trading. When a strong inside bar pattern is picked by the Price Action indicator, open new trades on breakout of the mother bar.
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Hull Moving Average (HMA) is Client Side VTL Indicator, is an extremely fast and smooth moving average that almost eliminates the lag associated with moving averages. The major disadvantage with moving averages is the inherent lag associated with them. HMA reduces the lag with common moving averages like Simple MA and Exponential MA. 
HMA calculation process is first you define the HMA period (e.g. period = 16). Then,
1                     Calculate the Weighted Moving Average (WMA) for half of the period (period/2, i.e. 16/2 = 8) and for full period (16) WMA.
2                     Subtract the full period WMA from half period WMA multiplied by 2.  (WMA(8)*2 – WMA(16))
3                     Calculate the square root of the full period. (Sqrt(16) = 4)
4                     Calculate WMA with square root of period in step 3 as period on the result got in step 2. (WMA(4) of result in step 2)
 
Like moving averages HMA is used to identify the trend direction. The direction of the HMA line shows the trend direction. When the HMA line is rising, trend is up and when the HMA line is falling trend is down. Also price trading above the HMA indicates uptrend and price trading below HMA line indicates down trend. Slope of the HMA line shows the strength of the trend.
 
HMA can be used to generate entry signals in trading strategies. First find the long term trend by the use of trend lines or any other trend identification method. A short term HMA is used for entry signals with this trend. In long term uptrend, when the short term HMA turns up, buy position can be opened. In long term down trend, when short term HMA turns down after a pullback, short position can be opened. The chart attached shows an example sell trade with trend line and HMA. After the trend line is drawn with major swing highs, wait for price to pull back, in the pull back HMA will rise. When the HMA turn down again open Sell position.
 
The HMA indicator has the following parameters.
1                     HMA Period – Period for HMA calculation
2                     MA Shift       - Shift if HMA is used as displaced moving average
3                     MA Method – Moving average Calculation Method for internal indicator formula. Values can be 0 - SMA, 1 - EMA, 2 - SMMA, 3 – LWMA
4                     MA Price      - Price field used for HMA. Values can be 0 - Close, 1 - Open, 2 - High, 3 - Low 4 - Median, 5 - Typical 6 - weighted

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Harami is a Client Side VTL Indicator to identify Bullish and Bearish Harami candle stick patterns. When the Harami pattern appears, it depicts a condition in which the market is losing its steam in the prevailing trend direction. The Harami consists of a small real body (candle open close range is the real body) that is contained within the preceding large candles' (Master Candle) real body. A bullish Harami comes after an upward price move and bearish Harami comes after a downward price move. The VTL indicator plots an up or down arrow after the Harami pattern is confirmed, that is, on the next candle after the Harami.
A buy signal could be triggered on the day after the bullish Harami occurred, if price close higher than Harami candle’s close price. Confirming the reversal with a down trend lines is a good practice. A sell signal could be triggered on the day after bearish Harami occurs, if price close lower than Harami candle’s close price and an uptrend line break happened. Note that the Harami candle in the chart is the candle prior to the up or down arrow in chart. A sell trade example is show the chart.
The Harami detection algorithm can be customized through parameters. Open the VTL script in VTL editor and parameter values are located at the top of the script file. Change the parameter values and compile the script and apply to chart.
1                    Minimum Master Bar Size - Value in Pips
2                    Maximum Master Bar Size - Value in Pips
3                    Minimum Harami Bar Size – Value in Pips
4                    Maximum Harami Bar Size – Value in Pips
5                    Maximum Harami Bar to Master Bar Ratio
6                    Minimum Harami Bar to Master Bar Ratio
7                    Arrow Offset        - Marker arrow offset from High/Low of Bar


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