Trend Quality Indicator
Trend Quality Indicator is an excellent trend detector for MT5. An ideal indicator to show when the market is trending and when there is “noise” in the market.
Description
You’ve probably heard that the trend is your friend. However, the market follows a smoothly established trend. We know that most of the time the market moves in an up and down cyclical trajectory. Therefore, the main task of traders is to determine the market trend. Luckily, the Trend Quality Indicator for MT5, which can be downloaded for free, is designed to assist traders in detecting and evaluating a trend. David Sepiashvili developed the trend quality indicator to determine when there is a smooth trend and noise in the market. The trend quality indicator measures price changes over a period of time and correlates them with market noise.
The indicator uses a two-stage filtering process.
- The first step uses moving averages to filter specific time periods. The moving average corresponds to the upward and downward movement of the price of half-cycles. In other words, the indicator distinguishes between uptrends and downtrends.
- The next step is to improve the accuracy of the moving average by identifying the strength of promising trends.
In a nutshell, the trend quality indicator tries to evaluate the trend in relation to the noise. In addition to informing traders about the reliability of a trend, it also measures gradual strength. Therefore, it can be used on any timeframe and currency pair.
How to Trade Using the Trend Quality Indicator for MT5
The oscillator in a separate window on the chart characterizes the indicator. When the market is bullish, the indicator moves up and turns green. Similarly, when the trend is bearish, the indicator moves down and turns red. When the market trend is strong, the trend moves sharply up or down. However, when there is noise in the market, if the indicator makes small fluctuations. In this case, the market is not trending.
Sample Market
The chart above shows the price action of the Euro against the US Dollar (EURUSD). The indicator shows sideways movement when the market fluctuates or consolidates. The red circle shows market consolidation. When there is “noise” in the market, bidders show hesitation characterized by short up and down moves.
After consolidation, the market fell sharply, as shown by the red arrow. In fact, the indicator also shows a sharp downward move.
The price movement that follows the red arrow is an indeterminate trend characterized by a bearish trend and bullish corrections. During this period of market “noise”, the indicator shows sideways movement.
Conclusion
Trend quality is the perfect tool to incorporate into your trading strategy. Although it does not give entry and exit signals, it does tell you when the market is trending. In general, you are more likely to make money in the market when the price is in a steady trend. Since the indicator is freely available, it does not hurt to try it.