Laguerre RSI with Laguerre Filter Indicator for MT4

Laguerre RSI with Laguerre filter Indicator For MT4

The Laguerre RSI with Laguerre filter Indicator For MT4 is a very resourceful tool for swing traders. The indicator normally indicates the market cycles. Therefore, it is a perfect fit for the traders that trade market swings.

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Understanding the Laguerre RSI with Laguerre filter Indicator For MT4

The indicator is normally drawn as two trending lines on a separate chart below the trading chart. One of the lines is dotted and dim gray in color while the other line is continuous and PaleVioletred.

The dotted dim gray line is associated with the Languaerre filter signal while the pale violet red line is associated with the Languerre RSI.

The Languerre filter normally gives a time warp delaying the low-frequency component than the high-frequency component.  In short, the Languerre filter is responsible for the generation of much smoother filters with the use of fewer market information.

Looking at the Laguerre RSI with Laguerre filter Indicator For MT4 window, you realize that there is a scale on the right-hand side with two lines at 0.85 and 0.15 levels. However, it is worth noting it is at times not possible to view the two lines at the same time depending on the market.

Once the indicator moves above the 0.85 level and below the 0.15 level it flattens out.

Both 0.85 and 0.15 levels are visible in the chart

The Laguerre RSI with Laguerre filter Indicator For MT4 can, therefore, be said to oscillate between the two levels (0.85 and 0.15).

If the indicator is between 0.15 and 0.85 and heading towards 0.85, then there is a bullish trend. However, the bullish trend weakens when it goes beyond the 0.65 level. That is why in the inputs' section of the indicator properties, the 0.65 is denoted as the ‘No Trade Zone up’.

On the other hand, if the indicator is between 0.85 and 0.15 and heading towards 0.15, then there is a bearish trend. And similarly, the bearish trend weakens when the indicator gets below the 0.35 level, which is denoted as the ‘No Trade Zone down’ in the inputs' section of the indicator properties.

No trade Zone in the inputs of the properties of the indicator dialog box

The ‘No Trade Zone’ is shown using the pinkish color region. The upper side of the region is the 0.65 level while the lower side is the 0.35 level.

When the indicator goes past either of the two levels (0.85 and 0.15 levels), it flattens out showing that the market is overbought or oversold respectively and it is waiting for a reversal to take place. This means that if the indicator goes below the 0.15 level, it shows that the bearish trend is most likely nearing its end and it may reverse to a bullish trend. And similarly, when the indicator goes above the 0.85 level, it shows that the bullish trend is almost over and the market trend may change to bearish any time.

Customizing the Laguerre RSI with Laguerre filter Indicator For MT4

Looking at the indicator's input properties list, there are quite a number of inputs that can be changed depending on the trader’s taste. However, most of the inputs are standard and should only be changed if the trader is very experienced in trading and clearly understands their effects on the performance of the indicator.

The long list of inputs

The most important inputs that the trader may opt to change are the colors depending on the background color of his/her trading chart, the level up, the level down and the no-trade zone levels. The rest of the inputs are best used in their default state.

Entering trades using Laguerre RSI with Laguerre filter Indicator For MT4

Apart from understanding how the indicator functions and how to customize it, it is also very important to know how a trader should use it to place trades.

As the indicator oscillates within its indicator window, it gives a number of signals that the trader should take note of. Of importance, the trader should keep his eyes on the various levels (0.15, 0.35, 0.65 and 0.85) and on which line is above the other.

  • Buy (Long position) signal

The buy signal of the indicator is given when the indicator is moving up from the 0.15 level to the 0.85 levels. The trader should look for when the dim gray line of the Laguerre RSI with Laguerre filter line crosses the pale violet red line. That means when the pale violet red line is above the pale gray line.

In most cases, this happens just before the indicator lines cross the 0.15 level moving upwards.

  • Exiting the Buy Order

The buy order should be closed once the indicator lines hit the 0.65 level since after that the bullish trend becomes weak.

Once the buy order is closed, the trader should not place any other trade, especially when the indicator lines get above the 0.85 level and flattens since the market is overbought and the trend could reverse any time.

  • Sell (Short Position) Signal

The sell signal of the indicator is given when the indicator is moving down from the 0.85 level to the 0.15 levels. The trader should look for when the pale violet red line of the Laguerre RSI with Laguerre filter line crosses the dim gray line. That means when the pale gray line is above the pale violet red line.

In most cases, this happens just before the indicator lines cross the 0.85 level moving downwards.

  • Exiting the Sell Order

The sell order should be closed once the indicator lines hit the 0.35 level since after that the bearish trend becomes weak.

Once the sell order is closed, the trader should not place any other trade, especially when the indicator lines get below the 0.15 level and flattens since the market is oversold and the trend could reverse any time.

Entering trades using the Laguerre RSI with Laguerre filter Indicator For MT4

 

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