CAP station Trading is a volatility-based index that uses the “elongated envelope concept”in its work. These envelopes consist of two outer lines. Envelope theory says that the market price generally falls within the range between the boundaries of the envelope (or channel). If prices go beyond the envelope, this is a trading signal or trading chance.
The idea of the indicator and how to use it could be found in my website (in English).
fundamentally, CAP Channel Trading can be used to help ascertain the overbought and oversold state of the market. When the market price is near the upper band, the market is considered overbought (buying area). Conversely, when the market price is close to the lower band, the market is considered oversold (sales area). The indicator gives signals with arrows if there is a potential price reversal. It is recommended to open positions when the price approaches 30 points or closer to the channel border.
However, this study can be used to determine the strength of the price trend. Some traders use price movement up and closing the candle above the upper band CAP Channel Trading as the buy signal and the price moves down and closing the candle below the lower band as a signal to sell.
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The advantage of the CAP Channel Trading indicator is that compared to other indicators, the market lag is not so pronounced. This is because CAP Channel Trading is extremely sensitive to fluctuations in volatility.
By varying the bands over the most recent average daily range, the channels will naturally be at a greater distance from the market with strong price jumps than with weak ones. However, they will remain at a much more constant width than with other envelope methods.
This indicator can be used to open initial trades in our Expert Advisors listed below
- Deviations – deviations of the bands.
- Minimum Bar Redraw – the minimum number of bars to recalculate and redraw the channel.
- Show Analysis Report is to show on the chart the analysis report.
- displayprofits – show profit on the chart for each signal.
- Signal Bar-working on the current one/a closed bar.
- Enable Pop-Up Alerts – a message in the platform about the appearance of a signal.
- Enable Email Alerts-notification of an alarm by email. You need to configure receiving email in the platform.
- Enable Push Alerts-notification of the appearance of signals on the mobile phone, you need to configure in the MetaTrader 4 platform.
- Enable Sound Alerts – sound alerts when a signal appears.
- Sound File Name (For Long) – name of the sound file for short signals. The file must be located in the “Sounds” folder in the installation directory of the MetaTrader 4 platform.
- Sound File Name (For Long) – name of the sound file for long signals. The file must be located in the “Sounds” folder in the installation directory of the MetaTrader 4 platform.
Mohammad Ali, technical analyst, stock speculator, programmer and founder of Capilta Business Solutions.
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