Hysteresis for MT4
This indicator determines the market regimes based on the channel moving average of the highs and lows. When the system is in a bullish mode, the channel is growing, and vice versa for the bear market. The purpose of channel selection instead of a simple moving average is to obtain advantages in terms of reduction in hysteresis and spurious signals from the range of values to a shift mode to bullish to bearish.
Hysteresis - a natural phenomenon, which manifests itself in magnetism, elasticity, and cell division control theory (e.g., thermostat). In these systems manifest dependence ways in which the current state is dependent on the way in which this condition has been reached. The system has a memory, and the consequences of the current changes will be felt only after a certain delay or or exceeding the range. Many believe that the market also needs time to respond to new information, and that this response occurs, taking into account the recent history of the market. Filter market regime requires that the price closed below the minimum channel before switching to a bearish mode.
interpretation of values
- When the price is above the indicator value, the market is bullish and the need to look for opportunities to go long.
- When the price is below the indicator value, the market is bearish and the need to consider the possibility of opening a short position.
Indicator Hysteresis is primarily intended for use as a trend filter in combination with other strategies or indicators. For example, you can use the Value Chart indicator in conjunction with the indicator Hysteresis. When Hysteresis indicates that the market is bullish, consider only the possibility of opening of long positions and use the Value Chart indicator to determine the temporary setbacks and vice versa for the bear market.
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