Today I want to tell you about an indicator that can be used to create a profitable trading strategy. The algorithm of its work is based on modified moving averages and Bollinger bands. Caixxa V3 is displayed in a separate window below the graph as four lines. The two lines are gray. They are an optimized version of Bollinger Bands. The red and blue lines are moving averages. In addition, there are two levels in the indicator window, which define zones that indicate overbought and oversold levels. This indicator is not included in the standard MT4 technical analysis toolkit, so you need to download and install it.
In order to achieve good trading results using Caixxa V3, you need to understand its settings. They can be optimized if necessary.
Basic parameters of Caixxa V3
First of all, the indicator needs to indicate the number of candles, the data for which should be used in calculations. This can be done using the Processed parameter.
The periods of the red and blue lines are set using the Control-Period and Signal-Period variables.
Signal-Method is a type of MA (blue line).
BB-Up-Period, BB-Up-Deviation, BB-Down-Period and BB-Down-Deviation are periods and deviations of Bollinger Bands (gray lines).
The Level-Ob and Level-Os variables allow you to adjust the overbought and oversold levels.
The rest of the parameters are used to select the method of signaling.
Now let’s move on to the trading rules for this indicator.
How to open deals
The most popular use case for this indicator is to track the exit of the red and blue lines from overbought and oversold zones. As soon as this has happened, we open an order of the corresponding direction. That is, if the lines left the overbought zone, open a sell order. Accordingly, if both lines have left the area indicating oversold, open a buy order.
Here is an example of a buy trade
If at the same time there is a rebound from one of the gray lines (Bollinger bands), then the signal strength increases.
And the second option for using Caixxa V3 , one might say, is standard. The signal for entry is the intersection of the fast (red) and slow (blue) MA. If this happens from the bottom up – buy, from top to bottom – sell.
Which of these options to choose is up to the trader. But I would prefer the first one.
I recommend trying this tool first in demo trading, and only then you can decide whether to switch to a real account.