We have already talked about digital indicators using the example of a strategy based on the Fourier spectral theory. The indicators used in it practically do not exist without each other, being applied exclusively in pairs. Based on the composite indicator elements ATCF (Adaptive method of following the market trend), modified combined tools are built. One of them is the Digital filter, described in the link strategy. Today we will look at another such digital indicator, called RBCI (Range Bound Channel Index).

RBCI and Digital Indicators

One of the theories of successful trading is: the less people know about the indicator or strategy, the more chances to earn on it. Sliders are used almost at every turn, but it is obvious that everyone will not be able to become millionaires in Forex. As far as this theory works, let us judge you, but, as practice shows, digital indicators turn out to be more effective than basic MT4 tools. Why they are not used? Tell me, what do you know about spectral analysis in trading? That is the reason. Traders are simply wary of using something that works like a clue. Why take the indicator if it is unclear how the settings work in it?

We propose to break this stereotype. The advantages of digital indicators:

  • they are based on a clear scientific theory with filtering algorithms;
  • they can be used not only in Forex, but also in stock or commodity markets;
  • is open source;
  • they are considered rare and used by professionals.

RBCI is a band limited channel index calculated using a bandpass filter. It removes market noise, which is formed by low-frequency elements of the spectrum and speculative noise, the source of which is the high-frequency spectrum. Visually, RBCI is similar to MACD, but their formulas are radically different. When RBCI approaches its local maximum, the price trend is located at the edge of its channel.

RBCI trading terms:

  • timeframe – M15;
  • asset – euro / dol. US dollars US / Swiss franc;
  • RBCI parameters: CountBars = 5000.

Conditions for opening a long position:

  • time interval – 09.00-20.00 EST;
  • the red line RBCI goes below the blue line below and stays there for a while;
  • The red line goes up and is above the blue line;
  • The candle on which the RBCI crossed the red line above the blue has a body of no more than 15-17 points.

At the next candle you can open a position with a stop-loss of 10-20 points. At the profit level of 10 points, we move the stop to breakeven. The transaction closes, or to achieve a profit of 20 points, or after the indicator reached the top blue bar.

Conditions for opening a short position:

  • time interval – 09.00-20.00 EST;
  • the red line RBCI rises above the top blue line and stays there for a while;
  • The red line goes down and is below the blue line.
  • The candle on which the RBCI has crossed the red line below the blue has a body of no more than 15-17 points.

Trading is not conducted if the channel (the distance between the upper and lower bands of blue) is relatively narrow (determined visually), and at the time of the news release. There are questions – ask in the comments.

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