We already covered the Dots dotted indicator in the last review. Recall: the indicator indicates the direction of the trend, based on the cosine of the angle of price change. It was developed in 2006 and its effectiveness was the reason that it had modified versions. SR_Dots is one of these versions, which is designed to determine support and resistance levels. If you did not find this indicator on the Internet, indicate this in the comments after the review and we will send it to you for free by email.
Dots spot indicator
SR_Dots is a variation of the Dots spot indicator, which identifies the most significant resistance and support levels. The essence of the strategy is to catch these levels, evaluate them and make money on their breakdown. A few strategy recommendations:
- when testing the indicator, put parallel to the Bollinger Bands and compare this strategy with the strategy for the breakdown of the channel boundaries using a candlestick analysis;
- in the trading of important things. Enough not to trade, for example, on Monday or at the time of the opening of the session and the strategy becomes profitable;
- close the position is best for trailing.
- Timeframe – H4 (4 hours);
- Asset – any currency pairs, except for exotic;
- Spot indicator settings SR_Dots – Contract_Step = 150 (indicator step), Precision = 10 (accuracy), Shift_Bars (bar offset), Bars_Count = 1000 (number of bars for analysis).
The principle of opening a long position:
- for the resistance level, marked by the indicator with red dots +10 points, set a pending Buy Stop order;
- set a stop loss with a length of 20 points and close a trailing position with a length of 10 points.
If the order did not work, transfer it following the level movement. With a short position, the situation is similar: put a pending order Sell Stop at a distance of the lower level (blue dots) minus 10 points.
Together with the indicator, you can use other indicators confirming the breakdown of levels. These can be constructed levels for historical lows and highs, Fibonacci levels, oscillators. It is in the right combination that the success of the chosen strategy will lie.
The strategy can be called almost universal. The dot indicator Dots shows quite well the results on medium volatility currency pairs on different timeframes. In the H4 time interval, the number of signals is moderate, so you can run the tool simultaneously on several assets. If you are interested in this strategy, leave a comment in the comments about how effective it has turned out.