Market Interest Zone
General description
The Market Interest Zone (MI Zone) indicator is designed to facilitate market analysis and meet the needs of most traders by building zones that can act as support or resistance.
The logic of each MI Zone is based on the culminating increase in volume (the analysis of such volume is done by comparing the volume of each candle with the SMA plotted for a certain period with the input volume data). This logic is not very useful in the middle of a pulse, so by comparing the OHLC of candles, the indicator builds such zones only on local pulse extremes. The indicator also has a built-in super trend indicator that acts as a trend filter. We have compared many technical indicators that can help filter zones, but in our opinion, super trend shows the best results due to more flexible settings compared to moving average. Each drawn Japanese candlestick is an independent zone from which you can open a position with a limit order and close a position, depending on the trader's usual risk management.
In this version of the indicator, only the D1 timeframe is available, but it is enough for long-term trades
The indicator has two modes:
Trend/Reversal - in which absolutely all zones are displayed;
Trend - which displays only those zones that have passed the filter in the direction of the current trend;
Opening a position with a market order when a zone of interest appears is not part of the strategy's logic, as it increases the commission and limits the trading potential. However, if you understand the market context, then such an entry with a market order can be realized.
In cases when the candle that formed the zone is quite volatile and has a large spread, it is permissible to place a limit order for 50% of this zone.
Examples of using a trading strategy
As we wrote earlier, each Japanese candlestick drawn is an independent zone that can be worked with without additional conditions and understanding of the context. The MI Zone appears under certain conditions, when the second candlestick closes after the zone itself. After that, you can place a limit order at the high/low of this zone (depending on the direction) + a protective stop order on the opposite side of the zone.
Risk management strategy
Fixing positions is recommended when the RR reaches 1:3 to 1:5. It is also possible to split a position, the second part of which will be fixed at more global levels.
In the above examples, position fixation is shown exclusively at global levels. In real trading, we recommend closing part of the position when local levels are reached.
Also, when RR 1:1 is reached, it is recommended to move the stop loss to breakeven.
Conclusion
It is important to understand that this logic can have different meanings depending on the financial instrument used. Therefore, we recommend performing a basic backtest of the methods of use and risk management parameters before using the indicator directly.
The Market Interest Zone (MI Zone) indicator is designed to facilitate market analysis and meet the needs of most traders by building zones that can act as support or resistance.
The logic of each MI Zone is based on the culminating increase in volume (the analysis of such volume is done by comparing the volume of each candle with the SMA plotted for a certain period with the input volume data). This logic is not very useful in the middle of a pulse, so by comparing the OHLC of candles, the indicator builds such zones only on local pulse extremes. The indicator also has a built-in super trend indicator that acts as a trend filter. We have compared many technical indicators that can help filter zones, but in our opinion, super trend shows the best results due to more flexible settings compared to moving average. Each drawn Japanese candlestick is an independent zone from which you can open a position with a limit order and close a position, depending on the trader's usual risk management.
In this version of the indicator, only the D1 timeframe is available, but it is enough for long-term trades
The indicator has two modes:
Trend/Reversal - in which absolutely all zones are displayed;
Trend - which displays only those zones that have passed the filter in the direction of the current trend;
Opening a position with a market order when a zone of interest appears is not part of the strategy's logic, as it increases the commission and limits the trading potential. However, if you understand the market context, then such an entry with a market order can be realized.
In cases when the candle that formed the zone is quite volatile and has a large spread, it is permissible to place a limit order for 50% of this zone.
Examples of using a trading strategy
As we wrote earlier, each Japanese candlestick drawn is an independent zone that can be worked with without additional conditions and understanding of the context. The MI Zone appears under certain conditions, when the second candlestick closes after the zone itself. After that, you can place a limit order at the high/low of this zone (depending on the direction) + a protective stop order on the opposite side of the zone.
- Simple Limit Entry in Trend/Reverse Mode:
- Simple Limit Entry in Trend Mode:
- Retest Limit Entry in Trend/Reverse Mode:
- Mirror Retest Limit Entry in Trend/Reverse Mode:
Risk management strategy
Fixing positions is recommended when the RR reaches 1:3 to 1:5. It is also possible to split a position, the second part of which will be fixed at more global levels.
In the above examples, position fixation is shown exclusively at global levels. In real trading, we recommend closing part of the position when local levels are reached.
Also, when RR 1:1 is reached, it is recommended to move the stop loss to breakeven.
Conclusion
It is important to understand that this logic can have different meanings depending on the financial instrument used. Therefore, we recommend performing a basic backtest of the methods of use and risk management parameters before using the indicator directly.
Catatan Rilis:
Update volume comparison method
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