The MA Chanels FIBO indicator consists of 8 lines of different colors that build the price movement channel around one moving average, the period and the averaging method of which is chosen by the user. The distance of the channels from the moving average is equal to the Fibonacci coefficients: 23.5, 38.2, 50 and 61.8.
For a complete picture of what is happening, you should add a moving average to the chart with the same method and averaging settings as MA Chanels FIBO.
The parameters of the MA Chanels FIBO:
BarsCount – the number of bars in the history to which the indicator will be calculated;
MAPeriod – moving average period selected under the terms of the trade;
MAMethod – moving average calculation method:
3 – Linear Weighted;
MAPrice – the price to which to apply the moving average:
4 – Median Price (HL/2)
5 – Typical Price (HLC/3)
6 – Weighted Close (HLCC/4)
First, you need to understand the theory on which the indicator is built, and it sounds like this: the price always moves around its axis (moving average), therefore, you need to open a position when the price is as far away from its “imaginary” axis in one direction, and close the position on the opposite side.
In practice, it looks like this:
Open a position (s) when the price closes behind the orange or red line. Depending on where this line is located, buy or sell. For example, if the price has moved away from the moving average as much as possible up, then open a position on the decline and Vice versa, at the bottom – buy.
As can be seen in the history, this indicator is more suitable for catching big trends, and therefore requires a lot of exposure while waiting for the opening and closing of the transaction, as this method can not give any signals for a long time to trade and requires a large enough Deposit to withstand not small drawdowns when trading.
This indicator is as easy to install as all custom indicators. After installation on the chart, a small adjustment of the moving average parameters and indicator colors is required.