OPEN-SOURCE SCRIPT
MACD BY PRO MENTOR
Custom MACD Trading View Indicator by PRO MENTOR
The Custom MACD with 4-Color Histogram is a powerful, flexible technical indicator designed for traders who prefer customized settings and enhanced visual clarity. This indicator improves upon the traditional MACD by offering fully adjustable parameters, a dynamic 4-color histogram, and a zero-line reference to help traders make better-informed decisions.
Features:
Customizable Parameters:
Fast Length: The period for the faster moving average (default: 100).
Slow Length: The period for the slower moving average (default: 200).
Signal Smoothing: The period used to smooth the MACD signal line (default: 50).
Source: The price data used in calculations (default: close price).
Oscillator MA Type: Choice of "EMA" (Exponential Moving Average) or "SMA" (Simple Moving Average) for calculating the MACD line.
Signal Line MA Type: Choice of "EMA" or "SMA" for the signal line.
4-Color Histogram:
Green: Histogram is positive and increasing, signaling strong bullish momentum.
Lime: Histogram is positive but decreasing, indicating waning bullish momentum.
Red: Histogram is negative and decreasing, signaling strong bearish momentum.
Maroon: Histogram is negative but increasing, indicating waning bearish momentum.
Zero Line Reference:
A dotted zero line serves as a neutral reference point to identify bullish or bearish conditions. The MACD line above the zero line indicates bullish conditions, while below the zero line indicates bearish conditions.
Clear Visual Representation:
The MACD line (blue) and the signal line (orange) are plotted with distinctive colors for easy differentiation.
A color-coded histogram visually represents the strength and direction of the trend.
How It Works:
The MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator. It is calculated as the difference between two moving averages: a fast and a slow moving average. The signal line, which is a smoothed moving average of the MACD line, is used to generate trading signals. This custom version allows traders to adjust key parameters to fit their trading style and market conditions.
Applications:
Identifying Trends:
When the MACD line is above the signal line and the histogram is positive, the trend is bullish.
When the MACD line is below the signal line and the histogram is negative, the trend is bearish.
Momentum Analysis:
The histogram color changes provide insight into the momentum strength and potential reversals.
Entry and Exit Signals:
Buy Signal: When the MACD line crosses above the signal line, especially above the zero line.
Sell Signal: When the MACD line crosses below the signal line, especially below the zero line.
Trend Reversal Detection:
Color changes in the histogram can alert traders to potential trend reversals or weakening momentum.
Benefits:
Customizability: Tailored to individual trading styles and market conditions with adjustable parameters.
Enhanced Visualization: The 4-color histogram provides detailed insight into trend strength and momentum shifts.
Broad Applicability: Works across various markets, including stocks, forex, cryptocurrencies, and commodities.
Limitations:
Lagging Nature: Like all moving average-based indicators, the MACD may lag in fast-moving markets.
False Signals: Sideways or choppy markets can lead to misleading signals.
Usage Tips:
Combine the Custom MACD with other technical indicators like RSI or Bollinger Bands to filter signals and improve accuracy.
Use the zero line as a reference for broader market trends.
Experiment with parameter settings to optimize the indicator for different timeframes and assets.
This Custom MACD Indicator by PRO MENTOR is a versatile tool for identifying trends, momentum, and potential trading opportunities. Its adaptability and enhanced features make it an excellent choice for traders at any experience level.
The Custom MACD with 4-Color Histogram is a powerful, flexible technical indicator designed for traders who prefer customized settings and enhanced visual clarity. This indicator improves upon the traditional MACD by offering fully adjustable parameters, a dynamic 4-color histogram, and a zero-line reference to help traders make better-informed decisions.
Features:
Customizable Parameters:
Fast Length: The period for the faster moving average (default: 100).
Slow Length: The period for the slower moving average (default: 200).
Signal Smoothing: The period used to smooth the MACD signal line (default: 50).
Source: The price data used in calculations (default: close price).
Oscillator MA Type: Choice of "EMA" (Exponential Moving Average) or "SMA" (Simple Moving Average) for calculating the MACD line.
Signal Line MA Type: Choice of "EMA" or "SMA" for the signal line.
4-Color Histogram:
Green: Histogram is positive and increasing, signaling strong bullish momentum.
Lime: Histogram is positive but decreasing, indicating waning bullish momentum.
Red: Histogram is negative and decreasing, signaling strong bearish momentum.
Maroon: Histogram is negative but increasing, indicating waning bearish momentum.
Zero Line Reference:
A dotted zero line serves as a neutral reference point to identify bullish or bearish conditions. The MACD line above the zero line indicates bullish conditions, while below the zero line indicates bearish conditions.
Clear Visual Representation:
The MACD line (blue) and the signal line (orange) are plotted with distinctive colors for easy differentiation.
A color-coded histogram visually represents the strength and direction of the trend.
How It Works:
The MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator. It is calculated as the difference between two moving averages: a fast and a slow moving average. The signal line, which is a smoothed moving average of the MACD line, is used to generate trading signals. This custom version allows traders to adjust key parameters to fit their trading style and market conditions.
Applications:
Identifying Trends:
When the MACD line is above the signal line and the histogram is positive, the trend is bullish.
When the MACD line is below the signal line and the histogram is negative, the trend is bearish.
Momentum Analysis:
The histogram color changes provide insight into the momentum strength and potential reversals.
Entry and Exit Signals:
Buy Signal: When the MACD line crosses above the signal line, especially above the zero line.
Sell Signal: When the MACD line crosses below the signal line, especially below the zero line.
Trend Reversal Detection:
Color changes in the histogram can alert traders to potential trend reversals or weakening momentum.
Benefits:
Customizability: Tailored to individual trading styles and market conditions with adjustable parameters.
Enhanced Visualization: The 4-color histogram provides detailed insight into trend strength and momentum shifts.
Broad Applicability: Works across various markets, including stocks, forex, cryptocurrencies, and commodities.
Limitations:
Lagging Nature: Like all moving average-based indicators, the MACD may lag in fast-moving markets.
False Signals: Sideways or choppy markets can lead to misleading signals.
Usage Tips:
Combine the Custom MACD with other technical indicators like RSI or Bollinger Bands to filter signals and improve accuracy.
Use the zero line as a reference for broader market trends.
Experiment with parameter settings to optimize the indicator for different timeframes and assets.
This Custom MACD Indicator by PRO MENTOR is a versatile tool for identifying trends, momentum, and potential trading opportunities. Its adaptability and enhanced features make it an excellent choice for traders at any experience level.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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