This is a simple indicator that works very well to spot divergence and so changes in the trend.
The speed (histogram) is what is commonly called the “momentum”. The acceleration (yellow line) is the speed of the speed and is, in my opinion the perfect indicator, to spot divergences. Divergences are usually used to spot the possibility of a trend change.
When you drive your car, and want to make a turn, you need to reduce your speed. You do that by pushing the brakes. So while the speed is slowing down, the acceleration has already became negative. So the acceleration usually gives you information of a trend change much before the speed does. Sometimes too much, so be careful using it and never use it alone.
Below are two example of the indicator, a regular version and a smoothed version (using Hull Moving Average). The yellow line is the acceleration and the blue histogram is the speed of the price.
And here is how well and easy it can spot divergences:
The following images show you a comparison of the price speed and acceleration indicator vs other commonly used indicators to spot divergences (purple line is the acceleration and the grey histogram is the speed):
Here’s an example of the possible entries (candles with grey background) simply using the price speed and acceleration indicator to spot divergences and trendlines break:
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You can freely download the indicator from here:
http://pimpmyea.com/downloads/price_speed_and_acceleration.mq4
Right click the link and select “Save as”. Copy the file into your “MT4 installation dir/experts/indicators” folder. Restart MT4 and you should see the indicator listed under “Custom Indicators” section of the Navigator window.
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Thank you for the freebie
Will give it a try along side my rsi and see how it compares.
This is the first freebie… more will come shortly.
It’s a very good indicator. Play a little with the period to find the best setting 😉
El indicador "price speed and acceleration.mq4" NO LO PUEDO DESCARGAR.
COMO LO HAGO?
right click here: http://pimpmyea.com/downloads/price_speed_and_acceleration.mq4 and “save as” to your desktop or wherever. Then copy it into experts/indicators directory.
Hi Andrea,
Price Speed And Acceleration looks very interesting, I like the smoothed version. Does the download offer both versions or is there a setting in the indicator for both versions?
Thank you for sharing a freebie.
Bruce H
I'll post the smoothed version later today or tomorrow. I'm on mobile now
Hi Andrea,
How does price speed work, and what are the best setting for 1 hour, 4 hour, and daily charts?
Hi,
I usually use periods that have a meaning.
On a 1H chart I usually use 24 for fast setting and 120 (5 days/1week) for the slow one.
On a 4H chart I use 30 (5 days) for fast setting and 120 (4 weeks) for the slow one.
For daily you can use 20/24 (about 1 month of trading) and 120/240 (about 6 months/1 year of trading).
But feel free to experiment 😉
Andrea,
I don't understand 'fast' and 'slow' setting.
I have only two possible settings – 'period' and 'show_speed'
You can apply the indicator more than one time to the same chart to have a "broader" view. A fast one (meaning one looking at what's happening recently) and a slow one (looking at a wider range).
Depending on your trading style you can use the first one (fast), the second one (slow) or both
But there's no fast/slow setting in the indicator. Sorry, you know that sometimes I mess up things with my English 😀
What settings do you recomend on the weekly chart?
Hi Simon,
for a weekly chart I’d use a 27 or 54 period value. That is 6 months or 1 year. Try them an see if they give good signals.
Cheers,
Andrea
Thanks Andrea, another great tool for the kit. I have often wondered whether an EA strategy could be based on something like this sensing price change relative to time.
This is a tool that I developed for manual trading but in a different way can also be used for automatic trading to measure “momentum”.
Despite of the fact that I can code an EA trading divergences my experience tells me that it is not a strategy that works for automatic trading. Divergences are very “visual” and that means that they work because of the trader “experience”, exactly the kind of thing that you can’t code in any EA.
thanks Andrea for the freebie and suggested settings..Looks interesting …I'll give it a try
Dana
Yes that indicator is very simple but in my opinion very powerful.
Can take a little to understand it's signals but the divergences one are quite easy to spot 😉
Hello There,
Have you seen a similar indicator that can act on tick data?
Or on price movement between short intervals (say 100ms).
The challenge I see is that I cannot use iclose or any other Timeseries access function as those are working on at best 1min chart information, and that is too slow for my needs.
Regards,
Vlad
Hi Vlad,
the problem is that on MT4 everything is tick/bar releated and not on time relation.
The distance between each tick maybe a few ms to seconds depending on the market liquidity and on the broker data feed.
I already coded a set of indicator doing a tick analysis and I’ll publish them in the coming weeks. I also started coding an automatic scalping strategy working on them but it’ll take time to have consistent results.
It shouldn’t take long to publish them so stay tuned.
Andrea
Hello Andrea,
Do you have a mtf and alert version of your price speed and acceleration indicator?
Thanks in advance.
Ciao,
no we actually didn’t develop any MTF and alerting version.
Maybe in the future but can’t say now 😉
Thanks for your interest,
Andrea
Hi,
I downloaded the price acceleration indictaor and attachyed it to my 1hour chart but didnt see the dots(Green and purple) at the end of the candlesticks as in the last picture displayed at this page.
Hi Hector,
the dots are not related to the speed/acceleration indicator but it is a MTF fractal indicator.
Cheers,
Andrea
Hi Andrea,
Thanks for your tool. It’s been a while since I was wondering why such an indicator was not implemented by default in MT4! However, I have two questions:
1) Assuming the speed is the derivative of the price, the speed should be positive when the price is increasing and negative when the price is decreasing. And it works fine, so I’m perfectly happy with this. But assuming that the acceleration is the derivative of the speed, then the yellow line should be positive when the speed is increasing and negative when the speed is decreasing i.e. the yellow line should cross the zero line each time the blue bars (speed) reache a top or a bottom. And this is not the case in the chart. Do you know why?
2) I like the smoothed version, can you share the mq4 code too?
Thanks again and best regards,
Évariste
Ciao Evariste,
I think that speed and acceleration are really important indicators and I agree with you that should be “embedded” into MT4. Speed is there already (Williams %R -WPR) but there’s no acceleration other than applying WPR to WPR
You’re right that the acceleration is the speed of speed. But you should also consider that we calculate that based over a period of time. So there maybe a “shift” in when you have a top/bottom respect the speed.
But acceleration is a great “divergence” indicator. In my opinion one of the best. Simple and effective. It shows you when the trend is loosing momentum most of the times in great advance.
And that’s the same in physics… if you want to turn back for example, acceleration is the first one changing direction, then speed and then you
About the HullMA version it’s already available here:
http://pimpmyea.com/indicators/hullma-based-indicators/
along with many other “smoothed” indicators 😉
Cheers,
Andrea