Lately we’ve been reviewing our trend indicator PotenzaFX and PowerbarsFX in an attempt to implement an indicator that was able to provide a better currency strength\weakness analysis. They are the core of our automatic strategies and that’s why we always work on improving them.
Here is what we mean with “better”:
- simpler for the user (only a handful of inputs)
- completely based on price action
- completely exempt from repainting
- tailored to the peculiarities of each individual pair
That’s how we came up with the idea of RangoFX, which is based on the code of PowerbarsFX_Spread, but with significant differences in the algorithm it implements.
The “timeframes” of PowerbarsFX have been completely removed and replaced with “price ranges“, hence RangoFX doesn’t have to deal with multiple timeframes at the same time which inherently brings the problem of “repainting”.
If you apply PowerbarsFX to a chart it does NOT repaint for as along as the platform is kept opened. But once you restart MT4 the indicator inevitably changes the displayed data. Unfortunately we cannot do much about that because it is caused by an intrinsic limitation of the trading platform. I’ll try to explain why that happens with a simple example. Imagine an indicator applied to a M15 chart which deals with data coming from the timeframes M15 and H4 at the same time. When the time is 08:30:00 a new M15 candle is opened and the indicator generates a value which is based on 2 pieces of data:
- the M15 candle that opened at 08:15:00 and closed at 08:29:59
- the H4 candle that opened at 08:00:00 and was still forming itself at 08:29:59
The first piece of data can be provided by MT4 in case the platform is restarted, however the second piece of data CANNOT, because once you restart the platform the only information available are OHLC (Open-High-Low-Close) data of each candle. There is no way of getting the value of an indicator associated to that H4 candle when the time was exactly 08:29:59. Once restarted the indicator will repaint itself and provide a value which is based on:
- the value of the M15 candle that opened at 08:15:00
- the value of the whole H4 candle that opened at 08:00:00
As you can understand the indicator is now “looking into the future” because the Close of the H4 candle (which happened at 11:59:59) is now taken into account. This is the classic problem affecting all multi-timeframes indicators than run on MT4.
On the other hand RangoFX is only based on the data of a single timeframe. It is still able to perform a sort of “multi-timeframe” analysis because it explores data related to different “price ranges“, however it will never “look into the future” when the platform is restarted. That is a big relief for any trader who wants to develop a trading strategy based on the historical analysis provided by a technical indicator.
You’ll also be happy to know that the “price ranges” are completely dynamic and tailored to the historical volatility of each currency pair, so that we can always compare “apple with apple” so to speak. But I’ll explain that better and in more detail in the next post. That’s all for today and for this week.
How RangoFX Works
RangoFX is based on the code of PowerbarsFX_Spread, but with significant differences in the algorithm it implements, bacause the “timeframes” of PowerbarsFX have been completely removed and replaced with “price ranges“.
The first major benefit of this approach is that RangoFX is not affected by the problem of “repainting” which arises in indicators dealing with multiple timeframes simultaneously.
The second major feature of RangoFX is the fact it does not rely at all on indicators, it is completely based on calculations made with respect to price action.
Let’s see how RangoFX computes the “spread” (for a single price range) of a pair like EURUSD:
- first of all it computes a “score” of EUR based on the price action of all major pairs involving EUR: EURAUD, EURCAD, EURCHF, EURGBP, EURJPY, EURNZD, EURUSD.
- secondly it computes a “score” of USD based on the price action of all major pairs involving USD: AUDUSD, USDCAD, USDCHF, EURUSD, GBPUSD, USDJPY, NZDUSD.
- the “spread” is simply the difference between these 2 scores.
The indicator then repeats this process for other price ranges, and finally makes an average of all spread values.
Let’s see as an example some scores computed for EUR by RangoFX when the indicator looks over different price ranges of EURUSD (100 pips, 80 pips, and 60 pips):
The price ranges are automatically fixed by RangoFX based on the historical volatility of each currency pair. Let’s assume as an example that EURUSD moved in a range of 500 pips in the last 24 months. At the same time the user has specified the percentages 20%, 16%, and 12% in the input settings of RangoFX. That’s how the indicator comes up with the numbers 100, 80, and 60 for the different price ranges of EURUSD. The spread computed on EURUSD for a different bar could involve different price ranges, because the big price range starting from that bar and looking 24 months backward could very probably be different from 500 pips.
RangoFX offers a very small set of input settings, but at the same time it gives full control to the user, so that it looks like a swiss knife for performing a currency strength/weakness analysis 😉
Comparing RangoFX And PowerbarsFX
The two indicators have a very similar approach to currency strength/weakness analysis, however RangoFX is completely based on “price ranges” and that makes a huge difference with respect to the “multiple timeframes” of PowerbarsFX.
The following table illustrates how RangoFX is different from PowerbarsFX:
Of course also the “spread” calculated by the two indicators can be very different as a result of the “price ranges” approach of RangoFX which makes it pretty resilient to range periods of any length:
In the screenshot above I’ve associated to a EURUSD M1 chart both RangoFX (in the first subwindow) and PowerbarsFX (in the second subwindow). RangoFX is working with the percentages 1%, 2%, 3%, 5%, 7% of the historical price range, while PowerbarsFX is working on the timeframes M1, M5, M15, M30, H1. As you can notice in the left side of the chart (a pretty tight range period) PowerbarsFX clearly oscillates in negative territory (because the indicators it is based on calculate peak values also during ranging periods), while RangoFX is more resilient to such range.
Use RangoFX With FortissimoFX and ForteFX
Not only you can use the RangoFX to trade manually but starting from today, it is also embedded into the latest version of FortissimoFX EA and can also be used in conjunction with the latest version of ForteFX.
We also want all the trend indicators to be embedded so that it can change dynamically based on the number of open transactions.
That’s why we followed an approach similar to the one adopted with PowerbarsFX (the first and only indicator embedded into an official version of FortissimoFX so far). This time the “multiple timeframes” of PowerbarsFX are replaced with the “multiple price ranges” of RangoFX.
The following table illustrates two examples of RangoFX Hybrid Trend implemented into FortissimoFX:
First of all we set 5 price ranges (1%, 2%, 4%, 8% and 16% of the historical price range in the first example). These price ranges are applied to RangoFX when the trading system is started and there are no open trades. When the number of open trades increases the larger price ranges gradually take the place of smaller ones, so that RangoFX gradually transitions to a version more oriented toward a long term price analysis. After the 6th trade we have all identical timeframes, so that RangoFX returns only the value associated to the largest price range. In other words RangoFX has gradually morphed from a “multi-price-range” version to a “single-price-range” version (similar to the morphing from PowerbarsFX into PotenzaFX that takes place in the current version of FortissimoFX). The logic behind this technique is that RangoFX should provide a more reliable trend score (because it’s entirely based on a larger price range) when it is most needed, that is when we have larger lot sizes to deal with.
We can also make this morphing more gradual increasing the value of the parameter rango_autopricerange:
As an example when rango_autopricerange=3 a complete morphing is performed only after the 12th trade.
The latest version of ForteFX supports the RangoFX for trend scoring. Please update to the latest version if you want to use this new innovative trend score indicator.
What You Get
- RangoFX Indicator
- Use of embedded RangoFX on FortissimoFX
- Use of RangoFX Indicator as external trend score indicator on ForteFX
- An online manual with instructions
- Email Support
Ready To Buy?
If you are interested in the RangoFX Indicator you can buy it from here.
|RangoFX Indicator (for MT4 – any Build version) – $99.99
The indicator works on every MT4 platform.The licence is for one live account and any demo account.
|RangoFX Indicator for Forte/Fortissimo/Potenza/Powerbars Users (for MT4 – any Build version) – $79.99
If you already own any of ForteFX, FortissimoFX, PotenzaFX or PowerbarsFX you are eligible of the discounted price.The indicator works on every MT4 platform. The licence is for one live account and any demo account.
Please review our Refund Policy