October 22, 2021

TrendWave indicator: essence, settings, template, examples of strategies

15 min read
TrendWave indicator: essence, settings, template, examples of strategies

TrendWave – one of the forex indicators, which combines the properties of a trend tool and an oscillator.

Its algorithm is built on two moving averages, the intersection of which at signal levels gives a signal (the algorithm itself is a bit more complicated). TrendWave can be used by itself, but it’s better to supplement it with other indicators. In this review, you will briefly get acquainted with the indicator settings and the principle of operation, as well as with examples of real strategies, where the nuances are clearly visible, advantages and disadvantages of this tool.

About 10 years ago, this author’s trading indicator could be found on the Internet only on a paid basis. Then they asked for about $ 100. USA, but all paid sooner or later becomes free. And although some «authors» still trying to squeeze the maximum out of him, selling modified versions of TrendWave under other names, below in the recommended strategies you will find links to templates and the indicator itself for free.

TrendWave indicator is called a trend oscillator – an interesting combination of two types of technical analysis tools. It is able to determine the beginning and end of the wave trend movement and how the oscillator has its overbought and oversold zones.

The indicator is based on simple and exponential moving averages with signal levels. Intersection of moving in overbought and oversold zones, limited by signal levels, gives a signal, which is marked on the chart by a dot. The general charting algorithm is more complicated and it’s not worth going deep into its essence. However, who knows the code, will be able to figure it out himself.

Most strategies are based on indicator reversal models: when both lines intersect above or below a given level (depending on the intended direction of the opened transaction), point appears, being a signal.

A few points, which are worth paying attention to:

  • Key indicator levels – «50» and «-50» – levels are not always support and resistance levels. The signal is the appearance of a point: to buy – between levels «-50» and «-60», sale – «50» and «60». If the indicator falls below «-60» or rises higher «60» – this is an even stronger signal. But this rarely happens, therefore it makes sense to focus on the specified range. You will see this more clearly in the strategies described below. Levels are undesirable.
  • After the appearance of a point, the indicator lines should be directed to exit the zone, then after 1-2 candles they should cross the key levels and go to zero (midline). An example of signal weakness will be given below in the 3rd strategy, when TrendWave draws a point twice for 10 candles.

Redrawing is not characteristic of the indicator – a definite plus. Another advantage is that it works during the times of flat (this will also be seen in the strategies below).

TrendWave Indicator Settings:

  • WavePeriod. Parameter, which determines the algorithm setting in accordance with the selected timeframe. Indicator period.
  • AvgPeriod. Smoothing period (averaging) indicator (number of candles taken into account), applicable for both sliding (lines «bulls» and «bears»). Shorter period, the more sharp will be the fluctuations of the lines and the more will be false signals due to price noise. Longer period, the greater the chance of signal lag. Optimal period is the key to indicator efficiency.
  • SoundAlert. Activation of sound notification at the moment of signal appearance. Convenient function, if the strategy with the indicator is secondary and there is no time to constantly monitor the chart. But worth considering, that when combining TrendWave with other indicators, it is only a TrendWave signal, and not about the point of potential transaction opening.
  • EmailAlert. Sending an alert when a signal appears by email. Given trading activity and intraday time frames, this function seems useless. Although to whom it is more convenient.

TrendWave has as supporters, both opponents. In the reviews you can find a lot of criticism in his attitude: delays, false signals and t.d. I think, this is everyone’s personal opinion. There are no ideal technical indicators – much depends on fundamental factors, from overall market conditions, a certain indicator period, moods of traders, average asset volatility and t.d. Therefore, I propose moving from theory to practice.

Clear strategies with the TrendWave indicator

TrendWave in most cases acts as the main indicator, but building strategies only by his signals would be an unjustified risk (although an example of one such strategy will be given below). Professional indicators, showing signals of entry and exit from the foreign exchange market or any other, have a narrow range of applications, because they additionally require filters, who could appreciate the strength of the trend, confirm overbought or oversold market, etc.d. The best addition to the trend indicator – oscillators. This is what you will see later in practical examples of strategies.

Each strategy has a link to an archive of a template of indicators and strategies. Instruction manual, how to install them, given in the second part of this review. If you have any questions – write them in the comments.

TrendWave as a tool for independent strategy

One indicator is good, two are better. Classic rule, but trading is not always the pursuit of profit. It is also an interest, desire to figure out, how it works and how it can be put into practice. Therefore, I will start with a kind of simulator – strategy, built on only one TrendWave without graphical analysis.

Timeframe – 5 minutes. For such an indicator, the timeframe is dangerous, since it is better to run it at intervals from H1. But to demonstrate the operation of the indicator is suitable. Currency pairs: EUR/USD, GBP/USD. Settings: WavePeriod = 10, AvgPeriod = 21. Levels: 60, 50, -60, -50. Template archive can be downloaded here.

  • Trading takes place in the European session.
  • TrendWave draws a yellow dot as close to level 60 as possible, but not below the mark «50».
  • Over the next 5 hours (no more) TrendWave goes down and draws a blue dot as close to the level as possible «-60», but not above the mark «-50».
  • The lines between both points look relatively straight without explicit local extrema.

After the blue dot appears on the next candle, open a deal. Target profit is small – 10 points is enough. Stop is also worth putting a relatively short, within 10-20 points.

Here, the condition for the appearance of 2 points of different colors at opposite levels is met. Both lines are relatively even between them, although there is a small depression. On one of the 3 candles at the moment the blue dot appears, you can open a deal.

Red horizontal lines indicate top to bottom: take profit, transaction opening moment, stop loss. Stop was not hurt, the deal closes on the order after a few candles, closing moment is marked by a green arrow.

Terms of opening a short position:

  • Trading takes place in the European session.
  • TrendWave draws a blue dot as close to the level as possible «-60», but not above the mark «-50».
  • Over the next 5 hours (no more) TrendWave goes up and draws a yellow dot as close as possible to level 60, but not below the mark «50».
  • The lines between both points look relatively straight without explicit local extrema.

The condition for opening a transaction is similar.

Here the situation is the same. The blue dot is located between the required levels, the yellow dot rose above level 60 (this is considered a stronger signal, than the location between the marks «50» and «60»), watching the price movement, on the green arrow, the price catches take profit and the deal closes automatically.

Strategy allows you to experiment. You can see the story, what time interval between points is optimal: for different pairs, the distance between points can be 2-3-4 hours. Also, according to the history, you can evaluate the effectiveness of transactions depending on the distance of points from levels «60» and «-60».

TrendWave and Hooya Map: triple trend confirmation

The Hooya Map indicator has already been briefly described in an overview of intraday strategies. Remind you: this is a combined indicator, which includes classic MACD, MA and stochastic. All three indicators are oscillators, having advantages and disadvantages. Hooya Map is convenient to, that instead of three graphs, cluttering screen, it displays three horizontal rows of dots, each row is the data of one of the oscillators. The color of the dots means a forecast trend – a rising trend or a falling one. The essence of the strategy is to wait for simultaneous signals from all Hooya Map oscillators, so from TrendWave.

Recommended timeframe – H4, currency pair – EUR/USD. TrendWave Settings:

  • WavePeriod = 10.
  • AvgPeriod = 21.
  • Levels – 60, 50, -50, -60.

Sound notification and mailing is superfluous, therefore, I recommend setting false for these parameters. Hooya Map settings are shown in the screenshot below. Download the template archive here.

Conditions for opening a long position:

  • TrendWave draws a blue dot.
  • Hooya Map draws three green dots at a time.

The second condition is confirmatory and must be observed on the same candle, as the first condition, or next. On the next candle after, how is the second condition satisfied, you can open a deal. Stop set at a distance of about 30 points, target profit – 20 points. After reaching it, you can either completely close the deal, or 50% to close, second 50% leave in the market, insured by trailing. Do not forget to transfer your stop loss to breakeven in that case, if the internet connection with the broker disappears (trailing in this case will not work).

On the screen you can see, that Hooya Map only on the next candle after the blue dot drew a vertical row of 3 points. A deal was opened on the next candle, and what is important in this case – on the signal candle Hooya Map also showed a similar signal. In the event of a color discrepancy between the points on the signal candle, you can open a deal, but it is worth considering, that take profit should be reduced.

note, that the set take profit could close the deal ahead of time. Its level is dictated by the results of testing on history, but in this case, the deal could have been closed later.

Terms of opening a short position:

  • TrendWave draws a yellow dot.
  • Hooya Map draws three red dots at a time.

Simultaneous Matching Requirements, opening a deal and exit the market are similar.

Here the situation is similar. Hooya Map also draws a vertical row of red dots only on the next candle. And here also take profit is triggered earlier, what ends the trend movement. In special cases, it makes sense not to rush to exit the market, and, eg, close at target level 50% deals, the remaining 50% control until the next turn with the installation of trailing.

A few strategy recommendations:

  • Exact match signals infrequent, therefore it is better to run the strategy simultaneously on several pairs, choosing the optimal stop and take profit value in accordance with the pair volatility calculator.
  • A discrepancy may appear on the Hooya Map on the candle, at the beginning of which a deal was opened. This is a signal to, what it costs to stay at the monitor and it is possible to close the deal until the target profit of 20 points.
  • The first 12 hours of Monday and the last 12 hours of Friday rest.
  • H4 – optimal timeframe. You can test the strategy on the interval H1, but signal accuracy will be worse due to speculative and price noise.

TrendWave and Trend Cycling

According to the wave theory, the market is cyclical. No trend can last forever: after any recession, growth begins and vice versa. The only question is, how to distinguish a trend change from a temporary correction? Another interesting tool will help TrendWave indicator – Cycle Koufer Extremus. It allows you to track the end of trend waves, what is somewhat similar to TrendWave. truth, more details about him a little. There is only a general principle of description. because, if someone is well versed in code, write, you are welcome, in the comments of his formula. The same, who prefers to focus on signal accuracy, without delving into the mathematical essence of the tool, I invite you to get acquainted with the settings.

Indicator Settings:

  • TrendWave: WavePeriod = 10, AvgPeriod = 21. Levels: 60, 50, -60, -50.
  • Cycle Koufer Extremus: fast MA period – 12, the period of slow MA – 24, Crosses = 50, Levels: 85, 15.

Timeframe – 15 minutes, currency pairs – EUR/USD, GBP/USD. Despite, that TrendWave is recommended for use on intervals from H1 and higher, in combination with a duplicate cycle indicator, the results are good. Strategy template can be downloaded here. note, what’s in the archive, except strategy template, there are two indicators. The second is auxiliary, and without it, Cycle Koufer Extremus will not work. Therefore, in MT4, copy both files.

Conditions for opening a long position:

  • Cycle Koufer Extremus draws a point between levels «0» and «15». The closer she gets to level zero, all the better.
  • TrendWave draws a blue dot as low as possible. The main condition is that it should be below the level «-50» as low as possible, closer to level «-60». This corresponds to the intersection of the green line «bulls» red line «bears» upwards.

Additional condition: look at the behavior of TrendWave previous 10 candles. He should not have gone below the mark «-50» with blue dot display. If on the chart at the moment of coincidence of both conditions TrendWave drew points a few candles earlier, do not open a deal.

On the next candle you can open a deal. Targeted profit – according to circumstances. The strategy allows you to catch the course of a trend wave of 20-30 points, to the same level, focusing on local lows (just below them) can stop. To achieve the target profit, we focus on the state of the market: if the trend has not yet developed itself, insure the deal with trailing. If there are hints of a U-turn, close the position completely. If the price has not reached the target level, close the deal ahead of schedule.

On the screen you can see the simultaneous coincidence of the readings of both indicators, there were no other points from TrendWave to the signal candle. On the next candle, open a deal. Green arrow marked candle, on which the target profit was achieved. Here you can close the whole deal or tolerate – after a small rollback, the trend has gone up several points before leaving the flat.

Terms of opening a short position:

  • Cycle Koufer Extremus draws a point between levels «85» and «100». The closer it is to the hundredth level, all the better.
  • TrendWave draws a yellow dot as high as possible. The main condition is that it must be above the level «50» as high as possible, closer to level «60». This corresponds to the intersection of the green line «bulls» red line «bears» top down.

Here we also check the last 10 candles before the signal – TrendWave should not show a yellow dot in the interval between the 85th and 100th levels. The conditions for opening a transaction and exiting the market are similar.

Here the situation is similar: there is a simultaneous coincidence of the signals of both indicators, TrendWave did not draw dots in front of the signal candle (Cycle Koufer Extremus points are not taken into account). And in this case, the trend has gone further after reaching the target level – an example of that, that such trading strategies require the constant presence of a trader at the computer.

Next screen, which examined two other possible situations.

In the first case, the simultaneous coincidence of both indicator signals, but TrendWave before that drew a point, which indicates a trend uncertainty. A deal opened by signals in this case would still be profitable if a further stop was placed. But, Firstly, she is insignificant, Secondly, is it worth the risk, if the main trend direction is not defined?

In the second case, non-compliance with 2 conditions is visible: indicator signals appeared with a shift of several candles, and Cycle Koufer Extremus is just above level 15. The strength and direction of the trend are mixed, deal cannot be opened.

And finally, the last screen.

Here you can also see the difference between the signals of the indicators in a few candles, but other conditions (placing points as close to target levels as possible) performed. Despite, that in this case, it is not recommended to open a deal, risk is acceptable, and as you can see on the screen, justified. This indicates, that the discrepancy between the signals of this type of indicators in 1-3 candles is not a significant error in comparison with the levels «100, 0» for Cycle Koufer Extremus and «50, -50» – for TrendWave.

The goal of the strategy is to help the trader track the beginning of a strong trend. Its complexity is, that the signals are not always accurate and the strategy itself leaves room for the trader to experiment. Its advantage – no need to wait for the exact observance of all conditions. Indicators can draw points on different candles (with a gap of not more than 1 candle), which will also be considered a signal. If on previous 10 candlesticks TrendWave showed points, this indicates, that the current trend is not finished yet and the reversal may be a correction. In this case, we do not open deals. Change of timeframes and currency pairs is allowed.

Sentiment indicator you have already seen in the review of long-term strategies. This is another trend indicator, which in this strategy will act as a filter. Currency pair – EUR/USD, Timeframe – H1, template archive is located here.

Indicator Settings:

  • TrendWave: WavePeriod = 10, AvgPeriod = 21. Levels: 60, 50, -60, -50. We leave them basic.
  • Sentiment: Period = 10, Type of line building – fast, Levels: 0,22 and -0,22.

Conditions for opening a long position:

  • TrendWave draws a blue dot between levels «-50» and «-60». The condition is exactly the same, as in the previous strategy (possible location of the point and below the mark «-60»). The lower this point will be, all the better. This indicates, that the current trend has already maximized its strength: «the Bears» reduce trading volumes and may soon shift the balance of power in favor «bulls».
  • Sentiment is below the mark «-0,22». The indicator should have columns growing in absolute value at the time of the signal and a column should appear on the signal candle, modulo smaller than previous.

As soon as both conditions are fulfilled simultaneously on one candle or on 2, running in a row, open the position on the next candle. There are several options for closing a deal. You can wait for the target profit of 30-50 points, but this does not always happen. Also, signals for at least partial fixation of a position will be a touch of TrendWave zero level. The deal closes completely, if sentiment touched the opposite mark «0,22».

First TrendWave point below level «-60» marked with a blue arrow. Sentiment painted a series of columns before the signal candle, each of which is modulo larger than the previous, but at the time of the signal from TrendWave the columns were not decaying. This indicates, that the trend has not yet developed itself and is likely to go flat or continue a downward ambiguous movement – you cannot open a deal.

The second signal is fully consistent with the requirements of the strategy: TrendWave draws a point near the level «-60», at the same time, Sentiment draws a pattern with columns growing and falling in absolute value. Three candles are circled in a pink rectangle on the candlestick price chart, which could be called signal. It makes sense after the appearance of the first falling column of Sentiment to wait for at least one more candle.

Green ovals indicate transaction closing conditions: achievement sentiment level «0,22» or intersection of TrendWave level «0».

Terms of opening a short position:

  • TrendWave draws a yellow dot between levels «50» and «60». Higher point, all the better.
  • Sentiment is below the mark «-0,22».

The condition for opening deals is similar.

Here is another controversial situation. In the first case (green arrow) Sentiment is below the required level, because we don’t open a deal. In the second case, TrendWave is clearly lagging. Sentiment painted growing columns above the required level, then a column appeared, smaller in magnitude, but only after one candle did TrendWave point appear. In contrast to the example discussed above, the signal here is not accurate and the trader must understand, what, entering the market, carries relatively large risks. In this case, the transaction was successful and the points of the expected exit are also indicated by green ovals.

Signals are rare, but also, as in the previous strategy, there remains a wide field for experiments. There are no requirements to strictly adhere to the entry conditions – for a given pair, the signal value of TrendWave may be different, its location in the upper or lower zones is important (levels in engine settings undesirable). The sentiment pattern of the columns is also important, confirming a change in trend direction.

Conclusion. In some sources you can see information, that TrendWave is a flat indicator and in the trending market it gives a lot of mistakes. The question is rhetorical. Of course, errors are not excluded, but if, when testing a story, you see the patterns of its behavior and be safe with additional indicators (volume indicator, eg), then the result may be much better. In the above strategies, I tried to parse the most frequently occurring combinations and suggested options, how to respond to them. I hope, it will help you. And of course I’m waiting for questions on strategies, comments or just ideas.