A Weighted Candlestick Indicator with Smoothed Moving Averages
Summary
The indicator converts each candle into a weighted value based on its body, upper and lower shadows, direction, and gap from the preceding candle. Users set the relative weight of each component. A component’s contribution is scaled against its average historical range: large values retain their assigned weight, while smaller ones are reduced in proportion to that range. This creates a combined measure of candlestick characteristics rather than relying on a single candle feature.
The indicator can display the combined candle weights as a data line, then smooth them with a first moving average to form a primary line and a second moving average to form a secondary line. The description identifies the adjustable component weights, display choice, and periods and methods for both averages. It offers example configurations but no trading rules, performance results, or validation. The usefulness of the resulting signal therefore depends on parameter choices and testing in the intended market and timeframe.
Key ideas
- The indicator combines candle body, shadows, direction, and the gap from the previous candle.
- Each component is weighted and scaled according to its size relative to its historical average range.
- Two successive moving averages smooth the combined measure into primary and secondary lines.
- The document describes inputs and example configurations but provides no evidence of trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.