Ease of Movement Threshold Strategy with Persistent Directional Signals
Summary
This script turns the Ease of Movement indicator into a long or short strategy. The indicator combines midpoint movement with the bar’s volume relative to its high-low range: larger signed values represent stronger price movement relative to volume, while smaller values suggest heavier volume or less movement. The strategy compares the resulting value with configurable upper and lower thresholds. Crossing the upper threshold sets a long state, and crossing the lower threshold sets a short state; between thresholds, the prior state persists. An option reverses the direction of the signals.
The script submits entries for the active direction, colors bars by the current state, and plots the indicator as a histogram. Its description explains the intended interpretation of positive and negative readings, but supplies no backtest report, market, timeframe, or performance evidence. The thresholds are fixed inputs in the example and may not transfer across instruments or data conventions. The author presents it as educational, and the code offers no explicit stop loss, profit target, or position sizing method, so the signals alone do not specify a complete risk-managed trading plan.
Key ideas
- Ease of Movement relates price midpoint changes to volume and the bar’s trading range.
- Large positive and negative readings indicate substantial directional movement relative to volume.
- Upper and lower thresholds establish persistent long and short states until another threshold is reached.
- A reverse option swaps the directional interpretation of the states.
- The published example provides no performance evidence or explicit stop and position sizing rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.