Measuring Moving Average Trend Strength with Standard Deviation

Summary

This indicator extends a moving-average candle display by adding colored dots to show the strength and direction of a trend. It measures the standard deviation of the indicator’s centerline and compares it with two configurable thresholds. When the value falls between the thresholds, a small dot appears in the color associated with the current direction; when it exceeds the upper threshold, the dot grows larger. No dot represents the weakest level.

The description presents a three-level visual classification: no dots for weak conditions, small dots for medium strength, and large dots for strong strength. The signal line supplies the initial candle color. The document explains the indicator’s display logic but provides no performance evidence, market tests, or guidance on choosing thresholds, so the dots should be understood as a visualization rather than a validated trading signal.

Key ideas

• The indicator estimates trend strength from the standard deviation of a moving-average centerline.
• Two thresholds distinguish medium-strength readings from stronger readings.
• Dot size represents strength, while dot color follows the current trend direction.
• The document explains the display rules but gives no evidence that they predict returns.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.