Normalizing Moving-Average Angles to Measure Trend Strength

Summary

This article examines moving-average slope as a measure of trend direction and strength, then questions the usual conversion of slope to an angle with an inverse tangent. Because price and time use different scales, the conventional angle changes dramatically across instruments and chart timeframes. The examples contrast currency pairs and show that equal or comparable price moves can produce very different angle readings, making raw degree thresholds difficult to interpret consistently.

The proposed alternative rescales the time interval using the price range observed over a preceding interval of matching length, then calculates a signed angle from the moving-average change relative to that range. The article applies this measure in an MQL5 Wizard signal class and reports tests using an angle threshold, as well as a threshold with a permitted band. The latter version traded less often and showed better results on several reported metrics, but the author cautions that longer tests and tick data are needed before judging efficacy. These results do not establish that the measure generalizes across markets.

Key ideas

• Raw moving-average angles depend on price scale and chart timeframe, limiting comparisons across instruments.
• The article proposes expressing the time interval in price units using a preceding price range.
• A signed normalized angle can then represent the direction and relative steepness of moving-average movement.
• The signal is tested with both a simple angle threshold and a threshold constrained by a band.
• Reported improvements are preliminary and require longer testing with tick data.

Tags

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