Price-Range Color Indicator for Trade Direction and Exits

Summary

This indicator colors each price bar according to whether the close is above or below a recent average of bar midpoints. Green represents a close above the calculated level, while red represents a close below it. The note presents the tool as a way to stay with a trade while its color persists and describes two consecutive bars of the opposite color as an entry or exit signal.

The document attributes the indicator to John Carter’s trading book, but gives no performance data, tested market, chart interval, or detailed rules for handling equal closes and other edge cases. Its written description refers to the previous five bars, while the displayed calculation includes six midpoint observations, so the lookback is inconsistent. The signal should therefore be treated as a simple visual trend aid rather than a validated standalone strategy; no risk controls or evidence of profitability are supplied.

Key ideas

• The indicator compares each close with an average of recent bar midpoints.
• Bars are colored green above the calculated level and red below it.
• The description proposes two consecutive opposite-color bars as a trade signal.
• The prose says five prior bars, but the shown calculation uses six observations.
• No backtest, market specification, or risk-management rules are provided.

Tags

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