What is the Center of gravity indicator?
The Center of gravity indicator is an mt4 indicator in which the centerline acts as a gravity line. it attracts the price each time price goes away from this line.
This indicator uses the average value of high and low waves. The average value attracts the price like moving averages mean reversion strategy. So by using this technique, the center of gravity indicator has made a trading system.
How does the center of gravity indicator work in mt4?
COG indicator plots five lines on the chart in a waveform. Three colors have been assigned to these five lines.
- Green
- Brown
- Blue
Green and brown lines are extreme lines and prices mostly bounce from these lines to the average line. Blueline is the average line and it is the average value of upper and lower extreme lines. The average line attracts the extreme lines always.
When price moves away from the average line towards extreme lines, then after bouncing from a key level or any other level, the price returns back to the average line. That’s why it is named the center of gravity indicator.
Center of gravity indicator signals
Buy signal
When price will approach or touch the lower extreme green, then place a buy order. You can also place another buy order when the price will touch the lower brown line. Close the trade at the average line.
Sell signal
Place a sell order when the price will approach the upper extreme green line. You can also use a strategy like placing an order of half amount at the green line and then the rest of the amount at the brown line.
Best working conditions for COG indicator?
To get the best results, price patterns can also be used with this indicator. For example, to get a reversal signal from extreme lines, you can also wait for a reversal candlestick pattern at extreme lines. Reversal candlestick pattern will increase the probability of price trend reversal and also it will help you to place a stop loss level.
Conclusion
It is the best indicator based on the average price formula. Extreme lines act as support/resistance lines and average lines tend to attract the price like gravity.
Using this center of gravity indicator in mt4 with price action strategies will give good results.
Make sure to backtest this indicator properly using an mt4 demo account before trading on a live account.
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