Modified Gann HiLo Activator

10 abr 2019

Introduction

The gann hilo activator is a trend indicator developed by Robert Krausz published into W. D. Gann Treasure Discovered: Simple Trading Plans for Stocks & Commodities. This indicator crate a trailing stop aiming to show the direction of the trend.

This indicator is fairly easy to compute and dont require lot of skills to understand. First we calculate the simple moving average of both price high and price low, when the close price is higher than the moving average of the price high the indicator return the moving average of the price low, else the indicator return the moving average of the price high if the close price is lower than the moving average of the price low.

My indicator add a different calculation method in order to avoid whipsaw trades as well as adding significance to the moving average length. A Median method has been added to provide more robustness.

The Indicator

The indicator is a simple trailing stop aiming to show the direction of the trend. The indicator use a different source instead of the price high/low for its calculation. The first method is the "SMA" method which like the classic hilo indicator use a simple moving average for the calculation of the indicator.



Sma Method with length = 25

The "Median" use a moving median instead of a simple moving average, this provide more robustness.



Median Method with length = 25

The shape is less curved and the indicator can sometimes avoid whipsaw with high's length periods.

Mult Parameter

The mult parameter is a parameter set to be lower or equal to 1 and greater or equal to 0. High values allow the indicator to be far from the price thus avoiding whipsaw trades, lower ones lower the distance from the price. A mult parameter of 0.1 approximate the original hilo indicator.



In blue the indicator with mult = 0.1 and in radical red the original hilo activator.

Conclusion

The modifications allow more control over the indicator as well as adding more robustness while the original one is destined to fail when market price is more complex.

Thanks for reading :)

For any questions/suggestions feel free to pm me