How to Use REDline

REDline is extremely versitle and can be used in a number of trading setups.

Summary

REDline is a custom built indicator used by DROID to both indentify high-probability trade entries and to use as a general market trade filter. The indicator monitors market volatility, and compares this to recent market price movements, in order to evaluate the strength of a prevailing trend.

REDline is a trend identifier. It is NOT a reversal indicator. Zero line crosses are NOT indications of a 'bottom'. REDLine is best used as an additional trade CONFIRMATION within your existing trade systems. No indicator should be solely relied upon for trade entries and exerts.

Use Cases

Examples

Classic Long and Short Signals

Demonstration of Choppiness Line Filter

Demonstration of Extreme REDline Readings

Contrasting Stoch RSI Usage w REDline

Using REDline ONLY as a Trade Filter

REDline is highly effective when used ONLY as a filter. You can use it to support the rest of your system - perhaps you favour MACD, or RSI.

You can turn off the Zero-line crosses of REDline and just use it as a trend signal. Try it in various ways to find the best use for your system

Using REDline Cluster Signals

Strong trade signals often follow immediately after a period of 'cluster' switching signals. Stay disicplined. You should exit any trade you are in when the indicator 'switches' but if it then switches back (ie Long-Short-Long) in very quick succession the last Long signal is often very strong

Figure 5

Using REDline to Confirm a Long at Support

Using REDline to Confirm a Short at Support

Using REDline to Confirm a Short at EMA

Figure 8

Using REDline to Confirm a Long at EMA

Figure 9

Figure 10 (A&B): Using REDline to Confirm an Ichimoku Trade

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Example of a Trade Progression - "Non-Trade Signals"

Figure 11

Example of a Trade Progression 2 - "Non-Trade Signals"

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Example of a Failed Long Signal - When to Exit

Example of a Failed Short Signal - When to Exit