Market Mover Indicator for ThinkorSwim

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BenTen

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The Market Mover indicator is simple yet effective for day trading options and stocks. It's based on the idea of using a Simple Moving Average in combination with the RSI. The concept was introduced to me by another trader named Thanson Stevens. He called the study #Thandicator.

Before we begin, I want you to add the following to your chart:
  1. 5 SMA (Simple Moving Average)
  2. RSI (default settings)
  3. Recommended time frame: 5m or higher
Here is what your chart should look like:

zZ5Mau9.png


When to Buy

Think of this strategy as any other moving average crossover where you buy on the fast SMA crossing up on the slow SMA, except in this case we're using a 5 simple moving average and the Relative Strength Index indicator. A buy signal will be produced when the RSI is crossing up on the 5 SMA while both lines are in the oversold region or around there.

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Those are just a few examples of when to go long on the stock.

When to Short

Lucky for you, this strategy also works for shorting the market as well. That way you can make money on the way up and on the way down :) At this point, you probably know what would trigger a short signal. When the RSI is crossing down on the 5 SMA while both lines are in the overbought zone or around there.

aKD8VyI.png

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Why this strategy work

If you think about it, the 5 SMA acts as a trend following indicator while the RSI shows you the momentum of the stock. When both indicators combine forces, it truly produces some outstanding trade signals. I did mention earlier that day trading is ideal for this strategy but if you zoom out to the 30m, hourly, or even daily you can get some nice swing signals too.

A few warnings:
  • Just like any indicators and strategies we shared on this site, the Market Mover Indicator is not the holy grail. Be sure to backtest it with historical data.
  • Due to the nature of ThinkorSwim, especially when you move an indicator designed to be on the upper chart to the lower chart, it messes up how ToS display it. For the crossover to be accurate, make sure you zoom into your chart rather than expanding it out. If you want to avoid this problem, see the advanced version below. ⚠
  • Avoid any buy or sell signals created between the Overbought and Oversold regions.
I'm sure this strategy has been shared before (like the 5 SMA with 5 RSI strategy for Forex Trading) but since I heard of the indicator from Thanson Stevens I'm giving him full credit.

The Advanced Version

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If you're looking for a ready-made indicator of the concept above, you're in luck! With the advanced version, you no longer have to zoom into your chart to see the crossover.

Here's the full list of features in the new version:
  • Scanner ✅
  • Alerts ✅
  • Backtesting capability ✅
  • Less false signals ✅
  • Stop loss line ✅
  • Works on the ThinkorSwim mobile app ✅
  • No scaling errors ✅
  • Continuous support and updates. ✅
VIP members can now grab the Advanced Market Moves indicator here.
 
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BenTen

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Will be showing you guys how to apply this on the Mobile app as well. Stay tuned :)
 

BenTen

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Hey Ben, for the moving average/RSI that you used above, is it the same as this?

That was my intention but that code does not produce the right outcome as it uses the 5 SMA Of the RSI instead of the stock price.
 

BenTen

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@ROEye By dragging the original Simple Moving Average indicator from the upper chart to the lower chart. Warning: if you do that there is a scaling problem. Proceed with cautious.
 

thinky

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How does it compare to the RSI Laguerre + FE?
The Laguerre RSI indicator plots the weighted RSI indicator value filtered with a Laguerre filter. The gamma sensibility of the Laguerre filter is self adjusted with the “fractals energy” as the original author describes it.

S93.png
 

markos

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@thinky it does not compare, but it contrasts in a way. Please take a look at the RSI Laguerre with FE tutorial. I have an explanation there of how it works. Laguerre time causes an indicator to change speed depending on the price change i.e. whether it is trending or trend less.
As @BenTen noted above, this is a strategy that has been used by Forex traders. The RSI Laguerre with FE is an indicator, not a strategy. I hope that helps.
 
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horserider

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Just as a heads up to people that may be using this version of Market Mover. ToS will not correctly display the RSI and SMA in the same study or same chart window if you have added separate RSI and SMA studies as described. If you place them together it will plot but if you go back to beginning of your chart time interval and scroll forward you will see the SMA shift in position relative to RSI. Looks like this can be solved by zooming in to a short part of your chart. The question is how much to zoom. Also now to see the whole chart as it relates to your zoomed area is not possible.
Since ToS presents this scaling problem I am proposing several alternatives to the Market Mover that avoid the scaling difficulty.
The difference in one alternative is the cross is now calculated from only RSI data. It becomes a cross of RSI and RSI average.

Commercial Photography


The 5 day 5 minute chart Signal is RSI (white) crosses SMA(cyan). The top study is Market Mover. You can see does not work well when not zoomed.
The second study is simply the Bollinger Band midline(cyan) and a SMA of 1(white)
The third and fourth are RSI and SMA of RSI.
The fourth is MACD and SMA of MACD.

Results of all but Market Mover are very similar.
 
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horserider

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Too confirm results are very similar even with Market Mover now zoomed.

Commercial Photography


Lavender is Market Mover crosses.Second from bottom) Cyan is BB price crosses (bottom indicator). Yellow is RSI ave crosses.(top).

So if use Market Mover be mindful of scaling errors which may occur. The alternative shown give ery similar signals and have no scaling problems. My suggestion would be use an alternative.
 
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BenTen

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@thinky Thanson (the guy who tweeted about the concept) mentioned the 5 SMA of the price rather than the RSI. So I would stick to it. But you can try the alternatives that horserider pointed out.
 
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