Flat Trend Indicator identifies the prevailing trend in the chart. It plots a green histogram when the price is in an uptrend, in a downtrend it plots the red histogram and in sideways markets it plots a yellow histogram. With this indicator applied on the chart, trend identification can be easily done by looking at the indicator panel. The trend is identified by combining Parabolic stop and reverse indicator (PSAR) and ADX indicator. When PSAR is in buy mode and ADX is showing an uptrend, the trend is marked as up. When PSAR is in sell mode and ADX is showing downtrend, the trend is marked as down. All other situations are marked as a neutral trend. This indicator is useful to identify the prevailing trend in the market and traders can tune their system to take positions in the trend direction. Discretionary traders can use it to align their position in the trend direction. The RSI indicator is used to identify the overbought oversold situation in the market. However, in trending markets, going short when RSI indicates an overbought situation is not a good trade. With this Flat trend indicator, if the trend is flat and RSI reaches overbought, levels, opening a sell position has better chances of winning. Many traditional indicators performance can be improved by using Flat Trend indicator as a trade filter.
