Contents
There are plenty of indicators available on IQ Option. Today we are going to introduce the one known as the Coppock Curve indicator or the Coppock Guide. It was invented by Edwin Coppock. Let's see how you can use it in your trading.
Key Takeaways🔑
| →The Coppock Curve is a long-term price momentum technical indicator designed for monthly charts. |
| →It can be used to filter the direction of swing trading and day trading trades, but may produce false signals on intraday charts. |
| →Always use extra confirmation for your entry points when using the Coppock Curve for trading. |
Coppock Curve indicator basics
The Coppock Curve helps to identify significant up and downturns in a stock market index. It is a long-term price momentum technical indicator. A formula to calculate it is as stands below.
WMA10 of (ROC14 + ROC11)
WMA10 is a weighted moving average with a period of 10
ROC14 is a rate of change with a period of 14
ROC11 is a rate of change with a period of 11
The IQ Option platform has a multitude of indicators. Some of them are not very suitable for day trading. The Coppock Curve belongs to this group of indicators. The indicator itself is designed to detect long-term momentum. The author himself recommends using it on monthly charts. Thus, it can be said that the indicator is more useful for long-term investing than for trading. In trading, however, you can use it to filter the direction of your swing trading and day trading trades.
How do you trade with Coppock Curve?
The indicator invented by Coppock is designed to be used on a monthly candlestick chart. On such a chart, a candle represents information about the price for a whole month.
To add an indicator to the chart, click the indicators icon. Coppock Curve is located in the “Other” indicators group. As with most tools, the Coppock Curve indicator settings can be left at default to begin with.
How to read trading signals from Coppock Curve?
The interpretation of the readings from the Coppock Curve indicator is very simple. A buy signal is produced when the indicator's line rises above the middle 0 line. If you already own the asset and the curve is over 0, it means a hold. You may sell when the indicator falls below 0.
Pros and Cons of the Coppock Curve Indicator
Pros
- ✅ Identifies significant up and downturns in a stock market index
- ✅ Simple interpretation of the readings (above or below 0)
- ✅ Can help filter the direction of swing trading and day trading trades
Cons
- ❌ Not suitable for intraday charts (may produce false signals)
- ❌ A lagging indicator, requiring extra confirmation for entry points
| Coppock Curve Indicator | Function |
|---|---|
| WMA10 | Weighted moving average with a period of 10 |
| ROC14 | Rate of change with a period of 14 |
| ROC11 | Rate of change with a period of 11 |
The purpose of the Coppock Curve indicator
A monthly interval is intentionally shown on the chart above. An indicator was created to analyse such charts. If you want to use it on an intraday scale, be alert and attentive. Notice on the 5-minute chart below how many false signals the indicator has generated.
Coppock Curve indicator summary
The Coppock Curve is a momentum indicator used to catch major price movements on the monthly candlesticks chart. Its readings are quite simple, just follow its line and note when it goes below or above the 0 line. It may, however, produce false signals as it is a long-term lagging indicator. It is recommended to use extra confirmation for your entry points.
Do not forget there is an IQ Option demo account waiting for you on the platform. You will not invest your money as the account is supplied with virtual cash. Moreover, it can be replenished any time you want. And you can stay there long enough to begin to feel comfortable trading with a new indicator. Then, shift to the live IQ Option and work on your profits.
Most traders on IQ Option are day traders and scalpers. However, today's indicator may also be useful for them to determine the higher-order trend. Do you have any experience with the Coppock Curve indicator? Be sure to share them in the comments below the article.
Wish you an enjoyable experience!
Q&A: Coppock Curve Indicator
- ❓ What is the main purpose of the Coppock Curve indicator?
- 💡 The Coppock Curve indicator helps identify significant up and downturns in a stock market index using long-term price momentum.
- ❓ Is the Coppock Curve suitable for intraday trading?
- 💡 No, the Coppock Curve is designed for monthly charts and may produce false signals on intraday charts.
- ❓ How do you read trading signals from the Coppock Curve?
- 💡 Buy signals are produced when the indicator's line rises above the 0 line, and sell signals are produced when the indicator falls below the 0 line.
- ❓ Should you rely solely on the Coppock Curve for trading decisions?
- 💡 No, it is recommended to use extra confirmation for entry points as the Coppock Curve is a lagging indicator.
- ❓ How does the Coppock Curve perform on short-term charts?
- 💡 The Coppock Curve doesn't work well on short-term charts, such as the 5-minute chart, due to the number of false signals generated.