There are plenty of indicators available for IQ Option users. Today we are going to introduce the one invented by Edwin Coppock and known as the Coppock Curve or the Coppock Guide. Let's see how you can use it in your trading.
Coppock Curve 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.
Trading with the use of the 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 from a whole month.
To add an indicator to the chart, click the indicators icon. Coppock Curve is located in the “Other” indicators group.
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.
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.
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.
Wish you an enjoyable experience!
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