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2 Basic trading methods based on the Trend Intensity Index


Trend Intensity Index on IQ OptionThere are many technical analysis indicators that traders use to get better results. Today I am going to describe one that is designed to measure the strength of the trend. It is known as the Trend Intensity Index.

Chart preparations

First, log in to your IQ Option trading account. Choose the financial instrument for the session. Then, click on the Indicators icon. Choose ‘Trend' type and the list of the indicators will unfold on the right side. Choose the Trend Intensity Index and it will be added to your chart.

How to insert Trend Intensity Index on IQ Option platform
How to insert the Trend Intensity Index on the IQ Option platform

The TII is an oscillator. Its line moves below the price chart from 0 per cent to 100. The middle line 50 is also visible in the indicator window.

You may notice similarities to the Relative Strength Index or the Stochastic lines. The main principles for these three indicators are indeed the same.

TII oscillates in the range from 0 to 100 percent
TII oscillates in the range from 0 to 100 per cent

Trend Intensity Index description

This type of oscillator was invented by M. H. Pee. It measures the strength of the trend and produces trading signals. They are based on the supposition that the price will continue in the previous direction when the trend is strong.

The TII indicates a strong trend when its line falls below 20 or rises above 80 per cent. When it goes in the direction of the middle 50 line, it gives a signal the trend is getting weaker.

2 trading methods based on the Trend Intensity Index

Now, I am going to present two basic trading methods that are based on the TII.

The first method

This trading system produces signals when the oscillator crosses the lines of 20 or 80. You should be prepared to buy when the TII line was below the level of 20% and now rises above it.

Sell when the oscillator crosses the 80 line from above.

Buy and sell signals from TII
Buy (green) and sell (red) signals from TII

The second method of trading

This system is a bit less popular. It takes into account the middle line of 50 per cent. The rule is very simple.

Open a long transaction when the TII crosses the middle line from below.

Enter the short trade when the oscillator drops below the 50 line.

TII crossing 50 percent line
Buy (green) and sell (red) signals from TII crossing 50 per cent line

Summary

Trading with the use of the Trend Intensity Index is quite simple. It requires only that you observe the crossings of the important lines. There are, however, many false signals generated. That is why it is a good idea to complement the method with some trend filter. It can be, for example, the Exponential Moving Average with the period of 200.

For different assets, you can try different settings of the Trend Intensity Index. Do not forget to test the strategy in the demo account. IQ Option provides such an account for its users for free. It is supplied with virtual cash and you can refill it if needed. This way you do not risk your own money before you get to know the strategy well.

Wish you a good experience!

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