Meta-Trader - Double Doji Indicator

Welcome back Meta-Traders.

As promised, I present the double-doji indicator. This idea originated from an e-mail I got from the guys over at Megadroid and originated by a guy named Vladimir Ribakov.

The Doji is a candlestick pattern with a small-real body and a large shadow. The Doji pattern represents indecision on the part of market participants and does not indicate direction.

When the doji occurs twice in a row, its a relatively rare occurrence, signaling the trader to take action on a break above or below the high or low formed by the shadow lines.

The indicator displays a blue dot above and a red dot below the shadow lines indicating the points where the orders should be placed. The author indicates the Double-Doji works best on the 1-hour, 4-hour or daily charts.

For my indicator, I defined the Doji in terms of the percentage of the real body in terms of the entire size of the shadow. I started with a percentage of 0.05 meaning if the real body represented 5% or less of the shadow, it would be considered a Doji. I later changed it to 0.10 or 10% to increase occurence of the condition.

In terms of the rarity of the signals, on the hourly chart, the signal displayed about 23 times on the EUR/USD since the beginning of 2010. The signal appeared 11 times on the 4-hour chart and only once on the daily chart, which just happened to be just recently on July 28th.

I have uploaded the indicator to my Yahoo group. If you would like to join, send me an e-mail at fx-mon@yahoogroups.com or a direct message on Twitter at http://twitter.com/tcxmon.

Stay tuned for the Double-Doji Expert Advisor!