LT Velocity 2.0

This indicator can show both the probable momentum direction and also a key level on the chart that can be used by chartists as a potential “trailing stoploss”. The indicator plots dots on the chart which can also indicate key levels of support and resistance – a break of which can often lead to potential trend reversals (or corrections).
The LT Velocity GREEN dots show positive momentum and usually appear beneath the price. The LT Velocity RED dots show negative momentum and usually appear above the price. The ORANGE dots are neutral, so they do not usually have a directional bias – however, they can still be used as a trailing stop (or support/resistance as described below).
Typically when price is trending up, we see a series or trail of rising GREEN velocity dots beneath the price. Similarly when price is trending down, we see a series of falling RED velocity dots above the price. Chartists can monitor the position of these velocity dots to measure the probable direction of momentum and the RISK.
For example, if price is rising or trending up, and we have a green velocity dot beneath the price, this level can be used by chartists as KEY SUPPORT. The reason is that a break below (or a close below) the last green velocity dot could indicate that the uptrend is likely breaking (or ending) and that the probability or RISK of a trend reversal (or a corrective drop) is increasing. Vice versa applies: if price is falling or trending down, we usually see a series of red velocity dots above the price – chartists can use this as KEY RESISTANCE. A break or close above the last red velocity dot could indicate that the downtrend is likely coming to an end and that the risk of a trend reversal (or a corrective rally) is increasing. (It should be noted that in this specific context of support/resistance, orange velocity dots can act as “green” dots when below the price and as “red” dots when above the price).

The indicator uses a combination of price, RSI, averages and momentum. Due to the fact that LT Velocity places the dot positions a distance away from the price action, it is probably one of the most effective tools for a trailing stop – i.e. a method to reduce and limit risk. So the stoploss can be moved in accordance with the position of the most recent velocity dot position – which offers some “wiggle room” for the price. Therefore, if a trader is long, they could move their stop to the most recent green velocity position beneath the price (and vice versa for shorts – by moving stops to the most recent red velocity position above the price). By offering “wiggle room” the LT Velocity can create a safe balance between risk protection and protecting potential gains.
As with any indicator, the position of LT Velocity on the chart depends on the timeframe being chosen. Chartists with a long term focus can observe the position of LT Velocity on the daily, weekly and monthly charts – for a medium term perspective the daily, 8-hour, 6-hour and 4-hour charts can be used – and for a short term perspective the hourly, 30-min or 15-min (or lower) charts can be used. The lower the timeframe being chosen, the greater the degree of noise and randomness (and thus the greater the risk of whipsaws and risk).

The indicator can be used on the charts of the majority of markets (e.g. stocks, indices, ETFs, currencies, cryptocurrencies, precious metals, commodities etc.) and any timeframe, but please note that the degree of noise and randomness (and therefore false signals) increases significantly on lower timeframes (as mentioned previously). Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.
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