The algorithm for the dynamic zones is a series of steps. First, decide the value of the lookback period t. Next, decide the value of the probability Pbuy for buy zone and value of the probability Psell for the sell zone. Probability is the area under the distribution curve. The task is to find such value of x that the area under the distribution curve to the right of x will be equal to the probability selected. That x is the dynamic zone. Dynamic zone calculation can be applied to a wide range of indicators. Don’t worry, the indicator does each and every calculation for you.
- Easy to identify, easy to understand and easy to implement.
- Dynamic zone calculation can be applied to a wide range of indicators
- Dynamic zone levels are penetrated so infrequently, when this happens, traders know that the market has truly moved into overbought or oversold territory.
Platform: Meta Trader 4
Timeframe recommended: M15 – H1 – D1