Forex indicators help you determine the right time to enter or exit a trade. Therefore, it is an important aspect of your trading career. This fact is known by almost all fundamental analysts and technical analysts. Here are some of the top 9 most useful indicators in MetaTrader 4 Forex trading.
Before you use the Moving Averages indicator, you must carefully understand its concept. It is the multinational companies and the central banks that are the major game changer of the financial market. Because of that, it is important to know and understand everything that’s going on at the macro level.
The one that represents the overall price sentiment is the moving average. If the price goes above the moving average that means that the buyer is in control of the price. But if the price goes below the moving average then the seller is the one in control of the price.
Relative Strength Index
The movement of the relative strength index goes from 0 to 100 level. The Relative Strength Index is an indicator that shows when the price in the market will reverse. During an uptrend or when the price goes above 70, this means that the market is bearish. But if the price movement is below 30, then it is considered as a downtrend which is also called a bullish market.
Another technical indicator found in MT4 is the Moving Average Convergence Divergence (MACD). It is made up of an exponential moving average and histogram. The main function of MACD is calculating the divergence together with the price.
Bollinger Bands was created by John Bollinger, an American financial analyst. Moving Average is the main element of this indicator. MACD has two standard deviations which include and downside/upside and the classical moving average located at the middle.
A momentum indicator popular among traders is known as Stochastic which was developed in the 1950s. The main purpose of this indicator is to identify if the price is oversold or overbought. This indicator is used to pinpoint the possible profit-taking area.
Ichimoku Kinko Hyo
Simply called Ichimoku Cloud, is an indicator that creates a complete strategy in trading. Some elements in this indicator help in identifying the different aspects of the market. Kumo Cloud is known as the first element of Ichimoku Kinko Hyo and it helps to identify the market context.
A trading tool showing accurate market direction seems to be the need of every trader out there. Fibonacci is said to be related to all the creatures present in the universe but the most significant part of this tool is the 1.618 golden ratio.
Average True Range
Knowing the volatility of the currency pair you are trading helps you make the proper decision in trading. Average True Range is a tool in MetaTrader 4 that helps traders know the volatility of a certain currency pair. Volatility in trading is connected to direct market movement.
This indicator helps identify the market trend of a particular currency pair.