What is the most powerful MT4 indicator?

The most popular approach for determining how the price of an asset could possibly perform in the future is التحليل الفني with the help of MT4, which compares current market conditions with previous data to forecast future performance.

This type of analysis is often linked with the application of different technical indicators and the majority of them are available for free in the ميتاتريدر 4 terminal. Surprisingly, forex traders have at their disposal literally thousands of forex indicators for the MetaTrader 4 (MT4) platform and it might be challenging to determine which ones to apply. This is why, in this article, we will help traders better understand the most effective MT4 indicators that can be used in trading.

What are the technical MT4 indicators?

Forex or technical indicators help traders who use price action strategies to determine the existing market situation and future price movements. It is any kind of measure with a value estimated from the activity of the price of a currency pair or any other financial tool.

In technical analysis, such MT4 indicators are used by the traders to establish future price levels or future price trends of the particular security. They do this in two ways: through pattern analysis or through prior market performance.

Technical indicators have nothing to do with fundamental factors but are widely used by active forex traders, to identify price patterns and detect changes in prices in the short-term.

Most MT4 indicators help traders by displaying results on the price chart of an asset. This is convenient for the analyst, especially when they are checking the market price and comparing it to the MT4 indicators. There are other categories of MT4 indicators, for instance, oscillators, which present their outcome in a different window.

Most technical indicators are not of great significance, especially to people whose time frame is long term trading or investing. This is because they don’t provide significant information about the basic determinants that can also influence the price. But, it is also useful for long term traders to utilise technical indicators because they can enter or exit positions by identifying the long term trend.

The Best MT4 Indicators

It will be pertinent to note here that different MT4 indicators are used with a specific purpose and are more useful for particular trading styles or strategies.

There is not a clear answer to the question of which are the best MT4 indicators because the answer highly depends on the situation and the trader. Nevertheless, there are different things to consider when choosing one.

MT4 indicators: The Moving Average Convergence Divergence (MACD)

It is important to mention that among the most commonly used indicators in the foreign exchange market, there is one that tends to be the most popular in MT4, MACD – The Moving Average Convergence Divergence. This is an upward and downward momentum indicator, which basically shows the relationship between two moving averages of prices.

This indicator calculates the difference between the average of the price over the last 26 sessions (EMA) and the two sessions prior to them (EMA). Furthermore, a 9 session Exponential Moving Average (EMA) commonly referred to as the signal line is then drawn over the MACD responsible for generating buy and sell signals.

Technically, there are three ways that the MACD MT4 indicator can be interpreted. The first one we can distinguish is Crossovers. If the MACD falls below the signal line, especially below the zero level, this is considered bearish and could mean that it is time for ‘selling’. On the other hand, if the MACD jumps above that signal line then your indicator is displaying a buy signal.

Rather than getting into a position, most FX traders tend to wait for a confirmed cross over of the signal line; this is to avoid getting into a position on the wrong side.

The second method is the Divergence method. This is when the asset price is actually moving apart from the MACD, which is the signal that the current trend is over.

The last kind is the Dramatic Rise. This is the time when the MACD increases sharply. It is when the shorter moving average is lower than the longer term moving average and is often employed to signal that the security has been overbought and will return to its normal value.

Traders generally are looking to trade from under this zero line or over it, because it informs the trader of the short-term moving average position versus the long-term moving average position.

In addition, when the MACD is above the zero level then the short-term moving average is located above the long-term moving average. This can be seen as creating a momentum of a positive kind in an upward direction. The reverse is the case if the MACD is located below the zero line. In fact, this zero line is used mostly as the support and resistance level of this indicator.

Money Flow Index (MFI)

The Money Flow Index (MFI) is a momentum indicator for MT4, which uses the instrument’s price and volume to determine the likelihood of the current trend. The Money Flow Index is the volume adjusted RSI as the indicator adds volume to the Relative Strength Index or RSI.

On Balance Volume (OBV)

On Balance Volume (OBV) is a Forex indicator for MT4 which can be helpful in the computation of the negative and positive volume movements in relation to a particular security relative to its price over a period. It sums up the volume by increasing or decreasing each period’s volume based on the price direction.

MT4 indicators: Bollinger Bands

Bollinger Bands are one of the most well-known MT4 indicators for forex trading. It has two lines, or bands, which are positioned as two standard deviations below and above a moving average, to which the central line of the MACD belongs. For the upper and lower bands, when they expand, this shows that volatility is high and when the bands contract, it shows that volatility is low.

Commodity Channel Index (CCI)

With the CCI it is easier for the trader to decide whether to select a long or a short position. Moreover, this indicator for MT4 has a very low latency, and traders report a high level of accuracy.

This is one of the best forex indicators for MT4, loved by most traders because it shows direct sell or buy signals, and for this reason it earns its place among the best MT4 indicators.

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Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.