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Forex Education Forex Indicators

The Absolute Best Forex Indicators (and How to Combine Them)

One of the most challenging and time-consuming aspects is trying to find out what your trading style is and the time period that best suits you. From the perspective of technical analysis, that means finding the right tools that you will usually use and learning well. What are Forex indicators? Forex indicators are useful in […]

One of the most challenging and time-consuming aspects is trying to find out what your trading style is and the time period that best suits you. From the perspective of technical analysis, that means finding the right tools that you will usually use and learning well. What are Forex indicators? Forex indicators are useful in […]

One of the most challenging and time-consuming aspects is trying to find out what your trading style is and the time period that best suits you. From the perspective of technical analysis, that means finding the right tools that you will usually use and learning well.

What are Forex indicators?

Forex indicators are useful in helping you answer these dilemmas. What to do if a currency is making historical maximums and minimums, so there is not enough or no support and resistance to guide you in and out decisions? How do you know if you’re not shopping at the top, or selling right at the bottom, right before the trend ends? Ideally, in any case, you’d wait for a retraction of some kind, but in the meantime, you risk losing the trend!

If you’re in a winning transaction and you’re approaching your planned exit, how do you know if you should take a planned exit, or leave at least some of the position in the hope of letting the winnings run with a trailing stop?

The consensus is about 5 technical indicators that in the balance indicated between sufficient information to make appropriate decisions and not too much for you do not suffer from an information overload, paralysis by analysis. Practically, a precise combination of forex indicators can mean anything from three to seven indicators; ultimately it is your decision. You don’t have to get attached to the same tools all the time; just limit the number you’re seeing at a certain point. Those negotiating over longer periods of time have more time and can afford to see more indicators. They should also be more informed about the key long-term indicators of:

The savings of the currencies they are trading.

The macroeconomic engines of the global economy push the appetite for risk and influence all markets all the time.

This is very critical. As a minimum, it involves following a few fundamental analyses to read and at least an indicator that gives you a big perspective like the S&P 500 index (and what is driving it in the period of time you chose).

Continue reading for more information or start risk-free trading and combine the best fórex indicators in a successful way. Use software to create Expert Advisors to test and optimize your strategy and use it as a fórex robot for automated trading.

Recommended Forex Indicators

While the number of indicators you choose may vary with your preferences, needs, and trading style, the main principle in selecting your toolkit of indicators is to have a balance that gives you a good perspective of the different types of information you need, specifically:

  • Trading trend or range
  • Momentum
  • Support/Resistance
  • Timing or cycles

Trend or Range of Indicators

Indicators that follow trends, as the name suggests, are designed to take advantage of market trends. Examples of these include moving averages (Mms), the average directional index (ADX), and on-balance volume (OBV).

Range-based indicators are mostly designed to show oversold and oversold conditions in a price range that includes Bollinger Bands, the Commodity Channel Index (CCI), the Relative Strength Index (RSI), and the stochastics indicator. Some indicators, such as the moving average convergence divergence (MACD), can be used to generate either a trend-following signal or a range-based signal depending on the time periods used in the calculations.

Probably the best fórex indicator in the world is the Double Bollinger Bands -The Bollinger Bands with a brilliant extension. Dbbs are really a hybrid trend and an indicator of momentum. In markets where there is a certain regression to the average, the DBB provides points of support and resistance(s/r). When there is a trend, they show the momentum of the trend and the power to stay probably.

The euro/yen with 50-day and 200-day moving averages. Image by Sabrina Jiang © Investopedia 2020

Indicators of Momentum

The basic problem traders and investors have is that they are paid to be correct about what will happen later, but the vast majority of the best-known indicators we have covered so far are lagging indicators rather than leading indicators. They inform us of the past, and with that information, what we can do in the best way is form a hypothesis about the future.

What does a trader do? uses momentum indicators. They are leading indicators because:

They can tell if a trend is strengthening or weakening.

They can tell whether an asset is overbought or over-exploited relative to past activity over a given period, and also indicate whether the trend is likely to reverse.

Knowing this can help you predict changes and have better returns.

Momentum indicators give you additional clues to put the odds of being right in your favor. There are many indicators of momentum, but now we will introduce only some of the most effective and easy to use:

Double Bollinger Bands

Three types of basic oscillators: Moving Average Convergence/Divergence (MACD), Relative Strength Index (RSI), and the Stochastic Oscillator. As with any other indicator, you can use these without knowing how well they work, although if you do, you will be able to use them more effectively and know how to adapt them to your specific situations.

You should consider using the Double Bollinger Bands and one or two oscillators you choose, especially the moving average convergence/divergence (MACD). A few lines of moving averages as we saw before (in periods of 10, 20, 50, 100 and 200) not only serve as indicators of momentum, they also provide points of support and resistance.

Points of Support/Resistance

To add to the obvious price levels highlighted in your chart ( and in periods 4 or 5 times shorter and longer) you should always see:

  • The s/r points generated from the trend or range indicators.
  • The s/r points formed by the western style graphs, both their trend lines and the target points involved in new trends.
  • The s/r points transmitted by the pivot points.

The use of pivot points should be taken into account. A pivot point is no more than a technical analysis indicator, normally used to determine the market’s major trend over different time periods. The pivot point for it is simply the average of the maximum, minimum, and closing prices of the previous trading day. On the following day, the negotiation at a higher point of the pivot point indicates a bullish feeling, while if below the pivot point indicates a bearish trend.

The pivot point is the base of the indicator, but it also includes other support and strength levels that are projected based on pivot point calculations. All these levels help traders to try to guess where the price might have resistance or support. Similarly, if the price fluctuates around these tells the trader that the price goes in a certain direction.

Synchronization or Cycle Indicators

Gann, Fibonacci, Dinapoli, Elliott Wave, and other similar studies are synchronization or cycle indicators. For example, the typical toolkit could include, in addition to any obvious s/r points:

A set of moving averages of periods of 10, 20, 50, 100, and 200: Again, these serve as s/r points as well as momentum indicators if they show a cross or a stratification.

Trend lines and channel lines show the trend and provide points of s/r.

Double Bollinger Bands and MACD show the changes in momentum.

Fibonacci Setbacks One of the most recent trends in every period of time possible are the points s/r. If you need to re-draw these for every period of time you examine, do so, as the primary trend can vary dramatically over different periods of time.

If you can locate any pattern on a western graph, note the levels involved of s/r (maxima, minima, necklines, shoulders, etc.). Japanese candle patterns provide short-term signs of continuing trend or a reversal.

Euro/yen cross with 50-day and 200-day moving averages and MACD indicator. Image by Sabrina Jiang © Investopedia 2020

How to Enter MT5 and MT4 Indicators Into Charts

Then you would have to apply this group of fórex indicators to the time period you are negotiating, as well as those 4 or 5 times longer or shorter. For example, if you are trading daily graphs, you should also see the weekly and two or four hours (depending on what defines your trading day whether it is 24 hours or 8 to 10 hours).

A good graphics program that includes the Metatrader 5 will allow you to store any group of indicators you want since a model on the chart can be applied to any chart of any asset your broker offers.

The purpose of this first visualization in a longer period of time (weekly, in our examples) is to find points of support and longer-term resistance that you should see in the graphs you are negotiating, hoping to find a currency pair that looks like it can reach the s/r área and provide an entry point with a lower risk. That is the first step in locating low-risk, high-yield transactions.

The second visualization would be to examine the possible inputs and outputs in the shortest time periods you are negotiating, to see if you can find situations where your entry point is two or three times further away from the exit point than is your stop loss. The point of taking the winnings is usually easy to see. It is where you can reach the correct stop-loss point that usually determines whether you take the transaction.

The third visualization would be to check in the shortest time period (from two to four hours of the time period in our examples) to see any short-term s/r points, just so you are informed of s/r. time points. If these points are held for much or too often, your transaction may be showing signs that it is failing and you would have to reduce the size of your position. However, these are quickly overcome, this is a sign of progress and a signal to consider adding to your position.

  1. Run an MT5 indicator on the graph.

The most appropriate way to enter an MT5 indicator is to remove it from the browser window. You can also use the indicator command to insert them from the Insert menu or the indicator button in the standard toolbar.

  1. Change the settings of an applied MT5 indicator.

The settings of using an MT5 indicator can be changed. Select the required indicators in the list of indicators and click on “Properties” or use the menu of indicators in the graph.

Use the menu to manage the indicators:

  1. Indicator Properties Properties – opens the properties of the indicators;
  2. Delete Indicator Delete Indicator – Deletes the selected indicator from the graph;
  3. Delete Indicators Window Delete Indicator Window – deletes the indicator subwindow. This command is only available in the indicator menu which is in a separate sub-window. ;
  4. List of indicators Indicator List – Opens the indicator list window.
  5. Move the cursor to a line, symbol, or to the limit of a histogram of an indicator, it is possible to define quite precisely the value of the indicator at this exact point.
  6. Customize the MT5 display appearance

You can customize the appearance of the indicators on the trading platform. You can configure the parameters of the indicators on your trading platform. You can configure the indicator parameters when you apply them to the graph or you can modify them later. The appearance of the indicator is adjusted in the tab “Properties”.

The Color, width, and style of the indicator are configured in the “Style” field.

  1. Choose data to draw an MT5 indicator.

Technical indicators can be graphically based on price data and their derivatives as (Median Price, Typical Price, Weighted Close), also based on other indicators. For example, you can apply the moving average to an oscillator and have an additional AO signal line. First of all, it is mandatory to draw the indicator AO, and once drawn apply the moving mean to it. In the MM configuration select the option, “Previous Indicator’s Data” in the “Apply to” field. If you choose “First Indicator’s Data”, MM will be applied to the first indicator, it can be another indicator.

There are nice variants for the construction of an indicator:

  • Close – Based on closing prices.
  • Open – Based on opening prices.
  • High – based on maxima.
  • Low – Based on minimums.
  • Median Price (HL/2) – Based on medium price: (High + Low)/2.
  • Typical Price (HLC/3) – Based on typical price: (High + Low + Close)/3.
  • Weighted Close (HLCC/4) – Based on average heavy closing price: (High + Low + 2*Close)/4.
  • First indicator’s data – Based on values that were first applied to the indicator. The option to use data from the first indicator shall only be available for indicators in a secondary window because in the main window the main indicator is the price.
  • Previous indicator’s data – based on previous indicator values.
  1. Configure additional MT5 indicator levels.

For certain indicators, it is possible to enable additional levels. Open the tab “Levels” and click on “Add” and then enter the value of “level” in the table. You can also add the description of “level”.

The line color, width, and style of the levels can be configured below. To edit a “level”, click on “Edit” or double click on the appropriate field.

For the indicators applied to the price chart, the levels are drawn by adding the values of the indicator and the specified level. For indicators drawn in a secondary window, “levels” are drawn as horizontal lines through the value specified in the vertical scale.

  1. The MT5 display settings.

The display of the indicator for different time periods can be configured in the tab “Visualization”. The indicator shall only be shown for the specified time frames. This situation could be useful when the indicator is intended for use in specific time periods. The “Show in the Data Window” option allows you to manage the indicator information displayed in Data Window.

Euro/yen cross with three-day RSI overbought/oversold indicator. Image by Sabrina Jiang © Investopedia 2020

Combining the Best Forex Indicators

The forex indicators are great to guide us in manual trading. But if what we want is to automate trade and let Metatrader negotiate on its own while doing other things we cannot simply do that using indicators. Metatrader indicators do not contain trading logic. This is where Expert Advisors come in.

There are many tools that will allow you to generate unencrypted fórex robots. This is where we can help you quite a bit. Instead of spending hours coding, testing, changing, and optimizing your robots, we can offer you a tool that does it for you.

Robo-Advisor is designed to help you analyze, test, and generate strategies. It also allows you to export those strategies easily to the Expert Advisors so you can automate your trading on Metatrader.

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Forex Education Forex Indicators

Differences Between Price Action and Forex Indicators

If a survey were conducted among Forex and Futures retailers and one of the questions was: “What method or system did they first use to negotiate?” Without any doubt, the vast majority of traders would say that they started with indicators such as moving averages, stochastic, MACD, Bollinger Bands, and the list would follow. I’m […]

If a survey were conducted among Forex and Futures retailers and one of the questions was: “What method or system did they first use to negotiate?” Without any doubt, the vast majority of traders would say that they started with indicators such as moving averages, stochastic, MACD, Bollinger Bands, and the list would follow. I’m […]

If a survey were conducted among Forex and Futures retailers and one of the questions was: “What method or system did they first use to negotiate?” Without any doubt, the vast majority of traders would say that they started with indicators such as moving averages, stochastic, MACD, Bollinger Bands, and the list would follow.

I’m very lucky to be able to talk and help traders with their trading objectives every day, and the list of methods and systems with indicators that I find are endless. You just have to look at any Forex forum to see how many of the new traders are scouring all the “Forex Systems” threads for the latest indicators, because people use new indicator systems whenever they can (not necessarily the most profitable).

The reason the indicators are so popular is that they feed into the new trader’s belief that the indicator can help predict where the price will go. In order to understand the indicators in the right way traders need to understand how the indicators are constructed and project their information. 98% of all indicators are built using old price information to make a late indicator. For example, a moving average is created using the old price to make a mobile line that traders can use in various ways.

The main problem with indicators is that they are always created after the event and traders are using previous information to guide them. In other words, they are using late information to make live trading calls.

A Dangerous Trading Mindset

The other major concern with indicators is that traders rarely stop at an indicator and that’s often where things begin to adjust to the trader mentality. A novice trader will normally have some winners with their first indicator. It doesn’t matter how many losses the trader has suffered or even if they terminate their account. What the trader tends to remember is that the first indicator helped him to make a winning transaction and above all the trader will remember that this first indicator helped to predict correctly the direction of the price. All the losses and bad thoughts have been completely relegated to one side because the trader has already moved on to what comes next and has already solved EXACTLY how it will do everything again and much more.

The trader often thinks: “If an indicator helped me to perform a winning transaction, then two indicators will surely help me to predict even better the direction of the price” and then when two do not help, three have to be even better, etc., but the problem is that, Like so many things in negotiation, this just doesn’t work out this way. Human beings in everyday life are programmed to think that anything worthwhile can’t be simple and new traders often spend a lot of time trying to make trading complicated by adding fantasy indicators for their trading thinking that the more indicators they use, the better they can predict the direction of the price, but this is the exact opposite of what traders have to do.

This mindset is a trap in which it is very easy to fall because the trader may find himself in the usual situation of adding more and more indicators like him begins to have more and more losses, with the erroneous mentality that indicators will help you predict the direction of the price. What ends up happening is that the trader, from the beginning of his trading trip, uses so many indicators in his charts that he ends up in a tremendous mess and in a state of paralysis of analysis. The trader finally ends up with many indicators in his charts, and they all tend to contradict each other and the trader can no longer operate, as he is very confused about what to do. So what does the trader have to do?

Forex Indicators

The simplest and least complicated method of negotiation in the world is the action of price. All that is needed to negotiate according to the share price is a chart of the stock of the blank price and its method of negotiation. The main difference between the indicators and the price share is that with the indicators you are using old and late price share information to try to predict the future, but with the stock price continually reading the live price as it is being printed on the chart.

There are no indicators or external influences at all that are used to trade according to the price share. Basically trading according to the share price is the ability to read the price and make trades on any chart, on any market, in any time frame, and without the use of any indicator at all. Below are two charts, face-to-face, with the price share chart on the left side with just the raw price share and the graph full of indicators on the right.

Training and commitment are required to succeed by operating on the basis of price action as with any other method of trading or worthwhile systems, but the reason why trading with the share price is so successful, and why many professional traders use it, is because it simplifies the negotiation process and the mentality required to be profitable.

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Forex Indicators

The True Benefits of the ATR Indicator

Instead of using your own judgment, some statistical measures of price volatility are available. One of the most popular is the ATR indicator (Average True Range), which measures the average movement for a given exchange torque ( or action, raw material, etc.) for a given period. What Is the ATR Indicator? The ATR indicator moves […]

Instead of using your own judgment, some statistical measures of price volatility are available. One of the most popular is the ATR indicator (Average True Range), which measures the average movement for a given exchange torque ( or action, raw material, etc.) for a given period. What Is the ATR Indicator? The ATR indicator moves […]

Instead of using your own judgment, some statistical measures of price volatility are available. One of the most popular is the ATR indicator (Average True Range), which measures the average movement for a given exchange torque ( or action, raw material, etc.) for a given period.

What Is the ATR Indicator?

The ATR indicator moves down and up as the price of an asset becomes larger or smaller. This indicator is based on price developments, so the reading is in dollars. For example, in share trading, a reading of 0.23 of the ATR means the price ranges from $0.23 on each price bar. In the currency market, the ATR will show you pips, then 0.0025 is the same as 25 pips.

A new reading of the ATR indicator is calculated as each period passes. On a one-minute graph, a new ATR reading is calculated every minute. In a daily graph, a new ATR reading is calculated every day. All these readings are plotted as a line continues, so traders can see how the volatility has changed as time goes on.

Since the ATR is based on how much an asset moves, the reading of an asset is not comparable with other isolation assets. To better understand the indicator, here is how we calculated it.

Finding the A, or average first requires finding the true range (True Range TR).

The TR is the largest of the following:

  • The current maximum less previous closure
  • Current minimum minus previous closure
  • Current maximum minus the current minimum

Whether the number is positive or negative, it doesn’t matter. The highest absolute value is the one used in the calculation.

The values are recorded every day, and then you get an average. If the ATR is averaged over the previous 14 periods, then the formula is as follows:

ATR = [( ATR Previous x 13) [ TR Current] / 14

Continue reading about the ATR or start playing a little with a risk-free demo account and see for yourself how the ATR indicator works in real-time.

Setting the ATR Indicator

Typically, the default parameter is 14 periods, that is, 14 days on the daily graph, 14 hours on the hour graph, and so on, but as time goes on you want to experiment with the parameters. Knowing the ATR for a certain period, traders can choose to place a stop loss at a certain percentage of that range, based on the entry point. Let’s take an example, traders with confidence in the trend direction who want to prevent their stop loss from being reached would place the stop loss at 80 or 100 percent of the ATR away from the entry point near strong support. They will accept the long loss if that stop is reached because they believe that the probability of that happening is slim.

Traders with lower confidence and greater risk aversion that they want less loss (even if there are more of them because the stop is reached) can place their stop closer, perhaps 50 percent or less from the ATR indicator outside the point of entry. When you know the usual volatility for a given period of time through ATR, you have a better idea of how far you want your stop loss fixed or dynamic to prevent a random movement from reaching it.

Let’s use an example of how to use the ATR indicator to measure volatility and place a fixed or dynamic stop loss command.

Measuring Volatility

We refer to the example above. In the figure below, we show the same daily graph EURUSD showing the daily candles for the transaction’s entry date on August 11, but this time we include the ATR, which shows that for the past 14 days or candles daily, The average price range was around 210 pips. Those interested in how the ATR is calculated can view it online.

However, if we wanted to decrease the chances of reaching a stop loss in exchange for a risk of further loss if the transaction turned against us, we could have established the stop loss at a distance of 50 percent or more from the ATR, 105 pips, below the point of entry or some different percentage of the ATR.

The point here is that there are two different ways to determine how far you are going to establish your stop loss. In this example of fórex trading, we use the most recent minimums as a guide while we could have used the ATR. Much depends on factors such as your appetite for risk, market conditions, and confidence in the transaction. For example, if you caught a retraction to strong support in a strong general trend, you may be more confident that that upward trend will return and allow a wider stop loss to prevent it from being triggered by random price movements. When you have less confidence, you can keep the stops tighter.

Setting an ATR Indicator in MetaTrader 4/5

This section shows how to configure the ATR indicator in MT5. Assume that you have opened a graph.

Adds an ATR indicator and sets the parameter for this indicator:

  • Click on Insert and move your mouse over Indicators and Trend
  • Click ATR indicator
  • Configuring the common parameters

After you have completed the above step, the settings menu appears. Most indicators can be controlled by many common parameters.

There are two types of parameters:

  1. Indicator calculations: e.g. the number of periods used by the ATR indicator (you don’t need to worry about this much in the beginning)
  2. Display of an indicator: e.g. How will it look? The thickness and colour of the lines, etc.

To change the indicator settings directly on the graph a while later: Right-click on the ATR indicator (you will have to be very exact on the indicator line to see the menu below)

Choose the ATR Properties: The menu parameter appears again where you can change the indicator.

To delete the ATR indicator: Right-click on the indicator you want to delete (you will have to be very exact on the indicator line to get the menu below). Click ‘Delete Indicator’ and the indicator will disappear from your chart.

Final Words

The ATR indicator is not directional like the MACD or RSI, rather as a unique indicator of volatility that reflects the degree of interest or disinterest in a movement. Strong movements, in either direction, are usually accompanied by long ranges, or long and true ranges. This is really true at the beginning of a movement. Not-so-inspiring movements can be accompanied by relatively narrow ranks. As such, the ATR can be used to validate the enthusiasm behind a movement or a rupture. An upward reversal with an increase in ATR would show a strong buying pressure and the reinforcement of a reversal. A break in bearish support with an increase in the ATR would show strong downward pressure on sales and reinforce the break-up of the support.

Understanding how to read the ATR indicator is important, but if you want some help, Metatrader offers a very useful indicator toolkit. Play a little on a demo fórex account and see for yourself how the ATR indicator can give you a lot of money.

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Forex Indicators

Incorporating the Right Indicators Into Your Trading System

Technical traders are not making decisions on any other input but their set of indicators and rules. As a holistic approach, it is a trading system that combines position or risk management, chart analysis, and volatility/volume parameters, producing three types of signals: enter a trade, exit a trade and do not trade. Technical traders’ decisions […]

Technical traders are not making decisions on any other input but their set of indicators and rules. As a holistic approach, it is a trading system that combines position or risk management, chart analysis, and volatility/volume parameters, producing three types of signals: enter a trade, exit a trade and do not trade. Technical traders’ decisions […]

Technical traders are not making decisions on any other input but their set of indicators and rules. As a holistic approach, it is a trading system that combines position or risk management, chart analysis, and volatility/volume parameters, producing three types of signals: enter a trade, exit a trade and do not trade. Technical traders’ decisions are therefore based on a black and white mindset. In other words, their mind is not different than the trading systems they have made.

On a professional level, their mind is just thinking about testing out more to improve the system effectiveness on the forex market. This article will reveal an important view of how to add on an element or an indicator to a system that already has a few synergetic elements, each playing their role, and measure various categories from the market numbers. Using an example from one professional prop trader system structure, we can give an understanding of what to look for when improving your own trading system. 

Technical traders may follow a certain theory, using just John Ehlers’s indicators, for example, but it is proven that risk is mitigated by diversification. Even though the indicators from this researcher are somewhat predictive in nature, having another indicator from other theories that base on historic confirmation might be not only risk-mitigating but also create special chemistry when combined. Traders that are advanced already have a system and are probably familiar with the theories or how their indicators are made. Beginner traders are not familiar with this, and actually, they do not have to be to create effective systems. We will present you with a few shortcuts to finding this special indicator combination.

As an example, a trading system can have a volatility indicator based on which position size and risk management are based on. Having such a variable and adaptive way of controlling risk is imperative as discussed in other articles. ATR indicator is one such volatility measure. The next element in the system is a specialized volume or volatility indicator whose role is to tell us when there is not enough momentum in the market or trend and to just ignore signals from other indicators as the risk of price changing direction is increased. We are looking for quality trends to follow, a scientifically proven method of trading with the best results. When we are looking to exit a position, technical traders also make decisions after an indicator. This type of indicator should be great for finding points when trends exhaust and some think oscillators and reversal indicators are a good pick for this role.

A separate article also explains this in more detail. At the core of the system is the confirmation indicator, when to enter a trade is a starting point when we look at charts. Finding an indicator that proves to be very effective at finding emerging trends is a precious element but we all agree none is close to being right even 70% of the time. As this is the core of the system, why not make it better by adding an additional confirmation indicator? Having two different experts will generate better solutions than just one. Now, if we go on we might think more is better, but there is a thin line after which adding more indicators creates a detrimental effect on the system. It is too complicated. So adding just one additional confirmation indicator is enough. The point here is to make sure that the first trend confirmation signal is not a fake market move that just a whipsaw, so add another one that needs to produce a signal in the same direction before we make a trade. Eliminating losses from these fake moves has the same effect on our account as when we win. 

Confirmation indicators have various calculations, formulas, and ideas behind them, and that is great. As an analogy let’s say your system is a team of players. Each player has its role but we have all witnessed a magic bond between two or more players that are just extremely effective when combined. Of course, having a bad player and another bad player is going to be better but it is no-brainer because we want to have two greats. Finding great indicators is a long and tedious work, once we have one with the best backtesting and forward testing results, it is priceless. The ones that got to the top 10 of your list might be the ultimate additions to your number one. The good thing about these indicators is that they are abundant, unlike the volume indicators, and they are easy to test. 

Trend confirmation indicators can be categorized to make this process beginner-friendly. Starting with the Zero Cross indicators, they are generating signals based on a line crossing a horizontal zero value line. A typical example of this is the Chaikin Money Flow (CMF), an indicator using volume and other market values in its formula. After all, traders are interested in how good it is for their system after backtesting and forward testing. When the main signal line is crossing the zero line it means a new trend or continuation is starting. If your main confirmation indicator is from the same category, you will need to change one to get the diversification effect.

The second category is the Line Cross-type. These are probably the most common type of indicators. MACD can be one example of this, although MACD also has a zero line. If you want to diversify, you will need to pay attention to different signals even the  MACD, for example, belongs to the Zero Line and the Line Cross category. The third category is the on chart indicators. Now, these indicators are the ones when applied are represented on the MT4 chart itself, not in a separate window below it. Moving Averages are a simple example of this type of indicator, and there are many ways you can classify a trade signal with them. Many systems have them and they can be an extremely effective tool. Finding the right Moving Average indicator is surely going to be worth the time. 

Now when we understand how to combine and diversify indicators, understand that the second confirmation indicator is there to filter losses made from the main one. Since cutting losses is the same as generating wins, we are looking for synergy results where the second indicator is filtering the losses but not filtering the wins. Volume indicators have a similar role here but know it is hard to find a volume indicator that does not filter a win in the way. The nature of measuring volatility or volume simply needs more data to be effective, consequently, they lag. Lagging may cause your system to miss the right moment to enter a trade and therefore a possible big win but this is just something we have to accept.

Additional confirmation indicators are not necessarily like this but they still add value to your system. Traders’ focus should be on cutting the losses, it is the main problem once you make your first system. When we find and adjust our second indicator, aim to cut a lot of losses. If a winner is filtered, try to adjust settings a bit but not at the cost of letting the losers in. As we have discussed in previous articles, your indicators should be recent, do not latch on to the popular ones, you will soon find others have better results in your testing. Combining different type indicators with great results is the way to go but know that sometimes the synergy might not be there. Similar to sports, you may collect the best players together in a team but the result can be disappointing. On other occasions, two great players that understand each other can beat the opposition alone. Interestingly, case studies have shown each had a different specialized skillset that adds value to the other. The goal is the same but the formula is based on different measures and the representation is different. 

You will find many times that your two confirmation indicators do not align, and this is good. Pay attention to the main setting adjustment you can make, the period. By having one faster and one slower confirmation indicator, you may find that sweet spot of filtering losses and keeping the winners. Whatever confirmation indicators you find, only testing will show you if this combo is worth keeping. The more pairs you test, the better the odds you will find a golden team. Other elements in your trading system should not be messed with during testing, you need to have control and compare only this confirmation indicator combination.

Here is an example provided by one prop trader demonstrating how this idea works in practice. We are going to use the EUR/USD currency pair. It is the most traded pair with many news, reports, and event that could push the trend the other way. As such it is considered the riskiest pair you can pick and should provide a lot of losses and wins. Losses we should cut by introducing a second confirmation indicator. From the picture below we can see our Aroon indicator is really having a hard time finding a winner. This chart is very nasty for trading trends with many whipsaws.

Red and green vertical lines are added once the indicator gives a signal to go short or long. Aroon was able to give us approximately 3 wins and 8 losing trades. We can see Aroon is a line cross indicator type, signals are generated once the red line crosses above the blue for short and vice versa. Let’s see what happens when we add a second confirmation indicator not belonging to the line cross-type. 

We have added an Exponential Moving Average for 20 periods as the on chart type indicator. Now if you use the EMA for generating signals only when the price crosses it, you will find many conflicting signals with the Aroon. When they are in conflict, we do not take that trade. When we take this rule to the chart, many of the losses are filtered. 

Now we have kept the winners and have only 6 losses. EMA might not give us great loss reduction but the end result is still better than before. Let’s try to find a better indicator. 

We have added the Force Index indicator and adjusted its period to 26 from the default 13. Additionally, a horizontal line is added at zero effectively making this indicator a zero line cross type! The result is we still have 3 winners and now only 2 losses. Before all this, we had 8 losing trades. So we have transformed our system from a 27% success rate to 60%. Note that your system still has a volume filter and other elements that boost this rate to a much better percentage. With good position sizing, money management, you should be profitable. You now have better odds than a 50-50 coin flip.

By the way, having proper money management and using a 50% success rate system can still yield profits. Just pay attention, what is presented is just a couple of trades on a single currency pair. What you need to do is test your indicator combinations on longer periods and other assets. We are aiming to create a system that works on every currency pair, without adjustments. The final product is a universal system you can use professionally for a long, long time. 

To conclude, the hard work you have to put in is necessary to find that perfect combo. Treat it like a treasure hunt, a game with real treasures behind. If this is exciting to you then it is just a matter of time when you complete your trading system and just trade as it says, consistently providing you with treasures. Your score list of tested indicators is useful, you can pick up your second confirmation indicator from there without searching through the forums and indicator websites. Use the tricks described here, add a line, test different periods and settings, add an MA to the indicator. Finally, the synergetic effect is easy to test, as demonstrated, you will not spend too much time to figure out you have a high % combo in front of you.

Categories
Forex Indicators

SSL Indicator Methods that You Can Put to Use Today

As any forex trader worth their salt knows, there are a bewildering number of indicators out there to choose from – which is why you need a quick and handy overview to give you the lowdown. Introducing the SSL Channel Chart Alert Indicator Popularly known as the SSL, the Semaphore Signal Level Channel Chart Alert […]

As any forex trader worth their salt knows, there are a bewildering number of indicators out there to choose from – which is why you need a quick and handy overview to give you the lowdown. Introducing the SSL Channel Chart Alert Indicator Popularly known as the SSL, the Semaphore Signal Level Channel Chart Alert […]

As any forex trader worth their salt knows, there are a bewildering number of indicators out there to choose from – which is why you need a quick and handy overview to give you the lowdown.

Introducing the SSL Channel Chart Alert Indicator

Popularly known as the SSL, the Semaphore Signal Level Channel Chart Alert (can you see why everyone knows it by a shorter name?) is an indicator that combines moving averages to provide you with a clear visual signal for dynamics in price movement. In short, it seeks to show you when trends in the price emerge.

It does this by showing you two different-coloured lines that appear on your chart and track price movements. We say they appear on your chart because in most iterations this indicator is overlaid onto your chart, though there are off-chart versions available too. This is really down to your own preferences as a trader – would you rather your chart be clean and simple and have your indicators appearing separately in another window or do you like everything to be displayed in one place, making it easier to cross-reference? There is another thing to factor in here, which is whether you can find a good off-chart SSL. It has been primarily designed as an overlay indicator so if you do opt for an off-chart version, it goes without saying that you should make sure that it works as advertised.

When the two lines intersect, the indicator is signaling that the price movement is changing direction or is about to change direction (from long to short or from short to long). When setting up the SSL on your platform, you will have an opportunity to choose the colour of the two lines – make sure you select colours that make sense to you and don’t clash with anything else you have set up on your chart. Having a cluttered chart can be distracting enough without also having to squint to see colours that are too similar to one another or that clash in some other way.

Another thing to bear in mind when setting up the SSL is that it will have some alerts built-in – it is, after all, called the SSL Channel Chart Alert. Now, it depends a little on how you like to trade but our recommendation is that you turn these alerts off – especially until you have a good sense of how the indicator works and what you want to use it for. There is another reason why switching the alerts off is probably a good idea. And that’s the fact that the indicator might give you false signals as the price teeters back and forth before a candle closes. This would probably result in you getting alerts popping up before you can really use them and also could be confusing and even misleading. Plenty of technical traders who make heavy use of indicators will advise that you wait until a candle has closed before taking a reading or signal from your indicator and this applies just as much to the SSL as to other indicators.

Quick and Simple SSL Strategy

Ok, so the SSL is doing its darndest to show you trends in the price movement but when it gets down to it, how do you actually use it?

Well, first things first, as with any indicator you are considering using as part of your trading system, you are going to want to run this one through a pretty robust testing regimen that includes both backtesting and forward testing through a demo account. And what you will discover when you run the SSL through testing is that here and there it picks out some pretty juicy price trends. Remember, when the two lines intersect, the SSL is telling you that the price movement is changing direction and you can use this as an entry signal if you are confident that this change of direction – or reversal, for want of a better term – is likely to develop into a trend.

But – there’s always a but isn’t there – the other thing you will notice is that the SSL will also lead you down some blind alleys that would result in losses if you traded on them. You’ll notice this particularly when the market is ranging or going sideways, where the SSL will pick out changes in direction that don’t develop into trends.

Now, there’s a chance that in your testing process you will find that these losses are outweighed by the gains made when the SSL does successfully pick out a trend. Nevertheless, you will still want to minimise those losses and the way to do that is to pair the SSL with a second indicator that will help you to eliminate at least some of those losses without also holding you back from getting in on the gains.

The best way to do this is to pair the SSL with a volume or volatility indicator and some strategies will also suggest using a momentum indicator. Examples of indicators the SSL is commonly paired with include the ATR, Force Index, Volume Oscillator, and the Stochastic. Whichever one you go for, the outcome you are looking for is for this second indicator to tell you whether a change in the price direction flagged by the SSL has the strength to turn into a price trend. All of these approaches have their various merits and choosing between them will depend on the indicators you are comfortable with and other aspects of your trading system.

So, how might a typical trade with the SSL look? Well, you will be on the lookout for the two SSL lines to converge and intersect, this will give you your initial signal that the price movement is changing direction and that a trend could emerge. At this crossover point you will want to check what your confirmation indicator is telling you – if, for example, there is an insufficient volume in the market at that point, you should hold back and avoid entering a trade. If, conversely, the volume is there to indicate there would be the strength behind the move, this is an entry signal. You may want to hold back until an extra bar completes before you enter a trade as this will additionally protect you against the price dithering or backtracking. Pairing the SSL with a good second indicator to filter out price movements that lack strength could halve the losses it would otherwise generate.

The SSL and Exit Signals

One other rather neat feature of the SSL is that it provides both entry and exit signals. As described above, you would enter a trade when the SSL lines cross over (assuming your other indicators confirm the trade signal) and that will hopefully take you into a nice price trend. Just as with the trade entry signal, the SSL lines will then again converge and intersect. As we know, this indicated that the price movement is about to change direction – if you are in a trade, this neatly provides you with an exit signal. 

In a sense, if you do end up using the SSL, it kind of ties you into using it both to enter and exit trades. But this doesn’t have to be a bad thing at all. As you will see if you run it through your testing ground, the SSL has the potential to take you into some nice trends and, assuming you are sticking to the system as you design it, you should be able to ride those to grab gains that outweigh the smaller losses that it will also throw up from time to time.

Key Takeaways

The SSL can be used as a combined entry and exit indicator that will lead you to trends in price movements and, if properly paired with a secondary confirmation indicator, can help you to take advantage of those trends. When the market is not trending, the SSL will definitely throw out false signals that could lead you to losses but these can be mitigated by using it in conjunction with a good volume or volatility indicator.

Even if you don’t end up using it as part of your system, the SSL is a great little learning tool. Just taking it for a test-run and seeing which other indicators it pairs well with can help you to develop as a trader. What’s more, it is a useful asset to have around and once you start tweaking it, adjusting the settings, and playing around with combinations of secondary indicators, you might find that this is an indicator that has some real value to it.

 

Categories
Forex Indicators

Top 5 Forex Trend Indicators for New and Experienced Traders

There are thousands of indicators out there. In fact, there are so many that it is impossible to look at them all. What you may find when going through them is that a lot of them are actually different variations of a few different major indicators, with the creator having simply made a few small […]

There are thousands of indicators out there. In fact, there are so many that it is impossible to look at them all. What you may find when going through them is that a lot of them are actually different variations of a few different major indicators, with the creator having simply made a few small […]

There are thousands of indicators out there. In fact, there are so many that it is impossible to look at them all. What you may find when going through them is that a lot of them are actually different variations of a few different major indicators, with the creator having simply made a few small changes here and there. The underlying principle and method behind the indicators are fundamentally the same, in fact, for most of them, you would not actually see much difference at all.

So we are going to be looking at some of the more widely used trend-based indicators that are out there. You most likely will have heard of some of them or even used a variation of one yourself. Let’s take a look at what these major and popular trend indicators are.

Price Action

This is probably the one that most people would have heard of. In fact, some people who know nothing about Forex or trading may well have heard of this one too. When it comes to trading, price is the number one variable that we will be looking at and it is one that dictates the majority of moves within the markets. So getting a good understanding of what price action does and how the trends work is often the first thing that people set out to learn.

There are multiple different ways to look at price action. There are higher highs or lower lows and it is something that every trader should understand. We are not going to be going into detail here on how you actually analyse it, but there are hundreds of indicators out there that you are able to add onto your charts which give a fantastic overview of the current price action that is going on within the markets. The current price can tell you a lot about the current trends. The good thing about some of the price action indicators is that they also include trend lines, making it far easier to see where the current price sits within the current trend, a valuable tool for any trader or any experience level.

Moving Averages

One of the most used indicators when it comes to trading forex would have to be the moving average indicator. It is used to help identify the trends within the markets. There are multiple different forms of moving averages but they all follow the same ideas and aim to plot the average prices of a currency over a specific period of time over the price itself.

What the indicator suggests is that if the current price is above or below the current average price. It should indicate whether the markets are currently bullish or bearish. You are also able to work out the possible strength of a trend by looking at the steepness of the moving average slope. The steeper that the slope is, the stronger the trend would be. More often than not, you would use a long term in a short term moving average at the same time to help confirm any possible bullish or bearish movements.

The moving averages indicators are often used in conjunction with other indicators to help set up trades for specific strategies. Even if you do not use it for your trading, having a general idea of the current trend and where that trend sits above the average price can be invaluable to your trading, including both entry and exit positions.

The Parabolic SAR

Parabolic SAR, which stands for Stop and Reverse, is a great indicator that a lot of people use. The way it works is by identifying the short term trends within the markets. It will simply place dots on the charts which will be either above or below the high or the low in the price.

It works by using a number of different variables to help calculate its values. It uses things like acceleration factor and extreme price to do this. It is extremely useful when looking at the short term trends and the changes that are happening within these trends. It can be used to help with both entry and exits of trades as it is good at showing where the reversal could happen. It should also be used multiple times to enable for better correlation and confirmations of the short term trends and the changes that could be taking place.

The MACD

Also known as Moving Average Convergence, divergence, it is an oscillator which means that it will usually measure variables and changes in things like momentum and volatility. The MACD indicator is slightly different though because it also acts as a trend indicator, as well as calculating the momentum in the price of a currency.

The MACD indicator includes a histogram which will oscillate around the 0-level. The fast and slow lines are known as the MACD line and the signal line. The indicator gets its values from the exponential moving average indicator with a setting of 12 and 26 periods. The trends that are shown in the price charts are validated by using a combination of variables in the MACD indicator. MACD is widely used and there are a lot of indicators and expert advisors out there that have implemented it into their strategies and into their indicators, so you do not need to look far to see MACD being mentioned.

Ichimoku Cloud

This indicator is also known as Ichimoku Kinko Hyo, is a pretty unique one as it is a trending system within itself, not needing any additional input. It was developed to work as a trend following indicator which has a large number of variables included in it for customisation and adaptations.

The cloud within the indicator is often seen as the support and resistance level areas within the markets. The Chikou, Kijun-sen and Trinjensen measure the 9-period and 26-period levels on the charts. The Ichimoku Cloud indicator is fast becoming one of the most used trend indicators and is now getting used more and more by new and experienced traders. On first impression, it can look a little daunting due to the vast numbers of options and variables available, however, during a time of sustained trend in the markets, the indicator is able to give very good and very accurate results, which is why it is now so highly used.

So those are some of the most popular trend indicators that are being used right now. Which one you should use is entirely up to you. Some match and combine with certain strategies while some do not, some are far simpler than others, but the decision of which to use will need to be based on what will work best with your current strategy. All we know is that they are all incredibly helpful and potentially powerful tools that you can add to your trading arsenal.

Categories
Forex Indicators

What You Need to Know About Trading with the Williams %R Indicator

Do you trade using indicators? Still do not know this indicator created by Larry Williams? The Williams %R indicator, although less popular than others, is worth studying.

Do you trade using indicators? Still do not know this indicator created by Larry Williams? The Williams %R indicator, although less popular than others, is worth studying.

Do you trade using indicators? Still do not know this indicator created by Larry Williams? The Williams %R indicator, although less popular than others, is worth studying.

Introduction

The Williams %R is an impulse indicator developed by Larry Williams. It moves between 0 and -100, providing information about the weakness or strength of a financial instrument, i.e., stocks, currencies, or commodities. It can be used as overbought/oversold levels, impulse confirmations, and trading signals. Readings from 0 to -20 are considered overbought. Readings from -80 to -100 are considered oversold levels.

Calculus

The formula used to calculate the Williams %R is:

% R = (Maximum – Closing) / (Maximum – low) * -100

Minimum = lowest minimum over the period analysed.

Maximum = highest maximum in the period analysed.

The default setting for the Williams %R is 14 periods. It can be days, weeks, months, or an intraday period of time. An R %of 14 periods would use the most recent closure, the maximum of the last 14 periods and the minimum of the last 14 periods. The Williams %R has only one line by default.

When the indicator is:

-Near zero shows that the price is quoted near or above the maximum during the period analysed.

-If the indicator is close to -100, the price is traded near or below the minimum of the analysed period.

-Above -50, the price is traded within the upper part of the period analysed.

-Below -50, the price is traded at the bottom of the period analysed.

If we look at the daily chart, AAPL shows overbought at the -4 level. Back sessions were at the -80 oversold level.

Interpreting

Williams’ interpretation of %R is very similar to that of the Stochastic Oscillator, except that %R is traced backward and the Stochastic Oscillator has internal smoothing. Williams’ interpretation of %R is very similar to that of the Stochastic Oscillator. Values in the range of 80% – 100% want to tell us oversold, while readings in the range of 0 to 20% suggest that it is overbought.

Like other overbought indicators – oversold, the most favorable thing will always be to wait for the price to change direction before trading. The over-purchase may remain for an extended period of time. For example, if an overbought indicator – oversold (such as Williams’ Stochastic Oscillator or %R) shows an overbought condition, it is advisable to wait for the price to fall, before selling if you already have a long position or a stop loss.

Often, the %R indicator helps to find a turnaround in the stock market almost at the right time. The indicator usually forms a peak and then turns offa few days before the value price turns. Similarly, the %R usually creates a drop and goes up a few days before the price resumes.

Like the vast majority of overbought indicators – overbought, it is much better that we wait for the price to change direction before trading.

Using the William %R Indicator Correctly
  • To identify over purchases in an Index or stock.
  • Centre line of the WILLIAMS %R indicator.
  • Divergences

Let’s look at each of them in the most detail.

To identify levels of over-purchase:

The indicator ranges from 0 to -100. No matter how fast action moves or falls, the Williams %R indicator fluctuates in this range. Oversold and overbought levels can be used to make an identification price extremes, which appear to be unsustainable.

-Williams %R above the threshold of -20 is considered overbought.

-Williams %R below the threshold of -80 is considered to be oversold.

As is known, a market may remain overbought for an extended period of time. Trends with some strength usually present a problem in these oversold levels – overbought already classic. WILLIAMS %R can be overbought (> -20) and prices can simply continue to rise when the uptrend is strong. In contrast, the WILLIAMS %R may be oversold (-80) and prices may simply continue to fall when the trend is strong.

Amazon has a WILLIAMS %R at 14%, in a daily chart. Seeing, from left to right, Amazon came to overbought at -3 in early December, when it traded around 696. Amazon did not reach the peak level as soon as the overbought reading appeared. It took a few days but then we saw a drop of almost 149 points. 19%. From overbought levels of -3.1, the WILLIAMS %R moved around -98 in mid-January towards the oversold terrain. Despite this oversold reading, Amazon continued to fall to the ground on January 20. Traders must always confirm the WILLIAMS %R indicator with price action or price action. On 20 January a Hammer sail was formed with the oversold WILLIAMS %R. This confirms that the short-term soil was reliable and recovered up to $638 a share. The WILLIAMS %R indicator was overbought and again we saw drops. Overbought and oversold levels are marked on the charts.

Centre line of indicator WILLIAMS %R:

The WILLIAMS %R indicator detects bullish and bearish movements in the market by observing when crossing above or below the WILLIAMS% R-50 level. After being overbought and oversold, if the Williams %R crosses the -50 line, it usually indicates a change in movement.

If you can find the Microsoft chart from April 20, the DOJI formed by Microsoft suggests a trend change. It also broke -50 which also suggests a change. In the example illustrated above, the %R of MSFT was overbought, then the share price began to fall and the %R crossed below the -50 line quickly, before most of the bearish movement occurred.

It is advisable to use the price stock with this Williams-based %R strategy to increase the odds of success. . As you may have observed, in the above example, the bar that pushed the reading of the Williams %R, below -50, was a DOJI. This usually warns of a change of trend if the next candle is also bearish. Traders should open short positions in MSFT with Stop Losses just above the DOJI sail. The trader would have entered the market when the bearish momentum was at its highest. Therefore, you could have managed to place a tighter stop loss, which in turn would increase your risk/reward advantage in this particular operation.

It is possible to use this strategy to be able to open a long position when the %R is above -50after it has been oversold for a period of time.

It is highly recommended to use price action in combination with this Williams-based %R strategy to increase the odds of success.

Divergences:

The WILLIAMS %R divergence occurs when there is a difference between what the price action indicates and what the WILLIAMS %R indicates. These differences can be interpreted as a sign of an imminent turn. There are two types of divergences. Bearish and bullish.

Bullish divergence WILLIAMS %R:

A bullish divergence occurs when the WILLIAMS %R is oversold, below -80, increases above -80, remains above -80 in recoil, and then breaks over its previous reaction at a higher level. A bullish divergence forms when prices move to a lower minimum, but the indicator forms a higher maximum.

WILLIAMS% R bearish divergence: when the price reaches a new maximum, but the WILLIAMS %R reaches a lower maximum.

If you can see a Facebook chart, the price dropped to 77.22 on May 5. WILLIAMS %R went straight to the oversold area. It moved up and up even further, but the price dropped to 76.79 on May 12. Once the WILLIAMS %R moved above -80 and we had a bullish enveloping pattern, as shown above, we marked the turn. The price recovered up to $83.

Conclusion

The WILLIAMS %R index is a unique impulse indicator that has stood the test of time. The WILLIAMS %R is best suited to identify possible spins in overbought/oversold levels and bullish/bearish divergences. As with most indicators, WILLIAMS %R should be used in combination with another indicator or with the price action. It is possible and positive to perform the combination of using WILLIAMS %R with price patterns with the objective of increase signal robustness. If you operate intelligently, by combining price action, and use the Williams %R to confirm the momentum in the market, your likelihood of ending a profitable trade would greatly increase.

Categories
Forex Indicators

The ATR Indicator and Volatility in Trading

Have you ever considered how to use volatility in your trading? How to apply some filters according to their behavior? The ATR indicator can help you with this. In this article you will be able to show you a lot of information about the Average True Range (ATR), an indicator unfairly forgotten in trading systems. […]

Have you ever considered how to use volatility in your trading? How to apply some filters according to their behavior? The ATR indicator can help you with this. In this article you will be able to show you a lot of information about the Average True Range (ATR), an indicator unfairly forgotten in trading systems. […]

Have you ever considered how to use volatility in your trading? How to apply some filters according to their behavior? The ATR indicator can help you with this. In this article you will be able to show you a lot of information about the Average True Range (ATR), an indicator unfairly forgotten in trading systems.

Index
  • What are technical indicators and how can I use them?
  • What is the ATR?
  • How did ATR come about?
  • How to calculate the ATR – Average True Range
  • Find true range (True range)
  • Calculation of the ATR indicator
  • Graphic representation of the Average True Range
  • Uses of ATR
  • More frequent strategies using ATR
  • Momentum strategies
  • Böllinger bands
  • Supports and resistors
  • Conclusion
What are technical indicators and how can I use them?

The technical indicators, among those found in Average True Range (ATR) is based on a series of calculations on price action (some also on volume). I am sorry to say that the use of technical indicators does not always work. But they can be useful tools for detecting patterns of market entry and exit.

There are a number of technical indicators that have been developed, some show us when the market enters an overbought or oversold situation, others show us when a trend can be exhausted, if a movement is reliable and how much travel it can have.

The ATC shows us the volatility in a market, as well as its variations.

What is the ATR?

ATR stands for the name of this technical indicator: Average True Range. This indicator was developed by J. Welles Wilder. It is no more than an average of the price ranges (in fact, its name in Spanish corresponds to the average of the true range). A true range is the measure of volatility that can exist between two successive time periods (for example, two stock market sessions, two weeks, two hours, etc.).

To the point, it is a technical indicator of volatility. Volatility shows the strength they have, have had and can have (based on estimates) price movements. This can be useful both to calculate the risk and to filter market entries and exits (later we will delve into the importance of all this for our trading). The ATC simply reflects the periods in which the market has behaved more violently (is more volatile) and whether volatility increases or decreases.

How did ATR come about?

Wilder, the creator of this and other technical indicators (such as the Relative Strength Index; RSI or the Parabolic SAR, among others), was a commodity market operator. This trader used financial futures for its operations. Futures are leveraged instruments (like trading with Forex and CFDs) and are therefore very sensitive to strong price movements. For this reason, he discovered that it would be useful to have a tool that would allow him to know the range in which the market can move in a day.

However, it may be that the market opens at a different price than the previous session (what is known as a gap or gap) and does not move much further during the present day. In this case, the behavior in a day is not very volatile, but if we take into account the variation with respect to the previous closure, in fact, there may have been volatility.

For this reason, Wilder developed a calculation formula that allowed not only to see the volatility of a single day but in contrast to the previous day. Similarly, by averaging this calculation, you can observe how volatility in the market evolves over a period of time. His idea, which remains in force, was that after a period of high volatility he was continued from a period of low volatility; and vice versa.

All the technical indicators developed by J. Welles Wilder can be found in his book “News Concepts in Technical Trading Systems” (1978).

How to calculate the ATR – Average True Range

Like all other technical indicators, the Average True Range (ATR) is based on calculations of past price movements. To calculate this volatility indicator we must start from the True Range of the current period (True Range). The periods to be taken as the basis for the calculation (i.e., the number of immediately preceding sails or rods taken into account) must also be configured.

As a general rule, the period used is 14 (can be daily, weekly or monthly periods). Wilder, its creator, used this value for its development (in addition, on a daily basis). However, there are traders who use a very different trade from the father of the ATR and for this reason, the period is configurable.

Find true range (True range)

As I mentioned before, the ATR indicator is only an average of the true range calculated over the periods indicated. It is taken as a value to define the range (True Range), the highest value of these three:

  • The maximum price for the current period – minimum price for the current period.
  • The maximum price for the current period – closure of the previous period.
  • Previous period closure – the minimum price for the current period.

The difference between prices (in other words, the range of movement they have had) shows whether the market has been more or less volatile. The higher the range means the more volatility there has been.

Thus, the true range includes gaps that may arise in a market. This price difference, by taking the stock exchange session, better reflects the strength of the swings and helps us measure volatility in a more reliable way. As a last point, when creating an average on these values, we can observe the volatility changes. In other words, whether it goes up or down.

Calculation of the ATR indicator

The formula for calculating the ATR indicator is as follows:

ATR= [(previous ATR * n-1) + True range of the current period]/n

Wherein is the current period.

In any case, the default configuration of the ATR, which Wilder left us, was done over a period of 14 days. As discussed above, periods are taken on a daily basis (i.e., to calculate the ATR we take the price movements from the previous 14 sessions).

Thus, the original ATR would read as follows:

ATR= [(ATR previous period *13) + True range of current period] /14

Although this is the formula that its creator used to operate in the commodity market and know its volatility, the ATR can be configured according to the market, your trading style (scalping, swing, etc.), or strategy that you can use.

Graphic representation of the Average True Range

To make it easier to use the ATR indicator, it is graphically displayed at the bottom of our quotation chart (although there are platforms that allow you to place it at the top). The vast majority of trading platforms have this indicator and you just have to select it in the corresponding section and insert it. They also allow configuring of the number of periods on which we want to do the calculation. The ATR is represented by a linear graph, in which you can see the peaks and valleys of volatility. Increases and decreases in value are seen at a glance.

Uses of ATR

ATR has different uses in our trading. It can be useful both in designing strategies and in calibrating risk. As I mentioned at the beginning of this article is one of the most useful technical indicators, but, curiously, the least used.

Some of the uses we can give the Average True Range (ATR) are:

To calculate the size of the position in our trading account: dividing our risk according to the existing volatility (taken as a multiple of the ATR), we are in a position to limit the size of our trade.

Define the stop loss level: this is one of the most widespread uses of the ATR indicator. Sometimes you don’t know if the stop-loss order is too close to the price. Volatility can give you the answer. Knowing the violence with which the financial asset can move, we can calculate a safety margin to place our stop.

Set profit targets: just as we can limit risk based on the potential range of price movements. The ATR indicator will be useful to determine how far a movement has traveled. This way we will have an idea of what we can gain with an operation and set our take profit order.

To create strategies based on breaks: when the price goes through a trend, a channel, support or resistance, we must ask ourselves is this break reliable? If the price breaks with force, that is, with an increase in volatility, the break is more likely to be valid.

Select assets to trade: with the ATR you can create a filter to select which assets to trade on. You may want to exclude those in which volatility has been low and an explosion in price is expected. Assets that have excessive or very low volatility can also be discarded. To be able to compare the volatility of the assets, you just have to divide the ATR by its price and get a percentage (multiply it by 100).

More frequent strategies using ATR

Another of the most common uses of ATR is to use it as a criterion or filter within our trading system. For example, we can define that market entries occur “when volatility is greater than… (Usually a multiple of the ATR is taken).

Momentum Strategies

The ATC may indicate a change in the direction of prices. Bullish trends tend to occur in a less volatile way than market declines. If it is applied in an uptrend (in the long run) and there is an increase in volatility, it is possible that there will be a possible increase in panic and, therefore, a change in the direction of prices. Similarly, it is possible to exploit a bearish trend that is ending if we observe a decrease in volatility.

Böllinger Bands

A trading system could be, for example, combining the ATR with Böllinger Bands. If the price reaches the upper band and there is an increase in volatility, it is possible that we are facing a variation.

On the contrary, given that price falls occur with greater volatility, when the price reaches the bottom band and there is a decrease in the price, it could be interpreted as the end of the decline. As always this should be seen through a backtest. But I can tell you already that some of my strategies use ATR as an entry and exit criterion.

Supports and Resistors

This strategy has been outlined above when discussing the uses of ATR. However, it should be recalled that a strong price movement is more reliable as it better reflects market sentiment. The ruptures of supports and resistances must be validated and this indicator can help us to confirm it.

Conclusion

As you will have seen, the ATR (Average True Range) is a complete technical indicator that can be useful to exploit inefficiencies or improve your trading systems. Volatility is one of the most important aspects of the market and should be taken into account in your strategies. The ATR indicator can be incorporated into other systems and strategies. But it can also be an important element in determining risk and establishing proper risk management.

Categories
Forex Fundamental Analysis

Everything You Should Know About ‘Job Cuts’ As A Forex Fundamental Indicator

Introduction

Introduction

Introduction

The labor market plays play a crucial role in determining the strength of the economy. Perhaps one of the most closely watched fundamental economic indicator is the unemployment rate since it is one of the leading indicators of demand. The growth of any economy is entirely dependent on the forces of demand and supply. Entire industries have been built by surging demand and crippled by lack of it.

Understanding Job Cuts

Job cuts represent the number of corporate employees who have been laid off over a given period. The job cuts report shows the national number of people who were laid off. This number is further broken down by industry, ranking those with the most job cuts to the least. The job cuts are compared monthly, quarter-on-quarter, yearly, and year-to-date. The report goes further to include the hiring plans announced by the various sectors, thus showing the potential number of job vacancies.

Therefore, we notice that the job cuts report serves to show job losses and future openings. Thus, it is a powerful indicator in the labor market and the economy since it can be used to predict whether recessions are coming, the state of economic recovery, and show the sentiment about the economy from employers’ perspective.

Using Job Cuts Report for Analysis

As an indicator of economic health, job cuts can signal the following.

An increasing number of job cuts is a precursor to higher unemployment levels and signals a shrinking economy. It is considered a leading indicator of unemployment. With more and more people losing their jobs, households’ disposable income will be on a decline. Consequently, the aggregate demand in the economy will decline, and with it, the aggregate supply. These declines imply that producers are scaling down their operations, matching the lowering demand to avoid market price distortion.

Source: St. Louis FRED

Since the job cuts report is categorized by industry, it serves to show which sectors of the economy are performing poorly. Job cuts are a result of the general challenging operating environment. It shows that companies are attempting to reduce operating costs as a result of a decline in demand. With this report, we can analyze which sectors are hard hit by tough economic times and which sectors are resilient. For investors, this analysis is instrumental in deciding which sector to invest in. the report can also be used to show which industries are worse affected by economic recessions.

It will be useful for policymakers to implement sector-specific policies to help cushion the labor market in the future. The job cuts report can be used to establish which economic sectors are susceptible to business cycles by analyzing which sectors have the most cuts in times of recessions. During a recession, the aggregate demand is falling, and when the economy is recovering, the aggregate demand increases. Thus, it is expected for job cuts to reduce in time of recovery and economic expansion.

Similarly, investors can use historical figures to help pinpoint the peak and trough levels of the business cycle. Typically, the economy has the most job cuts when the recession is at its worst. This point can be considered the trough – and it precedes a recovery. Here would be the optimal point of investing for investors who would want to capitalize on the effects of recovery. When the economic recovery is at its peak and unemployment levels are their lowest, it signifies that the economy might overheat.

Source: St. Louis FRED

Together with the analysis of business cycles, the job cuts report can provide a clear picture of the number of temporary workers in the labor market. It goes to reason that in times of recovery, businesses tend to hire more workers. However, businesses most impacted by the economic cycles would opt to engage temporary labor instead. In times of recession, most of these jobs are lost. Therefore, the job cuts report can be used to identify which industries hire the most temporary workers.

Job cuts could also be a result of automation, not entirely because of a decrease in the aggregate demand. It is worth noting that the automation of business processes results in improved efficiency, higher output, and possibly higher quality of goods and services. While all these might be good for the businesses and possibly the economy, the effects of the jobs lost will still be reflected in the economy.

Impact on Currency

When analyzing the labor market, most forex traders concentrate their attention on the employment report. However, job cuts report is released ahead of the employment situation report; it can provide leading insights. Here are some of the ways job cuts can impact the forex market. The job cuts are used to forestall recessions and recoveries.

When the job cuts are increasing, it signals that the aggregate demand in the economy will decline. Businesses scaling down operations implies low investor confidence in the economy, which could mean there is a net outflow of capital. Increasing unemployment levels, a shrinking economy, and more households relying on the government social security programs signal a recession. Expansionary fiscal and monetary policies will be implemented. One such policy includes lowering interest rates, which make the currency depreciate relative to others.

A reduction in the job cuts signals economic recovery, making the currency increase in value relative to others. When job cuts are steadily reducing, businesses are retaining more of their employees as time goes by. This retention is a sign of improving economic fundamentals.

Sources of Data

Challenger, Gray & Christmas publishes the US job cuts data. Challenger, Gray & Christmas is a global outplacement and career transitioning firm. Comprehensive historical coverage of the US job cuts is accessed at Trading Economics.

How Job Cuts Data Release Affects Forex Price Charts?

The most recent release of the US Challenger job cuts was on October 1, 2020, at 7.30 AM ET and accessed at Investing.com. The screengrab below is of the monthly Challenger job cuts.

Low volatility is to be expected when the job cuts report is released.

In September 2020, the number of US job cuts was 118.804K compared to 115.762K in August. In terms of the YoY change, the September job cuts represented a 185.9% change compared to a 116.5% change in August.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before the Challenger Job Cuts Release on October 1, 2020, 
Just Before 7.30 AM ET

Before the new release, the EUR/USD pair was trading in a general uptrend. As shown in the above 5-minute chart, the candles were forming above a rising 20-period MA.

EUR/USD: After the Challenger Job Cuts Release on October 1, 2020, 
at 7.30 AM ET

After the US job cuts report release, the pair formed a bullish 5-minute candle as expected, due to the weakening of the USD. Subsequently, the pair continued trading in a subdued uptrend with the 20-period MA flattening.

Bottom Line

The job cuts report plays a vital role in the economy, especially now, by showing the state of economic recovery from the coronavirus-induced recession. However, in the forex market, the job cuts report is a low-impact indicator since most traders and analysts pay the most attention to the employment situation report. The low impact nature can be seen as the release of the Challenger job cuts report failed to advance the bullish momentum of the EUR/USD pair.

Categories
Forex Service Review

TIL Timeframe Overlay Indicator Review

TIL Timeframe Overlay is an indicator that was created by Viktor Macariola in 2014. The TIL Timeframe Overlay indicator is the tool that is designed and developed for multi-time analysis. It makes the task simpler but at the same time powerful to overlay a table of candles from several different time frames over another that […]

TIL Timeframe Overlay is an indicator that was created by Viktor Macariola in 2014. The TIL Timeframe Overlay indicator is the tool that is designed and developed for multi-time analysis. It makes the task simpler but at the same time powerful to overlay a table of candles from several different time frames over another that […]

TIL Timeframe Overlay is an indicator that was created by Viktor Macariola in 2014. The TIL Timeframe Overlay indicator is the tool that is designed and developed for multi-time analysis. It makes the task simpler but at the same time powerful to overlay a table of candles from several different time frames over another that allows you to see the bigger picture and see the underlying trend in the midst of noise and volatile price action.

The main features of this indicator are:

The indicator is compatible in all time frames, being able to work in M5, M15, M1h, M4h, and more. It works on any asset market instrument or symbol, be it currency pairs, indices, commodities, or stocks. Further, it displays the entire candlestick (body and wick) of other terms, including open, high, low, and closing prices.

The end-user can choose any time frame to overlap. Of course, the indicator does not repaint. It shows a new candlestick as the new fence (in real-time), depending on the time frame chosen. The colours of the candlesticks can be customized by the user.

A couple of important notes:

-Make sure that the time frame you choose to overlap is greater than the graph you are attaching it to.

-Given the limitations you have on MQL objects, you can only use one instance of this indicator at a time.

-The indicator displays the candles only when the candles have closed.

It seems an interesting indicator, which seems ideal to complement a clear trend indicator. The fact of superimposing chandeliers of several temporary spaces will be very useful to us to make the decision to make a trade or not, a 5-minute candle may give us a purchase and a 4-hour candle provides us with a sale and thus debug the trades we make.

This indicator is available on the MQL market for a price of 97 USD. You can also try it for one month for only 15 USD or try your free demo. We would have liked to have heard user opinions about this indicator, but there are no opinions about it, even though almost 60 people have tried at least the Demo version.

Categories
Forex Indicators

How to Trade with Sentiment Indicators

Can sentiment indicators help us make good investment decisions? When is the best time to use them? In this article, we will see three of the main sentiment indicators used by traders. A market is efficient if the prices of the assets listed therein reflect all available information. In addition, whenever new information appears, the […]

Can sentiment indicators help us make good investment decisions? When is the best time to use them? In this article, we will see three of the main sentiment indicators used by traders. A market is efficient if the prices of the assets listed therein reflect all available information. In addition, whenever new information appears, the […]

Can sentiment indicators help us make good investment decisions? When is the best time to use them? In this article, we will see three of the main sentiment indicators used by traders.

A market is efficient if the prices of the assets listed therein reflect all available information. In addition, whenever new information appears, the price should be collected quickly. In such a market, value and price would match all assets. As all participants would have the same information, it would be impossible to obtain a consistent performance over the average, except by pure chance.

In order for this market to exist, certain characteristics should be given, in addition to all participants having the same access to information. Primarily, market participants should act rationally on the basis of any new information they receive.

You don’t need to be any great expert on behavioral finance to realize that human beings are far from acting rationally. Emotions are very important in the decision-making process, in all areas. Also in investments. There are all the discoveries of behavioral finance to prove it.

The logical consequence of accepting this is that markets should not be efficient. However, the vast majority of studies show that markets are indeed efficient (or at least quite efficient). News is quickly reflected in prices (both macro and business results, etc.). And the reality is that there are not too many managers able to beat their benchmarks, consistently, is also proof of that. And the truth is that even among those who beat them, almost none can truly be considered an outlier.

Emotions are very important as they significantly affect our decision-making process, in all areas. Also in investments.

Obviously, the topic gives for much more than a brief article, but it is relevant to keep it in mind when carrying out an analysis, whatever the type. In this context, it seems wise to ensure, inspired by Andrew Lo’s ideas, that markets that tend to efficiency but are not fully efficient are most likely. In other words, no investment strategy will generate results on average consistently over time and it will therefore be necessary to adapt to the changing environment. That is why it is so necessary to diversify strategies.

We have developed three ideas so far: that the market is quite efficient, that it should not be so because human beings do not always act rationally, and that the same strategies do not always work. A consequence of all three could be that there are times when the irrationality of market actors reaches such an extreme that price and value do not coincide. This could be used to beat the market for a while until irrationality returns to normal levels. And it is in this context that indicators of market sentiment make sense.

Sentiment indicators are those that try to measure market expectations, to find out if they are rational or not.

The best indicator of feeling is, without a doubt, the price itself. As Homma, father of Japanese candles, said, “To know about the market, ask the market”. The problem is that at all, the market will tell us if the value matches the price. We have to compare the price with something: with oneself (current price versus historical, basis of technical analysis) or against balance sheet data of the companies that compose it, as for example against its profits or sales (the basis of fundamental analysis).

In this sense, any analysis can be considered an analysis of feelings. For example, if we use the PER (sometimes that the benefits are contained in the price of a stock) as an indicator, we will know that the valuations are useful in long periods, but it is a bad idea to use them to make market timing. Therefore, it can be thought that there are market moments where it is rational that valuations are above average until they reach a certain level that is unsustainable.

Pure sentiment indicators, in any case, are those that compare current prices with other assets (for example fixed income against equities through the EYG, but also the evolution of assets refuge against cyclical, etc.), with their own components (number of companies doing maxima) or with the investor positioning (Ratio Put/Call or the American Investors survey).

Sentiment Indicators: VIX Index

One of the best-known sentiment indicators is the VIX. In short, it measures the volatility that traders expect in the next 30 days. It usually picks up when markets fall and that’s why it’s called the fear index. Investing in VIX, up or down, is complex and should be reserved only for more sophisticated investors who understand well the characteristics of the products available.

As an indicator, VIX is an example of how to benefit from “opposing opinion theory”. This philosophy defends that, in very extreme moments, it is worth positioning against the majority of the market. It is interesting to observe the strong VIX rebounds (when it is about 1.5 deviations typical of its mean)

For VIX it is interesting because although its negative correlation coincides with the S&P 500 is very high (when the S&P 500 has negative returns the VIX usually rebound), its correlation with future returns is zero or even positive. So, it’s very interesting to observe the strong VIX rebounds (when it is about 1.5 deviations typical of its mean). These moments have often given interesting buying opportunities.

We must stress that the strategy we are citing has not worked on the other side: historically low VIX levels have not been followed by S&P 500 drops. VIX exhibits some asymmetry in its average returns and is usually faster when above-average than when below average.

Sentiment Indicators: Ratio Put/Call

Another well-known sentiment indicator is the Ratio Put/Call. This ratio simply measures the volume of Put options between the volume of Call options. Broadly speaking, Put options are often used to take bearish positions and Call for bullish positions. If this indicator picks up means that there is either more volume of Puts or less of Calls and therefore the risk perception of operators increases. Similarly, if the indicator falls, it usually indicates greater complacency.

This ratio simply measures the volume of Put options between the volume of Call options.

It should be noted that the back-tests I have done on this indicator show quite poor results. For example, a strategy based on being 100% in Equities in bullish extremes, 100% in bonds in bearish extremes, and 50%/50% in the rest of the scenarios, is not able to beat a simple strategy of 50% Equities, 50% Bonds.

The above strategy is done using the CBOE aggregate indicator (known as Put/Call Ratio Composite or Total). Includes stock and index options. It is sometimes criticized for including indices because many investors use indices to make hedges and relative value strategies, which distorts it somewhat as a measure of positioning. However, using the Equity Put/Call Ratio results do not vary much.

Finally, it should be added that such indices are also calculated on other organised markets, such as ECI. However, the most often followed are those of the CBOE.

Sentiment Indicators: American Association of Individual Investors Survey

The last sentiment indicator I wanted to talk about in the article is the investor sentiment analysis conducted by the American Association of Private Investors. It is true that it can be criticized that sentiment indicators based on surveys could be less reliable than those based on the market, but the truth is that it is interesting to see a combination of both and their possible divergences, both between them and vis-à-vis the market.

Since 1987, AAII members are asked the same question every week: Do you think the stock market will rise, fall or stay as it is in 6 months? And every Thursday the results are published.

There are many ways to process published data, but perhaps the most interesting results can be found in the so-called Bull/Bear Ratio. This indicator is as simple as dividing the percentage of bullies among the bearings. Some add neutrals to bullies, but the results do not change significantly. The backtests on this indicator are surprisingly good.

In general, when the indicator reaches bearish extremes (fear) it would have been a good idea to add, giving good results even in the longer periods, and reduce in the bullish extremes.

Again, it is not a strategy in itself, nor an infallible indicator. But it proves a certain tendency that gives basis to the theory of opposing opinion. In line with what is seen in the VIX, it proves the initial theory: although markets tend to be efficient, there are times when they are not and the irrationality of investors overcomes. And these are just the moments to act.

Categories
Forex Indicators

Negotiation Strategies on Arrow Indicators

Arrow indicators are a set of tools for the “lazy” traders. On Forex charts, possible market entry points are indicated with arrows, green means the ability to open a long position, and red means a short position. The trader’s task is to be close to the platform and when the signal appears make the decision […]

Arrow indicators are a set of tools for the “lazy” traders. On Forex charts, possible market entry points are indicated with arrows, green means the ability to open a long position, and red means a short position. The trader’s task is to be close to the platform and when the signal appears make the decision […]

Arrow indicators are a set of tools for the “lazy” traders. On Forex charts, possible market entry points are indicated with arrows, green means the ability to open a long position, and red means a short position. The trader’s task is to be close to the platform and when the signal appears make the decision to follow it or not.

Advantages of Forex arrow trend indicators:

Arrow indicators are combined indicators that are based on several tools. They are usually based on basic classical indicators such as МА, RSI, MACD, Bollinger bands, stochastic, etc. A trader does not need to put on Forex always draws different lines and adjusts each indicator independently. Arrow indicators are already well combined and have been simplified adjustments. They are visually convenient and reduce the psychological and eye strain of a trader.

Disadvantages of arrow indicators:

Slips and repaints. Indicators are hardly applicable in scalping strategies. Problems with quotation provision, price noise, indicator lag, all these factors can cause the indicator signals to be redrawn, so an open position will not be profitable. The indicators are best to be used in the medium and long term trading on the H1 timeframe. The key factors should be observed when applying the indicators.

Which is the best way to choose an optimal arrow trend indicator for Forex:

It is better to choose an indicator according to a particular strategy. There are no versatile arrows indicators. One gives you much more accurate signals when the negotiation is flat, another in trend trading, and the other in long-term trading. You should try it on the demo account with at least 100 operations (the number depends on the frequency of the signals). Efficiency should not be less than 70% of the signs of success.

The indicator must have an open-source software for a trader to understand its operating principle and make any corrections if necessary. Below I will give as an example two arrow indicator strategies that can be used even by novice traders. There are links for you to download the indicators for MT4 (you can find them on their own on the Internet). To install the template, go to the “File” menu, choose the “Data Catalog” section and move the template you downloaded to the folder called “Templates”, move the indicators to the “MQL4” – “Indicators” folder.

Trading Strategies on Forex Arrow Trend Indicators

1. Sidus

The combined indicator Sidus 2v shows the entry points by arrows: red for sale and green for purchase. The indicator is based on 2 very popular trading tools, classic RSI and EMA (exponential moving average). Sidus gives signs of purchase when the fast ЕМА is above EMA slow, RSI is above level 50. And on the contrary, the short position should be opened when RSI is less than 50 and the fast movement is below a slow one.

I recommend not trading in this strategy at the time of publishing news, choose the no lower timeframe of H1, H4 is better, apply the strategy for the currency pair EUR/USD. Optimal indicator adjustment: the rapid EMA period is 14, slow 21, the RSI period is 14.

Opening of a long position:

-When Sidus paints a green arrow we open a long position on the next sail.
We place stop-loss fixed at 20 points.

-When profit reaches 15 points, we move the stop loss to the opening point of the transaction (breakeven) and close 50% of the transaction. The remaining position must be secured by trailing stop at a distance of 15 points.

-To use a trailing stop, you need to have a VPS server, because when the connection is lost, the trailing stop does not work.

-The selling position is opened under the same conditions when a red arrow appears.

2. Point of entry

The Forex Dots arrow trend indicator points to a successful position to a trader, not with arrows, but with points, however, the essence does not change. Signals are always formed at the beginning of a price change cosine and use for calculations the current values of MA (moving averages). The advantage of the tools is extensive use: М15 timeframe (flexible enough conditions for strategies with different time periods), currency pairs are all volatile pairs (from the euro and dollar to the Swiss franc).

The Dots parameters are:

  • Length (indicator range) – 10
  • AppliedPrice (price type to use in calculations) – 0
  • Filter – 0
  • Deviation (vertical displacement of indicator) – 0
  • Shift (horizontal shift of indicator) – 0

Under different market conditions, indicator parameters can be changed as long as they have been previously tested on a demo or cents account.

Opening of a long position:

-The indicator paints a green dot that is above the minimum value of the rising sail. The distance between the minimum and the point is estimated visually (the less, the better). We open the position on the next sail.

-Stop-loss is set to the minimum value of the previous candle or to the green sign level (up to 10 points).

-We placed the trailing stop at a distance of 5 points and with it we left the market.

-The sale transaction opens the same way, but under opposite conditions: the indicator paints a red dot above the maximum of the falling candle.

If on the Forex chart the distance between the maximum sail and a red dot visually seems too large compared to previous periods, I do not recommend opening the position. For example, in the previous examples the distance was about 2 points, but in the image below the distance is about 20 points.

The advantage of this indicator is that you can build numerous strategies in markets with different volatility. But if volatility is not a feature of the market or has a fundamental reason, the position cannot be opened. The indicator is versatile and proves to be 70% effective (i.e., the number of transactions closed by stop loss is negligible).

Categories
Forex Indicators

Boost Indicators Vs. Burst Indicators in Forex

Some traders prefer to use breakpoints that signal a trend entry, while others prefer to use indicators that simply show a strong directional impulse. Who is right and what works best? Indicators of Momentum There are several different impulse indicators to calculate the price boost, allowing the indicator used to quickly see if a currency […]

Some traders prefer to use breakpoints that signal a trend entry, while others prefer to use indicators that simply show a strong directional impulse. Who is right and what works best? Indicators of Momentum There are several different impulse indicators to calculate the price boost, allowing the indicator used to quickly see if a currency […]

Some traders prefer to use breakpoints that signal a trend entry, while others prefer to use indicators that simply show a strong directional impulse. Who is right and what works best?

Indicators of Momentum

There are several different impulse indicators to calculate the price boost, allowing the indicator used to quickly see if a currency pair is showing a strong long or short boost, or if it’s just crisscrossed and in a lateral range with no impulse at all.

Technical analysts have developed a wide variety of such indicators and they are available for free on almost all Forex trading platforms. The most popular are the moving average crosses, the relative strength index (RSI), the MACD, the Bollinger bands, and the Stochastic. What indicators usually do is mainly look back a given period of time and calculate whether price movements have been more upward or downward. The internal formulas that are used individually by each indicator to make the calculation the result are conceptually similar. In my opinion, the RSI works best.

Impulse traders tend to largely ignore supports and resistors and simply check if impulse indicators show that the price is more bullish or bearish in shorter and wider time frames. When both types of time frames show the same momentum, they place an operation in the direction of the current momentum.

Another approach that can be taken, and that can replace the use of indicators or used in a complementary way, is to draw supports and key resistors and check whether they are maintained or broken. For example, if resistance levels are continually broken while support levels are maintained, that would be a sign that there is upward momentum.

Ruptures in Forex

There are different ways to achieve the same type of entry with a strong boost and it tries to place a long operation when the highest price recorded during a certain period of time breaks. It is a method of operating with the trend well known and long tradition. In effect, the known turtle traders were using an entry system based on maximum or minimum price breaks of 20 and 55 days (these prices are indicated by the Donchian channel indicator).

This type of trading method is very attractive because it is very simple and time-consuming as it is a mechanical way of “placing an operation and forgetting”. For example, at the end of each trading day, you can simply place an order to go long or short on the X and Y prices, which are the maximum and minimum prices during the given review period, and then you no longer have to worry about it for the next 24 hours or so.

It is widely believed that such mechanical strategies based on ruptures are reckless and do not produce the best results. In today’s financial markets, there are more “false” than “breaks”, especially in Forex prices, which tend to move in narrower ranges than stocks and commodities.

A key issue to remember and which could counter this perception is to clarify what constitutes a successful break, a subject open for discussion. For example, the price breaks up, moves in your favor a few pips, and then moves against you 100 pips. Is this a failed break? The answer to that question sincerely depends on where you place the stop loss. If you put it in 50 pips, the rupture was a failure, resulting in a loss. However, if you have placed a wider stop loss, that could be an essential component for a complete trading strategy based on volatility, and if the price had undone your drop of 100 pips to finally climb 1000 pips, it would have been a successful break for you.

Traditionally, trend trading uses a stop loss of 3 multiples of True Middle Range (ATR), which also often uses breaks for entries. Of course, the use of a broad stop loss will tend to produce more profits, but the size of the gains will be smaller than if tighter stops had been used.

Comparison Between Impulse and Rupture Indicators

We can try to determine which of the entry strategies described above can work best in forex trading by performing a backtest on the same currency pair using the two different trading placement methods with the same stop-loss system. Let’s take a look at the EUR/USD pair in the period from 2001 to 2014. The stop loss used in each operation is always half the True Middle Range of 20 days.

In the pulse indicator method, an operation is placed when we reach the closing of any hour.

1. The price is on the same side as where it was 1 month and 3 months ago.

2. EMA 3 is on the same side as SMA 10 in the time frames H1, H4, D1, and W1.

3. The 10-period RSI is on the same side of 50 on the H1, H4, D1, and W1 time frames.

All these indicators must be bullish or bearish at the same time before placing an operation, thus showing that there is a strong directional impulse.

The results were as follows:

-With a risk target – reward of 2 times the stop loss, there was an average positive expectation of 6.2% per operation.

-With a risk target – reward of 10 times the stop loss, there was an average positive expectation of 39.6% per operation.

So, now let’s look at the method of breaking the Donchian canal. A long transaction is placed at the first moment during the day when the price is quoted above the maximum of the last 80 days, or a short transaction when the price is quoted below the minimum during the same period of time, assuming that the stop loss level was not reached before the operation was placed. The 80-day period is widely considered as a good measure to capture the best impulse break in Forex.

-With a risk target – reward of 2 times the stop loss, there was an average positive expectation of 11.72% per operation.

-With a risk target – reward of 10 times the stop loss, there was an average positive expectation of 42.68% per operation.

Conclusion

We can see that there was not much difference at the higher end of 10:1, but that the breaks produced a better result at the lower end. Needless to say, there were far fewer rupture operations in general.

One reason for this is that it has been well established for centuries that prices tend to move more easily when they are in “blue sky”, ie in areas where the price has not been for a relatively long time.

Finally, keep in mind that it mattered little what entry strategy was used if it was decided by large moves of 10:1. This only serves to show that traders tend to worry too much about tickets, while the real challenge is to stay in the market waiting for big profits instead of closing positions that turned out premature exits. As Jesse Livermore said, I made more money by staying in business than I ever did by being right.

Categories
Forex Indicators

Indicator Testing Pitfall – Repainters

30Test, test and test – the three most important things about choosing a new indicator. But can testing lead you down the wrong path? Before you even think about introducing a new indicator to your forex trading system, you’re going to want to test it to death to make sure it works how you need […]

30Test, test and test – the three most important things about choosing a new indicator. But can testing lead you down the wrong path? Before you even think about introducing a new indicator to your forex trading system, you’re going to want to test it to death to make sure it works how you need […]

30Test, test and test – the three most important things about choosing a new indicator. But can testing lead you down the wrong path?

Before you even think about introducing a new indicator to your forex trading system, you’re going to want to test it to death to make sure it works how you need it to work. Typically, that will mean backtesting it over a certain timeframe – up to and even over a year back in time if you’re trading on the daily chart – as well as forward testing it through a demo account. Now, for several reasons backtesting is your first go-to method of figuring out whether an indicator performs as advertised and as you need it to.

The main reason why backtesting is important and why you want to run that first is that it is so much quicker than forward testing – which you, of course, should also do. When backtesting you don’t need to wait for time to unfold at its natural rate – you can make things a great deal quicker.

Testing Trap

One potential pitfall or trap that an indicator testing process can lure you into – and that can be potentially dangerous if your testing regimen is not sufficiently robust – is the repainting indicator. What is a repainting indicator and why is it dangerous? Well, the short answer is that a repainting indicator is an indicator that moves the goalposts after the fact. It keeps changing its past values based on new candles and therefore makes it seem like it was more successful historically than it really was. This will, however, clearly be much easier through the use of a concrete example.

Backtesting an Indicator

So, let’s say you’re taking apart a combination indicator (like, for example, the Traders Dynamic Index) in order to have a better look at its constituent elements. Combination indicators, like the TDI, are made up of a number of separate indicators that work in concert together to provide what is hopefully a more accurate picture. You can, of course, test combination indicators as though they are one unit simply by treating them as a whole made up of constituent parts. But with combination indicators, there is also another possible approach and that is to examine each of the elements that make them up as a separate indicator. In fact, this is a very important way to test combination indicators – because if someone has gone to all the trouble to wrap up what amounts to a whole trading system into one downloadable tool, you’re going to want to know that all the parts of that tool work, right? Whenever you encounter a combination indicator, make sure you take it apart and test all of its components separately, as you would any other indicator. You can, afterward, always go back and test the whole combination as one tool.

The way to isolate those elements you want to test is to turn off or blank out those parts that you’re not looking at. Sticking with the example of the TDI, you might want to focus on one of the moving averages and temporarily (for the purposes of the test) turn off the other moving average, the Bollinger Bands, and the RSI. If you do this with the TDI, for example, you might notice as other traders have too that there’s something kind of special about the yellow line indicator. It seems that every time the line changes direction it is indicating a price trend. Indeed, it seems to be predicting price trends with an astounding level of accuracy that goes far beyond anything most indicators are able to achieve. Sure, you can’t use that as a trade entry signal but boy is it useful to have an indicator able to predict trends with a level of accuracy that exceeds 80 or even 90 percent. That’s astounding!

Too Good to be True?

How often is it that you find an indicator that you can add to your system that can achieve such levels of accuracy? Just imagine how many bad trades that will cut down on and how many winners it could help you to find. Well, if an indicator does come around and it looks like that, that’s your first red flag. Consider it a shot across your bows that sets alarm bells ringing.

If you’re being thorough and backtesting across multiple currency pairs and over a significant time period and you still come across something that is this accurate, that’s your first warning sign that you could be dealing with a repainting indicator.

As we said before, a repainter is an indicator that will draw you into thinking you’ve found the holy grail of indicators but could be truly dangerous if you start using it without taking the proper precautions. For a start, if you don’t put it through a comprehensive forward test and just rely on your results from backtesting, you could end up losing serious money.

Recognition and Identification

So, how do you know if what you’re dealing with is a repainter? Well, the first part of the problem is to recognise that you have a problem. The first clue should be, as above, that it performs so well in backtesting that you begin to suspect it isn’t quite what it seems. That’s step one. The second step is to identify it as a repainter.

What a repainter will do is basically change shape once a few candles have passed to show an outcome that better reflects what happened with price movements. In other words, the indicator will go back in time and repaint itself to show signals where there were no signals. That is a huge problem you’re your backtesting process and will mess with your results. An indicator that doesn’t repaint will stay the same as the chart moves on and will faithfully record what it showed you as the candles close but a repainter won’t.

The way to see that is to run the indicator through a fast timeframe and essentially catch it in the act. Go to a fast chart, like the five-minute chart or the one-minute chart, and run it through to see if it changes the data. Here you might want to even grab screenshots along the way because those changes might be quite subtle as time rolls forward and you may not want to wait long enough for it to give off false signals. If not, then those false signals will be a sure-fire sign that something is off. A false signal, in this case, is where the indicator initially does not show up a signal but as the candles move on it repaints itself in hindsight and shows up a signal. 

Another quick way of testing if an indicator is a repainter is using the MT4 Strategy tester module. Just set to work on a fast timeframe and look at how it behaves on the closed candles. Just bear in mind about the scale for that indicator. Sometimes when the value of the indicator pushes the window limits, or better to say higher or lower values which are not on the scale, the scale itself resizes to fit the representation. This can lead you into thinking the lines or historic values of the indicator repaints, but it is just because extreme values resize the scale and it may seem as indicator lines are reshaping. 

Catching a repainter in the act is the best and surest way to know that this is an indicator to steer clear of. The reason to use a fast chart in order to do this is because things will happen quickly enough for you to catch it and also because you don’t want to waste your own time waiting for a slower chart to unfold. Part of the purpose of backtesting is to eliminate indicators that would otherwise be a waste of your time to forward test through your demo account so making the process unnecessarily long would kind of defeat its purpose.

If you’re running an indicator through this repainter test on a fast chart and you see any kind of movement at all a few candles back, in the region where the data is supposed to be fixed, that is already too much movement. This is why it is a good idea to shoot off a few screenshots as you’re doing this because even the tiniest amount of alteration of data that is supposed to be fixed because it’s in the past is too much.

In addition to screenshots, another thing that will help you to identify a repainter is larger price movements. If you’re running an indicator through a one-minute chart but the price is not moving much, you will have a hard time catching any unwanted changes to the indicator’s history but if the price is moving up and down more drastically, those changes are likely to be more visible. Also, make use of the drawing tools in your platform to mark signals the indicator gives off as you go along. If you look back and signals you marked turn into non-signals or if new signals appear where you didn’t mark them, then you’re dealing with a repainting indicator.

Repainter Alert

So what can you do if you run a repainter check and the indicator you had such high hopes for because it looked so good in backtesting turns out to be repainting? The short answer is there is nothing you can do. Just steer clear of it like it’s the plague. Bin it and never think another thing about it.

The long answer is also there is nothing you can do. To change the indicator you would have to break into the code and start messing around in there to reprogram it. Now, some of you may feel that this is something you’d be good at and that’s fine as far as it goes. Just be aware that the reprogrammed indicator is going to essentially be a whole brand new indicator that you have to run through the full gamut of testing from scratch. None of the backtesting you’ve done on it so far will apply. However, even if you reprogram an indicator so that it no longer repaints, you now have to start wondering what else might be wrong with it.

Therefore, the best option remains scrapping it and continuing your search for indicators elsewhere.

Protecting Yourself

So, what can you do about repainters if you can’t fix them? Well, you can identify them and avoid them. Expand your testing regime to include a repainter check as described above – especially for indicators that seem to be too good to be true. Although you should really do this with every indicator before you introduce it into your system.

The second thing to do is to make sure you run proper forward testing and cross-reference this with results you expected to get on the back of backtesting you did. These will never precisely match up, of course, but there is a chance that this will help you catch out a repainter.

The last thing you want to do is introduce a repainting indicator into your system and use it to trade in the real world. It will throw your results off and it will require time and effort to identify the problem – hopefully before you lose too much money.

Finally, never get so hopeful or sentimental about any aspect of your trading system – whether it’s an indicator, a process or an approach – that you can’t ditch it the moment you discover it isn’t working for you.

Categories
Forex Indicators

Overview of Forex Indicator Types and Uses

Indicators are a tool that Forex’s technical analysis, traders, and statisticians use in financial markets to take a statistical approach rather than a subjective approach to trading. They will use things like money flow, volatility, timing, and trends to get a better picture of the potential price movement. Thousands of indicators currently available, which means […]

Indicators are a tool that Forex’s technical analysis, traders, and statisticians use in financial markets to take a statistical approach rather than a subjective approach to trading. They will use things like money flow, volatility, timing, and trends to get a better picture of the potential price movement. Thousands of indicators currently available, which means […]

Indicators are a tool that Forex’s technical analysis, traders, and statisticians use in financial markets to take a statistical approach rather than a subjective approach to trading. They will use things like money flow, volatility, timing, and trends to get a better picture of the potential price movement. Thousands of indicators currently available, which means there is a lot of debate about which are the best.

Advanced Indicators 

Advanced indicators are one of the two main types that are available to traders. They tend to anticipate any price movement and predict the future. They tend to be used for trading in ranges, as they may give signs of a potential break, which of course is very powerful information to have.

Some of the most popular forward indicators are the stochastic oscillator, and the relative force index RSI. The worst part of these indicators is that can pre-empt events and perhaps give false signals occasionally. This is because most people will use something more than an advanced indicator, using it as a secondary indicator in addition to simple price action. Just as with most indicators, there is a complex mathematical formula that shows the moment and where the market will go.

Back Indicators

In contrast, retrospective indicators tend to follow the movement of prices. They are much more useful in the course of a well-defined trend, as they tend to give signals after the most popular indicators. This, unfortunately, comes with the disadvantage of being less profitable, even though they are more reliable. Retrospective indicators have been popular for years and are still one of the most basic indicators that traders will use.

Two retrospective indicators would be Bollinger bands and moving averages. As an example, the moving average is the estimate of the average price of the last “N” candles, which by virtue of its definition excludes the current price. However, in a trend, this information can be very useful, as it shows that the average price is going up or down. Again, as we mentioned earlier, these indicators are typically part of a larger trading system.

There are several types of indicators:

Oscillators

Oscillators are by far the most used technical indicator, usually subject to some sort of range. Generally, there is a complete range between two values that represent respectively the overplayed and over-bought conditions. Typically, there is some kind of line or indicator that lets you know when the market is going too far in one area or the other. A couple of examples could include the stochastic oscillator, the moving average convergence divergence, and the feedstock channel index. Even though these could measure the condition of over-bought and overbought with different formulas, in the end, they work in the same way.

Indicators with No Range

The non-rank indicator is much less common, but will usually be used to form signals in a trading system to show strength or weakness in a trend. Unlike oscillators, they generally do not have a set range. For example, the accumulation/distribution line indicator that measures the flow of money to a value is an example of an indicator without a range. However, in the world of Forex, you will realize that this is almost impossible to measure, however, some volume variations are going to be offered by forex brokers, using information from their own servers, which is only a part of the market.

The Use of Indicators

While there are some trading systems that use indicators only, these do not tend to be commonly used today. One of the most common systems that only use indicators is the system of crossed moving averages. This consists simply of graphing two moving averages on a graph, which (if you remember), are simply a mathematical average of a specific amount of prices over a certain amount of time, being one of the moving averages the slowest, and the other the fastest. The quickest is the one with the fewest candles, which will make you change direction faster. The less rapid one represents a more stable environment because it takes much more information to move around.

But if the fastest line crosses over the slowest line, this can mean that the moment is moving up, which is a sign of a buying opportunity. Otherwise, if the moving average falls below the fastest line, this is typically a signal to sell. With the system of crossed moving stockings, you are constantly on the market, buying and selling when these lines intersect. The biggest problem is that you need a strong trend to make profits. In a market that is not very active, you could be crushed.

As a general rule, the most beneficial thing is to combine support and strength with those indicators as it gives you different types of confirmation for your trade. A typical example would be to look for support, a particularly encouraging candle, and then buy a signal formed on the stochastic oscillator. The typical system will have a certain number of steps to go through to put money to work. Beyond that, you begin to pay attention to money management, and then before you realize you will have an entire system set up. You should think of the indicators as a tool, not the “holy grail” that so many traders are always looking for. As these increase your chances of success, nothing is perfect, and you should learn how they work and when they work if you are going to use them in your trades.

Since there are literally hundreds of indicators that can be used, preferences play an important role in selecting those who have more security for you. For what it’s worth, the more I trade, the less I use indicators to make decisions. When I use them, they are usually secondary and tertiary reasons.

Categories
Forex Fundamental Analysis

Everything You Should Know About ‘Government Budget Value’ Fundamental Indicator

Introduction

Introduction

Introduction

Regardless of the country, the respective governments have a pivotal role to play in economic growth for a given year. The vast resources at the disposal of the nation and state’s government, when combined with effective planning and action, has yielded phenomenal results for many countries’ growth. Understanding the government budget and its role in economic growth helps us to predict how conducive the market place will be for economic growth for the fiscal year.

What is Government Budget Value?

Budget: A budget is a periodic estimation of revenue and expenses for a specified period. The time-frame can be monthly, quarterly, or even yearly. A budget can be drafted for an individual, a group, a business, the government, or anything else that has cash in-flow and out-flow.

Government Budget: When we refer to the term budget, it is generally associated with the local or central government. The Government Budget refers to the estimated or forecast of its expenditures and revenue for a particular period. The time-frame generally for which it is estimated is for a financial year, which may or may not coincide with the calendar year. The combined income and outlays of a government for a fiscal year make up the government budget.

Government Budget Value: Here, the government budget value refers to the actual dollar value of the entire budget. We are referring here to the raw or direct numerical dollar value of the total budget. The budget is drafted as per the plans and obligations of the government for the fiscal year. The government has obligations like paying out social security funds, interests, and principal on its debts, purchasing military equipment for national security, and other mandatory spending programs. The government receives incomes from interests on its investments, revenue from taxes, fees collected from government services offered, etc.

All these income sources, outlays are all detailed in the government budget report. It is analogous to a bank statement of an individual except that it is for the entire government as a single entity, and the transaction values would be in millions and billions of dollars.

How can the Government Budget Value numbers be used for analysis?

In the budget report, if the revenues exceed the expenditures, then it is called a budget surplus. When the expenditures exceed the revenue, it is called a budget deficit. When both the revenue and expenditure level off and are equal, it is called a budget balance. All three scenarios have different meanings and implications.

When there is a budget surplus, the government has additional funds to create new infrastructure, improve the living conditions, raise salaries of government officials, and even provide support for new businesses to improve business growth. In developed economies, when the government experiences prolonged periods of excessive budget surplus, there may be outbursts from the public to reduce taxes levied on them to make sure money stays with the people who earned and not the government. Ideally, a budget surplus is preferred.

The budget balance is an ideal situation for any government where all their outlays are met through the revenues received, although any change of plans or additional programs, if needed to be taken up, would push them to a deficit. In general, all the expected expenditures would be factored in. A balanced budget would indicate every penny is accounted for and is very hard to achieve in real-world scenarios. There would always be some differences in income and outlays.

When the income does not suffice the expenditures, we have a budget deficit. It is the less preferred and more commonly occurring scenario, especially for developed economies like the United States. However, some arguments can be made where a deficit is not always bad, as the government can borrow extra funds from investors to set up the infrastructure for future returns. Temporary deficits for future surplus are acceptable. Deficits arising out of sustainable expenses, meaning expenses that will pay off in the future more than what they cost now, are seen as good signs for the economy.

On the other hand, when the deficit arises out of unsustainable expenses, which are likely to continue due to increasing debt, interest payments, inflation, etc. all are warning signs for the economy. The government plugs in the deficit by issuing securities and treasury bonds. Corporations and investors buy these bonds. A budget deficit can arise out of a multitude of reasons. When the economic growth of the native country is slower than its trading partners, it would spend more and earn less, leading to a deficit. High unemployment rates, recessions, tight lending environments, increased government spending, etc. all add to the deficit.

The United States has been facing a deficit crisis for many years in succession now. Things are only getting worse as the baby boomer generation is retiring, further increasing the weight on the social security program adding to wider deficits in the budget. An ideal government should maintain a surplus or at least a balance to be safe. Still, like any real-world scenario, a surplus or balanced budget does not ensure or indicate high economic growth. It just makes economic growth more conducive and likely for the nation or state.

The nation’s growth depends on many factors, and one amongst them is through government budget planning and allocation of funds. When it is played right, many things fall in order, and a significant boost for the economy can be induced.

Impact on Currency

The Government Budget values are useful for analysts to ascertain what proportion of funds will be allocated to each of the listed programs. The raw value of the budget in itself is not useful for traders as it is just a number and does not bear significance until there is something to compare. In general, budget or government spending as a percentage of GDP offers a more relative picture to forecast whether stimulus from the government side is relatively more or less. Through it, we can forecast the growth rate and market environment.

The government budget value alone is not enough to bring forth any significant economic conclusions or make an investment decision. Hence, it is a low-impact lagging indicator that does not bring much volatility in the currency markets.

Economic Reports

The Treasury Department and Office of Management and Budget of the United States maintain the government budget reports on their official websites. Internationally, the World Bank and International Monetary Fund maintain the budget data for most countries.

Sources of Government Budget Value

Treasury department of the United States – Budget Reports and Office of Management and Budget – USA detail the budget reports

Government budget values for most countries are available on Trading Economics.

How Government Budget Value Release Affects The Price Charts

In the US, the Department of the Treasury is responsible for the release of the Monthly Treasury Statement. This statement contains the Federal Budget Balance, which is synonymous to the Government Budget Value. It measures the difference in value between the federal government’s income and spending during the previous month. The most recent release was on August 12, 2020, at 2.00 PM ET and can be accessed from Investing.com here. A more in-depth review of the Monthly Treasury Statement can be accessed at the US the Department of the Treasury here.

The screengrab below is of the monthly government budget value from Investing.com. On the right is a legend that indicates the level of impact the fundamental indicator has on the USD.

As can be seen, the government budget value data is expected to have a medium impact on the USD upon its release.

The image below shows the recent changes in the monthly government budget value in the US. In July 2020, the government budget value changed from a deficit of $864 billion to $63 billion, beating analysts’ expectations of a $193 billion deficit. This change is positive and, in theory, should make the USD stronger compared to other currencies.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before the Monthly Government Budget Value Release 
on August 12, 2020, Just Before 2.00 PM ET

Before the budget data release, the EUR/USD pair was trading in a subdued uptrend. As seen in the above chart, the 15-minute candles are forming closer to the 20-period Moving Average, whose steepness is decreasing.

EUR/USD: After the Monthly Government Budget Value Release 
on August 12, 2020, at 2.00 PM ET

After the data release, the pair formed a 15-minute bullish candle, indicating that the USD weakened against the EUR contrary to the expectation. However, the data release was not significant enough to cause a shift in the trading pattern. The pair traded in a neutral trend with candles forming around a flat 20-period Moving Average.

AUD/USD: Before the Monthly Government Budget Value Release 
on August 12, 2020, Just Before 2.00 PM ET

Before the data release, the AUD/USD pair traded in a steady uptrend with candles forming above a rising 20-period MA.

AUD/USD: After the Monthly Government Budget Value Release 
on August 12, 2020, at 2.00 PM ET

The pair formed a 15-minute bearish “hammer” candle after the data release. Similar to the EUR/USD, AUD/USD subsequently traded in a neutral trend with the 20-period MA flattening.

NZD/USD: Before the Monthly Government Budget Value Release 
on August 12, 2020, Just Before 2.00 PM ET

NZD/USD: After the Monthly Government Budget Value Release 
on August 12, 2020, at 2.00 PM ET

NZD/USD pair showed a similar steady uptrend as observed with the AUD/USD before the data release. The pair formed a 15-minute bearish candle. It subsequently traded in the neutral pattern observed with the other pairs.

Bottom Line

For economists, the monthly government budget value is an invaluable indicator showing the trends in government budget deficit, revenue, and expenditures. However, in the forex market, this fundamental indicator does not produce significant price action changes, as observed in the above analyses.

Categories
Forex Basic Strategies

Guide to Trading Forex Without Indicators

Indicators are a wonderful thing, they can do a lot of our thinking for us, there are however problems with them and since they are becoming more and more popular, people seem to be adding hundreds of them to their charts which causes them to end up looking like a bit of a mess. Too […]

Indicators are a wonderful thing, they can do a lot of our thinking for us, there are however problems with them and since they are becoming more and more popular, people seem to be adding hundreds of them to their charts which causes them to end up looking like a bit of a mess. Too […]

Indicators are a wonderful thing, they can do a lot of our thinking for us, there are however problems with them and since they are becoming more and more popular, people seem to be adding hundreds of them to their charts which causes them to end up looking like a bit of a mess. Too many indicators can simply confuse things, you don’t really know what you are looking for and your actual strategy will be lost somewhere beneath them all. The other issue is that it takes away a lot of the skill from trading, simply using them as indications of when to trade means that you do not need to think anymore, everything that you learned before is going to waste.

If you are experiencing some of those issues, then there is something that could work for you, naked trading. We don’t mean getting all your clothes off, you are probably doing that already, what we are talking about is trading without any indicators. We need to remember that indicators are not designed to be signals, they should not be telling you to buy or sell, but that is how a lot of people arouse them. They are designed to simply tell you something about the markets, it should then be your job to use that information to make up your own trading decisions. We are going to be taking a look at what it means to be a naked trader and how you could potentially bring this idea into your own trading routine.

So let’s get a brief idea of what naked trading actually is, its main principle is that you will be looking at the markets it is current state, the price that it is currently at, we are not looking at the past prices and we are not looking at its potential future price, just what it is at right now in this moment of time. It is all about making trades and decisions based on the charts that are in front of you and nothing else. The difference between naked trading and trading with indicators is that you are required to have a good knowledge of different candlestick and chart patterns, hopefully, you should have already learned some of these during your initial trading training and education, they are afterall one of the main analysis techniques in trading. Price action is another bit of knowledge that you need to have a good understanding of, you will be using this to help work out your trades as it will make the markets a lot clearer for you.

Understanding Trends

Trends can be a naked trader’s best friend, understanding them gives you a greater understanding of the markets and the way that it generally likes to move in cycles. If we think of a typical market cycle, it will start ranging low, then start to trend upwards, it will then range high before a downtrend starts, it will then cycle like this, of course, that is a typical one and the markets don’t always play fair. These movements are however vital for a naked trader to understand. These patterns appear in all charts, not just the longer timeframes a good naked trader will be able to see the direction of these trends and will trade with them, not against them.

Understanding Market Psychology

Getting yourself a good understanding of the psychology that goes on within the markets will help you with your naked trading. There is something known as dumb money and smart money. When there is a huge candlestick forming, those that jump on it is what is known as dumb money they are simply throwing money into something that is already happening or has already happened. You need to get in before this, as after a huge buying candlestick, there is normally a lot of selling at the end, you want to be selling, that is market money. You need to be able to establish how the markets are moving. Or in other words, how volatile the markets are at that point in time. Volatility is great, it presents you with opportunities to get some trades on the go, of course too much volatility can be dangerous and can be made more dangerous when trading naked without any indicators to help you. Understanding this volatility and the larger movements are key to making profits when naked trading, ranging is a little trickier but can still be profitable.

Trend Lines and Support and Resistance Levels

When naked trading, you should still be using support and resistance levels as they can provide you with a lot of information about the markets. The thing to remember is to not draw too many lines, if you are writing on 100 lines then it will just become confusing, you need just a few and you need to ensure that you are constantly updating them, recent lines are far more useful to you than older ones. You should also only draw the lines that you are 100% sure of, do not try guessing where the resistance and support levels may be. It may not sound like naked trading anymore, but remember that you are drawing these yourself, not using a bit of software to do it for you, the trend lines can give you a real boost to your analysis and trading, so ensure that you at least try to use them.

So it sounds a little complicated, but who can actually trade naked? Is it for everyone? The simple answer is no, however you should certainly try it at least once. Even those that do not like it will still admit that they often look for price action first before then using their indicators, indicators are great for confirmations and can help to confirm whether it is safe to make a trade or not. Naked trading can also help to save time, you are trading in real-time and will not be overthinking your analysis which could cause a trade to pass by without you taking it. It can be simpler, less stressful, more precise and it takes less time. Having said that, you still need to set yourself a trading plan and some goals. Do not just go straight into naked trading without hanging ideas of the trades you want and when you should be getting into and out of the markets.

So you have decided to do some naked trading, there are a number of different things that you should be looking for, one of them are patterns, there are multiple different ones to think about covering the candlesticks and price action, so let’s very briefly look at what some of these patterns are.

Price Action Patterns

Let’s start with price action patterns, the first to look for is the Head and shoulders pattern. This is an extremely common pattern and you most likely would have seen it a number of times without knowing it. It is one of the key patterns to look for when naked trading. It is easy to notice as it consists of two shoulders which are lower heights and a head, or the highest point. More often than not when this pattern emerges it means that an uptrend is starting to tire and could be about to reverse into a downtrend. If you have a position open then it is a good idea to sell it before the market reverses. It can also work in reverse and would signal that a downtrend is about to reverse into an uptrend.

The other main price action pattern to look for is the Wedge, this pattern is also sometimes referred to as a triangle pattern and it can occur in a number of different ways which indicate slightly different things depending on the market condition it is found in. The wedge pattern is defined as a triangle, it has one long side which is accompanied by the price getting closer and closer together, the other sides are then drawn with trend lines. As the price gets closer than a breakout will occur and either a downtrend or an uptrend will occur. Normally, if there is a falling wedge pattern with the price slowly falling, then an uptrend breakout will occur, and vice versa for a downtrend. There can also be wedges without a rising or falling trend, which can make things a little harder to predict the breakout.

Those are two of the main price action patterns, there are then two main candlestick patterns to look out for. These patterns are based only on a small group of candlesticks, normally just two, three, or four of them. The first that we will look at is the Hammer, this pattern is a single candlestick that simply looks like a hammer, sometimes known as a pin bar. It has a long wick and a short body, it can sometimes be used to help indicate that a reversal is about to happen and can be seen at the top or bottom of a trend. The Engulfing pattern is the second one, this pattern consists of two candlesticks, it gets its name from the fact that the first candlestick is completely engulfed by the second one. This pattern helps to indicate that a trend reversal may be about to take place.

So it all sounds good, there doesn’t seem to be any reason not to naked trade right? Well not quite, it takes a lot of skill to trade naked, for many people, it is not something that they will be able to do straight away, it will take quite a lot of experience to do it properly and to be profitable when doing it. Many will argue that it is still better to use some indicators, especially when the markets are being a little funny. It is far harder to be a consistent trader when naked trading than it is when using a few indicators, if you are not fully reading and understanding the markets, then it could change without you noticing.

Our advice is to try trading with indicators, at least to begin with, if you are confident, and then try naked trading on demo account for a bit, if you do well, then move on to a live account, just remember that it takes a lot of skill, not everyone is cut out for it, so do not be afraid of giving it a miss after trying for a bit and going back to indicators, those indicators were designed to help you after all.

Categories
Forex Indicators

Dangers of The RSI Indicator

Relative Weakness or Relative Strength? The RSI is a popular indicator but it is not without its detractors. If you go online to learn more about technical forex trading – and who these days doesn’t? – then you will surely encounter a lot of people recommending the RSI. Indeed, most people you see on social […]

Relative Weakness or Relative Strength? The RSI is a popular indicator but it is not without its detractors. If you go online to learn more about technical forex trading – and who these days doesn’t? – then you will surely encounter a lot of people recommending the RSI. Indeed, most people you see on social […]

Relative Weakness or Relative Strength? The RSI is a popular indicator but it is not without its detractors. If you go online to learn more about technical forex trading – and who these days doesn’t? – then you will surely encounter a lot of people recommending the RSI. Indeed, most people you see on social media or YouTube who talk about the RSI will talk about it in glowing terms. This is why we think it’s important to bring you to the other side of the story. There is a growing number of technical forex traders out there who dismiss or outright criticize the RSI and this article is here to bring you their side of the story and the arguments they deploy to highlight the major problems with the RSI.

Popularity Contest

If you go online and do a search for all of the most popular indicators out there, you will likely find that you’ll get more hits for the RSI and just about any other indicator. You’ll hear about it all over social media whenever you’re trying to learn from others about forex and you’ll see video tutorials mentioning it or even promoting it. More than that, you’ll see it on your TV screens when you turn over to see the financial news and you will have heard about it from the very people you relied upon to teach you forex trading in the first place. Already here there are several serious problems to point out but we’ll come back to those further on in the article. First thing’s first, what is RSI?

Brass Tacks

The Relative Strength Index is an oscillating indicator that measures the velocity and magnitude of price movements. What you need to know though, is that it ultimately tells you if something is over-bought or over-sold. “Wait a minute, what do you mean over-bought or over-sold?”, you cry at your screen. Indeed, that’s one of the things about the RSI you should know. It was invented by a guy who is the father of a number of technical indicators, J. Welles Wilder. But the thing is, he invented it primarily for equities trading, where knowing if a stock is overbought or over-sold is pretty useful information because stocks – and commodities, where it is also heavily used – have an intrinsic value, while forex does not.

That isn’t to say that a currency pair can go as high or low as it wants, there are limits because governments or national financial institutions will eventually step in and rein things in. But that can happen thousands of pips down the line and there’s no guaranteed or even foreseeable limit where that kind of institutional intervention is going to kick in. Moreover, there is another issue with the RSI’s history, beyond it being invented for trading stocks, and that’s that it was invented back in the 1970s – literal decades before the kind of retail forex trading we are all doing was even a thing.

How Does It Work?

In its basic configuration, the RSI measures values from 0 to 100, where you will typically have lines at 30 and 70. When the reading goes below the 30 line, this indicates that a security or currency is oversold or undervalued and when the reading goes above the 70 line, this indicates that it is overbought or overvalued. As a default, the RSI will cover the previous 14-day period and is supposed to be overlaid against your chart to provide you with trade signals.

For example, if the RSI verges off into overbought territory and then drops down below 70 again, this should indicate that there is about to be a downward trend and you should go short. Conversely, if the inverse is happening with the RSI crossing into oversold territory and then rising back above the 30 line, this should indicate a reversal and the signal will be telling you to go long. That is how it’s supposed to work but – as many traders are increasingly keen to point out – there are several problems with that so let’s look at some of those.

The Problem of Popularity

As any high school prom king or queen will tell you, being popular is not always all that it’s cut out to be. In terms of the RSI, for us, it is important to understand why it’s so popular in the first place. Firstly – and this is pretty understandable actually, especially for traders who are just starting out – it is dead simple to use. Even if you’ve never encountered it before, just the short explanation above will tell you a huge chunk of what there is to know about using the RSI.

There isn’t a problem with simplicity per se – something being simple should not be a reason to avoid it. If there is a simple and easy to use indicator out there and it works, then just go ahead and use it. The problem comes from people who expect to be able to find one indicator and use it to consistently make money by trading on the back of that one indicator. But you should know by now – regardless of where you are in your trading career – that there are no silver bullets. In fact, if you think you’ve found a silver bullet that’s easy to use and is simple and everyone else is using it, you’re in big trouble.

But that isn’t the real problem with the RSI’s popularity. The real problem with the RSI’s popularity is that it is popular. If that sounds like a tautology, it is. But in forex trading there is a big problem when everybody is doing the same thing so when something’s popular, it’s time to start hearing those alarm bells. If you’re doing something in forex trading that is popular, something everyone else is doing, you’re running with the herd. And if you’re running with the herd, there are big players out there, who have way more influence in the way the market behaves, who is going to notice that the herd are all moving in a particular direction. The herd as a whole are going to be on the radar of the big players who will manipulate the mechanics of the market to take advantage of that big clump of traders who are all doing the same thing and sending their money in the same direction.

Of course, you’ll eke out a win every now and then – that is, the big players will let you have a win from time to time – because this keeps you in the game and lets them pick you off the very next time the herd gets going together. This doesn’t work the same way in the equities trade, so if you’re used to that, get ready for something different. In forex trading, you want to steer clear of the herd and stay away from what’s popular as much as possible. If that were the only problem with RSI, it would be enough to make smart traders drop it immediately. But there are other problems lurking in there and if you are still clinging on and conjuring up counterarguments in your head right now, you should be aware of the other problems some traders are keen to highlight.

The Problem of Credibility

The RSI is not only one of the most popular indices out there, but it has also been given the weight of credibility by television. You will have noticed that financial news anchors will often pull up a chart of a given currency pair and show it on your screen referenced against its RSI. Now, why do they do this and why is it a problem?

The simple answer to why they do this is that they don’t know any better. Most financial analysts on television are not traders and certainly not technical traders. They make their living by being smart and credible and being extremely good at talking about the financial markets. They do not need to spend their time trading, researching, testing, and backtesting indicators. Moreover, they know full well that their audience is also not, for the most part (like 99%), technical traders. So neither are they in a good position to properly present and explain indices more complex than the RSI nor would their audience appreciate it because they would struggle to follow along.

So why is this a problem of the RSI and not just a problem of how the financial news treat forex trading? Well because if you are just starting out trading or have been trading using the RSI (with mixed results), seeing these prestigious financial news shows flashing that very same indicator up on the screen will probably mean you will give the RSI more weight than it deserves. If it deserves any at all. You might use it and lose money or you might continue using it beyond the time when you actually become aware that it isn’t working. All because it has been lent this credibility by being on television and being discussed by smart people in suits.

The Problem of Teaching

Speaking of smart people in suits, another reason why people continue to use the RSI and why it is so popular is that it is taught to people learning how to trade in just about every forex trading course out there. When you’re just starting out and you don’t know any better – and crucially, you haven’t built up any of your own trading experience in a meaningful way – RSI looks pretty valid. It is kind of exciting because you are taught this indicator that tells you to wait for certain conditions and when you see them, it gives you a signal to trade.

It’s really easy to learn and you pick it up with no effort at all (are those alarm bells ringing yet?) – all you have to do is look at your chart and identify when the RSI is giving you a signal to trade and just take it. If you’ve learned anything about forex trading by now, you should hear how unrealistic all of that sounds. What’s more, the RSI really easy to teach, which is why it has found its way onto all those courses and video tutorials. It doesn’t take a rocket scientist to teach it and you don’t have to have a foundation course in brain surgery to learn it.

But that’s where you have to question who it is that’s teaching you to trade. Is the person you’re learning from an actual trader? Chances are they are not. If they are making their money by teaching forex trading or by making forex tutorials and courses and then selling them on, there’s a good chance they don’t have to trade for a living. They just want to teach this stuff and, if you’re starting out, you’re hungry for knowledge and just want to learn. As a result, they will show you easy-to-teach indicators, like RSI, that fit neatly into their course material and are easy to back up with simple examples that will make them look like they’re teaching you something important.

There’s a problem with those examples, however. In almost all cases, when somebody is showing you an example of how RSI works, they’re showing you a cherry-picked example. They’ll go out and find the perfect moment, on a chart of the perfect currency combination and set it to the perfect timeframe and then they’ll say, “see here where the RSI crosses back down under 70, that’s an indication that the price is about to trend downwards and here you can see that that is what’s happening”. But even in these best-case scenarios, if you look at the chart, you’ll probably be able to see a couple of cases of the RSI telling you to trade one way but the price going the other way or stagnating. You can try it now, go to YouTube or on social media and find somebody singing the RSI’s praises – there’s a 90% chance that you’ll be able to see for yourself that the example (the one that they chose) is full of holes.

Ultimately, the reason RSI gets taught so much to just about every last living soul who wants to learn about forex trading, is that the teachers themselves don’t know any better. As we said, they are almost certainly not traders themselves, and, more to the point, there are thousands of indicators out there to choose from. A great many of these are more difficult to teach than the RSI, less likely to throw up what appear to be sure-thing examples and more likely to work in conjunction with other indicators in a trading system that’s adapted to the needs and habits of the individual trader. Well, how do you teach that? Surely it’s just simpler to show people the RSI. It is and that’s why they do it.

The Problem of Success

With all of its popularity and credibility and the fact that it was taught to you when you first started trading, the RSI gets used a whole lot. Now, if everyone was learning the RSI and using it and it failed every time, people would simply drop it immediately and it would be resigned to the ash heap of history. But it doesn’t work that way. In fact, it’s much more insidious and sinister than that. The main reason people continue to persevere with the RSI is that even though it is probably losing them money in the long term, they have occasional successes with it, which reinforces all those cognitive biases generated by everything we’ve already covered in this article. It’s called gambler’s ruin or casino theory.

If you went to a casino in Las Vegas and you and everybody around you was just constantly losing money – never winning, not even 0.001% of the time – nobody would ever go to a casino again. The way the house keeps you coming back for more is that you do occasionally get that blackjack or the roulette ball does sometimes land on your number. It doesn’t happen nearly as often as the house wins but it happens often enough that it gives you that kick of adrenaline and clouds your judgment so you keep gambling.

Do not underestimate the power of that rush from winning. It will keep you in a casino for ten hands beyond the one at which you should have stopped or keep you using an indicator that you have seen doesn’t work consistently but that brought you that one win a few months ago and boy didn’t that feel good. The big players in the forex market understand the power of that thrill and will use it as mercilessly as the casinos in Vegas or Macau or anywhere else in the world. They reel out a little slack and the herd lap that up and comes back for more.

The Final Nail in the Coffin

There is a counterargument to much of this and if you use and like the RSI, you’ve probably been reading through this like a coiled spring, waiting to counter with: “But the RSI does work in range-bound markets!” Well, there are a lot of seasoned technical traders out there that would respond like this: If you’re seeing a ranging market, it’s probably already over. Forex markets don’t range forever and identifying a ranging phase in the market is not as simple as textbooks will have you believe. You won’t know when it’s coming and when you see it forming it will likely be too late to take advantage of it using the RSI.

The problem is that there is a glut of reversal traders out there relying on the RSI to call out reversals for them and they outnumber the people who are trying to follow a trend when it does break out. It’s the very reason the price trends as long as it does sometimes. When it does, it sucks the life out of those reversal traders over and over again – erasing any gains they made when the price was consolidating.

Try It and See

Of course, the best way to be really sure that the RSI is flawed is not to listen to an endless to-and-fro of well-thought-out arguments. The best way to be sure is to take the thing to the testing range and see if it falls apart. One good way of doing that is to open a demo account and trade it using the RSI exclusively. Use this account to track the wins and losses over a meaningful period (anything less than a couple of months is too short) to see where it gets you. Sadly, most traders are not sufficiently disciplined to go through all of that and will not benefit from that learning experience but demo-testing an indicator like that does reveal a whole lot about it.

The alternative is to look at a historical example and analyse those moments where the RSI was giving a trade signal. Chances are you would see very few examples where the signal would actually have paid off. The way to do this is to take a popular currency pair or a pair that you actually trade and look back over a year’s worth of data. Pull up the RSI indicator, compare it against the price chart, and go through each and every time the RSI pinged a trade signal. Check forward from that point to see whether following that signal would have paid off but be honest with yourself about where you would have set your stop/loss and take profit limits.

You will find that, in most instances, following the RSI will completely kill you. That’s not to say it never throws up a win. It will give you a win from time to time but the losses will outweigh these infrequent wins over time. And not only that but the wins will more often than not be pretty mediocre and the losses will not. To sum up, there are a lot of traders out there who are very disparaging about the RSI and now you know why. If you feel like this is sound advice, don’t take their word for it, test it out for yourself in a demo account and see if it really lives up to any of its hype.

Categories
Forex Fundamental Analysis

Everything About ‘Social Security Rate’ – An Important Fundamental Forex Driver

Introduction

Introduction

Introduction

During the recent Coronavirus pandemic, the whole debate about social security has taken CenterStage. At a point in life, we all grow old. Since not everyone will go through life-saving for retirement, our main worry then would be; how to pay bills on time, how to provide for our families should we lose out jobs or become incapable of working.

Social security attempts to anticipate all this and offer practical solutions. So why should forex traders care about the social security rate? This article seeks to understand what impact of social security rate has on a country’s currency. To establish this, we first need to understand what it is and what it entails.

What is Social Security?

Social security has been given several definitions. In the UK, it is considered to be any form of monetary assistance from the government towards individuals who have inadequate or no income. In the US, social security is a federal program that is meant to provide retirees, the poor and the disabled with income and health insurance.

Thus, social security is the guarantee that a government gives to its vulnerable citizens that in the event they are exposed to a specific future risk, they will be looked after. The social security program, therefore, uses public resources to provide economic support for private citizens.

What is Social Security Rate?

This rate is the percentage of earnings that is charged on both the workers and their employers. It is used to fund the social security program.

How it is Calculated

Various countries have different mechanisms of arriving at the social security rate for both the employed and self-employed.

In the US, the social security rate is 15.3%. It is a combination of a 12.4% social security tax and Medicare tax of 2.9%. In 2020, the 12.4% social security tax is applied on everyone for all income up to $137,700; any amount earned beyond this threshold is exempt from the social security tax. The social security tax is deducted on an individual’s payroll through payroll withholding by the employer. This rate is split in half between the employee and the employer.

Therefore, an individual contributes 6.2% for social security and 1.45% of their earnings while the employer matches the other half. The employer then remits the withheld amount together with their contribution to the IRS. For those that are self-employed, since they are the employee and the employer at the same time, they have to pay both halves of the social security tax. In the UK, the social security rate is 14%. A comprehensive list of current and previous social security rates for every country can be found on the Trading Economics website.

Purpose of the Social Security

Conventional taxes are meant to be a revenue source for government expenditure or meant to be punitive. The social security tax is meant to a safety net for the contributors should they fall on hard times. It also functions as an economic guarantee for the most vulnerable in society. The chart below shows the dependency on social security benefits by various household income class in the US.

Source: AARP

Some of the benefits of the social security program include:

Retirement benefits

This offers workers and their dependents a replacement income for when they choose to retire. The earliest retirement age is 62 years. For one to be eligible for retirement benefits, they need to have worked for a minimum stipulated period. This period differs depending on the country. In the US, it is for ten years. The amount of money received largely depends on one’s lifetime earnings and the cost of living.

Disability benefits

Also known as disability insurance, the Social Security and Supplemental Security Income disability is meant to provide an income for the disabled. For one to be eligible, they need to have worked for a minimum number of years, depending on the age when the disability occurred.

Medical cover

This is the health insurance coverage that covers part of medical bills for ageing workers, people with permanent health conditions and those with disability.

Survivors benefits

This is meant to help those who are bereaved to cope

Social Security Rate and the Economy

The social security program differs in every country. However, in every economy, such programs are meant to provide stability to the households by providing a replacement stream of income, hence avoiding poverty. In the US alone, close to 56 million people are recipients of social security benefits.

Source: International Labour Organization

As shown in the chart above, higher expenditure in terms of social security corresponds to a higher GDP per capita. While some might argue that a higher social security rate reduces the amount of disposable income, the multiplier effect generated by the resultant social security benefits outweighs any short term loss.

It is worth noting that the families and individual who receive these benefits use the income to purchase goods and services. In 2019, it was estimated that the social security program injected over $1 trillion into the economy. Therefore, the presence of social security helps to maintain demand in the economy in times of crises and some cases, increase the demand.

The benefits of the social security program have a powerful multiplier effect within the economy. The businesses that receive this income from the consumers use it to increase production and hire more employees. These expansions, in turn, generate more revenue for the government to use in national expenditure while the earnings by the employees serve to create more consumption and increased savings.

How Social Security Rate Impacts Currency

As we have already established above, a higher social security rate creates a multiplier effect that generates more revenue within the economy. The strength of a country’s currency is a reflection of its economy. The growth in the national economy, therefore, corresponds to the appreciation in the value of the currency.

Conversely, lowering the social security rate will reduce the multiplier effect within the economy, which leads to shrinking of the national economic growth. For forex traders, lowering the social security rate could be a foreboding of a looming reduction in the national GDP growth, prompting expansionary monetary and fiscal policies. Therefore, in the long run, a low social security rate leads to the weakening of a country’s currency against other pairs.

How Social Security Rate News Release Affects The Forex Price Charts

Forex traders rarely pay any attention to the release of the new social security rates. This inattentiveness is because as an economic indicator, the social security rate is a low impact indicator. However, it is essential nonetheless to know how the news release of the social security rate affects the price action of different pairs.

In the UK, the national government through the Department for Work and Pensions sets the social security rate and is reviewed annually. A breakdown of the UK social security rate can be found HM Revue and Customs website. It should be noted that for the past 25 years, the US government has not changed the social security rate, as can be seen here. Below is a screengrab from the Trading Economics’ website on the UK and US social security rates.

UK social security rate

US social security rate

In the latest release on April 6, 2020, around 1100 GMT, the UK government revised the social security rate upwards from 12% to 14%. Now, let’s see how this news release made an impact on the Forex price charts.

GBP/USD: Before social security rate release April 6, 2020

We plotted a 20-period Moving Average on a one-hour GBP/USD chart. As can be seen on the chart above, the pair is in recovery with the candles crossing over the 20-period Moving Average and subsequently forming above it.

For the GBP/NZD and GBP/AUD pairs, the market is in a general downtrend before the announcement of the hike in the social security rate. This trend is evidenced by the subsequent candles forming below the 20-period Moving Average, as shown in the charts below.

GBP/NZD: Before social security rate release April 6, 2020,

GBP/AUD: Before social security rate release April 6, 2020

For forex traders, going long on the GBP/USD wile short on the GBP/NZD and GBP/AUD pairs would have been an excellent trading opportunity since the prevailing market trends would favour them.

Let us now see if the release of the new social security rates changed the market trend for these pairs.

GBP/USD: After social security rate release April 6, 2020

In theory, raising the social security rate should be positive for the GBP. Bust, as can be seen in the GBP/USD one-hour chart, the news release, did not have any impact on the pair to change the market trend significantly. The lack of impact can be observed for the GBP/NZD and the GBP/AUD pairs as shown by the charts below.

GBP/NZD: After social security rate release April 6, 2020

GBP/AUD: After social security rate release April 6, 2020,

Whereas the social security rate plays a significantly important role in the overall economy and the GDP, it is apparent that its impact in the forex market is negligible.

Categories
Beginners Forex Education Forex Basics

Should You Invest In a Forex Robot?

A forex robot is a computer program that automatically places trades on one’s trading account, based on predetermined factors that are unique to the specific robot that is trading for you. The software is used by both beginners that may not understand exactly how to trade and more experienced investors in an effort to maximize […]

A forex robot is a computer program that automatically places trades on one’s trading account, based on predetermined factors that are unique to the specific robot that is trading for you. The software is used by both beginners that may not understand exactly how to trade and more experienced investors in an effort to maximize […]

A forex robot is a computer program that automatically places trades on one’s trading account, based on predetermined factors that are unique to the specific robot that is trading for you. The software is used by both beginners that may not understand exactly how to trade and more experienced investors in an effort to maximize their earning potential. On the other hand, some traders have had bad experiences with automated software and will tell you to avoid it at all costs. Are automated trading robots money-making machines, or a bad investment all around? Deciding whether to invest in a forex robot really comes down to one’s personal opinion after weighing the pros and cons.

We’ll start by looking at some of the positive benefits associated with using a forex robot:

–Forex robots eliminate the psychological burdens of trading. After all, a computer program won’t feel anxiety, grief, excitement, or any other emotion that can affect a human. This allows the robot to trade without making human errors based on emotions.

-The software can scan and analyze multiple sources of data much more quickly than a human possibly could.

-Trading robots can monitor and place trades on multiple accounts at the same time.

-The computer program can’t get tired or distracted, so it won’t miss opportunities. A forex robot never sleeps.

-A robot can backtest different strategies to figure out which is the best.

-Beginners can rely on forex robots while they’re learning, although you should have a good idea of what you’re doing before you get started.

Forex robots can provide us with an advantage because they aren’t subject to human emotions, distractions, or fatigue. The program does exactly what it was designed to do, and it can analyze multiple sets of data and place multiple trades at the same time. It just isn’t possible for a person to do all of this at once or as effectively.

With the benefits of using a forex robot in mind, one also needs to look at the disadvantages. We gave a lot of credit to this software because of its lack of humanity – but that can also be the catch. A robot can only consider the factors that it is programmed to, while humans can think about other things that might affect their trades, such as news releases or economic reports. If things change, the robot will continue trading the same way as before and might wind up losing a lot of money if there is no interference. Here are the main disadvantages to using a forex robot:

While the lack of human emotion can be a good thing, the robot cannot consider things that a human could.

A lot of forex robots were created by scammers that promise to make you rich, even though their product will wind up losing your money. Once you pay for it, they’ve made their profit and don’t care that you will only lose more.

Many of these products cost a good bit of money if they work. This can put the software out of reach for many beginners or investors that just can’t afford it.
Most robots run on your device and need a connection to the internet 24/7 for trade execution. Otherwise, they can experience problems. You can purchase VPS to help with this, but this adds another cost to using a forex robot.

Forex robots can automatically trade on your behalf and can be very profitable, but each robot was not created equally. There are a lot of scammers out there aiming to take advantage of beginners with flashy promises and impressive-sounding programs that just don’t work. If you’re going to use a robot, you need to do a lot of research before making a purchase, test it first, ensure that risk-management procedures are followed (like setting a take profit or stop loss), and keep an eye on the robot’s activity. You’ll also want to turn off the robot when certain news data or other market affecting information is released to avoid losing money during those times.

Whether or not to invest in a forex robot is a personal choice. The best developers will explain how their software works, allow you to test it or perhaps to access a free trial, and might even offer a money-back guarantee in some cases. You also want to check for user reviews to get an idea of how the product has worked for real traders. Keep in mind that some might lose money because of their own personal interference, but user reviews and comments can paint a bigger picture of whether the robot is profitable or not. Don’t buy into claims of instant riches, instead, do your research and invest wisely, and remember that forex robots can be profitable, but they are not the magic answer to becoming rich.

Categories
Forex Indicators

Guide to Selecting Custom Forex Trading Indicators

How should you use custom forex trading indicators and should you buy them? One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft […]

How should you use custom forex trading indicators and should you buy them? One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft […]

How should you use custom forex trading indicators and should you buy them?

One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft for ourselves bespoke strategies, charts, and indicators in order to optimize our market experience to fit our needs.

Why Custom Indicators?

If you are a technical forex trader, why should you use indicators when trading? There are really two answers to this and neither of them will come as any big surprise to any of you. The first one is simple, to give you an edge in terms of the timing of your trades and the precision with which you take advantage of that timing. The second reason is that forex trading, even technical trading, is as much an individual process – trying not to say art, here – as it is a scientifically or mathematically founded methodology. Even if you are a very technically driven trader, you will want to adapt your trading strategy to your own personal needs, goals, and ways of doing things. Inevitably, one of the outcomes of this is that you will need to build up, over time, a personalized system that relies on, among other things, a set of trading indicators that you have finely tailored to your requirements.

Who Builds Indicators?

Who designs and makes those custom indicators that you can find out there and download for your own use – whether you pay for them or not – and should we care? The short answer is, of course, we should care a bit. Here’s why: While some custom indicators are made by traders and enthusiasts with some knowledge of how trading and the markets work, there are a great many indicators out there – maybe even most of them – that are made by programmers. Now, being good at coding is important to make a good custom indicator but that does not necessarily mean it will result in one that is actually useful. More to the point, it does not mean that it will result in one that is useful for you.

Evaluating Indicators

Ok, bad news first: There is no shortcut. Of course, if you’ve been forex trading for almost any amount of time at all, you will have been able to figure that answer out for yourself because there are no shortcuts to anything. If you’re not ready to put in the grind, you won’t get very far. That is particularly true if you’re a technical trader.

So, how do you chose the right custom indicators for your strategy? There’s no mystery here, the answer is you have to test them. Testing is important for two reasons. First, you will have to probably go through a large number of custom indicators to see what fits with your approach to trading. Even good indicators, those that work as advertised or as close to the way they are advertised as possible, may not be the ones that mesh with the system you are building. The second and even more important reason is that you need to test the dice out of indicators to make sure they work.

Once you download a custom indicator, take it to the testing range. Backtest it to make sure it worked in the past. This is the first hurdle and if it clears that, its time to upload it to your demo account and forward test it to see how it performs in the market. Moreover, forward testing is the best way to ensure that a given indicator will add value to your strategy.

The testing process you put custom indicators through needs to be rigorous. It has to be robust in two senses: First, it should comprehensively test each indicator you select and, second, it should test a broad range of indicators to provide you with a clear picture of what works and what works in your system.
Your friends here are time and work. The more indicators you put through a testing regimen, the better honed your system will be. Expect to test tens, if not hundreds, or even thousands of indicators throughout your career as a trader. The key is to avoid resting on your laurels but to always be learning and adapting.

Paying for Indicators

Should you go out and buy custom indicators to integrate into your platform? There is now a very broad market for custom indicators out there – some are free and some are paid-for. When you first encounter this it might seem a little daunting. You will ask yourself, are the paid indicators better in some way? As many experienced technical traders will tell you, ultimately there is no guarantee of a difference. Those who have already put the time and effort into exploring and testing the custom indicators that are floating around out there will have discovered the following: the main thing separating paid indicators from those you can download for free is that the person who made them decided to try to charge for them. The vast majority of custom indicators that somebody else made are likely to either a) not work properly at all, or b) not suit your particular system or strategy. This applies equally to those that are free and those that cost actual money.

So, should you just ignore the indicators that will cost you a few bucks? There’s an element of personal preference in the answer here. Because technical trading is an unending cycle of learning and re-learning, there is a good chance you will not regret paying for an indicator even if it turns out that it isn’t very useful. Even just by taking it through a robust testing process, you will learn something – both about the indicator itself and about your approach to trading. There is also the caveat that an indicator you pay for could turn out to be really useful to you and end up helping you to make many times over the 10, 30, or 50 dollars you paid for it.

It is also possible that you will pay for, download, and test an indicator and then decide not to use it. But that down the line at some point, as your trading strategy evolves and as you learn new approaches, you will want to go back to an indicator you previously decided to set aside. Maybe you will realize that you can tweak it to make it a useful addition to the way you trade or maybe the way you trade will change over time to the point that you need a new mix of indicators that will now include one you bought two years ago, say, and never used.

The Bottom Line

Whatever approach and strategy to forex trading you are designing for yourself, you will certainly benefit from the myriad of custom indicators available out there. You don’t have to feel like you have to pay for indicators – there is no guarantee that paid-for indicators will work any better than free ones. The key thing to remember is that any indicator you are thinking of using will have to go through a comprehensive testing phase – whether you chose to pay for it or source it for free.

Categories
Forex Indicators

Forex Indicator Testing Tips & Shortcuts

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of […]

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of […]

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of indicators out there that can be used.  Unlike the price action trading, indicators, if everything is done correctly, and have been tested and trusted already, will give you a crystal-clear signal every time.

There is no guesswork with indicators and you can customize settings. Adjust it in the way you like it and make it better than it already is. This cannot be done with Support and Resistance line, right? The best option is that you can combine indicators, and by this, make better results. Everything is going around choosing the right indicators and combining them together to make the system more accurate. One stand-alone indicator will not get anyone anywhere, what is recommendable to do, is to create algorithms – the system of rules to point out to the same signal at the time, which can be used and traded upon.

We will focus now on the ways of testing Forex indicators and choosing adequate ones.
As we already mentioned, there are thousands of indicators out there that can be used. Also, now and then new indicators are made by programmers. In order to choose the right ones, one would need an awful lot of time to test each and every and to make the right choice. This is actually not a bad way to do it, don’t get this in a wrong way. It would even improve your skills, however, to help you shorten the process we chose five criteria points.

An indicator that does nothing other than following the price.

There are a lot of indicators out there that do just this – follow the price. As if you took a pencil and just tracing the price – honestly, this cannot help at all. These kinds of indicators are just mirroring where the price is going and it is not very useful. What you really need from the indicator is to show you what you cannot really see – foreseeing what is not yet visible with a bare eye.

Indicators that do not even work in the example.

Most of the programmers that are making indicators are not traders. Many indicators that are for sale cannot be tested before you buy it and then you need to assume how they work. What would be very useful is they could give a snapshot to a user of a real successful example – where a certain indicator worked and provided the correct signal. If it happens that even in the example the indicator does not meet what is expected and in the way it is expected, it should be cast away without even trying.

Too many signals.

It is not easy to choose between an indicator that gives quality signals and ones that give more signals. If this poses a dilemma to you, a suggestion is to go for quality over quantity each time. In truth, it doesn’t really matter which one you choose as long as it brings you money at the end of the day.

Indicators that give you a buy signal and a sell signal way to quickly, one after another, it would be best to avoid it. If you happen to use this kind of indicator, even in combination with other indicators you may take too many trades and exiting them too soon.

Indicators offering Support/Resistance levels of any type.

The way some traders believe is that Support/Resistance levels are completely non-useful based indicators. Even if it is dynamic support and resistance – meaning it moves, it doesn’t stay fixed, it is still not very useful according to them. What these indicators do is trying to predict the place where the price is going to break out or reverse and it is not really something that can be predicted. It is also good to know, if you are following this kind of strategy, that all indicators which contain words like ‘pivot’, ‘gann’, ‘channel’ are most likely also part of this category.

Indicators you cannot adjust.

If you happen to use these indicators, you know that every once in a while, it works perfectly on default settings. For example, Heikin Ashi – nothing can be changed or adjusted in this indicator. Some serious professional traders think that every indicator that gives you a possibility to improve it – personalize in a way, is going to be better than the one that doesn’t.

These five points should offer you some guidelines on how to choose and test indicators in the future. You can always come up with your own selection, which can take you a lot of time to do it, but it would probably be very useful for improving your trading skills.

Benefits of following the price action.

There are also traders out there that strongly believe that indicators are just a waste of time. These kinds of traders are mainly Price Action traders, trading with clean charts – which are very successful in what they do and wouldn’t change it for any of the indicators. To them, indicators are just a clumsy way of interpreting what they can already see on the chart using Price Action methods.

A lot of new traders are coquetting with both ways in order to find their comfort zone and a method that will work for the long term. According to these guys, a clean chart with minimal indicators represents a clear mind and way of trading on fundamental price movements in opposition to the trading with indicators. Accessing a clean chart may seem simpler and non-demanding and can also be a lot less stressful than having to scan multiple lines, levels, and bars that indicators may show.

While a clean chart would present price information upfront, a chart with indicators will often show other information on top, or even worse, can show compress or stretch actual price information on candlesticks or bars, leading you to the wrong appearance of volatility levels and moment relative to the existing trends.

We must admit that a cleaner chart also gives fewer filters that you are potentially looking out for, allowing you quicker decision-making without getting distracted by information on another window or overlaid on price information. This can improve your efficiency. Just for this method to be applied correctly, your mindset needs to be sharp, equipped with enough years of experience reading the charts and mastering Misk Management.

So, to summarize, the major benefit of trading price action is the simplicity factor. Top trading professionals are often found trading with totally clean charts that allow stress-free and comfortable trading environments that ultimately contribute majorly to their trading success.

Bottom line is, as you may have realized by now, trading with or without indicators is a completely personal decision and depends entirely on the trader. On what kind of trader you are, your own circumstances, risk appetite, experience, and comfort level.
It is impossible to categorize either approach as categorically good or bad, but depending on your situation, choosing one over the other may contribute majorly in determining your success as a trader.

Categories
Forex Service Review

Magic Histogram Indicator Review

Magic Histogram is found within the indicators section of the MQL5 marketplace. It was created by Evgeny Belyaev and was first uploaded to the marketplace on the 21st of July 2017, it has not had any further updates and so, is remains at version 1.0. Overview Magic Histogram is an indicator for the MetaTrader 4 […]

Magic Histogram is found within the indicators section of the MQL5 marketplace. It was created by Evgeny Belyaev and was first uploaded to the marketplace on the 21st of July 2017, it has not had any further updates and so, is remains at version 1.0. Overview Magic Histogram is an indicator for the MetaTrader 4 […]

Magic Histogram is found within the indicators section of the MQL5 marketplace. It was created by Evgeny Belyaev and was first uploaded to the marketplace on the 21st of July 2017, it has not had any further updates and so, is remains at version 1.0.

Overview

Magic Histogram is an indicator for the MetaTrader 4 trading platform, its kain purpose is to act as a universal tool that is suitable for scalping and medium-term trading. It will help to determine the direction and strength of a trend, it will also not redraw and is most suitable for the M5, M15, M30, H1, and H4 timeframes and on the AUDUSD, EURUSD, USDCHF, EURJPY, and NZDUSD currency pairs.

Some of the benefits described by the developer:

  • Excellent indicator signals!
  • Suitable for beginners and experienced traders.
  • Using the flexible indicator settings, you can adjust the indicator.
  • Works on all timeframes.
  • Works on any financial instrument.
  • It does not repaint/redraw.
  • Sending signals to email and mobile devices.

The indicator also comes with some parameters that can be changed to more suit your own needs. Some of these settings include the time period, alert options, email and push notifications, colors for up and down, and the width of the histogram.

Service Cost

The indicator will currently cost you $28 to purchase it outright, this one-off payment will give you up to 5 activations of the indicator. If you prefer, you can also rent it, this can be done for a period of three months for $15 or for a one year period which will cost you $24.

There is a free demo version, as the details are not stated on the site, this normally means that it can only be sued with the strategy tester within the MT4 trading platform.

Conclusion

Unfortunately, there aren’t any user reviews or ratings given so we do not know whether those that are using it are finding it useful or whether it is doing what it was advertised to do. There are some comments, the developer has been replying to them al in a prompt manner, there have not been any comments since 2019 so it is not fully clear if it is still being supported. Due t these reasons we would suggest contacting the creator with your questions, so you can be sure that it will work for you and that it is still receiving active support from its developer.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/23610

Categories
Forex Service Review

PipFinite Impulse Pro Indicator Review

PipFinite Impulse PRO can be found in the MQL5 marketplace under the indicators category. We have provided a link to it below. The indicator was first uploaded by its creator Karlo Wilson Vendiola on the 21st of May 2018, it was most recently updated on the 1st of January 2020 and is currently at version […]

PipFinite Impulse PRO can be found in the MQL5 marketplace under the indicators category. We have provided a link to it below. The indicator was first uploaded by its creator Karlo Wilson Vendiola on the 21st of May 2018, it was most recently updated on the 1st of January 2020 and is currently at version […]

PipFinite Impulse PRO can be found in the MQL5 marketplace under the indicators category. We have provided a link to it below. The indicator was first uploaded by its creator Karlo Wilson Vendiola on the 21st of May 2018, it was most recently updated on the 1st of January 2020 and is currently at version 3.0.

Overview

The PipFinite Impulse PRO is an indicator designed for the MetaTrader 4 trading platform. The indicator was created to help prevent losses during periods of dramatic movements within the markets.

The main advantages of the indicator:

  • Early impulse detection algorithm.
  • Flexible combination of different trading strategies.
  • Advanced statistics calculation following the entry point, take profit and exit signal.
  • Never repaints, never back paints, never recalculates.
  • Signals strictly on the close of a bar.
  • Works in all symbols and all timeframes.
  • Integrated pop-up, email, push notifications, and sound alerts.
  • Fully compatible with the Expert Advisor (EA) development.

The indicator also comes with a number of parameters that can be used to help alter the way that the indicator functions, some of them include the volatility period, the volatility factor, the take profit factor, the maximum number of historic bars, misc parameters, display parameters, graphics parameters, dashboard parameters, and alert parameters.

Service Cost

The indicator will currently cost you $88 to purchase it outright without any limitations and wish unlimited use. There is also an option to rent the indicator, this will cost you $58 per month, you can also rent it for three months which will cost you $78 for that period. There is a free demo version mentioned on the site, it does not, however, mention any possible limitations that we know will come with the free version, it is always worth downloading and trying out though.

Conclusion

At the time of writing, there are currently 60 different reviews for the indicator, the overall rating from these reviews is 5 out of 5 stars.

“All PipFinite indicators are spectacular, but IMPULSE PRO exceeds all expectations. Thank you, Pipfinite team, 5 stars for your indicators and support!” – A 5-star review.

“Acquired PipFinite Impulse Pro, MT4. I studied it on the materials on the site. It seems to me a very promising tool that facilitates the work of the trader and the analysis of graphs. I hope for a good profit.” – A 5-star review.

“I recently purchased Impulse Pro and it’s crazy how well it’s working for me. Within the first couple hours, I closed out 7 of 10 trades for a 200 pip overall profit. I’m a repeat customer of Pipfinite, and I couldn’t be happier with this latest product. Thanks.” – A 5-star review.

So the reviews are all pretty positive which his a great sign, even with all the positives, we would still highly recommend that you download the try out the free version before you make a purchase, this way you can be sure that it works for you. The comment section also has plenty of activity, the developer has been replying to comments and questions which is really good to see, and it is a good sign as to the kind of customer service you will receive once you make a purchase.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/29188

Categories
Forex Service Review

Lighthouse Support and Resistance Indicator Review

Lighthouse is a utility that can be found in the indicator section of the MQL5 marketplace, we have provided a link to it below as there may be other indicators with similar names. The indicator was first uploaded on the 15th of Aril 2014, it has had many updates, the most recent being on the […]

Lighthouse is a utility that can be found in the indicator section of the MQL5 marketplace, we have provided a link to it below as there may be other indicators with similar names. The indicator was first uploaded on the 15th of Aril 2014, it has had many updates, the most recent being on the […]

Lighthouse is a utility that can be found in the indicator section of the MQL5 marketplace, we have provided a link to it below as there may be other indicators with similar names. The indicator was first uploaded on the 15th of Aril 2014, it has had many updates, the most recent being on the 18th of February 2020 which brought the indicator up to version 3.34.

Overview

Lighthouse is an indicator designed for the MetaTrader 4 trading platform, it works by displaying the most important trading levels and then draws them in accordance with their relevance.

The main features of the indicator:

  • Automated adjustment to the underlying time frame
  • Displays only significant support and resistance levels
  • Immediate graphical response if a level is clearly broken
  • Thicker drawn SR levels are more important than thinner ones

General settings:

Analysis mode: Select between three different scan modes (intraday, medium, and high time frames) or use the automatic adjustment which is set by default.

Sensitive mode: The sensitive mode identifies more support and resistance levels. We recommend using it if you are an intraday trader. Set this to false if you like to reduce the number of drawn SR levels.

SR Distance in Pips: This changeable value is the basis for the built-in support and resistance level distance check. It measures the distance between the current price and the next Lighthouse levels.

There is also a range of other settings for graphics and notifications such as the ability to turn them on or off, have the colors, backgrounds, types of alerts, and messages.

The developer of the indicator also offers a support service as well as a change group available to purchasers where you can discuss strategies and tool usage, as well as receiving any help that you may need.

Service Cost

The indicator will cost you $49 to purchase outright (this is a reduced price and it is originally priced at $99), you are also able to rent it, you can choose between 3 months and 1 year, to rent it for three months it will cost you $29, to rent it for one year it will cost you $39. There is also a free version available, but the site does not indicate what the limitations of the free version are or whether there is a time limit to its use.

Conclusion

There are currently 82 reviews available for this indicator, they are giving it an overall rating of 5 out of 5 which is a fantastic score to have. It should be pointed out that the creator is offering an exclusive chat group for those that leave a review, so some of them may have been provided simply to get into that group.

“After searching for a trading system and trying many indicators for a long time, I finally found indicators that suit my trading style and help me to improve my trading performance. I totally recommend combining Daniel’s tools (Fx Trend, Fx Power, and Lighthouse). His support and the community built around the usage of his tools are awesome.” – A 5-star review.

“After using it for some months, I have to admit that this is the best horizontal support and resistance indicator that I know of. I don’t follow its go or wait for signals. I just use it for stops and targets and make lines thinner (2 and 1) as they are a kind of too thick. Many thanks to the author. If you trade every day and for living this is an extremely useful tool to have.” – A 5-star review.

The vast majority of reviews are extremely positive, they are indicating that the indicator works as it is described and that the creator is helpful and offering good support. Even with all of this great feedback, we would recommend that you check out the free version, it will help you make sure that the indicator suits your needs as well as ensuring you are able to get it set up correctly.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/3941

Categories
Forex Service Review

Horizontal Channel Alert with Custom Fibo Review

Horizontal Channel Alert with Custom Fibo can be found within the MQL5 marketplace under the indicators heading. It was first uploaded to the marketplace on the 13th of October 2017 by its creator Yurij Izymunov and received a number of updates. It was most recently updated on the 7th of January 2019 and is currently […]

Horizontal Channel Alert with Custom Fibo can be found within the MQL5 marketplace under the indicators heading. It was first uploaded to the marketplace on the 13th of October 2017 by its creator Yurij Izymunov and received a number of updates. It was most recently updated on the 7th of January 2019 and is currently […]

Horizontal Channel Alert with Custom Fibo can be found within the MQL5 marketplace under the indicators heading. It was first uploaded to the marketplace on the 13th of October 2017 by its creator Yurij Izymunov and received a number of updates. It was most recently updated on the 7th of January 2019 and is currently at version 1.7 of the software.

Overview

Horizontal Channel Alert with Custom Fibo is an indicator designed for the MetaTrader 4 trading platform (a MetaTrader 5 version is also available). The indicator was created to trade during horizontal channel breakthroughs, it will search for prices that are exceeding the extreme points and then bouncing back, it will offer you sound alerts any time that this occurs.

The indicator is able to plot channels both at high/low and open/close prices. The indicator will automatically attach the channels to the prices, the channel area can be expanded or reduced on the chart, it can also draw horizontal and Fibonacci levels on the timeframe that you need without removing any other details.

There are also some settings that come with the indicator, these include reverse Fibonacci levels, to auto-build Fibonacci levels by range, time range, the color of channels, channel width, channel length, alerts, notifications, to limit alerts, price mode, custom Fibo lines, and more.

Service Cost

The indicator can currently be purchased for $30, this is a one-time payment that will get you up to 1000 product activations. There is also an option to rent the indicator, this can be done monthly and will cost you $10 per month.

Horizontal Channel Alert with Custom Fibo also offers a free demo version, this will only be usable with the strategy tester within MetaTrader 4 but may still be worth downloading to try out before you make a purchase.

Conclusion

Unfortunately, there aren’t currently any user reviews or ratings, so we do not know whether people are finding it useful and that it does what it was designed to do, there are some comments from people who have purchased or rented it, they are mainly asking for support, the developer has been replying to each one which is a great sign as to the kind of support you would receive. There have not been any comments since the start of 2019, so before making a purchase, we would suggest sending any queries that you have to the developer, this is a way to check that there will still be some support once it has been purchased.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/25834

Categories
Forex Service Review

Advanced Currency Strength28 Indicator Review

The Advanced Currency Impulse with Alert is an indicator that can be found on the MQL5 market. We have added a link below so you can see exactly which indicator we are looking at. This indicator was originally released back on the 7th of September 2016, it was last updated on the 6th of January […]

The Advanced Currency Impulse with Alert is an indicator that can be found on the MQL5 market. We have added a link below so you can see exactly which indicator we are looking at. This indicator was originally released back on the 7th of September 2016, it was last updated on the 6th of January […]

The Advanced Currency Impulse with Alert is an indicator that can be found on the MQL5 market. We have added a link below so you can see exactly which indicator we are looking at. This indicator was originally released back on the 7th of September 2016, it was last updated on the 6th of January 2020 and is now at version 3.0 (at the time of writing).

Overview

The Advanced Currency Impulse wit Alert is an indicator designed to be used with MetaTrader 4, it uses some of its own proprietary features in order to function. The indicator is able to give alerts for 28 different currency pairs. It will show you whether the strength of a currency is growing or falling and bases its indication of potential trades on that information.

The indicator also uses the dynamic market Fibonacci 23 level in order to trigger alerts. These alerts can be within the trading window or via an email address and will indicate what sort of trade should be placed, you must place the trades manually though.

There are a number of different parameters available to change to help alter the indicator to better suit your requirements. You are able to select what the lines and graphs look like in terms of colors, thickness, and more. You are able to set up alerts within the window nad on which candles, to set it to draw additional or fewer lines and other alterations like that.

Service Cost

You are not able to purchase this indicator outright, instead, you need to rent it, you can rent it for three months for $62, however you can also rent it for one year for $78. There is also a free version available, but it does not indicate what the limitations of this version are or whether there is a time limit to its use.

Conclusion

There are 283 reviews for this indicator the overall rating is at 5 out of 5 which is very impressive. However, sometimes when everything is positive, it can look a little suspicious, there are a couple of negative reviews but the vast majority are positive.

“Taken by how much I have been impressed by Advanced Currency Strength28 Indicator I have also decided to rent this indicator for 1 year. In this case, I have seen that Impulse, although in my humble opinion I think it is a little below in terms of the strength of signals offered by Advanced Currency Strength28 Indicator, I also think however that they can be perfectly complemented. 5 stars.” – A 5-star review.

“Bernhards indicators look very promising and he provides very good support” – A 5-star review.

“I won’t rent it again. Waste of time and money.” – A 1-star review.

Some decent reviews, but a single negative, while the indicator looks very promising, we would recommend using the demo version for a while to make sure that it does in fact function how you desire and that you are able to get it set up properly before renting it.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/18155

Categories
Forex Service Review Forex Services Reviews-2

FFx InsideBar Setup Alerter Review

FFx InsideBar Setup Alerter is found on the MQL5 marketplace, it was created by Eric Venturi-Bloxs and was first uploaded on the 26th of MNArch 2014. It has not received any further updates so the indicator is still at version 1.0. Overview FFx InsideBar Setup Alerter is a MetaTrader 4 indicator that has been designed […]

FFx InsideBar Setup Alerter is found on the MQL5 marketplace, it was created by Eric Venturi-Bloxs and was first uploaded on the 26th of MNArch 2014. It has not received any further updates so the indicator is still at version 1.0. Overview FFx InsideBar Setup Alerter is a MetaTrader 4 indicator that has been designed […]

FFx InsideBar Setup Alerter is found on the MQL5 marketplace, it was created by Eric Venturi-Bloxs and was first uploaded on the 26th of MNArch 2014. It has not received any further updates so the indicator is still at version 1.0.

Overview

FFx InsideBar Setup Alerter is a MetaTrader 4 indicator that has been designed to alert you to trade setups, it will also provide you with entry points, two targets for taking profits and stop losses.

The main features and settings for the indicator:

-Entry suggestion – pips to be added over the break for the entry
-Minimum candle size – to avoid too close buy/sell entry suggestions
-3 different options to calculate the SL – by pips, by ATR multiplier or at the pattern High/Low
-3 different options to calculate the 2 TPs – by pips, by ATR multiplier or at Risk/Reward
-Offset the dashboard – any place on the chart
-Remove the suggestion once the price reached the SL line
-Lines extension away from the current candle
-All colors changeable – Background, text, Buy/Sell, entry and TP/SL
-Alert when a setup is found – sound / popup / email / push notification

Service Cost

The indicator can currently be purchased for $12 so it is quite affordable, purchasing it will give you up to 5 activations, unlike many indicators on the MQL5 marketplace, there is no option to rent it.

A free demo version is available, the details of it are not known to us which often means that it can only be sued with the strategy tester within the MetaTrader 4 trading platform.

Conclusion

There are currently six user reviews, they are all very positive and have given the indicator an overall rating of 5 out of 5.

“Awesome indicators….just needs to be able to show historical would be a great help.” – A 5-star review.

“Paints a clear picture of an inside bar, and allows you to customize your stop loss and take profit levels. Very useful for trading inside bars.” – A 5-star review.

“2 weeks at my chart and already a rate of 12/3 winning trades and making money….thank you Ferru” – A 5-star review.

So the reviews are all very positive showing that the indicator is doing what it was intended to do. There are also plenty of comments, the indicators creator has been very active in replying to the comments which are great to see and it shows that they are supporting the indicator and those that have purchase dit. Ther have not been any comments for around 10 months, so if you are thinking of purchasing it, contact the developer, this way you can make sure that they are still around top support it and you.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/3718

Categories
Forex Service Review Forex Services Reviews-2

Engulfing Bars Trading Indicator Review

Engulfing Bars is an indicator that can be found on the MQL5 marketplace, there may be other indicators with very similar names, due to this we have provided a link to the one we are looking at below. The indicator was first uploaded on the 8th of January 2016 by its creator Paul Geirnaerdt, there […]

Engulfing Bars is an indicator that can be found on the MQL5 marketplace, there may be other indicators with very similar names, due to this we have provided a link to the one we are looking at below. The indicator was first uploaded on the 8th of January 2016 by its creator Paul Geirnaerdt, there […]

Engulfing Bars is an indicator that can be found on the MQL5 marketplace, there may be other indicators with very similar names, due to this we have provided a link to the one we are looking at below. The indicator was first uploaded on the 8th of January 2016 by its creator Paul Geirnaerdt, there have not been any further updates so the version of this indicator is still version 1.0.

Overview

The Engulfing Bars indicator has been designed to work with the MetaTrader 4 trading platform. It works by showing Engulfing Bars on the charts, the signal will then suggest a stop loss and take profit for the trade these bars are important for price action patterns. This indicator works better when using it on higher timeframes.

There are a number of settings available that can be altered:

-Show Engulfing Bars – Set to true to show Engulfing Bars.
-Body size percentage – Minimum size of the body of the Engulfing Bar in a percentage of the moving average of body sizes, a higher value detects less but (arguably) better Engulfing Bars.
-Stoploss distance in pips – Standard stop loss is at the high or low of the Engulfing Bar, this number of pips is added to that.
-Color Palette – pick Color Palette for ‘Dark’ or ‘Light’ Backgrounds.
-Colors – you know what to do.
-Show Alerts – set to true to do alerts.
-Show Screen Alerts – set to true to show screen alerts.
-Email Alerts – set to true to email alerts.
-Push Alert Notifications – set to true to push alerts.

Service Cost

The indicator can be purchased outright for $19, there is no option to rent this one unlike many of the other indicators on the MQL5 marketplace. There is a free version available, but there is no mention of the possible limitations or time limits on the free version.

Conclusion

Just the one review available, it is giving the indicator a 5-star rating.

“Very good”

While there is only the one review, there are plenty of comments asking questions, the creator seems very active at replying to the comments which are a good sign for your kind of support that you would receive. Due to there only being one review available, we would very strongly suggest that you download and test out the free version, there are some unknown limitations on it, but it would give you a better idea as to how the indicator works and to ensure that you are able to get it set up and running correctly.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/13882

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Forex Services Reviews-2

Advanced Dashboard for Currency Strength and Speed Review

The Advanced Dashboard for Currency Strength and Speed can be found within the indicator section of the MQL5 market, we have added a link below to this exact indicator. The indicator was uploaded by Bernhard Schweigert, its creator on the 13th of October 2017, there have been a few updates, the most recent update was […]

The Advanced Dashboard for Currency Strength and Speed can be found within the indicator section of the MQL5 market, we have added a link below to this exact indicator. The indicator was uploaded by Bernhard Schweigert, its creator on the 13th of October 2017, there have been a few updates, the most recent update was […]

The Advanced Dashboard for Currency Strength and Speed can be found within the indicator section of the MQL5 market, we have added a link below to this exact indicator. The indicator was uploaded by Bernhard Schweigert, its creator on the 13th of October 2017, there have been a few updates, the most recent update was on the 17th of January 2020 and this brought the indicator cup to version 1.6.

Overview

The Advanced Dashboard for Currency Strength and Speed is an indicator and dashboard for the MetaTrader 4 trading platform. It currently works on 28 currency pairs and is based on two other indicators (Advanced Currency Strength 28 and Advanced Currency Impulse).

The way it works it’s by giving an overview of the entire forex market, it will show advanced currency strength values, currency speed of movement, and signals for the 28 currency pairs on all available timeframes.

The main features of this indicator:

-Shows currency strength values of ACS28 and GAP-speed (Impulse) in each timeframe.
-Columns: the color codes show currency strength in 7 colors: strong extreme/stronger/strong/neutral/weak/weaker/weak extreme.
-Left Column: Shows a currency trend with a strength rating of all timeframes with a trend alert.
-If 3 timeframes in a row agree, 3 those blocks are highlighted showing a total rating.
-If there is a pattern, a button appears below the timeframe column for the strongest possible pair with an alert.
-Click on the button to open a chart for that pair/timeframe.
-Quick chart buttons: click 2 currency names to open any pair in a new window.
-Auto-update quote charts for all 28 pairs and timeframe will keep all MetaTrader 4 data current.

There is also a range of parameters and settings available which can alter the way the indicator works and displays, some of these include alert settings such as alert windows, popup alerts, email alerts, alerts for different timeframes. There is also a color setting for changing the colors of the lines and boxes, and finally, there are settings to choose where it will auto open charts, use specific characteristics, and more.

Service Cost

You are not actually able to purchase this indicator outright, instead, you are required to rent it, you can rent it in two different increments, the first being for a three-month period, this will cost you $165, you can also rent it for a one year period which will cost you $199 per year. There is a free demo version to test out, however, we do not know what the limitations of this free version are as they are not stated on the website.

Conclusion

There are currently 54 different user revies for this indicator, the majority are very positive and the indicator has an overall rating of 4.5 stars out of 5.

“This is a very good indicator. It gives you an overview of the whole forex market in terms of currency strength and speed. You can push alert buttons and open charts in the same chart window or different chart window. I use a different chart window and put the Advanced Supply Demand, ACS8, Impulse, and volume indicator on it and set it as default. Then when you push the alert button it opens chart with all your indicators on it. I like it very much. It gives you alerts which you can configure to your trading style. Love it. Very good support also. Thank you Bernhard.” – A 5-star review.

“Its Overprice and cant be just a Standalone trading system !!. And yes the price moves away while you are just trying to confirm is it as per rules or not (( to many rules !! )) so what is the use of it; its a nice indicator to give an overall picture of the market. BUT the cost for me I regret buying it.” – A 1-star review.

“Good product to predict which currencies to trade.” – A 5-star review.

So the majority of reviews are very positive, even with the great reviews and support(the creator is actively replying to emails), we would recommend that you download and try out the free version of the indicator, just to make sure that it does, in fact, suit your requirements and that it is something that you actually need.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/25461

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Forex Services Reviews-2

Blahtech Market Profile Indicator Review

The Blahtech Market Profile can be found on the MQL5 marketplace, we have added a link to it below. The indicator was uploaded by Blahtech Limited on the 18th of December 2015, it was most recently updated on the 1st of August 2019 and is currently at version 2.9. Overview Blahtech Market Profile is an […]

The Blahtech Market Profile can be found on the MQL5 marketplace, we have added a link to it below. The indicator was uploaded by Blahtech Limited on the 18th of December 2015, it was most recently updated on the 1st of August 2019 and is currently at version 2.9. Overview Blahtech Market Profile is an […]

The Blahtech Market Profile can be found on the MQL5 marketplace, we have added a link to it below. The indicator was uploaded by Blahtech Limited on the 18th of December 2015, it was most recently updated on the 1st of August 2019 and is currently at version 2.9.

Overview

Blahtech Market Profile is an indicator for the MetaTrader 4 trading platform, it was created to help you determine market behaviors. It helps to see the value zones which are ranges where 70% of trading took place.

Key features of the Blahtec Market Profile indicator:

  • Configuration presets for schedules on higher timeframes
  • Auto-switching of focus to the next active session
  • The highlight of business rules – Open, IB Extension, and Rotation Rules
  • Multi-session display
  • Backtest directly on the chart
  • Custom session times
  • Custom intervals and timeframe period
  • Market and volume profiles
  • Overall Market and volume profiles
  • Text-based TPO profiles
  • Configurable TPO start letter
  • Value area, Volume value area
  • Initial balance, Point of control
  • Fast access hot-keys

There are a number of different parameters available to alter, some of them include the configuration presets, interval periods, profile lines, overall volume, overlay charts, profile text, summary text, hotkey, and many others including backtesting mode, and calculating TP size factors.

Service Cost

The indicator can currently be purchased for $119, this will enable you to use it as much as you desire with no limitations if you would prefer, there is also the option to rent it, you can rent in on a monthly basis which will cost you $25 per month, or you can rent it for three months which will cost you $32.

There is a free version available too, this free demo will have some limitations which are unfortunately not mentioned on the website, so we are not fully clear what they are. It is always worth using the free demo version just to make sure the indicator does what you need it to do.

Conclusion

At the time of writing, there are 12 different user reviews, they have given the indicator and overall rating of 4.5 out of 5.

“Three stars due to lack of sufficient material explaining the purpose of each setting and how to use it. When you are selling a high-end indicator such as this with so many settings, you should at least provide sufficient documentation (with images) explaining how to use each setting and what its purpose is. You have provided some material, but for the most part, you have left it up to the user to figure out how to use the indicator. That’s not a professional way to do business.” – A 3-star review.

“Waste of money! Most of the time [it] doesn’t show anything, no profile at all. If it shows any profile it is with barely any detail. Highly overrated! Not recommended for purchase.” – A 1-star review.

“I bought this indicator together with the Daily Range indicator over a month ago so that I can give an honest review. I have to say….just as the Daily Range Indicator, Market Profile is amazing. I have this indicator currently running on 15 charts at the same time on an older PC and I have not once experienced a slowdown or freezing of MT4. The features in this indicator are truly amazing, which makes my life so much easier. Thank you Blahtech 🙂” – A 5-star review.

So there is a range of reviews, however, there are far more 5 out of 5 ratings than any other rating which is a good sign. The creator also seems to be replying to the majority of comments which shows that they are still supporting the indicator. As always, download the free version and send any queries to the developer, this way you can ensure that the indicator is right for you before you make a purchase or rental.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/13443

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Forex Services Reviews-2

Line and Shadow Indicator Review

Line and Shadow can be found within the indicator section of the MQL5 marketplace, you can find a link to it below so as to avoid any possible confusion as to which indicator we are looking at. The indicator was first released on the 19th of January 2016 but its creator Sergei Konoplev, it received […]

Line and Shadow can be found within the indicator section of the MQL5 marketplace, you can find a link to it below so as to avoid any possible confusion as to which indicator we are looking at. The indicator was first released on the 19th of January 2016 but its creator Sergei Konoplev, it received […]

Line and Shadow can be found within the indicator section of the MQL5 marketplace, you can find a link to it below so as to avoid any possible confusion as to which indicator we are looking at. The indicator was first released on the 19th of January 2016 but its creator Sergei Konoplev, it received an update shortly after on the 25th of January 2016 and this brought it up to version 1.6.

Overview

The Line and Shadow indicator was created for MetaTrader 4, the indicator shows the trend direction and power on your charts, it will then plot entry and exit points for you the indicator contains the main lie and trend shadow zones.

The main settings available on this indicator:

  • Show_Shadow – show/hide shadows.
  • Show_ARROW – show/hide arrows and market entry points.
  • Show_max_Lines – show/hide the maximum possible profit lines.
  • ALERT – enable/disable trend change notifications in the terminal.
  • Email – enable/disable e-mail notifications.
  • Push – enable/disable push notifications.

https://youtu.be/j9aZLb0mnVA

Service Cost

The indicator currently costs $30 to purchase it outright, this will give you unlimited access without any restrictions. There is also the opportunity to rent it, it will cost you $10 per month to use it this way. There is a free demo version mentioned don the site, however, they do not mention what the limitations of this free version are.

Conclusion

There are currently three user reviews about this indicator, they are giving it an overall rating of 3.5 out of 5.

“Very good indicator, When you use correct value and all timeframes. Good feature is no repainting indicator” – A 5-star review.

“It works as described. Satisfied. Recommend ~!” – A 5-star review.

“The indicator is redrawn !!!” – A 1-star review (translated from Russian).

The 2 reviews were very positive with one being negative, there are also a number of comments in the comment section, the developer has been replying to the comments which are a good sign for the future customer service. As there aren’t many reviews we would highly recommend that you use the free version to make sure it works, or get in contact with the developer so you can be sure that it will do what you need it to do prior to making a purchase.

This Forex service is currently available for purchase in the MQL5 marketplace: https://www.mql5.com/en/market/product/14048

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Forex Services Reviews-2

Keltner MTF FX Indicator Review

Uploaded by Algoritmic Capital on the 25th of April 2019, the indicator can be located on the M!:5 marketplaces, there have not been any further updates since it was uploaded but it was initially uploaded as version 1.1. Overview The Keltner MTF is an indicator that was created for the MetaTrader 4 trading platform. Its […]

Uploaded by Algoritmic Capital on the 25th of April 2019, the indicator can be located on the M!:5 marketplaces, there have not been any further updates since it was uploaded but it was initially uploaded as version 1.1. Overview The Keltner MTF is an indicator that was created for the MetaTrader 4 trading platform. Its […]

Uploaded by Algoritmic Capital on the 25th of April 2019, the indicator can be located on the M!:5 marketplaces, there have not been any further updates since it was uploaded but it was initially uploaded as version 1.1.

Overview

The Keltner MTF is an indicator that was created for the MetaTrader 4 trading platform. Its main purpose is to act as a channel indicator and will display price channels from different timeframes. So when looking at the H1 chart, you will also see the price channels for the M15 and H4 timeframes. The indicator can be used for both channel trading and for following the trend.

Service Cost

The Keltner MTF indicator will currently cost you $54 to purchase, there is also an option to rent it which will cost you $39 per month. A free demo version is also available to try out, the limitations of the free version are not stated on the site, it may only be usable with the strategy tester and not on live charts.

Conclusion

Unfortunately, there are no user reviews which means we cannot see how the indicator is working and if people are finding it useful, there are also only two comments which are both fro the developer themselves. Due to the lack of feedback, we would strongly suggest trying out the free version of the indicator, this was you can make sure that it will work for you, you could also send any queries that you have to the creator, this is a way of making sure that they are still actively supporting the indicator before you make a purchase or a rental.

This Forex service is currently available for purchase in the MQL5 marketplace: https://www.mql5.com/en/market/product/38080

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Forex Services Reviews-2

FFx PinBar Setup Alerter Indicator Review

FFx PinBar Setup Alerter can be found within the indicators section of the MQL5 website, it was uploaded by its creator Eri Venturi-Bloxs on the 27th of March 2014. It has not received any updates and so it still at its original version of version 1.0. Overview FFx PinBar Setup Alerter is an indicator that […]

FFx PinBar Setup Alerter can be found within the indicators section of the MQL5 website, it was uploaded by its creator Eri Venturi-Bloxs on the 27th of March 2014. It has not received any updates and so it still at its original version of version 1.0. Overview FFx PinBar Setup Alerter is an indicator that […]

FFx PinBar Setup Alerter can be found within the indicators section of the MQL5 website, it was uploaded by its creator Eri Venturi-Bloxs on the 27th of March 2014. It has not received any updates and so it still at its original version of version 1.0.

Overview

FFx PinBar Setup Alerter is an indicator that can be sued with the MetaTrader 4 trading platform. It was created to five your entry, profit targets, and stop-loss targets.

The indicator comes with a number of options:

-Entry suggestion – pips to be added over the break for the entry

-Minimum candle size – to avoid too small candles

-3 different options to calculate the SL – by pips, by ATR multiplier or at the pattern High/Low

-3 different options to calculate the 2 TPs – by pips, by ATR multiplier or at Risk/Reward

-Offset the dashboard – any place on the chart

-Remove the suggestion once the price reached the SL line

-Lines extension away from the current candle

-All colors changeable – Background, text, Buy/Sell, entry and TP/SL

-Alert when a setup is found – sound / popup / email / push notification

Service Cost

The indicator can be purchased with a one-time payment of $12, this allows you to activate the indicator up to 5 times and there are no other limitations. There is no option to rent it but a demo version that can be used with the strategy tester within MT4 is available to use for free.

Conclusion

The indicator has an overall rating of 4.5 out of 5 which was given to it by 8 user reviews.

“Awesome indicators….just needs to be able to show historical would be a great help.” – A 5-star review.

“Brilliant indicator! Early days, but it has a 80% hit rate when used in conjunction with Fibonacci ratios on H4 for forex and commodities.” – A 5-star review.

7 out of the 8 reviews are all very positive indicating that the indicator is doing what it is intended to do. There are a lot of comments that the developer has replied to in a very prompt manner, showing a good level of customer support. The most recent comment was from 2018 so it has been a while, due to this we would suggest sending any questions that you may have to the creator of the indicator, this way you can be sure that it will still be supported would you decide to purchase it.

This Forex Indicator is currently available for purchase in the MQL5 marketplace: https://www.mql5.com/en/market/product/3734

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Forex Services Reviews-2

Blahtech Supply Demand Indicator Review

Blahtech Daily Range can be found within the indicator section of the MQL 5 marketplace, we have provided a link to it below so you can know exactly which indicator we are looking at. https://www.mql5.com/en/market/product/13147 The indicator was first uploaded by Blahtech Limited on the 8th of April 2016, it was most recently updated on […]

Blahtech Daily Range can be found within the indicator section of the MQL 5 marketplace, we have provided a link to it below so you can know exactly which indicator we are looking at. https://www.mql5.com/en/market/product/13147 The indicator was first uploaded by Blahtech Limited on the 8th of April 2016, it was most recently updated on […]

Blahtech Daily Range can be found within the indicator section of the MQL 5 marketplace, we have provided a link to it below so you can know exactly which indicator we are looking at.

https://www.mql5.com/en/market/product/13147

The indicator was first uploaded by Blahtech Limited on the 8th of April 2016, it was most recently updated on the 19th of June 2019 and is now at version 2.8.

Overview

Blahtech Daily Range is an indicator for the MetaTrader 4 trading platform, it will display the average daily range alongside the individual session ranges. It will show both a fixed range as well as dynamic range targets on the charts, these lines will show you when the average range is exhausted. This is best to use when you need to confirm entries or to set targets.

The main features of the indicator:

  • Daily Ranges
  • Session Ranges
  • Single or multiple ranges
  • Fixed and dynamic exhaustion chart lines
  • Highlighting of larger ranges
  • Configurable targets and highlight values
  • Backtest directly on the chart
  • Customizable alerts and messages
  • Selectable period for higher timeframes
  • Fast access hot-keys

There is also a vast number of inputs and parameters that can be altered to help make the indicator better suit your own requirements, some of these include display options such as the color of lines, time periods, sessions schedules, there are also options for the number of ranges, average range composition, projections, text colors, daily range start time, alerts, and more.

A video explaining how this Forex indicator functions is available on YouTube:

Service Cost

The Blahtech Daily Range indicator will cost you $48 to purchase it outright, giving you unlimited access to it. There is also an option to rent the indicator, you can rent it on a monthly basis which will cost you $10 per month, or you can rent it for 3 months which will cost you $12. There is a free demo version available, the limitations are not known but we believe that it will only work on a demo account.

Conclusion

There are three reviews for the indicator, they are giving it an overall rating of 4.5 out of 5.

“The indicator looks promising, but I am disappointed that there isn’t a user-friendly manual providing basic details on how to use its features. As a courtesy to customers, a “how-to” user manual should be included.” – A 4-star Review.

“I have been trading the markets for quite some years now but only recently stumbled about the concept of Average Daily Ranges and it has transformed my trading. This indicator is very good and does not slow down my PC at all as so many other indicators on MQL5. This is top-notch quality. The creator of this indicator really knows his stuff. He was also kind enough to make amendments or put further features in. Will ADR call intraday market turns every time? Of course not….will it add structure to your trading and increase your chances of success?…Absolutely! Good product that I can only recommend.” – A 5-star Review.

“This is a great indicator, and no intraday trader should go without it. Knowing the average ranges of any given time slice is invaluable information, and this indicator is well coded and visually appealing. Great work, I use it every day.” – A 5-star Review.

There isn’t a massive selection of reviews, but the ones that there are shown a very positive opinion towards the indicator, there are plenty of questions and the creator seems to be replying to them quickly which is a good sign that it is being actively supported. As always, be sure to check out the free version, while it may be limited, it will give you a better idea of how the indicator works and you can make sure that it is right for you prior to making a purchase.

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Forex Services Reviews-2

Double Divergence Scanner Indicator Review

The Double Divergence scanner was made available in November 2019 by the creator Jan Flodin. Flodin has created a vast selection of pattern scanners and dashboards that have extremely good reviews online and the indicator we are reviewing today is no different. After having multiple updates and improvements made, Flodin is currently offering version number […]

The Double Divergence scanner was made available in November 2019 by the creator Jan Flodin. Flodin has created a vast selection of pattern scanners and dashboards that have extremely good reviews online and the indicator we are reviewing today is no different. After having multiple updates and improvements made, Flodin is currently offering version number […]

The Double Divergence scanner was made available in November 2019 by the creator Jan Flodin. Flodin has created a vast selection of pattern scanners and dashboards that have extremely good reviews online and the indicator we are reviewing today is no different. After having multiple updates and improvements made, Flodin is currently offering version number 2.3 of this indicator which can be used on the MT4 platform.

Overview

This indicator’s main function is to identify when divergence occurs between the price and one/two or three indicators/oscillators. This multi oscillator is able to identify both classical/regular and hidden divergences. The indicator is customizable as it has RSI and MA trend filters which enable users to filter out the strongest setups.

Another advantage is that the indicator writes signals onto a file that can be used by an Expert Advisor for those interested in Auto Trading. Users can also choose between setting only the main indicator/oscillator (only receive alerts when there is a divergence on the selected oscillator/indicator), setting both the main and second/third indicator/oscillator + the time frame for the second/third divergence or setting both the main and second/third indicator/oscillator and leave the default value Current as the second timeframe (receive alerts when there is a double divergence on each time frame selected by the user).

Some other features that this indicator has to offer are; the ability to monitor all symbols that are in the user’s market watch window simultaneously sends real-time alerts when divergences are identified and an interactive panel. This indicator can detect divergences on a number of indicators/oscillators including; MACD, Stochastics, OsMA, and CCI amongst others.

Service Cost

This indicator comes at a price of $39 for those looking to purchase it, or it can be rented out for $12 a month. Fortunately, traders can test out this indicator and its functions free of charge on the free demo that is available.

Conclusion

The Double Divergence Scanner has a number of positive reviews online from users that have been using the indicator for quite some time. One user said, “I love trading divergence and to me a double divergence is the perfect opportunity to confirm”. The creator is continuously improving this product by taking note of user comments and recommendations. We highly suggest checking this indicator out if you are looking to trade divergence!

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/29221

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Forex Services Reviews-2

Market Profile Volume Relative Accumulation Indicator Review

The Market Profile Volume Relative Accumulation Indicator was launched back in 2016 by creator Sergey Efimenko. Over the years Efimenko has released a vast number of products for traders with some of them having very positive reviews whilst on the other hand, some were not that well received. The same goes for this particular indicator […]

The Market Profile Volume Relative Accumulation Indicator was launched back in 2016 by creator Sergey Efimenko. Over the years Efimenko has released a vast number of products for traders with some of them having very positive reviews whilst on the other hand, some were not that well received. The same goes for this particular indicator […]

The Market Profile Volume Relative Accumulation Indicator was launched back in 2016 by creator Sergey Efimenko. Over the years Efimenko has released a vast number of products for traders with some of them having very positive reviews whilst on the other hand, some were not that well received. The same goes for this particular indicator we will be looking at today, whilst some users found it very useful, others felt it was not an indicator worth purchasing. Read this review to determine whether investing in this indicator would be beneficial to you and your trading.

Overview

This indicator, that is meant to be used on the MT4 platform, displays the conditional price tick volumes that are added over a set time interval. Users can adjust a number of different parameters including the length of the displayed price bands, the step of price-volume distribution, graph colors, the lines style used on the charts, and users can also add object descriptions on the price levels.

The most recent version available of this indicator, version 1.3, has seen an update to the algorithm for adding volumes.

Service Cost

The Market Profile Volume Relative Accumulation Indicator can be bought for $30 or users can choose to rent it out for $10 yearly, which is quite cheap. There is also a free demo that is available for customers to test out the indicator before actually purchasing it.

Conclusion

The reviews for this indicator are quite varied, whilst one user commented that this indicator is a convenient indicator to use, another mentioned it is ‘useless are there is no money back graph’. On the other hand, the creator seems to be very in tune with the user’s comments and he does try to adapt and take in user comments to improve this indicator. If you’re interested in what this indicator has to offer, try out the free demo and test it out yourself to determine whether it is useful for you and your style of trading.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/15009

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Forex Services Reviews-2

ACPD Auto Candlestick Indicator Review

ACPD Auto Candlestick is an indicator for MetaTrader 5 that can be found on the MQL5 marketplace, there may be other indicators with a similar name so we have included the link so there is no confusion as to which indicator we are reviewing. https://www.mql5.com/en/market/product/677 The current version of this indicator is version 1.0 and […]

ACPD Auto Candlestick is an indicator for MetaTrader 5 that can be found on the MQL5 marketplace, there may be other indicators with a similar name so we have included the link so there is no confusion as to which indicator we are reviewing. https://www.mql5.com/en/market/product/677 The current version of this indicator is version 1.0 and […]

ACPD Auto Candlestick is an indicator for MetaTrader 5 that can be found on the MQL5 marketplace, there may be other indicators with a similar name so we have included the link so there is no confusion as to which indicator we are reviewing.

https://www.mql5.com/en/market/product/677

The current version of this indicator is version 1.0 and it has received no updates since going live on 30th January 2013.

Overview

The ACPD Auto Candlestick is an indicator designed to work with the MetaTrader 5 trading platform.

The main features of this indicator:

Determining 40 reversal candlestick patterns by their main parameters; it displays over 40 signals based on these models.

Each signal is displayed with an arrow above or below the last candlestick in a model, the direction of the arrow indicates the forecast direction of movement of the chart.

The indicator includes 10 patterns based on one candlestick, 10 patterns based on two candlesticks, and 20 patterns based on three candlesticks. Depending on the number of candlesticks in a pattern the caption text has a different color (can be set in the parameters).

Each caption of a pattern indicates its name, the strength of the “S” signal (calculated in percentage terms using an empirical formula) that shows how close is the pattern at an ideal one, and the trend coefficient “T” (calculated on the basis of three candlesticks using a scoring system) that shows how close it the trend to an ideal one.

As mentioned there are over 40 different candle patterns available on this indicator, these include:

  • Hammer
  • Hanging Man
  • Inverted Hammer
  • Shooting Star
  • Spinning Top
  • Doji
  • Long-Legged Doji
  • Gravestone Doji
  • Doji Dragon
  • Doji Four Price
  • Engulfing
  • Harami
  • Harami Cross
  • Piercing Line
  • Dark Cloud Cover
  • Doji Star
  • Meeting Lines
  • Kicking
  • Homing Pigeon
  • Matching Low
  • Morning Star
  • Evening Star
  • Morning Doji Star
  • Evening Doji Star
  • Abandoned Baby
  • TriStar
  • Upside Gap Two Crows
  • Unique Three River Bottom
  • Three White Soldiers
  • Advance Block
  • Deliberation
  • Three Black Crows
  • Identical Three Crows
  • Two Crows
  • Three Inside Up
  • Three Inside Down
  • Three Outside Up
  • Three Outside Down
  • Three Star In The South
  • Stick Sandwich

There are also a lot of parameters that can be altered, some of these include buffer candles, colors for down and up arrows, test sizes, box colors, and more.

Service Cost

The indicator currently costs $50 to purchase outright, you are also able to rent it on a monthly basis and will cost you $10 per month to do that. There is a free demo version available, however, we are not sure what the limitations to this demo account are, but would always suggest downloading and testing it out.

Conclusion

There is just one review available for this indicator, it is a 3/5 star review.

“Would have been a good idea to have provided a visual indication as to whether the recognized candlestick pattern is by convention indicating indecision, bullish/bearish trend reversal or continuation trend in the market. Very good app for associating the name with the visual appearance of the candlestick patterns provided for by the app.”

As there aren’t too many reviews available, we would recommend checking out and using the free demo version just to make sure it has the functions that you need and that you are able to successfully set up the indicator to work as intended.

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Forex Services Reviews-2

ACE Oscillator Adx Plus Double Keltner Bands Review

ACE Oscillator Adx plus Double Keltner Bands can be found on the MQL5 marketplace, we have provided a link to the indicator below. https://www.mql5.com/en/market/product/5781 The indicator was uploaded by Alberto Cejudo on the 1st of September 2014, it was uploaded as version 1.1 and has received no further updates. Overview ACE Oscillator Adx plus Double […]

ACE Oscillator Adx plus Double Keltner Bands can be found on the MQL5 marketplace, we have provided a link to the indicator below. https://www.mql5.com/en/market/product/5781 The indicator was uploaded by Alberto Cejudo on the 1st of September 2014, it was uploaded as version 1.1 and has received no further updates. Overview ACE Oscillator Adx plus Double […]

ACE Oscillator Adx plus Double Keltner Bands can be found on the MQL5 marketplace, we have provided a link to the indicator below.

https://www.mql5.com/en/market/product/5781

The indicator was uploaded by Alberto Cejudo on the 1st of September 2014, it was uploaded as version 1.1 and has received no further updates.

Overview

ACE Oscillator Adx plus Double Keltner Bands is an indicator for the MetaTrader 4 trading platform, the indicator is an Oscillator that is based on ADX Crosses and also the Doubly Keltner Channels Crosses too.

The main set of features for the indicator:

-The colored histogram shows D+/D- crosses on-trend (green up/salmon down or without trend (white) based on ADX main (over ADXon level -ie. 24-).

-Signals (arrows) shows high probability orders (long/short) based on D+/D- crosses.

-Color line (green/salmon) shows ADX main less ADXon level (ie: ADX main – 24) for trend purposes (trending in/out).

-Signals (horizontal gross lines) on level +20/-20 indicate the first derivation of KC band (k shift) is crossed, and signal (gross lines) on level +30/-30 indicates the second derivation of KC band (n shift) is crossed too.

There are also a number of different parameters available, some of them include the ADX period, limits for ADX trending, MA periods, ATR periods, k shift, n shift, and more.

Service Cost

There is not the opportunity to purchase this indicator outright, instead, you will be required to rent it on a monthly basis and will cost you $10 per month. There is a free version available. However, the limitations of this free version are not stated on the site and are unknown to us. Even so, it may still be worth downloading it to try out.

Conclusion

There is only one review available which is giving the indicator and overall rating of 5 out of 5.

“Convenient” – A 5-star review.

The review doesn’t give us a whole lot of information apart from the fact that it most likely works, due to there being no other reviews or comments, we would strongly suggest that you download and try the free version, you could also contact the developer if you have any questions that way you can be sure that it will do what you need it to be froe you rent it.

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Forex Services Reviews-2

Abiroid GMMA Trend Scanner Dashboard Indicator Review

The Abiroid GMMA Trend Scanner Dashboard can be found on the MQL5 marketplace. There may be others with similar names so we have provided a link at the end of this review to the exact service we are looking at. The indicator was uploaded by its creator Abir Pathals on the 22nd of May 2019, […]

The Abiroid GMMA Trend Scanner Dashboard can be found on the MQL5 marketplace. There may be others with similar names so we have provided a link at the end of this review to the exact service we are looking at. The indicator was uploaded by its creator Abir Pathals on the 22nd of May 2019, […]

The Abiroid GMMA Trend Scanner Dashboard can be found on the MQL5 marketplace. There may be others with similar names so we have provided a link at the end of this review to the exact service we are looking at.

The indicator was uploaded by its creator Abir Pathals on the 22nd of May 2019, it has been updated a few times with the latest being on the 18th of March 20209, the indicator is now at version 1.7.

Overview

The Abiroid GMMA Trend Scanner Dashboard is an indicator designed for the MetaTrader 4 trading platform. The indicator works by finding food trades using the GGMA method as a base and then the TDI method to verify the trends.

How the scanner finds trades:

-When short GMMA crosses Long GMMA upwards it will wait for some bars (customizable) for TDI to show a strong BUY trend.

-When short GMMA crosses Long GMMA downwards it will wait for some bars (customizable) for TDI to show a strong SELL trend.

There is also a host of settings that can be changed to slightly alter the way that the indicator works and displays its information. Some of the settings include the pairs to use, the preferred time frames, alert settings, font sizes, colors, and more.

Service Cost

The Abiroid GMMA Trend Scanner Dashboard can be purchased for $40, this will give you unlimited access to the indicator, it can also be rented, you will be charged $10 per month for the monthly rental or $20 for three months. There is a free version available, however, the limitations of the free version are not currently known to us.

Conclusion

There are just three reviews available for this indicator, they are all giving it a 5 out of 5 ratings.

“Best one!”

“Great Product!”

“Useful Indicator. Outstanding Customer service.”

The last review also pointed out the customer service, looking at the comments, the creator is replying to comments (although there aren’t many of them) which is great. As with any indicator or expert advisor, we would highly recommend that you test out the free version prior to making a purchase, his way you can make sure that it suits your needs and that you are able to get it all set up and working correctly.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/38747

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Forex Services Reviews-2

Resistance and Support Zones Indicator Review

The Resistance and Support Zones Indicator was published back in July 2016 by Filipe Acerbi, a creator who has other products available such as the Price Pressure indicator. A few months after being published, the Resistance and Support zones indicator was updated and it now offers its 1.3 version. Keep reading to find out more […]

The Resistance and Support Zones Indicator was published back in July 2016 by Filipe Acerbi, a creator who has other products available such as the Price Pressure indicator. A few months after being published, the Resistance and Support zones indicator was updated and it now offers its 1.3 version. Keep reading to find out more […]

The Resistance and Support Zones Indicator was published back in July 2016 by Filipe Acerbi, a creator who has other products available such as the Price Pressure indicator. A few months after being published, the Resistance and Support zones indicator was updated and it now offers its 1.3 version. Keep reading to find out more about this indicator and how it can be used to maximize your profits when trading.

Overview

This indicator makes use of a mechanical approach to recognize resistance/support zones and simultaneously assess their level of strength resulting in a clear indication of which price zones are more important to the trader than others. According to Acerbi, the creator, this indicator was created to try and eliminate subjectivity rules when drawing support/resistance zones.

The price action can perform a breakout or a reversal when it reaches a particularly important price zone and this creates great trading opportunities. To be able to do this, the indicator is programmed to search for tops and bottoms to build the support/resistance zones. Those making use of this indicator can set the top/bottom parameter themselves. Apart from recognizing these resistance/support zones, this indicator also assesses the strength level of each price zone identified.

The strength of these zones is measured by analyzing the price action when the market reaches that particular price zone. Price zones with higher levels of strength means that price actions will correspond powerfully to this price area. The level of strength and weakness for each zone is outlined on a chart. Traders making use of this indicator can also apply a Strength Level filter and as a result, the indicator will smooth out the weaker price zones.

The indicator uses a number of criteria to define the level of strength of each price zone such as; how many times the price reacted strongly to the specific price zone in the recent past, how many times the price zone worked as a barrier to the price advancing and also how many times the price used this area as a support. For those who feel that the set-up is a bit too busy, they can manually turn off/on any specific price zone by clicking on the checkbox.

This indicator has a number of key features apart from those we’ve already mentioned such as; it works on every symbol and timeframe, it can be used in conjunction with higher time frames, price zones can be compared and traders can turn their focus onto the stronger ones and it also has accessible buffers for EA developers.

Service Cost

This indicator can be purchased for $50 and it is also available for rent at $10 a month. Those interested in trying out this indicator before purchasing it can do so by downloading the free-demo, this is only available to those who have the MT4 platform already downloaded onto their device.

Closing

An online review that we found stated that this indicator is not worth the $50 as similar indicators are available for free, however, we also found some comments which praised this indicator. It would be a good idea to test out the demo version to determine whether this indicator could be beneficial to your trading or not before spending the money.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/17525

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Forex Services Reviews-2

Tipu Candles Pattern Indicator Review

The Tipu Candles Pattern was made available by Kaleem Haider in January 2016. This product is built on the Japanese technique of charting that has been around since the 17th Century. Haider has a number of successful products available such as the Tipu Trend Dashboard and Tipu Heikin Ashi Panel, which have been very well received by traders in the past. At this moment, traders can purchase or rent version 1.10 of this Tipu Candles Pattern Indicator.

The Tipu Candles Pattern was made available by Kaleem Haider in January 2016. This product is built on the Japanese technique of charting that has been around since the 17th Century. Haider has a number of successful products available such as the Tipu Trend Dashboard and Tipu Heikin Ashi Panel, which have been very well received by traders in the past. At this moment, traders can purchase or rent version 1.10 of this Tipu Candles Pattern Indicator.

The Tipu Candles Pattern was made available by Kaleem Haider in January 2016. This product is built on the Japanese technique of charting that has been around since the 17th Century. Haider has a number of successful products available such as the Tipu Trend Dashboard and Tipu Heikin Ashi Panel, which have been very well received by traders in the past. At this moment, traders can purchase or rent version 1.10 of this Tipu Candles Pattern Indicator.

Overview

The Tipu Candles Pattern Indicator uses the candlestick pattern class by Metaquotes however it has been re-written to suit MQL4 and it has been combined with the panel class written for the Tipu Panel. Some of the main features of this indicator include; a visual display of the last candle of the pattern as well as the age of the pattern, a number of alerts that are customizable such as; push alerts, email alerts, on-screen alerts and Buy/Sell alerts and its supports Multi Time Frame Candle Patterns.

The main task of this product as a pattern recognition indicator is to visually mark patterns, along with their age, on a chart to make it easier for traders to take notice and act upon specific indications.

This product is very customizable with a number of parameters to set such as; Bearish/Bullish/Neutral Pattern colors – allows traders to choose the color that will be used to mark the chart, Box Line Style/Width, Max Candles to Check, Signal Setting, time frame setting and also a number of alerts that can help traders stay on top of all the market movements that might affect their trades.

Service Cost

Traders can purchase this Indicator for $30 and it is also available for rent at an affordable $10 per year. If you want to test this product out without spending any money, there is a free demo available to all traders that would like to see the product in action.

Conclusion

From what we could see, the overall feedback for this indicator is quite positive and it seems to work very well with the Tipu Trend Indicator when this is combined with high probability patterns such as Englulfing. A common disadvantage that seems to be limiting customers from purchasing and using this product is the fact that it is only available in English for the time being. If you’re interested in finding out more about what this indicator has to offer, download the Demo Version and test it out for yourself.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/13428

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Forex Services Reviews-2

DSZ Mini Charts Indicator Review

The DSZ Mini Charts Indicator was created by Dariusz Szewczyk back in June 2016. Szewczyk has two other similar indicators available for purchasing however they do not seem to be very popular amongst traders. This indicator can be used on the Metatrader 4 platform and it has so far only had one update meaning that users can currently purchase version 1.2 of this indicator. Read through this review to determine whether this could be useful for you and your unique trading style.

The DSZ Mini Charts Indicator was created by Dariusz Szewczyk back in June 2016. Szewczyk has two other similar indicators available for purchasing however they do not seem to be very popular amongst traders. This indicator can be used on the Metatrader 4 platform and it has so far only had one update meaning that users can currently purchase version 1.2 of this indicator. Read through this review to determine whether this could be useful for you and your unique trading style.

The DSZ Mini Charts Indicator was created by Dariusz Szewczyk back in June 2016. Szewczyk has two other similar indicators available for purchasing however they do not seem to be very popular amongst traders. This indicator can be used on the Metatrader 4 platform and it has so far only had one update meaning that users can currently purchase version 1.2 of this indicator. Read through this review to determine whether this could be useful for you and your unique trading style.

Overview

This indicator’s main function is to display a bar chart for specific symbols at any given time period. It is mainly used to implement a top-down investment approach which is an investment analysis technique that first looks at the macro picture of the economy and then looks at the smaller factors in even finer detail.

The DSZ Mini Charts available have a number of interesting features including unique statistical bands, the elapsed time count, specific information about orders, the option of rounding numbers, saving and loading graphic objects, up to nine charts per row and pivot support and resistance levels.

Users can also customize the charts in a number of ways including the style and colors of the charts, color schemes for the volume and the price, and an adjustable symbol and timeframe for every chart.

Costs

This indicator can be purchased for $39 or it can be rented out for $10 for one month, $19 for three months, or $29 for six months. There is also a free demo available for those wanting to test it out before purchasing or renting it.

Conclusion

Although the Demo version of this indicator has been downloaded more than 100 times, only 10 traders have decided to purchase it. Unfortunately, there are no ratings or reviews available for us to share with you so for those of you who would like to find out more about what this indicator can offer, we suggest that you download the free demo and check whether these mini charts can be beneficial to you and your trading.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/16299

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Forex Services Reviews-2

Critical Support and Resistance Panel Indicator Review

The Critical Support and Resistance Panel was published back in June 2016. The creator, Wang Yu, has published over 50 indicators in the past and most of them seem to be well-received traders.

The Critical Support and Resistance Panel was published back in June 2016. The creator, Wang Yu, has published over 50 indicators in the past and most of them seem to be well-received traders.

The Critical Support and Resistance Panel was published back in June 2016. The creator, Wang Yu, has published over 50 indicators in the past and most of them seem to be well-received traders.

This particular Panel indicator has only had one update that was done after one month of its launch, so users can now download version 2.0 of the Critical Support and Resistance panel that can be used on the MetaTrader 4 platform.

Overview

The Critical Support and Resistance Panel is an intuitive graphic tool that can help users to monitor closely and manage critical support and resistance price points quickly and easily. All the information can be viewed on one panel making it easy to follow and take action at the right moment. Support and Resistance levels are used to identify price points on charts where, for a variety of reasons, the probabilities favor a reversal or a pause of a prevailing trend.

This indicator was designed to help traders monitor and take full advantage of critical support and resistance areas such as pivot support 1/2/3, pivot resistance 1/2/3, daily/weekly/monthly pivot, and daily open.

This indicator alerts the user once prices move close to these support and resistance warning areas that the users themselves can adjust beforehand. Apart from receiving a notification, users will also see the indicator panel change its color to red to make it more noticeable.

With these features, users will be informed and make the right decisions at the right time without having to constantly monitor charts all day long. To minimize the number of alerts users will receive, once notification of a particular support and resistance zone is sent, the next alert will be sent after 5 minutes to avoid numerous alerts being sent continuously that can be irritating for users.

Here are the main three features of this indicator; the ability to adjust the warning range for each type of critical support/resistance, the ability to select which critical support/resistance is to be used (if the user does not specify this, by default, all are selected) and the ability to adjust the position of the indicator panel.

Cost

Customers wanting to purchase this indicator can do so for $10. Unlike many other indicators available, this one cannot be rented out. Luckily there is a free demo version that can be tested before actually purchasing it.

Conclusion

Currently, there are no user reviews that we can share with you so we suggest any of you who would like to test this indicator out to download the free demo to see if this panel’s alerts and notifications can be beneficial to your trading.

This Forex Indicator is currently available in the MQL5 marketplace: https://www.mql5.com/en/market/product/17122

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Forex Course

87. Using Ichimoku Cloud To Identify Trading Signals In The Forex Market

Introduction

Introduction

Introduction

The Ichimoku Cloud is a Japanese charting method and a trading system developed by Mr. Goichi Hosoda. This indicator consists of many different lines embedded in the price chart. Hence it might look complicated at first and might even make novice traders unforgettable reading the charts. But with enough experience, we can grab all the information presented by the indicator. The indicator consists of five Moving Averages and a cloud formed by two of those averages. The default settings of the indicator are 9, 26, and 52, and these settings are configurable according to the trader preference.

Components of the Ichimoku Cloud

This indicator consists of five lines in total, as discussed. They are a Red Line (Tenken Sen), Blue Line (Kijun Sen), Green Line (Chinoku Span), and Two Orange lines that make the cloud (Senkou Span A and B). Each line of the indicator is a moving average, so we can also look at the Ichimoku cloud indicator as a five moving average indicator.

The Basic Interpretations of the Ichimoku Cloud

When the price is above the cloud, it means the market is in a bullish trend. Contrarily, when the price is below the cloud, it means the market is in a bearish trend. When the price action is in the middle of the trend, it means that the market is in a consolidation phase.

Below is how a Forex price chart looks when the Ichimoku cloud is plotted on it.

Ichimoku Cloud Trading Strategy – Buy

First of all, the price action must be above the cloud as it indicates that the market is in an uptrend. When the Tenken Sen (Red Line) crosses the Kijun Sen (Blue line) from below, it indicates a bullish signal, and we can go long.

Buy Example 1

The image below represents a buying trade in the CAD/JPY Forex pair. We can see that the cloud goes below the price action, and it indicates that the trend is up. Soon after Tenken Sen (Red Line) crosses the Kijun Sen (blue line) below the price action, we know that the pullback is exhausted, and buyers are ready to resume the uptrend.

Buy Example 2

The image below belongs to the Weekly chart of the USD/CHF Forex pair. In Dec 2000, the Ichimoku indicator generated a clear buy signal when the cloud was below the price action, and the crossover of both the lines shows that it’s a perfect moment to go long in this pair.

Ichimoku Cloud Trading Strategy – Sell

The price action must be below the cloud as it indicates that the market is in a downtrend. Go short when the Tenken Sen (Red Line) crosses the Kijun Sen (Blue line) from above as it indicates a sell signal.

Sell Example 1

The below example is from the daily chart. It doesn’t matter which timeframe we trade; this strategy works well on all the timeframes. In the below image, at first, the market was in the consolidation phase. When the cloud goes above the price action, it’s a sign for us to prepare to go short soon in this pair. When the Tenken Sen (Red Line) crosses the Kijun Sen (Blue Line), it indicated that the sellers are now ready to print a new lower low.

Sell Example 2

If you are an investor or a higher timeframe trader, the below example is for you. The Red arrows and the encircled area indicate that the price action is below the cloud. Also, the Tenken Sen (Red Line) crosses the Kijun Sen (Blue line), indicating a sell signal.

The example below we took was from 2016, and the price action continuously goes down for the complete year. We should be patient enough and have control over our emotions to ride longer moves. We have placed the stop-loss above the crossover of two lines and booked the profits when the cloud goes below the price action.

That’s about Ichimoku Cloud and relative trading strategies. There are many other ways through which the signals can be generated using this indicator, but the ones discussed above are the most basic yet reliable ones. Cheers.

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Forex Course

80. Indicator Based Trading – Bollinger Bands

Introduction

Introduction

Introduction

In the previous course lessons, we understood the importance, types, and various pros and cons involved in indicator-based trading. From this lesson, let’s start learning some of the most widely used indicators in the market. We will be starting with Bollinger Bands, which is arguably considered as one of the most widely used indicators in the Forex Market.

What are the Bollinger Bands?

They are a technical analysis indicator, which was developed by one of the famous technical trader John Bollinger in the 1980s. This indicator consists of three lines, which are simple moving average (the middle band), an upper and a lower band. In a volatile market, the bands of the indicator expand, and it contracts in tight market conditions.

Most of the traders think that the Bollinger bands indicator is similar to the moving average envelope, but it’s not true, because the calculations of both of the indicators are different. For plotting the upper and lower bands of the Bollinger Bands indicator, the standard deviation is considered. On the other hand, for moving average envelopes, the lines are calculated by taking a fixed percentage.

Bollinger Bands Indicator Plotted on a Forex Price chart

Using The Bollinger Bands Indicator To Take Trades

Most of the market experts and chartists believe that when the price action continuously touches the upper band, it means that the market is in an overbought condition, triggering a sell signal. Conversely, the closer the price action moves towards, the lower band, the more oversold the market is, triggering a buy signal.

This is the most common way to trade the markets using the Bollinger Bands. As much as this is true, we don’t suggest to use this approach to trade the markets where traders just blindly follow this one single rule. As we all know that the trend is our friend, we must first figure out the trend. Then it is advisable to trade only buy opportunities in an uptrend and sell opportunities in a downtrend. This is one of the most reliable ways to identify the trades on any trading timeframe.

The below image represents the buying opportunities on the EUR/CAD 5 min Forex chart. As we can see, the market was in a strong uptrend. We have identified four buying opportunities in just a couple of hours. The chart clearly represents how many times the price action touched the upper band and didn’t drop instantly. This is the reason why most of the professionals use this indicator to trade the market.

Trading Ranges Using The Bollinger Bands

One more crucial applications of the Bollinger Bands indicator is while trading ranges. This is because the bands of the indicator act like dynamic support and resistance levels to the price action. Higher the timeframe we use to trade the ranges, stronger are the bands will be. That is, price relatively respects these brands than the bands in the lower time frames. Many successful traders ace the market by using this strategy alone.

As we can see in the below chart, the market generated three buying and two selling opportunities when the market is ranging. Do not place the buy or sell orders blindly when prices reach the upper or lower level of the consolidation phase. Instead, wait for the prices to hold there for a couple of candles to activate your trades. In the below image, we have activated our trades only when we saw the confirmation candles. In this way, we can filter out whipsaws and false trading signals.

Conclusion

This lesson is an attempt to give you a basic idea of the working of this indicator. There are many more aspects to this, and you will be learning them once you start exploring Bollinger Bands on the price charts. You can refer to this and this articles to get advanced trading strategies using this indicator. Bollinger Bands can also be combined with technical tools like chart patterns and other reliable indicators to generate more accurate trading signals. One such example can be found here. Cheers!

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Forex Course

79. Is Indicator Based Trading For You or Not? (Pros & Cons)

Introduction

Introduction

Introduction

In the previous course article, we have briefly discussed the basics of indicator-based trading. We have also understood the different types of indicators. Before considering how to trade using these indicators, let’s see if indicator based trading is for you or not. For that, we will be listing down some of the significant pros and cons involved in indicator-based trading. After going through this article, we will know why we should be using indicators to trade the markets and what we should be cautious about while using these indicators.

Pros of using Technical Indicators

Simplification

As discussed in the previous course article, Indicators mainly present the existing price and volume data on the price charts. For novice traders who have less knowledge of reading this data, can take the help of indicators to understand the price charts in a more precise way. Also, indicators act as a great tool to identify market strength.

For instance, using the Moving Average indicator, the direction of the trend can be found. By using the stochastic indicator, overbought and oversold areas can be found. These cannot be easily identified by the novice traders if not for these indicators.

Swift Decision Making

Since you aren’t entirely aware of most of the indicators, we would like to give you an example of the indicators we have learned till now. If you remember trading Fibonacci levels, we have taken our entries right after the price bounces after touching the respective Fib levels. It is impossible to make such swift decisions in the absence of these indicators. Hence we can say that indicator based trading allows us to make quick decisions comparatively.

Confirmation Tool

Indicators act like an excellent confirmation tool for experienced traders as well. For example, a technical trader identifies a candlestick pattern and wants to take trades based on that pattern. To confirm if the signal provided by the pattern is accurate or not, he can take the help of any technical indicator like RSI or Stochastic. If the indicator supports the signal provided by the pattern, the trader can confidently make trades.

Combination Capability  

Indicators can be combined to understand the market more clearly. For instance, Moving Averages can be combined with Fibonacci levels, and Stochastic can be combined with many other reliable indicators to generate accurate signals. If we wish to, we can even add an end number of indicators, but these additions should able to simplify the price chart rather than making it more complex.

Cons of using Technical Indicators

Unawareness of the complete picture

Novice traders who get used to trading with these indicators can never get an entire background on what’s happening behind the charts. If they get used to this, they can never become a professional technical trader. Also, they won’t be able to identify if the signal generated by the indicator is accurate or not. Hence, it is always crucial to understand why the indicator is moving the way it is so that we can make better trading decisions.

Not for pure price action traders

Price action trading is also a part of technical trading. It is purely based on the price movements of the asset alone. So price action traders might find indicator based trading a bit redundant because they know why the price is moving the way it is moving. Hence we can say that indicators don’t add more value to pure price action traders.

Lag Issue

By now, we know that there are lagging indicators that portray what has already happened in the market. These indicators do add significant value to indicator based trading, but they can’t be completely used to take the trades.

Final Word

These are some of the pros and cons involved in using indicators for trading the markets. So the answer to the question ‘If the Indicator based trading is for you or not?’ is yes. It is for you. But we have to be cautious and understand the entire picture instead of blindly following the indicators. In the upcoming articles, we will start learning how to take trades using various reliable indicators in the market. Cheers!

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Forex Course

77. Moving Averages – Detailed Summary

Introduction

Introduction

Introduction

In the past few course articles, we have learned a lot about Moving Averages, their purpose, and various applications of this trading tool. So we just wanted to summarize everything we have discussed until now related to Moving Averages. This article will act as a quick guide for you to recall and remember the concepts better.

What Is A Moving Average?

A moving average is a tool that is used by the traders to identify the direction of the trend. It smoothens the price fluctuations by eliminating the temporary noise in the market. This will eventually help us in identifying the actual trend of the market. There are two types of moving averages, and both of them have different purposes. They are Simple Moving Average and Exponential Moving Average. There are different athematic calculations behind these averages, and we don’t have to know about them in detail. However, if you are interested in knowing, you can find the formula behind the averages here.

The length plays a significant role in the usage of a Moving Average. Lenght is nothing but the predetermined period of the moving average. Smaller MAs always reacts swiftly to the price movements where are longer MAs respond slowly to the price. For example, a 10-period MA always reacts quickly compared to a 20 or 30 period moving average.

SMA vs. EMA

Both SMA and EMA have their own applications to them. They can also be combined to produce more reliable trading signals. But those are sophisticated strategies that are used by some of the experienced traders. The basic approach is that the SMA should be used to protect yourself from the fake-outs that are produced by the market. We might miss out on the opportunity of being a part of the early trend, but we will be safe.

Contrarily, Exponential Moving Average quickly predicts the trend and help us in being a part of the early trend. However, it carries the risk of not identifying the fake-outs. Hence one must use these MAs depending on the market situations. We have also discussed the ways through which we can identify the market trend and taking trades using moving averages.

Applying the Moving Average Indicator On The Price Charts

With the advent of technology, most of the Forex charting platforms these days provide advanced MA indicators. MT4 has all of the moving average indicators by default. However, if you want to download a customized MT4 indicator, you can download it here. If you are a TradingView user, you can plot different period MAs on the price charts just by accessing the toolbar and choosing the MA indicator. You can change the period setting before plotting the MA on the charts.

Conclusion

Moving Average is one of the most basic technical tools but is sturdy. The usefulness of this indicator is increased when we use different period moving averages on the same chart. Also, this indicator can be combined with various other technical indicators to improve the reliability of our signals. If you have been following our strategy series, you would have seen us combining moving averages with other technical tools to filter out fake trading signals. That’s about the basics of moving averages and their applications. In the upcoming lessons, we will be learning about various indicators and their use cases. So stay tuned! Cheers.

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How To Win More Forex Trades – Synchronised Indicators!

https://youtu.be/yWLqVactpPc

https://youtu.be/yWLqVactpPc

Synchronized indicators equal more winning trades

A little bit of care and patience will enhance your trading. One area where new traders fall down is because they have a system, but do not stick to it. And one of the most common traits is using indicators in a haphazard way, so as to set up a trade to fail.

Example 1

Let’s look at example 1, which is a one hour chart of the USDJPY pair for some examples. In this chart, we are using two commonly used indicators, the stochastic oscillator, and the moving average convergence and divergence or MACD indicator.
For a brief recap, the stochastic indicator tells us when an asset is overbought when the two moving averages cross above the 80 level and when they move beneath the 20 level the acid is considered to be oversold.
The MACD uses one or two moving averages – in our case we are using one, and when the MA is moving from a low and subsequently rising towards and then through and above the 0-axis it is considered to indicate that an asset should be moving higher, and especially if it is supported by and almost mirroring the histogram, which is the second component of the MACD the. The opposite action applies to a descending asset.


At position A, we have drawn a vertical line, which shows us that the stochastic is suggesting that this pair is overbought and due for a move lower. However, the MACD is moving higher and thus not working in unison with the Stochastic, and where the MACD’s moving average is going up above the 0-axis and the histogram is following suit, having come from underneath, to move above the 0-axis also. In this scenario price action has ignored the stochastic and moved higher. Here our indicators are at odds with each other. Selling this pair based only on the stochastic indicator would have resulted in a losing trade.


At position B, the stochastic is moving up, having been below the 20-line and on this occasion the MACD histogram is moving underneath its 0-axis and now higher, having pierced through its moving average, which is an indication that divergence is occurring and indeed the price action does move higher from this point. Here our indicators are synchronized, and the pay off is that buying the pair based on both of these indicators would have been rewarded with a positive winning outcome.
Position C, is similar to position A, in that our stochastic he is suggesting that the pair is overbought and due for a move lower and where the MACD histogram is starting move higher, quickly followed by the MA, and had we gone short at this point we would have entered a losing trade.
At position D, our stochastic is showing that the pair is oversold, and our Macd is showing that the pair is due to fall lower and where we see a slight move lower in price action, before a reversal. Again we have seen mixed messages from our indicators, and where we can see from our charts that when our indicators are working on a synchronized basis, they throw up more winning trades than losers.

Be patient and wait for your chart indicators to be synchronized and keep an eye on the price action, which is the most important indicator of all, and where all of your indicators are working together only then should you be thinking about pulling the trigger on a trade.