November 8, 2022
When you trade on the MetaTrader 4 platform, you have many different features and tools at your disposal. As well as simply opening and closing positions in the market, you’ll be able to access all the data you need to make predictions on future movements.
The MT4 platform supports traders adopting a more sophisticated, data-focused approach to the foreign exchange market. This is where indicators come in. MetaTrader 4 indicators can help traders make educated estimations as to which way the market is heading. While it’s important to remember there are no guarantees, indicators can still prove useful to traders. Read on to learn more about this in our guide.
Understanding indicators for MT4
MT4 indicators are tools built into the platform, allowing users to analyse market data across several factors. These factors include movements of the price of a currency pair over a set time and trading volume, among other elements.
It’s important to remember that MetaTrader 4 indicators do not guarantee market changes. Instead, they represent sets of market conditions that typically suggest future movements. For instance, an indicator that looks at the average value parameters for a currency pair over a particular time will suggest which way this price will move on average in the future, as well as predict the support and resistance rates — i.e., the lowest and highest points that the price will reach within this period. It will not guarantee these values; it will simply suggest them.
As long as traders bear this in mind, indicators are useful tools to deploy while trading. When you download MetaTrader 4, you’ll gain access to various indicators to use in your own trading strategy. These tools will help you develop a more sophisticated set of trading practices.
While you learn how to use MT4, it is recommended that you use a demo account. You’ll still gain access to indicators for the MetaTrader 4 platform, but no risk will be involved. Once more comfortable, you can trade on the live account and receive market exposure by trading on the margin. Trading on the margin in FX essentially means borrowing capital from the broker and controlling a position worth far more than you would otherwise have been able to afford. Indicators can help you open these positions with more confidence, but there is always a risk that you’ll need to keep in mind.
Downloading and using indicators for MetaTrader 4
To download and use indicators for MetaTrader 4, you’ll first need to open an account with VT Markets and download MT4 for PC or another device. Next, open the platform and sign in.
From here, head to the Navigator window on the left side of the MT4 screen. Open this window.
Within the Navigator window, select Indicators to open the menu. This menu displays all the available indicators arranged according to their type.
Browse through the available indicators until you find the one you want. Select this and drag it to the Price Chart on the MT4 screen. This will apply the indicator to the chosen chart.
You will now be prompted to configure the indicator, adjusting its parameters. Complete this in the dialogue box and finish the process. The indicator is now applied to the Price Chart you want to analyse.
The most common MetaTrader 4 indicators
There are many different indicators available for the MetaTrader 4 platform. You might only use one or two of these as you begin learning forex. But if you are a more experienced trader, you may wish to explore the potential of indicators further, adding more options to your trading strategy. This will help you gain insight into your trades and understand which moves you to make in the future.
Take a look at some of the most popular MetaTrader 4 indicators and use this list to discover more about which indicators you want to add to your strategy.
Relative strength index (RSI)
This is an oscillator indicator that measures the momentum of a specific market. The indicator examines changes in the historical price of the market, analysing the differences between days of appreciation and days of depreciation. With this indicator, traders can identify potential candidates for investment and trading and determine the best time to invest or open a position.
Average true range (ATR)
The ATR indicator analyses market volatility, looking at the average range for a market — i.e., the maximum and minimum levels it hits during the examination period. This is very useful, as it identifies normal ranges for the market you are looking at, allowing you to place stop loss and take profit measures in the right positions to avoid trades that stray outside your strategic parameters.
Moving averages
Moving averages look at the prevailing price movement for a particular market by analysing past data. This indicator will suggest whether the market is currently moving up or down based on its past performance over a defined period. As mentioned above, you will see the market’s support and resistance levels. While past performance does not guarantee future success, this is still a useful metric for traders.
On-balance volume (OBV)
The on-balance volume indicator works on a cumulative basis, adding the total volumes of up days and then subtracting the total volumes of down days across the defined period. The aim is to provide a more reliable picture of the market direction based on this cumulative analysis. Movements on the OBV can suggest which way the market’s price will move when you trade.
Money flow index (MFI)
Like the relative strength index, this is an oscillator that provides an analysis of the direction of the market movement, as well as the volume of this movement. With the MFI, you can identify times at which certain markets are overbought or oversold, which can be useful in deciding on your next trading move.
The benefits of MetaTrader 4 indicators
As we’ve discussed already, MetaTrader 4 indicators do not guarantee or give traders any certainty. With this in mind, what benefit do they provide? Why should you incorporate these tools into your own strategy? Take a look at some of the key advantages of MT4 indicators.
Indicators provide data-backed analysis
While indicators do not offer guarantees to traders, they are based on technical data analysis. This means they can be used reliably by traders who know what to look for, making it easier to develop an effective strategy.
There are so many different indicators out there, each providing its own insight and analysis. While this can prove a little confusing initially, it quickly becomes an asset once you get used to deploying these indicators. The subtle differences between each indicator make it possible to build a strong strategy based on a diverse set of analytics.
Indicators simplify stop loss and take profit placement
Stop loss measures will automatically close trades if the value falls below a certain level, while take profit will do the same when the value becomes too high. These measures help you keep your trades within your strategic parameters, but you must ensure you set these tools correctly. Indicators will help you make an informed choice regarding stop loss and take profit.
Indicators help traders increase their market exposure
In the forex market, small price movements are measured in pips. Generally, the price of a certain currency pair or commodity will not move much over a trading day, so the profit potential is low. The potential losses are also low. To increase exposure, traders must make many small trades or open more advantageous positions. Margin and leverage trading can help traders command these more valuable positions.
Of course, as the potential for profit rises, so does the potential for loss. With this in mind, traders need to act confidently, executing positions according to the latest market data. This is where indicators can play a major role. While there are no guarantees, even with indicators, they can help experienced traders make data-backed moves.
Trade with MetaTrader 4 indicators at VT Markets
Start exploring MetaTrader 4 indicators today. Download the platform from VT Markets and start using these helpful tools and features. We recommend you set up a demo account first and start trading for real with a live trading account after you feel more confident using the tools.
Want to learn more about MT4 indicators and other features on the platform? Reach out to our team today.
