ADXm Indicator For MT4
ADX is a very popular indicator and its elaborated form is the Average Directional Movement. The pro traders rely on this indicator to assess the strength of the trend. But using the traditional ADX requires a perfect understanding of the highs and lows of the market. To make things easier, the developers have created ADXm Indicator For MT4 which is far more advanced. Even novice traders can start making money in Forex using this superb ADXm Indicator For MT4.
The ADXm Indicator For MT4 is mostly used to trade the major trend. The experienced investors always prefer to trade the trend since it helps them to reduce the risk. So, why can we use the ADXm Indicator For MT4 and ride the major trend? Before we dig into the details, you have to understand the two essential color code of this indicator. The featured image has the ADXm Indicator For MT4 installed and you can see the curve is changing its color from blue to brown in the bearish trend. Similarly, it changes from brown to blue during the uptrend. But learnings the functions of a different color is not enough. You must use other parameters to in your trading.
Color code and grey level
The ADXm Indicator For MT4 works amazing well since the reference calculation is based on zero. Notice the chart and you will always see two linear grey line maintain equidistant from the reference point. To understanding this much better, install the indicator in different currency pairs and you notice the visible change in the upper limit and lower limit data from the reference point. You don’t have to do any complex calculation to find these grey horizontal lines since all the things will be taken by care by the hidden code of the ADXm Indicator For MT4.
Shorting at trend line resistance
We know, the ADXm Indicator For MT4 is most used to trade the trend. But to trade the trend, you have to draw a valid trend line. Some of the naïve traders often use two connecting points in trend line drawing. Though it might work it’s a very risky strategy. You need at least three connecting points (lows or highs) to establish a valid trend line. Once you have the perfect trend line, it’s time to ride the trend based on ADXm Indicator For MT4. Let's see a short trade set up triggered based on the curve of the ADXm Indicator For MT4.
Figure: Short trade setup using bearish signals from the indicator
The first thing which you need to consider is a valid bearish trend line. See how the downward slopping lines connect three lower lows. This is a perfect example of a down trend line. Right at the 4th point (green shaded region), the market respects the resistance and sharply dropped. At that same moment, you can see the ADXm Indicator For MT4 curve changed its color from blue to brown. Most importantly it feels below the bottom grey linear line. And once the color-changing curve falls below the bottom grey line and continues downward with brown color, you can assume to selling pressure is high. So, a perfect short trade setup at the trend line resistance.
Dealing with frequent color change
If you get addicted to the ADXm Indicator For MT4, you might notice the frequent change in the indicator curve. This is nothing but the representation of the ranging market. We have already said this indicator works best when the trend is strong. Unless you are intending to scalp the market, you should not trade when there is a frequent change in color. However, by using the Fibonacci retracement tools and 100 day SMA, you can scalp the market based on the color change.
Accept the losing trades
Once you start to trade the major trend with the ADXm Indicator For MT4, you might think this is the best indicator in the world. Such a mentality will eventually force you to trade the market with high risk. Things might go in favor but never forget the fact, losing trades are inevitable. So, a one big losing trades can wipe your entire trading account. Accept the fact, you will have to face losing orders. So, stop taking too much risk on a certain trade since it will make things extremely hard. Try to trade this market with a 1% risk factor and this will alleviate the stress in trading.
Identifying the trend change
The experienced traders know the fact, the financial instrument often changes its trend without any notice. So, how do we protect our investment during the trend change? If the price prefers to stick to the trend, you notice no anomaly in the ADXm Indicator For MT4 reading. For instance, the above trade example showed a bearish signal both in price chart and indicator window. If there was any possibility of a bullish breakout, you would notice a bullish signal in the ADXm Indicator For MT4. Stay away from executing any order when the indicator suggests the different direction of price even though the trend seems to be perfect.
Improving your strategy
The novice currency trader might think the ADXm Indicator For MT4 can be used with trend trading strategy. But this is not all right. You can also use this indicator to trade the ranging market. No matter which system you follow, you can use the signals from the ADXm Indicator For MT4 as your trade filter tools. You might face some difficulties with this indicator, but every problem has its solution. Start using the demo account and try to improve your strategy with the help of ADXm Indicator For MT4. Never think about results rather concentrate on your demo trading performance. Try to find the faults and create a balanced system.