Keltner Channel Indicator for MT4
Table Of Contents:
- Keltner Channel Indicator for MT4
- Advantages and Disadvantages of using the Keltner Channels Indicator for MT4
The Keltner Channel Indicator for MT4 is a tool built for the Meta Trader 4 charting software. This indicator creates price envelops based on how volatile the price of a particular currency pair or trading asset is at a particular time. In-between these 2 price envelopes, an Exponential Moving Average sits there making the keltner channels look very much like the standard deviation based Bollinger Bands.
As regards how it plots its signals around a trading asset or currency pair, the Keltner Channel Indicator for MT4 sets the distance between the top envelope usually above price and the bottom envelope usually below price using the Average True Range indicator (ATR) which is an indicator that most traders and financial analysts would agree is one of the most stable and useful indicators in the Meta Trader 4 suite of tools.
Using the Keltner Channel for MT4 actually offers the trader a lot of advantages and very few disadvantages. Let us go through some of them together very quickly below.
Advantages and Disadvantages of using the Keltner Channels Indicator for MT4
One of the most prominent advantages is that the trader using it is that it is already a very popular trading tool used by traders all over the world in their day to day trading. This should immediately tell the trader that the Keltner Channels are very reliable in the way they create signals based on price action. This then allows the trader to trust whatever signals the Keltner Channel then generates for the trader as they are most reliable.
Another advantage to using the Keltner Channel Indicator for MT4 is that it can help the trader to identify and determine exactly what the current trend is across any timeframes and trading assets or currency pairs that the indicator is placed on. This means that the indicator can then be used as the go-to trend detector for their trading since it is built exactly for that. This also means that the Keltner channels can be used with any other indicator that can help the trader take entries in the direction of a Trend as both of them combined together would then enable the trader to find out the effective trend direction and take entries based on that direction alone. This easily leads to profits in the markets.
Traders can also use the Keltner Channel Indicator for MT4 to spot very clean and powerful potential reversals in price action. This simply means that the indicator can help traders to spot reversals as they happen in real time. One way this can be achieved is when the Trader watches about 3 to 4 different time frames using the Keltner Channel Indicator for MT4. This will immediately allow the trader to see how these price reversals are happening and what price action is doing in response to these reversals across the timeframes. In a very short while, the trader will completely understand that the forex markets are actually one irrespective of the timeframe where the trader is looking at the price from.
Another obvious advantage of using the keltner channels indicator is that it can provide the trader with reliable trading signals during the trading day. This is usually when price crosses above all of its channels into outer space or below it's lower channels into lower outer space. This essentially helps the trader to see how volatile the price move and to see how long it last outside the Keltner channels, since this can show the trader exactly how long the price trend is expected to last or how long it actually lasts, depending on when it crosses back into the Keltner channels.
One of the amazing things about using the Keltner channel indicator for MetaTrader 4 is that it immediately helps the Trader to see when the price is being very volatile. Now, this has a couple of advantages to it.
The first advantage would be that the Trader can immediately spot that a trend is in progress. Another advantage will be that the Trader can see exactly how that trend is progressing. Why watching price, it immediately forms a basis for the Trader to understand exactly what price is doing. for instance during an uptrend a trader can watch price move outside of the Keltner channel in the upward Direction. the Trader can then follow the move as the keltner channel then acts as a stop loss guide for the Trader who is already in the trend as it follows the trend all the way to the top and identifies exactly where the trend starts to reverse.
Another key and impressive way that Traders can use the keltner channel is to identify major trends. The keltner channels allow Traders to identify major trends by helping them to ignore the minor trends and kind of smoothen price action in such a way that the Trader doesn't see the minor trends as frequently as he would if the keltner channels were not in place there. This would immediately allow the Trader to identify major trading opportunities by identifying price patterns shown by the major trends.
Once a trader can identify these price patterns, the Trader can participate in trading the bigger trend picture.
Hence, the Keltner channels allow the trader to then spot price reversals, spot major price patterns and can help the trader identify major breakouts in trend and trade them effectively.
The keltner channels can work on any timeframe from the 1-minute charts to the Daily charts and can be integrated into any major trading systems already used by the trader. This integration will help to refine any trading strategy a trader may have and can help to bring out the best in other trading systems.
Using the Keltner Channels in trading will require that the trader continues to practice, taking trades using the indicator with a very protective stop, and a strict money management routine and in a short while, the trader can master using the indicator to take trades.