MTF BB Squeeze Indicator For Meta Trader 4
Table Of Contents:
- MTF BB Squeeze Indicator For Meta Trader 4
- Advantages and Disadvantages of using the MTF BB Squeeze Indicator For Meta Trader 4
The MTF BB Squeeze Indicator For Meta Trader 4 is an indicator that is based on the Bollinger Bands. This indicator was built primarily for detecting the periods in the market where there has been a compression between the two bands of the Bollinger. when such compressions occur between the Bollinger Bands, they are usually a sign that price action is compressing and preparing itself for a big move. Traders can drastically improve their trading if they take the time to learn how this indicator works and apply it to their trading. Some benefits of using the MTF BB Squeeze Indicator For Meta Trader 4 will be outlined below.
Advantages and Disadvantages of using the MTF BB Squeeze Indicator For Meta Trader 4
One of the major advantages of using the MTF BB Squeeze Indicator For Meta Trader 4 is that it lets the trader to visually detect the periods in the price of a currency pair or trading asset when the price is resting and may likely be preparing for a large move in one direction. Usually, the MTF BB Squeeze Indicator For Meta Trader 4 does not show traders the direction the price will likely breakout but it shows them when a breakout is imminent and when a big move is most likely to occur.
This means that a trader using the indicator can easily spot the periods before very large moves in the market simply by watching the signals being created by the indicator as just before most big price moves, there is usually a brief moment, when the price begins to trade in a very tight range, which may or may not get even tighter before the rice breakouts in a direction with very strong waves.
Usually, the tighter the range, the more the likelihood that the move will be bigger. What the MTF BB Squeeze Indicator For Meta Trader 4 does is that since the Bollinger Bands respond quite naturally to such periods by shrinking both of its bands together to help the trader using it to identify when such periods happen, the indicator then builds on it by creating a color scheme for such periods so that in addition to spotting the Bollinger Bands contract, they can also see a visual alert also indicating that the compression is happening at that particular time. This is super helpful for the trader.
Another added benefit for the trader using the MTF BB Squeeze Indicator For Meta Trader 4 is that the indicator helps to generate entry signals for the trader which can allow a trader get on a trend that is newly forming. This means that since the indicator can generally spot when a big price move is about to happen and give the trader notice ahead of the breakout, the trader can then capitalize on such moments to generate profits by taking the trades from such breakouts.
In order to do so, the trader would probably need to use a trend line or a couple of trendlines to mark out the highest point the price has been during that entire ranging period and also the lowest point the price has been during that ranging period.
Once the trader marks the high and low out, the next step would be to create a position size and the position size created must agree completely with very stringent money management guidelines such that even if the breakout is false, the trader can easily enter on the break of the opposite direction without hurting his account balance.
This is very important as the trader would need primarily to preserve their trading capital. This could be a way to use the MTF BB Squeeze Indicator For Meta Trader 4 to trade profitably. Our suggestion would be that a trader should only use 1% to 2% of their entire trading capital for each trade and not more.
Using the MTF BB Squeeze Indicator For Meta Trader 4 can also help traders stay in trend my mapping out the current direction in the trader's currency pair or trading asset of choice and also alerting the trader to where that current trend started and how many times the trend has stopped on the way to rest.
This means that since the indicator compresses whenever the price of a currency pair or trading asset prepares for a new move, the logic is that these compressions are also the beginnings of new trends and thus, traders can look on these compressions to identify where exactly a price move in a particular currency pair or trading asset started and then correctly align all their trades in the current trade direction until a new compression occurs to tell the trader the direction of the trend might likely have changed to whatever new direction price faces immediately after a compression.
These compressions indicated by the MTF BB Squeeze Indicator For Meta Trader 4 can also serve as opportunities for a trader to take off some of their profits from a current position especially if the position is already in profits. This can then teach a trader over time the correct way to take profits in the markets.
This means that since after the price compressions, price usually just moves in a new direction, sometimes the same direction as before and other times, it is the opposite direction, a trader with a position already in profit may not want to take the risk of having a position already in profit breakout against them as the breakouts of the price from such compression periods are usually comprised of very sharp moves and can quickly erode a trader's profits from an already existing trade.
Hence, the best thing to do would either be to use such new compression periods as a time to take off the entire position from the market if they are already in profits or to take off a major part of the position from the market and wait to see if the price will likely continue in the direction it was previously moving before the compression. This major position part that should be taken off in the second instance could either be 2/3 of 3/4 of the original position, depending on the risk appetite of the trader and if the trade is already.