The Trend Strength Indicator For MT4
The Trend Strength Indicator For MT4 is a histogram that is used by traders to clearly identify and emphasize market trending periods and other times when the markets are ranging or resting. According to analysis, it has been stated that the markets only trend about 30% of the entire time. This simply means that the market ranges a lot more times than it trends and it would then be wise for the trader to watch for these ranges when they occur as they will birth the start of new powerful trends.
Benefits of using the Trend Strength Indicator For MT4
Traders will find that using the Trend Strength Indicator For MT4 comes with a lot of benefits to the serious trader. One of the benefits is that it helps the trader using it to identify ranging periods in the markets. A lot of developers have already tried to build tools to identify these ranges because they have realized the power these ranges often encapsulate.
A simple backtest across several weeks or even months would show anyone that just before any very large trends, the markets have always be confined to a very tiny range, more or less contracted intentionally to accumulate the power for the large trend. Also, in recent times, a lot of traders have decided to adopt these ranges as part of or their overall trading systems. These traders would then look for them wherever they are happening and simply sit and wait for a breakout in any direction.
Most of the time, the tighter the range or the smaller the contraction between the highs and lows in price, the larger the trend that may be coming. Many successful traders have even been able to predict major trends this way.
There are 2 basic periods in any currency pair or trading asset. The first period is known as the trending period when the prices are moving sharply in the upwards or downwards direction. The second period is known as the ranging or resting period. This is generally known as the period where a lot of profits are taken and where institutional traders accumulate their orders before tricking the retail traders into helping them move the price to where they need it to be.
The Trend Strength Indicator For MT4 helps traders to identify both of these periods in the prices of a currency pair or trading asset. Identifying these periods in the price is actually very important since both of the periods require almost completely different strategies to make profits from them. Once they have been identified, the trader can then adjust his or her trading strategy according to which period it is and position themselves correctly to make profits.
Different colors are used by the Trend Strength Indicator For MT4 to identify and visually alert the trader on the different periods in price. The green color is used when the price starts to move up very sharply and stays as an unmixed green when the price keeps sharply trending upwards. The Trend Strength Indicator For MT4 starts to print yellow bars mixed with green bars when the sharp ascent of price starts to slow down to either a retracement or a reversal.
The red color is used when the prices of a currency pair or trading asset start to move down sharply. The Trend Strength Indicator For MT4 then keeps printing the red color unmixed with yellow so long as prices keep trending downwards sharply. Once the price starts to slow down, the Trend Strength Indicator For MT4 starts to print the red color mixed with a bit of yellow. This shows that a reversal or change in trend might be imminent.
Once a change in the intensity of a trend starts becoming noticeable, the trader can then either take partial profits or exit their total position. A major advantage of using the Trend Strength Indicator For MT4 is the clarity with which it tells the trader the power in the price action at a single glance. This way, it is easy for the trader to decide in seconds what he or she wants to do next so that he/she doesn't miss a quick opportunity if it presents itself.
Other trading systems and indicators can also be used hand in hand with the Trend Strength Indicator For MT4 in whatever order or style a trader likes. It is, however, important to note that the Trend Strength Indicator For MT4 mostly tells the trader about the strength of an already existing trend and so other indicators for more accurate direction and precision would have to be combined with it.
Although using the Trend Strength Indicator For MT4 as a standalone signal provider would be a bad idea, the trader can use it single-handedly to tell him/her exactly when a trend may be slowing down or getting weaker. This is important for traders who like to fade price moves or trade price retracements.
The Trend Strength Indicator For MT4 can show the trader the direction of a breakout even before that breakout happens and so breakout traders might find this useful when trying to place trades for breakouts.
Another added point to note is that this indicator does not repaint once a session has closed as so the trader can reliably take the signals it produces if that is how they trade once a session has closed.
Also, the Trend Strength Indicator For MT4 is an aggressive indicator and should be used with caution since it can produce a lot of false signals in a bid to keep the trader on the correct side of the trade as quickly as possible.
If and when the Trend Strength Indicator For MT4 is used across multiple timeframes, it becomes easy to see how price moves in smaller timeframes move the much larger timeframes and how the larger timeframes tend to bend the way the lower timeframes move most of the time. This also results in a greater level of accuracy.
Lastly, the Trend Strength Indicator For MT4 displays in a window of the chart so it doesn't clog the trader's charting space and allows the trader to still conduct his or her own analysis in a clean area.
The Trend Strength Indicator For MT4 can be combined with Heiken-Ashi candlesticks for a more complete system since the Trend Strength Indicator For MT4 can detect early trend change but cannot keep the trader for extended periods to ride a trend whereas the Heiken Ashi doesn't get the trader into the trade as early as it starts but can keep the trader for extended time periods riding the trend.