Extreme RSI Indicator For MT4
Table Of Contents:
- Extreme RSI Indicator For MT4
- Some of the Parameters of the Extreme RSI Indicator For MT4
- Some of the Advantages of using the Extreme RSI Indicator For MT4
- Some of the Disadvantages of using the Extreme RSI Indicator For MT4
The Extreme RSI Indicator For MT4 is a variant of the Relative Strength Indicator that can automatically print buy and sell signals on whatever currency pair or trading asset chart on the Meta Trader 4 it is applied to.
Some of the Parameters of the Extreme RSI Indicator For MT4
RSIPeriod: The Extreme RSI Indicator For MT4 only has a single parameter - RSIPeriod. The RSIPeriod parameter can be used by a trader to adjust how sensitive the indicator is to price. This parameter can also be used by the trader to either increase or decrease the frequency of Buy or Sell signals that the indicator can produce on the currency pair chart that it is attached to.
Some of the Advantages of using the Extreme RSI Indicator For MT4
Attaching the Extreme RSI Indicator For MT4 to a trader's currency pair or trading asset charts present on the Meta Trader 4 platform either as an additional indicator to an already existing system or as a standalone tool for searching the markets for trading setups can offer the trader a lot of different advantages.
A major advantage of using the Extreme RSI Indicator For MT4 is that it can easily help a trader to spot potential price extremes in his or her trading charts. These extreme prices are points in the trader's charts where the indicator has identified that the market has the potential to reverse. They could also signify a price zone where the previous price swing might just have ended and where a new price swing might be starting.
A trader who has the Extreme RSI Indicator For MT4 attached to his or her charts would not need to look for these areas of potential price extremes that exist in his or her charts. This is because the indicator would automatically print upward-pointing arrow or downward-pointing arrows at these price points on the trader's charts.
Once these potential extreme prices have been identified by the trader, he or she can then use them as a directional bias for his or her trades. The trader can also use them as active Buy and Sell signals for his or her trading method.
These potential price extremes can be especially useful to the trader whose trading method involves looking at the price action on several multiple timeframes of the same currency pair or trading asset before the trader makes a decision to either be a buyer or a seller in that market. Such a trader can easily use the Extreme RSI Indicator For MT4 on a higher timeframe chart in order to identify a potential price extreme on that timeframe and then go down to a lower timeframe. On the lower timeframe, the trader can then look for trade setups in the new direction of the potential price extreme.
Another very important advantage of using the Extreme RSI Indicator For MT4 is that it can help the trader to properly manage his or her existing trades. This means that since the trader who has the indicator attached to his or her current charts would be able to spot the periods in the market where there is a high chance of the price reversing to a new direction, he or she can close all or a part of an already profitable position once the Extreme RSI Indicator For MT4 prints a new arrow in the opposite direction to the direction of his or her trades.
This way, the trader would be able to ensure that a majority of his or her profitable trades are closed in profits since he or she would easily be able to detect once the price begins to move against the trading position using the indicator.
The Extreme RSI Indicator For MT4 can also be profitable to the trader since it can help him or her to be able to choose the same direction across several multiple timeframes. This implies that if a trader's methods involve that the trader needs to ensure the direction of the trend is the same on several different timeframes of the same currency pair before he or she can take a trading decision, the trader can easily use the indicator to achieve this.
One of the ways that a trader can achieve this is if the trader is able to spot the arrows that are pointing in the same direction on all of those different timeframes of his or her currency pair or trading asset. If the trader is able to do this, he or she would be able to have the same direction across all of those currency pairs and can then take a trade biased towards this new direction. This would generally help to increase the accuracy of any trading method.
Some of the Disadvantages of using the Extreme RSI Indicator For MT4
Using the Extreme RSI Indicator For MT4 demands that the trader must have a solid risk management strategy. The rules of this risk management strategy used by the trader must clearly state the exact dollar amount, lot size or percentage of the trader's equity that he or she would risk on each consecutive trade. This strategy must also include where the trader must leave a losing trade and what to do in such a situation.
This is because the Extreme RSI Indicator For MT4 can produce a lot of signals that do not work out perfectly. The indicator tends to produce a lot of these false signals because the Relative Strength Index that the indicator is a variant of, is built to be very sensitive to the price.
Hence, if a trader will use the Extreme RSI Indicator For MT4, he or she must not only have a strong strategy but also be willing and able to stick to this risk management strategy in order to be profitable. One of the reasons why a trader may not be able to practice a risk management strategy for instance, which uses only 1% per trade on a very small trading account might be broker limitations on the minimum required lot size per trade. Hence, the risk management strategy must also be built around the trader's account size.