Introduction To MACD And Flat Market Detector Indicator For MT4



Table Of Contents:

  1. Introduction To MACD And Flat Market Detector Indicator For MT4
  2. Key Parameters
  3. Trading Strategies Using MACD And Flat Market Detector Indicator For MT4
    1. Strategy 1 - Range Trading
    2. Strategy 2 - Breakout Trading
  4. Bottom Line

MACD And Flat Market Detector Indicator For MT4 is a modified version of the popular MACD indicator. MACD stands for Moving Average Convergence and Divergence. The original MACD indicator helps traders in finding the overbought and oversold areas in the market, thereby allowing them to spot the trading opportunities. On the other hand, the MACD flat market detector indicator is designed exclusively for day trading. This indicator helps you to do all the technical analysis on an individual timeframe during the intraday trading. MACD And Flat Market Detector Indicator For MT4 is built based on EMA, which stands for Exponential Moving Average.

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This indicator helps traders in spotting the trading signals when the market is in a consolidation phase. With the help of this indicator, traders can easily spot the non-trending conditions, and based on that they can make their trading decisions. The fundamental purpose of this indicator is to help the traders in trading the flat market (ranging market). Hence, for those who like to trade the ranges, this indicator is the best choice. Apart from that, MACD And Flat Market Detector Indicator For MT4 also identifies a new trend. Thereby, traders can prepare themselves to trade the upcoming trend.  

Key Parameters

Below are the default settings of this indicator.

Fast EMA – 9
Slow EMA – 26
AVPeriod – 400
Gamma – 0.75  

Trading Strategies Using MACD And Flat Market Detector Indicator For MT4

The working of MACD And Flat Market Detector Indicator For MT4 is similar to the original MACD indicator. The only difference between these two indicators is that the MACD flat trend indicator consists of two lines on the indicator, which goes flat as soon as the market turns into a range. In this indicator, when the MACD histograms go below the flat lines, it means that the market is at the oversold area, and a reversal is expected. Similarly, when the histogram goes above the flat lines it means that the market is in the overbought area and a correction or reversal is expected.

Strategy 1 - Range Trading

In this strategy, let us discuss how to trade the ranging market using the MACD And Flat Market Detector Indicator For MT4. When this indicator goes below the flat lines, and prints one or two blue-colored vertical lines or histograms, it is the initial sign that the market is preparing to reverse. By identifying this, traders can easily take specific additional steps to take advantage of the price behavior.

As you can see in the below AUDJPY chart, the market is moving in a range. Most of the traders think that there are both buy and sell opportunities in this chart. But in reality, there is no sell trade at all. The market didn't test the top of the range. As soon as the price hits the top, they shoot down. There is no way to take a sell trade. If someone is trying to sell in this condition, it can be considered as a gamble.

There are two buying trades in the above chart. Just before the first buy trade, sellers were super strong when they reached the bottom of the range. Then one green candle comes and then a couple of sell candles. This shows the inability of the sellers to move the market. At the exact same time, MACD And Flat Market Detector Indicator For MT4 also prints a couple of blue vertical lines at the oversold area, which confirms the trend reversal.

In the second buy trade, sellers were in a struggle, which is a good sign for us to take the buy trade. When the market reached the bottom of the range, prices held there for a couple of candles while the MACD And Flat Market Detector Indicator For MT4 prints a couple of blue vertical lines at the oversold area. This is a strong indication for us to take the buy trade. When the prices hold so long at the bottom of the range, there is less chance of spikes to occur as the opposite party is quite weak. So you can place your stop-loss just below the range to maximize your profits. Always close your buying positions at the top of the range, but if the buyers only took 1 or 2 candles to reach the top of the range, then you can expect spikes and exit your positions accordingly the market conditions.

It is easy to make money in the consolidation phase, but most of the traders often lose money in this phase. This is because they are used to hit the buy/sell trade when the market reaches the bottom or top of the range, and as a result, they lose money. Trading is a game of patience. It is important to let the market hold at bottom or top of the range first, and only then take the trade.

Strategy 2 - Breakout Trading

Breakout trading is quite popular in the industry, and it is the easiest yet safest method of trading. Traders, chartists, and investors use different indicators as well as trend lines to identify the breakout trades. Our strategy for breakout trading is to wait for the market to hold at the significant support or resistance area. When the histograms of MACD And Flat Market Detector Indicator For MT4 breakout below/above the flat line, it is an indication for us to take trade in the direction of the trend.

As you can see in the above CADJPY chart, the market was held at a major support area, and MACD And Flat Market Detector Indicator For MT4 also test the flat lines a couple of times. At around 82.50, prices break below the support area, and the indicator's histograms also break below the flat line. This is a clear indication for us to take the sell trade.

Bottom Line

MACD is one of the most trusted indicators in the market. Be it beginners or professionals, chartists or investors, everyone prefers using this indicator to trade the market. This modified version of the MACD indicator adds an additional feature to the original MACD making it extra powerful. This makes it easier for the traders to identify the trending signals even in the ranging markets. In the end, it all depends on how well you master this MACD And Flat Market Detector Indicator For MT4 to trade the ranging market.
We hope you had a Good Read! Happy Trading.

 

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