Normalized Volume Indicator For MT4
Table Of Contents:
- Normalized Volume Indicator For MT4
- Parameters of the Normalized Volume Indicator For MT4
- Some of the Advantages of Using the Normalized Volume Indicator For MT4
- Some of the Disadvantages of using the Normalized Volume Indicator For MT4
The Normalized Volume Indicator For MT4 is a variant of the Volume indicator in the Meta Trader 4 platform. This indicator can be used by the trader to identify when there is an unusual increase or decrease in the buying and selling volumes in any currency pair or trading asset.
Parameters of the Normalized Volume Indicator For MT4
VolumePeriod: The Normalized Volume Indicator For MT4 has a single parameter that is user adjustable - VolumePeriod. The VolumePeriod parameter can be used to adjust the average number of bars the indicator uses to calculate the normal volume on any currency pair or trading asset.
Some of the Advantages of Using the Normalized Volume Indicator For MT4
One of the important advantages of using the Normalized Volume Indicator for MT4 is that it can help the trader to identify when there are retracement opportunities in the price that a trader can easily take advantage of during the trading day. This means that the trader who has the Normalized Volume Indicator For Meta Trader 4 Charting Platform attached to his or her trading charts would immediately be able to spot when the trend is currently pulling back.
These pull-back periods in the market usually present an opportunity for traders to either take off some of the profits they have already gotten from previous trends, take off trades that had previously been in rather steep losses or to enter new trades in the previous direction that the market has been moving.
In the first scenario, traders would be able to take off some profits since they are not entirely certain that the market does not intend to reverse against their currently profitable trades, and so in order to prevent these positions becoming losses, the traders then take off a part or all of their trading positions.
The second one is that it can allow traders to get off already losing positions with smaller losses. This is very important since a lot of the time, traders tend to get into trades in the wrong direction. When traders get into trades in the wrong direction, they risk having the price move heavily against their trading positions.
When the price has moved heavily against their trading positions, it is often the wrong thing to cut losses later rather than earlier as whatever trend has triggered the loss would already be in full effect. Traders would be better off allowing the trend to retrace in order to allow for reduced losses from their already losing position assuming that they did not or could not cut their losses early enough.
The third scenario represents the idea that traders can easily get into profitable trading positions by making trade setups when there has been a retracement in the current trend. As a result, the trader is able to get into the trend in the best position possible where the market can easily get their trading positions into profits as soon as it begins to start moving.
Also, when the trader learns to combine these retracement positions with major pivot points, he or she would often be able to catch the market as soon as it completes its retracement. It is also possible for the trader who gets into trades early enough to avoid having huge drawdowns before their trades get into profits or having to wait for too long before their trades become profitable.
Another important advantage of using the Normalized Volume Indicator For Meta Trader 4 is it can help the trader to be more efficient and profitable since it can help the trader to achieve to have a much higher risk to reward ratio. This much higher risk to reward ratio would be as a result of the trader entering at the point of a pullback in the market which is very close to the point where the reason trader has chosen a particular direction can quickly become invalidated.
If a trader is able to get into a trading position close to his or her invalidation point, he or she can easily leave the trader with a small loss if it goes wrong. On the other hand, if the trade goes right, he or she would be able to make large profits relative to their risk of the trade.
As a rule of thumb, it is usually best for a trader to get into a trade in any market direction as close to their invalidation points as possible. This would make it easier for the trader to stay profitable as the market has very little room to move against the trader before he or she closes the trade.
This is generally because entering close to the invalidation point would keep the trader aware of the risk and help him or her to immediately identify when they are wrong and exit the market as promptly as possible.
Some of the Disadvantages of using the Normalized Volume Indicator For MT4
One of the disadvantages of using the Normalized Volume Indicator For Meta Trader 4 is that it needs the trader to always watch it in order to spot the times when there is a retracement opportunity in the price. This is because the indicator does not offer the trader any automated alert or trade entry functionalities.
Another important disadvantage of using the Normalized Volume Indicator For Meta Trader 4 that a trader must take note of is that its bars repaint temporarily when the current candle is still yet to close. If the price moves significantly in either direction of the charts before the candle closes, the signal might change. Hence, the trader who gets a trading signal from the Normalized Volume Indicator For Meta Trader 4 must wait for the current candle to close before taking such a signal.