Quantile bands Indicator For MT4



Table Of Contents:

  1. Quantile bands Indicator For MT4
  2. Explanation of the quantiles
  3. Settings of the Quantile bands Indicator For MT4
  4. Advantages of using the Quantile bands Indicator For MT4
  5. Trade ideas with the Quantile bands Indicator For MT4

The Quantile bands Indicator For MT4 is a great indicator for every trader. It uses the power of quantiles, that are often used in statistics and the theory of probability, to determine the market direction and display it in an easy way. The indicator can be used for trend trading as well as counter trend trading and on every timeframe. You can easily see the current trend direction based on the color of the bands.

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In this article there will first be a brief explanation of the quantiles and how they are used. Following that I will explain the different settings of the Quantile bands Indicator For MT4 to help you customize it to your likings. At the end I will show you some advantages as well as some trade ideas with this indicator.  

Explanation of the quantiles

Quantiles are based in statistics and the theory of probability. They are used as cut points to divide the range of a probability distribution into continuous intervals that all have equal probabilities. This way you can divide a range of values into one part that is lower than the quantile and the other part that is higher than the quantile. The 30% quantile is for example the value for which applies that 30% of all values are lower than this value.

The Quantile bands Indicator For MT4 tries to divide the market into equal pieces using quantiles. Those quantiles are displayed by the two outer bands. Using the standard settings of the indicator, those bands show the 10% and the 90% quantiles. Using for example the 10% quantile in this context means that 10% of all values of the specified period are lower than the current value of the lower outer band. The middle band is not the slope of the middle quantile, but a combination of the two outer bands.  

Settings of the Quantile bands Indicator For MT4

The Quantile bands Indicator For MT4 offers quite a lot of settings that all have a rather big impact on its calculation. This can help you to set up the indicator exactly as you like it or how it best fits your trading strategy.

First you can choose on which timeframe the indicators calculations should be based on without actually switching to this timeframe. This can be helpful if you are looking for entries on the lower timeframes, but want to keep an eye on what is happening on higher timeframes.  

The next setting allows you to change the period of the indicator. This basically means how many candles are used for the calculation of the quantiles.

The following three settings can be used to change the high-, median-, and low-price that is used for the calculation of the high, the low, and the middle band. There are a lot of options to choose from here, you can see the full list in the picture above. Feel free to experiment with those settings and see which one you like the most.

The “Upper band percent”, “Lower band percent” and “Median percent” settings allow you to define the quantile you want to use for the bands. The standard value of 90.0 for the “Upper band percent” setting means that 90% of the values are lower than the value of the band at a given time. Obviously the higher this value is, the harder it becomes for the price to reach the upper band and vice versa.

All the colors and the thickness of the Quantile bands Indicator For MT4 can be changed in the “Colors” tab of the settings.

Advantages of using the Quantile bands Indicator For MT4

The first advantage of this indicator that it is very easy to understand, even though the underlying calculations are quite difficult. This can help you to gain an edge over the people that do not use the Quantile bands Indicator For MT4, which in turns can lead to you outperforming them while trading and ultimately making more money.

The second advantage you can get using this indicator is that it can give you a nice overview of the current market direction within seconds while not cluttering your charts too much, which allows you to still do your technical analysis.  

With the function of the Quantile bands Indicator For MT4 to display the bands based on any timeframe you want while you switch around between the different timeframes you can for example get a nice view of the 1hour chart while looking for entries on the 15Minute chart. This can boost your performance immensely.

Trade ideas with the Quantile bands Indicator For MT4

In the picture above I explain an example trend following trade. The change of color of the middle band indicates the start of a new downward trend. Once you see that price comes back to the middle band and then bounces off of it you would enter a sell trade. In this example you even get a second entry opportunity, that you can either use to open a new trade if you have exited the first trade already, or you can add to your open position and maximize your profits. The first two entry opportunities into a new trend are typically the strongest and thus the safest to trade. 

Having that in mind, I would not have entered the third bounce off the middle line. In this case there also was very strong momentum against a sell trade, which is indicated by the V-formation that I marked in the chart. Those V-formations are very heavy indications of a change in the market direction. If you want to learn more about the power of the V-formations, why they work and how you can use them to your advantage, check out the information that is given here: https://www.perfecttrendsystem.com/day-trading-strategy-for-forex-v-power.  

Keep in mind that you should never risk more than 2% of your trading capital in a single trade. This helps you to stay active in the market and not lose your capital.

 

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