Equity Chart Indicator For MT4
The Equity Chart Indicator For MT4 uses account history data to plot equity and balance charts. This handy tool updates the charts in real time mode to reflect changes due to current opened positions.
Trading ideas with the Equity Chart Indicator For MT4
This indicator works well in giving you real-time visual updates of your performance. This works to your advantage because it prevents you from trading in the dark.
Trading is a mental game - once you have amassed solid technical and economic faculties you will come to the realization that trading is based on your mental strength. With a weak mind, a five-dollar loss will blow the rest of your account.
Whereas if you are on a losing streak with solid money management and you know that the strategy you are using produces considerably more wins than losses then you will have enough patience not to let small losses evolve into the complete diminishment of your account. Below you see a picture of what the indicator actually looks like.
In your screen, you would see that there is a red and black curve. Then there is a display window which shows the following - total equity, balance, total net profit, max drawdown, recovery factor and profit factor.
Most traders just trade in isolation without truly appreciating the data factors which comprises your overall performance. For now we are going to look at key pointers as per the data points shown in the indicator window or display window of the Equity Chart indicator.
Equity Chart Indicator For MT4 - Trading Data
Your trading portfolio consists of a bunch of parameters which we use to analyze the performance of your trading accounts so that we have a better idea of what is truly happening with our trading strategies.
Trading balance and trading equity are two concepts that are used interchangeably but fundamentally they are not the same thing. Though sometimes the values may be equal as per the screenshot shown previously - but they are not the same thing at the core.
So the best way to look at this is through closed and open positions. Your trading balance is the balance of your portfolio with the sum total of profit and loss of all your closed positions. If at any given time you find that you have a few trades open - your platform will completely discount all open positions in its trading balance computation.
Equity is an extension of the trading balance function because it takes into consideration the sum total of the active trades which are open in your proftofilio. In the image below you can see that the balance and equity have the same magnitude.
This can happen when the market is closed - like on weekends. This could also occur when the sum total of the active trades are zero. But this is a rare occurrence given the fact that the market is always changing therefore your equity will not always be the same as your balance.
Then we have the total net profit - which is the profit or loss of your entire trading history. The drawdown is also reflected in the display - it shows us the total potential loss that a trade or trades have gone against us prior to closing the trade.
If you are consistently trading one, two or three specific trading strategies then this will be great for you in a sense that you will know what the drawdown has been like throughout. Thus giving you clues as to how risky your trading strategies are in reality.
Beyond that we have the profit factor and the recovery factor. The recovery factor is the ratio of your total net profit and your maximum drawdown. So take your total net profit and divide it by your maximum drawdown, and then you will have your recovery factor.
The recovery factor can either be negative or positive. If your account has a balance less than your deposit or total deposits then your recovery factor will be negative but if you have been yiedling positive results and growth then the recovery factor will be positive.
Then lastly, in the window we have something called the profit factor. It is the ratio of your gross profits divided by your gross losses. So this indicator takes your gross profits and then it divides it by the gross losses.
This ratio effectively expresses your profitability in your trading activity or trading strategies. You might be under the impression that you are performing awesomely well but the profitability could be considerably low which means that your strategy is not as effective as you would like it to be. Therefore, you could look at modifying your strategy to make it more profitable.
Equity Chart Indicator For MT4 - Conclusion
In conclusion, it should be said that this indicator creates or gives a realistic report on your trading performance so that you know where you are standing in your trading. With these pointers you will then be able to dig deeper into your trading in attempt to improve your trading results based on all the metrics mentioned herein.