Color MACD Indicator For MT4
Table Of Contents:
- Color MACD Indicator For MT4
- Trading ideas with the Color MACD Indicator For MT4
- Interpreting the Color MACD Indicator For MT4 Histogram
- Color MACD Indicator For MT4 - Buy Entries
- Color MACD Indicator For MT4 - Sell Entries
- Color MACD Indicator For MT4 - Conclusion
The Color MACD Indicator For MT4 is an indicator which brings the power of color to the Moving Average Convergence/Divergence indicator for ease of analysis in your day-to-day trading. This makes your trading experience more pleasant because it removes the dull factor from the conventional Moving Average Convergence/Divergence indicator. For instance, you will notice that during bullish periods in the market there will be an array of red bars in the MACD's histogram followed by teal bars; these teal bars is there to signal to you bearish resistance in the underlying up trend of that specific market, the opposite hereof is also true - the only difference is that for bearish periods in the market there will be an array of lime bars instead of red bars.
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
Trading ideas with the Color MACD Indicator For MT4
Trading using the Color MACD Indicator For MT4 is almost similar to trading using the standard MACD Indicator. The only difference is that the Color MACD Indicator For MT4 assists traders by using differently coloured bars to signal different market situations, while for the standard MACD Indicator, traders only depend on the divergence and convergence of the bars about the zero-line at the centre.
The above screenshot shows the differences and similarities between the Color MACD Indicator For MT4 and the standard MACD Indicator.
It is important to note that although the bars in the Color MACD Indicator For MT4 are coloured, they are generated similarly to those in the standard MACD Indicator. Therefore, if a trader is conversant with the standard MACD Indicator, they will find it very easy using the Color MACD Indicator For MT4.
Interpreting the Color MACD Indicator For MT4 Histogram
The Color MACD Indicator For MT4 plots a histogram that has differently coloured bars that corresponds to different market situations and the trader must understand what each of the differently coloured bars shows in the market.
The colour of the bars of the Color MACD Indicator For MT4 alternate between Red, Lime, and Aqua. The Red and Lime bars are thicker compared to the Aqua colours.
The Red and Lime bars form when there is a divergence of the moving averages while the Agua bars form when there is a convergence. And whenever there is a divergence of the MACD moving averages, it shows that the market is trending either downwards or upwards.
To determine the direction in which the market is trending, the bars of the Color MACD Indicator For MT4 just like the standard MACD Indicator form on either side of the zero-line at the centre of the indicator chart. The red bars form above the zero-line while the Lime bars form below the zero-line.
It is therefore correct to say that the red bars show that there is a bullish trend in the market while the Lime bars show that there is a bearish trend in the market.
The Aqua bars which are formed when the MACD moving averages converge show that the momentum of the trend (either bullish or bearish) is reducing. If the Aqua bars form just after the formation of the Red bars above the zero-line, it indicates that the momentum of the bullish trend that had been prevailing has started to reduce and it could lead to a trend reversal. On the other hand, if the Aqua bars form just after the Lime bars below the zero-line, it indicates that the momentum of the bearish trend that had been prevailing has started reducing and it could lead to a trend reversal.
Besides the coloured histogram bars, there is also a magenta line that oscillates about the zero lines. This line acts as a signal line. In the case of a bullish trend, the trend is said to be strong when the Red histogram bars go above the line. And in the case of a bearish trend, the trend is said to be strong when the Lime histogram bars go below the line.
It is therefore important to note that the Aqua bars are mostly formed between the magenta signal line and the zero line.
It is however important to note that the formation of Aqua bars does not necessarily mean that the market trend is bound to change. There are times when the momentum of a certain market trend reduces or the market retraces before continuing with the previous market trend.
Color MACD Indicator For MT4 - Buy Entries
To place a BUY order using the Color MACD Indicator For MT4, the trader should wait for the Red bars to start forming above the zero-line. The trader should however wait for these bars to become long enough to cross above the magenta signal line, which shows that the market is in a strong bullish trend.
The BUY order should be closed once the first Aqua bar starts to form since this signals that the bullish trend has started getting week and if the trader waits too long, the market could become bearish.
Color MACD Indicator For MT4 - Sell Entries
To place a SELL order using the Color MACD Indicator For MT4, the trader should wait for the Lime bars to start forming below the zero-line. The trader should however wait for these bars to become long enough to cross below the magenta signal line, which shows that the market is in a strong bearish trend.
The SELL order should be closed once the first Aqua bar starts to form since this signals that the bearish trend has started getting week and if the trader waits too long, the market could become bearish.
Color MACD Indicator For MT4 - Conclusion
The Color MACD Indicator For MT4 makes it easy for traders to use the MACD trading strategy. The colour change makes it easy for the traders to identify when the market conditions change contrary to the standard MACD Indicator which requires traders to be keen on the size of the bars and on which side of the zero-centerline the bars form.
Color MACD Indicator For MT4 is easy to use especially for beginners who have little understanding of how the MACD works. Besides, with this guide, they can comfortably trade using it.
