Variance Indicator For MT4

Variance Indicator For MT4

Table Of Contents:

  1. Variance Indicator For MT4
  2. Trading ideas with the Variance Indicator For MT4
  3. Using the Variance Indicator For MT4 to open and close trades
  4. Variance Indicator For MT4 - Buy Entries
  5. Variance Indicator For MT4 - Sell Entries
  6. Variance Indicator For MT4 - Conclusion

The Variance Indicator For MT4 is an indicator which uses an advance method for calculating the statistical variance of an asset. The variance is visually displayed at the bottom of the indicator thus allowing traders to see the variance of the underlying asset. What will become evident for traders when they start using this indicator is that they will surges within the variance indicator and this essentially signals a shift in price, volatility and volume to change the market direction.

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Trading ideas with the Variance Indicator For MT4


The Variance Indicator For MT4 helps you to identify when there is a high market activity due to increased volatility. The indicator basically checks on how the market price within the specified period varies.

You can leverage this indicator to determine if it is the right time to place a trade or not.

So let’s look into how it is used.

If you look at the indicator line that is plotted on the indicator chart below the main chart, you will realize that the line rises and falls occasionally and sometimes remain low over some time.

When the indicator line rises it shows that there is an increasing market activity, which means the market is trending. On the other hand, when the indicator line starts to go down, it shows that market activity is decreasing, meaning the strength of the market trend is reducing with time. You should trade when the Variance Indicator For MT4 is in this condition.

There are times when the indicator line remains low and the line almost becomes straight. This shows that the market is not ranging or trending. During such times, the candlesticks/bars plotted on the main trading chart are usually relatively short. You should avoid trading when the Variance Indicator For MT4 is in this condition.

You should however note that although the Variance Indicator For MT4 shows if the market is trending or not, it does not show the type of trend in the market. It does not tell you if the market is bullish or not. Therefore, it is upon you to combine it with a suitable trend indicator that will assist you to identify the type of trend that is currently in the market to determine which trade to place.



Also as shown in the above screenshot, the Variance Indicator For MT4 enables you to identify when there is a likely news release. If you haven’t visited the market NEWS calendars to keep track of the day’s market news releases, the Variance Indicator For MT4 comes in handy.

A sharp rise in the Variance Indicator For MT4 indicator line followed by a V-shaped decrease shows that the market became extremely volatile all at once, which is an occurrence associated with NEWS releases. Depending on your trading strategy, you can therefore choose to trade during this time or choose to abstain from trading.

Trading during NEWS releases is more risker due to the rapid price fluctuations that could wipe your account in seconds if they are against your market forecast.


Using the Variance Indicator For MT4 to open and close trades


Since the Variance Indicator For MT4 does not determine the market trend, you will have to combine it with a trend indicator to identify the trend so that you can place the appropriate trade.

In this guide, we shall combine the Variance Indicator For MT4 with the Simple Moving Average (SMA).

To determine the market trends using the Simple Moving Average indicator, you should look at the position of the indicator line in relation to the candlesticks or bars depending on the chart you are using.

During a bullish trend, the SMA indicator line moves below the candlesticks/bars while during a bearish trend the SMA moves above the candlesticks/bars.

After identifying the market trend and being sure which trader/order to place, you should now look at the Variance Indicator For MT4 to determine if the conditions are correct to place the order.


Variance Indicator For MT4 - Buy Entries


To place a BUY order, you should lookout for a bullish trend in the market using a trend indicator. In our case, we have decided to use the Simple Moving Average. Therefore, we should prepare to place a BUY order when the indicator line goes below the candlesticks/bars.

Once the bullish conditions of the trend indicator are satisfied, you should then look to ensure that the Variance Indicator For MT4 indicator line is at least raised (bumpy). That shows that the market is trending and you are most likely to make profits fast if the predictions of your trend indicator are correct


Variance Indicator For MT4 - Sell Entries


To place a SELL order, you should lookout for a bearish trend in the market using a trend indicator. In our case, we have decided to use the Simple Moving Average. Therefore, we should prepare to place a SELL order when the indicator line goes above the candlesticks/bars.

Once the bearish conditions of the trend indicator are satisfied, you should then look to ensure that the Variance Indicator For MT4 indicator line is at least raised (bumpy). That shows that the market is trending and you are most likely to make profits fast if the predictions of your trend indicator are correct.




Variance Indicator For MT4 - Conclusion


In conclusion, we cannot tire to repeat that the Variance Indicator For MT4 is NOT A TREND INDICATOR and cannot therefore be used to determine the market trend.

To place and close trades using the Variance Indicator For MT4, you will have to combine it with a trend indicator of your choice as we have done in this guide by combining it with the Simple Moving Average.

You should also use stop levels to manage the risks involved in trading. To identify where to place the stop levels (stop loss and take profit), you can use indicators such as the Position Size Calculator Based on VP Money Management rules Indicator For MT4 or any other of your choice.

 

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