Historical Volatility Indicator For MT5
Table Of Contents:
- Historical Volatility Indicator For MT5
- Trading ideas with the Historical Volatility Indicator For MT5
- Historical Volatility Indicator For MT5 - Buy Entries
- Historical Volatility Indicator For MT5 - Sell Entries
- Historical Volatility Indicator For MT5 - Conclusion
The Historical Volatility Indicator For MT5 is also called the HV indicator and makes a statistical measure of the recent price action. Especially the volatility of the price action is expressed in the histogram subwindow. Based on the volatility information you can spot extreme overbought and oversold condition which you can the use to initiate reversal trades.
The Historical Volatility Indicator For MT5 is a simple tool that uses the dispersion value for a certain instrument for a given period. The historical data is analyzed with an advanced algorithm so that the investors can get a clear clue about the buying and selling pressure.
There is a saying in the Forex market, history repeats itself. When the strategic indicator is deployed to your trading chart, you get a general idea about the price momentum in resemblance with the previous highs and lows. The signal line tells you about the core direction of the trend. However, if you consider the blue signal line of the Historical Volatility as a trend direction identifier, you will taking some really bad decisions.
Instead of that, you should be considering it a trade filter tool. Note that this indicator evaluates the historic price data and also relates it with the dynamic volatility of the market. So, you can consider the signal data as a reactive reading since prompt actions are required to take the trades. To eliminate latency in the trade execution system, professionals use a simple but effective trading method. Once you are certain they have such a system, they take the data from the Historical Volatility to assess the significance of the signals.
Trading ideas with the Historical Volatility Indicator For MT5
Developing your trading method is a more challenging task. You can learn the use of the Historical Volatility Indicator within a few days but to develop a strategic sequence to find potential trade signals, you might have to spend months. Ask yourself whether you love quick and aggressive results or the conservative trading method.
The absolute beginners should go with the conservative trading technique as it provides great ease to the investors during real-life trading. As you have prepared the draft trading method, you need to ask yourself whether you are satisfied with the win ratio. A good trading system must have a win rate of over 70% and a RR ratio of 1:2 or higher.
Once you have the confidence the system is capable of winning 70% of the trade, you can incorporate the Historical Volatility Indicator to increase the win rate. But deploying a new indicator into the trading system can become a big challenge and hamper the performance. So, this should be done in a controlled environment where you won’t have to lose anything while learning the essential functions of the Historical Volatility Indicator.
Historical Volatility Indicator For MT5 - Buy Entries
Everyone intends to buy at the best spot. But in the Forex market, there is no place called the best spot. The professional traders always look for the closed price in which the price tends to go in their favor. For a long, they usually draw the important support level with the help of the trend line or other dynamic tools.
This is where you need a professional trading method since it will allow you to locate the buying zone. In the buying zone, you will notice the potential bullish trade setup. People who are well educated can analyze the price action pattern at that buying zone. Once your trading edge confirms the establishment of the bullish trade setup, take the reading from the Historical Volatility Indicator. The signal line should show an ascending curve which means the bulls are ready to push the price higher.
Note that the bullish blue signal line must be formed near the base portion of the indicator so that the blue line has enough space to rally in the north. Calculate the TP and SL point so that the minimum RR ratio for the trade is higher than 1:2 before you take the trades.
Historical Volatility Indicator For MT5 - Sell Entries
Those who have paid attention to the long trade setup must have understood how the short trades are going to be taken. To find the short trade setup, a trader has to find the potential trade setups in the most critical resistance level. A strong resistance level should limit the upward rally in the price and it will create a strong bearish signal.
As you notice the bearish signal in the trading instrument, you should be looking to take the short trade. Since you have an integration of the Historical Volatility Indicator, it is important to take the confirmation from this filter tool. With the help of this filter tool, you will find the potential sell signal via a downward blue signal line. The blue signal line shows how well the trade setup is.
The downward slope in the blue signal line from the top portion of the panel tells us the buyers are exhausted and the sellers are fueled up. But don’t get excited by seeing the confirmation. You still need to follow all the classic rules of money management. Breaking those rules can put your investment at great risk.
Historical Volatility Indicator For MT5 - Conclusion
Smart investors never rely blindly on the indicators. They keep on revising their trading method and match their technical data with the fundamental news. Though the synchronization of the fundamental news and technical data is a tough job, you can master this technique by using a practice account.
Try to classify the news hours into three main parts so that you know about the low, medium, and high impact news. After getting skilled with the news event, study the Historical Volatility Indicator behavior in different news releases. It might take a few months to understand the movement of the blue signal line in the extreme condition of the market but it’s worth it. Once the fundamental and technical analysis is integrated with your trading method and this unique trade filter tool, you will feel more confident.
But this doesn’t mean you won’t be able to use it by knowing technical analysis only. In this case, you have to trade during a certain period of the day. Evaluate your risk profile and find the potential setups after the high impact news only. You should give your trade enough time so that it can hit the take profit zone without experiencing heavy swings in the price due to major economic announcements.