The MT4 forex trading platform not only supports standard technical indicators but also custom indicators that users can easily share. These custom indicators are written in the MQL4 programming language — and the bulk of them are free MT4 indicators. The process of installing custom indicators on your forex trading platform is much simpler compared to a basic download procedure. All you need to do is copy the custom indicator, open the data folder, and copy your indicator to the Indicators folder of your MetaTrader platform.

You just have to relaunch the MT4 platform and your indicator will be in the category of custom MT4 indicators. It is actually much simpler than installing indicators. All you need to do:. Left click and keep the mouse pressed Drag your indicator from the MetaTrader Navigator frame to the chart Release the mouse and the trading indicator will be added to your trading chart If you want to use the best MT4 trading indicators, it is very simple: just install the platform on a demo or real account and add them to your charts.

Save my name, email, and website in this browser for the next time I comment. Skip to content. February 15, Foreign exchange market Forex February 15, Lesson The different types of indicators for technical Forex analysis February 15, As displayed in below, the red line measures today's closing price divided by the closing price 28 trading days ago.

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Readings above 1. The blue line represents a day moving average of the daily ROC readings. Here, if the red line is above the blue line, then the ROC is confirming an uptrend. If the red line is below the blue line, then we have a confirmed downtrend. A bearish configuration for the ROC indicator red line below blue :.

After opting to follow the direction of the major trend, a trader must decide whether they are more comfortable jumping in as soon as a clear trend is established or after a pullback occurs. In other words, if the trend is determined to be bullish, the choice becomes whether to buy into strength or buy into weakness. If you decide to get in as quickly as possible, you can consider entering a trade as soon as an uptrend or downtrend is confirmed. On the other hand, you could wait for a pullback within the larger overall primary trend in the hope that this offers a lower risk opportunity.

There are many indicators that can fit this bill.

However, one that is useful from a trading standpoint is the three-day relative strength index , or three-day RSI for short. This indicator calculates the cumulative sum of up days and down days over the window period and calculates a value that can range from zero to If all of the price action is to the upside, the indicator will approach ; if all of the price action is to the downside, then the indicator will approach zero. A reading of 50 is considered neutral. Generally speaking, a trader looking to enter on pullbacks would consider going long if the day moving average is above the day and the three-day RSI drops below a certain trigger level, such as 20, which would indicate an oversold position.

Conversely, the trader might consider entering a short position if the day is below the day and the three-day RSI rises above a certain level, such as 80, which would indicate an overbought position. Different traders may prefer using different trigger levels. The last type of indicator that a forex trader needs is something to help determine when to take a profit on a winning trade.

Here, too, there are many choices available. In fact, the three-day RSI can also fit into this category. In other words, a trader holding a long position might consider taking some profits if the three-day RSI rises to a high level of 80 or more. Conversely, a trader holding a short position might consider taking some profit if the three-day RSI declines to a low level, such as 20 or less. Another useful profit-taking tool is a popular indicator known as Bollinger Bands. This tool takes the standard deviation of price-data changes over a period, and then adds and subtracts it from the average closing price over that same time frame, to create trading "bands.

A trader holding a long position might consider taking some profits if the price reaches the upper band, and a trader holding a short position might consider taking some profits if the price reaches the lower band. A final profit-taking tool would be a " trailing stop.

Best Forex Indicators

There are many ways to arrive at a trailing stop. The chart below illustrates just one of these ways. Each day the average true range over the past three trading days is multiplied by five and used to calculate a trailing stop price that can only move sideways or lower for a short trade , or sideways or higher for a long trade. If you are hesitant to get into the forex market and are waiting for an obvious entry point, you may find yourself sitting on the sidelines for a long while.

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By learning a variety of forex indicators, you can determine suitable strategies for choosing profitable times to back a given currency pair. Also, continued monitoring of these indicators will give strong signals that can point you toward a buy or sell signal. As with any investment, strong analysis will minimize potential risks. The threshold of 40 indicates a trend strength, and everything above 50 is a strong trend.

The curvature of lines also has value, demonstrating how fast the rate of change is.

The ADX is a lagging indicator, commonly used to evaluate the strength of a trend. The Aroon is a Forex trading technical indicator that measures if there is a trend, how it's developing, and how strong is it. Aroon indicators play with the idea that the trend can be measured by evaluating how recent the previous highest highs and lowest lows were. The recentness of the highest high is reflected in the Aroon's bullish line, while the recentness of the lower lows is reflected in the Aroon's bearish line.

The lines are then further oscillated from 0 to For example, when the bullish line is pressed to the top of the scale around the mark, and the bearish line is barely above the bottom at 0, higher highs are often, while lower lows are seldom - and this all indicates that we have a strong bullish trend. Crossovers indicate trend direction change. The Aroon is also a lagging indicator, and is often used to confirm whether a trend has remained intact.

Top 5 Forex Oscillators

The MACD indicator is meant to reveal changes in the strength, direction, momentum, and the duration of a trend. It is built upon moving averages of 12 and 26 periods, but with some interesting alterations. There are two things you can conclude from this alone. Using moving averages is similar to using a lagging indicator; 12 and 26 sound a lot like a trading fortnight and a trading month, thus the indicator is meant to be used on daily charts.

The bars along the 0 axis - the histogram - are often used to identify divergences. A divergence occurs when the price makes a higher high or a lower low that is not supported by the histogram, also making a higher high or a lower low, accordingly.

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A divergence hints at the change in the price direction. Momentum indicators are used to signal if an instrument is being overbought or oversold, by measuring the velocity and the magnitude of price movements. Momentum is nothing more than the rate of price change. The bigger the difference between today and yesterday - the stronger the momentum.

Four Types of Forex (FX) Trend Indicators

Therefore, if every future close is higher than the previous one, the RSI will be oscillating upward, and as soon as it reaches the 80 threshold - the overbought area - it will constitute a sell signal. The RSI is no stranger to the concept of divergence. If the price makes a higher high, while the RSI only makes a lower high, a bearish signal is generated and vice versa. Every technical indicator that jumps up and down in a set scale is oscillated. That's how even the trend indicators may be oscillators in terms of their characteristics.

As mentioned above, the Stochastic Oscillator , much like other volume indicators, helps to identify overbought and oversold areas through measuring momentum. In the case of the Stochastic, it is done by evaluating how close the closing price was in relation to the price range. In an uptrend, the price should be closing near the highs of the trading range, and during a downtrend, it should be near the lows.