These three indicators will be the right recommendations for traders who want to maximize their trading activities on MetaTrader 5. What are they?
Since being used by many traders since 2009, MetaTrader 5 has become one of the most popular trading platforms in the world to date. As an update of MetaTrader 4, MetaTrader 5 brings various innovations that make it superior to previous versions. Some of these important updates include the availability of more technical indicators, a variety of time frames to choose from, and the availability of a forex calendar.
The availability of technical indicators in MetaTrader 5 is a breath of fresh air for traders. With this many choices, the opportunity to use technical indicators to increase profit is increasingly wide open.
See Also: MT5 Forex Brokers and Their Advantages
However, remember that many technical indicators are outdated and old-fashioned in MetaTrader 5 because forex and CFD have undergone many major changes over the past decade. So, which indicator is the most powerful to use in MetaTrader 5?
in this review, the author will discuss three MT5 indicators that are still relevant and able to provide many benefits for traders.
DeMarker is a momentum indicator used to measure market demand for an asset. This indicator relies on comparing the asset's current high and low price versus the previous high and low price, creating a plot of market demand embodied as a line in the indicator window.
There are two kinds of indicators in DeMarker, namely Moving Average DeMax and DeMin. DeMax is the component that makes the highest price comparisons, whereas DeMin takes care of the low price comparisons. In other words, if the most recent maximum bar is higher, a corresponding difference between the two will be recorded. The recorded value will be zero if the most recent bar is lower or equal to the previous period's maximum. The two combine to generate a signal line in the indicator window.
If you look at the chart, the vertical line is in the range of 0.0 to 1.0, although sometimes it can go outside the line. Remember that if the DeMarker indicator rises above 0.7, it indicates an overbought condition. On the other hand, if it drops below 0.3, it is an oversold signal.
As with other oscillator indicators, DeMark functions to detect price divergences. Price divergence. This is achieved if the peaks or troughs face the opposite direction from the DeMarker signal line.
To see the visual effect on a MetaTrader 5 chart, click and drag the peaks and troughs on the bullish or bearish indicator from the navigation window. A bearish or bullish indicator will appear as a series of vertical bars in the indicator window, having a midpoint corresponding to the DeMarker indicator. To include this indicator in MetaTrader 5, it's quite easy. Just use the following way:
Insert -> Indicators -> Oscillators-> DeMarker
For a clearer picture, consider the chart below:
2. Stochastic Oscillator
Initially launched in 1950, the Stochastic Oscillator has become a momentum indicator that is quite popular today. Even though it has been around for a long time, this indicator is still very relevant to use in MetaTrader 5. Stochastic's main function is to show price divergence or describe the difference between price movements and indicators. Apart from its main function, this indicator can also be used to show extreme conditions of Overbought and Oversold. If the stochastic curve is above 80, it is considered Overbought, while if it is below 20, it indicates an Oversold market.
The Stochastic Oscillator indicator has two lines, namely %K and %D. The %K line shows the asset's current price, which is the difference between the highest and lowest price during a certain period. The %K line is measured for 14 periods. On the other hand, the %D line is the 3-period Moving Average of %K. The %D line is also often referred to as the fast line to compare the 14 periods required by the %K line.
See Also: How to Use Stochastic in Forex Trading
What makes Stochastic even more interesting is that this indicator can be adapted to the needs of each trader. For example, the %K line could be adjusted to 50, %D to 40, and r with the Moving Average of 2. This would produce an almost perfect result because the Oversold and Overbought conditions could be filtered more strictly.
To see how this indicator works, please see the chart below:
3. Ichimoku Kinko Hyo Indicator (Tenkan Sen)
Ichimoku Kinko Hyo can be considered a unique indicator because it has a versatile function. Even though it has been around since the MetaTrader 4 trading platform, this indicator can still be used even if some of the components are removed. Then, it is placed directly in the indicator window and can interact with other indicators to generate a crossover signal. For more details, here are some of the components of the Ichimoku Kinko Hyo Indicator:
- Tenkan sen (line)
- Kijun sen (line)
- Senkou span A line
- Senkou span B line
- Chikou Span
In MetaTrader 5, the most important component is the Tenkan Sen because this line can cross several oscillators, such as the Stochastics indicator. Traders need to "unleash" other components by changing the color to white and only giving color to the Tenkan Sen. Thus, Tenkan Sen will be the focus of attention when observing the chart. For example, please see the chart below.
Using this indicator in MetaTrader 5 is quite easy; open the Navigator window on the left side of the page, click the + sign next to Trend, then click and drag the Ichimoku Kinko Hyo icon to the oscillator indicator window.
Trading is susceptible to changes, as well as the technical indicators used. MetaTrader 5 is considered the most complete trading platform and is an upgrade from the previous version. The three indicators above are examples of several indicators that are still very relevant, so they are the choice of many traders using the MetaTrader 5 trading platform.
Like its predecessors, MetaTrader 5 has plenty of fans throughout the industry. It's no question that many brokers are now offering MT5 as their trading platform option. But which broker has the best MT5 deposits?