MetaTrader 4 (MT4) is one of the most popular trading platforms nowadays. It has been in the trading industry since 2005 and was developed by MetaQuotes Software. Due to its user-friendly interface, a lot of traders, even professionals, still prefer MetaTrader 4.
Understanding everything about MT4 can be overwhelming, but you need to start somewhere. Besides, you can’t start trading if you don’t have a broker that offers a trading platform, especially one that can help beginners gain experience.
When trading using MetaTrader 4, there are many this you should know first. This includes its option for a demo account, the charts, and other indicators you need for a successful trading experience. Once you have an account, you need to be familiar with these indicators, which is crucial in planning your strategies.
In this article, we’ll discuss the most popular indicators you can use when trading using MT4.
1. Moving Averages
Moving Averages (MA) help traders identify the trends and counter-trends that may occur while you’re trading. So if you’re looking for the perfect opportunity to open a trade based on the overall trend, don’t forget to try it. For instance, if you want to try to find the trend or the right time to buy or sell while the market is doing great, use MA.
MA is one of the most popular indicators in MetaTrader 4, which has two types— Exponential Moving Average (EMA) and Simple Moving Average (SMA). If you want to know the movement of the market based on recent data, use the former. Meanwhile, use the latter if you’re a beginner or you want to know the overall market trend.
2. Relative Strength Index (RSI)
Relative Strength Index (RSI) is usually used to identify whether the market condition is overbought or oversold. In addition, it measures the change of price movements and its speed. The range usually goes from 0 to 100; where 70 and above suggests overbought market conditions, while below 30 indicates oversold conditions.
Perfect timing is essential in trading, and RSI can be used to identify the perfect entry and exit points. Additionally, this may help in preventing overstaying, and late or early entry.
As you know, RSI is under the oscillator indicator, which is a technical analysis tool. It creates a band where the upper and lower bands are identified. Additionally, the Relative Strength Index is usually used alongside Moving Averages in signalling reversals and breakouts.
3. Stochastic Oscillator
The Stochastic Oscillator specifically identifies the potential trend reversals. As it’s also a type of momentum indicator, it’s used to look for the perfect timing every trader wants to find. This can help traders avoid entering and exiting trades against the trend.
The Stochastic Oscillator is located below the price chart and consists of two lines, %K and %D. Similar to RSI, this indicator can go around 0 to 100. If you’re planning to use the Stochastic Oscillator and Relative Strength Index at the same time, it shouldn’t be confusing due to the differences in their reliability and frequency.
4. Bollinger Bands
You might have heard about the Bollinger Bands a few times before. It’s an MT4 indicator that works based on volatility. There are bands (upper, middle, and lower) used to identify whether the market may lead to being oversold (price touches the lower band) or overbought (price reaches the upper band).
In terms of volatility, these bands can also identify whether there’s high or low market volatility. If the bands are apart, this suggests the former, while it’s the latter when the bands are closer together.
Knowing the potential price extremes is vital, especially for beginners. This can act as a reminder to set up the take-profit or stop-loss orders.
5. Moving Average Convergence Divergence (MACD)
The Moving Average Convergence Divergence is an MT4 indicator that follows the trend and identifies the momentum, duration, strength, and direction. It consists of two lines, the signal line and the MACD line.
The trend goes up when there’s a bullish signal, which is when the MACD line reaches above the signal line. On the other hand, the trend is downward if there’s a bearish signal, or the MACD line is below the signal line.
Final thoughts
As a trading beginner, these MetaTrader 4 indicators can help you a lot in navigating your trades. Additionally, these can help you get to know more about the benefits of using MT4, and compare it to other trading platforms.
However, although these indicators can be helpful, they can also bring negative effects on your trades, especially if not used correctly. This is why it’s important to practise using them first and ask for professional advice.
We hope this article helps you get started with getting to know some of the best MT4 indicators. If you want to add more to this list, don’t hesitate to leave a comment below!