High Low Indicator MT4 … Sometimes, simplicity is the strength of the forex market, especially if you are new to trading and analyzing the market. That statement holds because there are essential tools available to remove every complexity in the market. Most times, complexity is the barrier to entry and exit of the market. However, for a beginner, the starting point is to search for an easy tool to use when trading. One essential tool that will help you achieve this feat is the high low indicator MT4.
The high low indicator MT4 is an indicator used by most traders as a profitable strategy. The concept of using an indicator such as the high low indicator MT4 is that when price moves beyond the previous day’s low or high, the market takes a clue and flow in the direction of such breakout. Importantly, the consideration period for most traders using a high low indicator is daily.
What are Indicators?
Technical analysis is a crucial tool used by most traders to analyze the market. They do this with the assumption that all information they need to predict a trade is reflecting by price. Hence, they analyze historical data of the market like volume, price, and patterns. Over time, analysts have designed tools known as indicators to help analyze the market effectively.
The concept behind an indicator is to create something that will help traders quickly analyze the market. This could be finding the difference between the opening prices or the moving average of a currency pair. However, there are complex indicators like linear regression and standard deviation.
Types of Indicators
In most trading platforms, Forex Indicators are made of four types. Perhaps you have heard the saying, “Trend is your friend.” The Trend indicators are well-known because they help you identify the current trend of the market. They include Average directional indicators, moving averages, Parabolic SAR, Envelops, Standard Deviation, and Bollinger Bands.
Another type of indicator you will come across is the momentum indicators. These are used to measure how fast the price of a currency pair changes. In order words, they check the rate of change of a currency pair. These include relative strength index, MACD, and the stochastic oscillator. However, some traders also use the Ichimoku Kinko Hyo indicator as a momentum indicator.
The volatility indicators are used to ascertain how volatile a currency pair is. These indicators include the Bollinger bands and the average true range. These two are very proactive in indicating the volatility nature of the market.
Finally, we have the volume indicators that show the number of volumes traded within a given period. These indicators include the accumulation distribution line, Chaikin Money Flow, and On Balance Volume.
These indicators are your arsenal to unleash in the market chart. However, you have to find the right indicator to combine else you will misfire, which will be costly to your account. Importantly, the timeframe in which these indicators are used is also essential when trading in the forex market.
The importance of High Low Indicator MT4
The high low indicator MT4 helps plot horizontal lines on your chart. This horizontal line represents the high and low of a currency price depending on the timeframe. Using this indicator can be helpful because it is easier to identify areas of support and resistance for a specified period. This indicator is most effective when used on a daily trade.
You can also identify areas of highs and lows without the high low indicator MT4 by looking at the chart to pinpoint an area of interest. However, this method is tedious and, at times, inaccurate.
How to trade using Highs and Lows
For beginners, it can be like WWIII to trade highs and lows of the day. Well, the simple way of trading the high and lows is by placing two different pending orders. With these orders, you can catch the direction of the breakout. The two pending orders are a sell stop and buy stop orders.
Buy Stop Orders
This order is placed when a trader wants to buy a currency pair above the current market price. If you understand the high and lows, you will appreciate why a trader will place a buy stop order to move with the direction of the market.
Sell stop order
This order is the opposite of the buy stop order because the order is placed below the market’s current price. In this situation, the trader is expecting the currency pair to depreciate downward to the market order.
The concept of Swing High and Swing Low
Most intraday traders widely use this concept in combination with other indicators such as Fibonacci Retracement. Although the swing high and low is different from the day’s high and low, it does help to identify potential areas of price movement. Most traders use the high low indicator MT4 in combination with other indicators to identify areas of potential interest.
Identifying swings highs and lows are very important because price doesn’t move in a particular direction in the market. You can experiment this by pulling up any chart in your trading platform, and undoubtedly you will see the candlestick moving in a zigzag direction. In other words, the price of a currency pair moves in an upward and downward direction. You will never see price move in an upward direction without retracing downward and downward without retracing upward.
A swing low represents a point in the market where the prices make a low and areaccompanied by another two successive higher lows. On the other hand, a swing high is the point at which price makes a high and immediately followed by another two consecutive lower highs.
Summary High Low Indicator MT4
If you are an intraday trader, then the high low indicator MT4 is the best indicator to use. Professional traders use the high-low strategy to trade the market effectively. It is a simple concept most newbies understand and apply in their trade.
Just sit and get the indicator on your chart while you watch price bounces or break through the previous day’s trading activity. It is quite easy to step up and profitable when used appropriately.
There are other ways you can learn about through this link to improve your probability of success in each trade. So take advantage of it and keep improving.