Indicators are an invaluable way to examine price charts and make sound trading decisions. There are various mt4 indicator available; therefore, it’s crucial that traders know which ones to watch out for and their potential benefits for trading success.
Leading indicators can provide traders with an indication of a trend or reversal before it actually occurs, while lagging indicators typically act as warning signals to traders about imminent price action or changes.
On Balance Volume (OBV)
OBV (On Balance Volume) is a momentum indicator used to track changes in volume changes to predict price movements, making it a popular mt4 indicator in stock markets but also applicable for commodities and currencies markets.
Joseph Granville invented On Balance Volume in 1963 in order to identify major market turning points based on volume changes, making it a potency tool for anticipating price movements.
When the OBV line displays higher peaks and lower troughs, this signifies an upward trend in prices. On the contrary, a falling OBV line suggests that prices may be weakening and possibly entering into bearish territory.
Although On Balance Volume can be an effective technical indicator, it should not be seen as a standalone strategy. Instead, it is usually employed alongside other technical indicators and for longer time frames.
Market Facilitation Index (MFI)
Bill Williams developed the Market Facilitation Index (MFI), an innovative indicator which combines volume and price movement into one bar to determine whether a trend is continuing or about to end; additionally, this can also serve as an entry signal into a market.
MFI measures price movements per volume unit by subtracting the lowest bar from the highest one and dividing that difference by total volume – this works across any timeframe or market condition.
MFI increases in value and volume simultaneously, which indicates more traders entering the market and that an emerging trend is emerging. This is considered a “green bar”, providing an ideal time for traders to enter new positions.
Blue bars indicate periods in which MFI and volume both increase simultaneously, but no new investors join (volume decreases). It is best to avoid such instances as they could signal price reversals or the end of trends.
Average True Range (ATR)
Welles Wilder developed ATR as a technical indicator to gauge volatility, making it popularly utilized in forex trading.
An ATR with high values indicates large and rapid price fluctuations that could signal a shift in trend soon; low values typically represent periods of sideways movement with prolonged sideways movements at the top or during consolidation phases of markets.
An indicator is an invaluable asset to traders as it allows them to accurately forecast how volatile an asset will be in the future and set stop losses and profit targets accordingly.
Balance Volume (BV)
The On Balance Volume (OBV) indicator is a momentum technical indicator designed by Joseph Granville that measures how much volume is pushing prices up or down. Widely adopted among professional traders, OBV remains a highly effective momentum tool.
As price advances and sets new highs, OBV typically rises alongside it; smart money moving into the security drives the price higher and creates new highs; but sometimes OBV does not break above its prior high when price does; this indicates that volume may be inadequate to continue the trend.
Non-confirmations occurs at either a bull market top or bear market bottom and is known to signal potential trouble ahead.