The purpose of Average Directional Indicator (ADX) is to calculate when a price is in a robust trend. The benefits of knowing this are that dealing when you are following a trend that is strong can improve your potential to make profit as well as minimising your risk.
ADX can be used to put a value on the strength of a trend. The ADX is calculated by basing the expansion of a price range moving average over a specific time period. The standard time period is for this to be 14 bars but clearly this can differ.
To plot ADX, a line containing values spanning from zero to 100 is drawn. The key with ADX is that it doesn’t follow a direction – only the strength of a trend is captured and if a particular price is generally moving upwards or downwards.
The ADX is normally shown alongside the 2 Directional Movement Indicators (+DMI and -DMI) that comprise the ADX.
If the –DMI is below the +DMI, the prices are generally trending upwards. Thus, ADX Indicator will reflect how strong that upward moving trend is.
Similarly, when +DMI is below the –DMI, the prices are generally trending downwards and ADX will reflect how strong that downward moving trend is.

Measuring the strength of a trend

Traders use the ADX number to seek out the most robust and lucrative trends to deal. This ADX value is also invaluable to identify which conditions are genuine trends and which aren’t
The benchmark that traders will use to signify a trend is strong enough to start dealing is an ADX in excess of 25. If an ADX value is 25 or below, most traders will take that to mean that a trend is too weak to deal.
A guide:
ADX between 0 – 25 means a weak trend
ADX between 25 – 50 is a trend strong enough to trade
ADX between 50  -75 is a highly strong trend
ADX between 75 – 100 is an excellent trend

Low ADX Values

When ADX values fall below 25, this normally means that distribution or accumulation is happening. If this continues in excess of 30 bars, the price now becomes part of ‘range’ conditions and so any patterns in the price become clearer to spot.
The price will then vary upwards and downwards moving from the resistance (upper price limit) and support (lower limit) to determine the relevant selling and buying prices.
Gradually, weak ADX circumstances will reveal a price that becomes a trend.
To understand how strong the trend is, the important aspect of the ADX line is its direction. A rising ADX signifies that the strength of the trend is moving upwards. The price will also move in the trend’s direction.

If the ADX line drops away, then this shows that the trend is weakening and the price will now consolidate. 

Most people mistakenly view the ADX line in decline as a sign that the trend is moving into reverse. However, unless the price has reached its maximum all this signifies is that the trend is not as strong. As long as ADX stays above 25, the trend is still there albeit a little weaker.

The Momentum of trends

Momentum is the speed of the price. The general ‘momentum’ of a trend can be demonstrated by a range of spikes in the ADX Indicator values. The ADX will easily show at what point a trend loses or increases this momentum.

So, when the momentum of a trend is rising, this will be reflected by a range of higher ADX spikes. Likewise, a falling momentum of the trend is shown by a range of lower ADX spikes.
It follows that an ADX spike in excess of 25 is robust even if not as high as others. Don’t think that just because ADX momentum is falling when a trend is moving upwards that prices won’t increase.

The best dealers do not get carried away by instinct but stick to objective signs. Any dealer noticing a range of smaller ADX spikes should take this as a sign to monitor price and control risk. Likewise, a dealer can allow gains to continue while the momentum of a trend is rising instead of panicking and leaving the trend early.
So, once a trend is no longer following the same pattern, one should assess how this situation should be handled so as to control any risk.

Conclusion: Seek out the strongest trends

The most profitable trades will emerge from the strongest trends. As ADX helps find these, dealers can identify which ones to deal and putting a number to these occurrences make them easier to spot.
As ADX can also reveal the weaker trends, any dealer will know which ones to avoid. And you can control your risks by using ADX for momentum changes.

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However, this perception has a fundamental flaw and could explain why a lot of trading indicators do not yield the results many would hope for.
Let’s assume that prices follow a square wave pattern and we adopt a trading system where we take a price that crosses a moving average.
What we will find is that by the time any price movement has been detected, it has already switched to the opposite value.
As with a square wave, the price has only two values, so there is be a clear 50% probability that the price will be only one of those values.
So, despite any confusion around how to calculate a probability density, the concept is no more complicated than understanding how likely it is that a certain price will be achieved.
Let’s now compare a Gaussian, or Normal, Probability Density Function to that of a sine wave cycle.
The first thing we notice is that with a sine wave, the majority of the data points will be present at the extremes of the sine wave cycle and more closely resemble that of a square wave.
This therefore means that in terms of trading, unless you are able to predict the turning point of the cycle as per the method used in the Hilbert Sine Wave Indicator, the probability is that you are more likely to hit one of these ‘extremes’, which will make successful trading more difficult.
So we can conclude that, as the Gaussian PDF will have the majority of values around the mean and the sine wave has the majority of its values at its extremes, the probability density function of a sine wave is not similar to that of the Gaussian probability density function.
This brings us to the Fisher Transformation. The main concept of the Fisher Transform is that by applying it to a sine wave it alters the probability density function of a wave so that it more closely matches that of a Gaussian PDF.
It does this by limiting any input values to within a range confined to no greater than -1 to +1.
This means that input data that is close to the mean yields a parallel gain. However, input data at the extremes of the range yields exaggerated results mirroring the largest deviations away from the mean.
The effects of the Fisher Transform can be significant in trading terms. As the Fisher Transform has standardised prices so that they remain within a -1 to +1 range, the exaggerated price movements become less common. In so doing, it becomes easier to identify those critical turning points.

If we compare the Fisher Transform approach to the more traditional indicator represented by the Moving Average Convergence / Divergence, or MACD, we notice a difference.

The MACD shows smoother, less obvious turning signals meaning one cannot be certain as to exactly when the cycle is starting or leaving a new phase. This will inevitably create delays when deciding when to buy or sell.
However, with the Fisher Transform, the cycle or price turning points are not only very clear and definite but they are immediate. This transparency and immediacy provides an obvious advantage for trading.
So in effect, the Fisher Transformation can not only minimise the frequency of peak price swings and move it towards a more normal probability density function but it will also clearly and quickly identify when prices are turning in time to maximise trading performance.

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Metatrader 4 Indicators for Trend Determination

A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary lasting short times.

MetaTrader Indicator HeikenAshi MultiTF, MetaTrader Indicator Trend-MultiTF, MetaTrader Indicator ADX Divergence, Metatrader 4 Indicator  MACD Divergence, Metatrader 4 Indicator TRIX Divergence, Metatrader 4 Indicator KnowSureThing Divergence.

Metatrader 4 Indicators for Momentum Determination

In finance, Momentum , a empirical tendency for rising asset prices to continue to rise.

TrueStrengthIndex Divergence Indicator,  MetaTrader Indicator Stochastic Divergence, MetaTrader Indicator RSI Divergence, MetaTrader Indicator WPR Divergence, MetaTrader Indicator Momentum Divergence

Metatrader 4 Indicators Volume Determination

Volume, or trading volume, is a term in capital markets, referring to the number of shares or contracts traded in a security or in an entire market during a given period of time. Higher volume for a forex  is an indicator of higher liquidity and vice versa.
Metatrader Indicator Chaikin Money Flow Divergence, MetaTrader Indicator Volumes Divergence, MetaTrader Indicator OBV Divergence, Metatrader Indicator Volume Price Trend Divergence, Metatrader Indicator Force Index Divergence

Metatrader 4 Indicators Volatility Determination

In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices. An implied volatility is derived from the market price of a market traded derivative (in particular an option).

MetaTrader Indicator BollingerBands Divergence, ATR

Geometric & Patterns Metatrader 4 Indicators

MetaTrader Indicator Alt-Pitchfork, MetaTrader 4 Indicator LR-Channels, MetaTrader 4 Indicator Wolfe Wave, MetaTrader Indicator Support Resistance Levels

Other Metatrader 4 Indicators

MetaTrader Indicator Hurst Divergence

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Normal Bullish Divergence: usually occurs in a down trend when new lows in the price do not result in a new low in the indicator. This signifies that the prevailing downward trend is weakening and a trader should look for other possible signs of a pending reversal to the upside.

Normal Bearish Divergence: usually occurs in an up trend when new highs in the price do not result in a new high in the indicator. This signifies that the prevailing upward trend is weakening and a trader should look for other possible signs of a pending reversal to the downside.

Hidden divergence appear when the technical indicator shows a new extreme, but the corresponding price action does not.

Metatrader 4 Divergence Indicators based on unique algorithm.

How to use Normal and Hidden Divergence

While regular divergence often indicates trend reversals, hidden divergence tends to be a continuation indicator that shows when an opportunity to take advantage of a pullback in a trend may exist. This means that a trader can now choose to enter the market in the direction of the trend to profit from its continuation.

f you are interested in studying technical analysis, you should learn more about indicators that allow traders to make sharper entry and exit points, which will improve their trading programs. Here we will try to give you a better notion of money flow, which was developed by Chaikin. This metatrader indicator is based both on price and volume that allows to get a better idea of the price action.

The Description of Money Flow Metatrader 4 Indicator

Money flow is an indicator. It allows you to calculate an indexed value on the basis of volume and price for the certain number of bars, which is set in the input Length. Each bar with an average price less or greater than the previous bar is included into calculations. After that all the received values are indexed in order to calculate the money flow. It is possible to receive different perspective from volume or price thanks to usage of price and volume at the same time. The given metatrader indicator is very useful for identifying overbought and oversold conditions because of its tendency to display dramatic oscillations.

Now let’s explain all of the above said in more simple terms. First of all, let’s speak about the momentum indicator that determines money flow, i.e. about accumulation/distribution. According to Chaikin, accumulation is a state of the stock when it is closed above its midpoint and distribution is when the stock is closed below its midpoint.

If you’d like us to represent the given explanation in terms of mathematics, here you are: in order to calculate the midpoint you just should find the arithmetic average of the highest and the lowest trade of the day. Then, according to Chaikin, you should use price and volume in order to finish the calculation. Chaikin added the accumulation/distribution number for a 21-day trading period, and then divided the derived number by the sum of the volume for the same 21-day period.

Usage of Money Flow Metatrader 4 Indicator

Money Flow Divergence

Divergence can show up in the indicator when the CMF indicator makes a higher high, while the price action makes a lower low. This implies that there is less selling pressure pushing the security lower, thus a bounce is in order. Money Flow divergence is very strong signal for trend reversal.

Money Flow Divergence Examples

Read more about Chaikin Money Flow Divergence Indicator

Conclusion

We’ve tried to explain the complicated indicator in simple words. The Chaikin money flow is a perfect tool for identification of overbought and oversold positions, but it has its shortcomings, too. The money flow depends on accumulation/distribution, and it may influence the accuracy of numbers in case of absence of the midpoint. Do not forget to use the signals of other indicators in order to check the accuracy of entry and exit points.

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1.    P&F charts send only clear buy or sell signals without any dual nature.
2.    P&F charts take into account only “important” price changes and filter out market noise. This being said, the “importance” of changes is set by a trader.
3.    P&F charts are not affected by time effect, which sometimes introduces additional element of uncertainty on general charts.
4.    P&F charts allow to identify support and resistance levels, and also trend lines.
5.    P&F charts are very intelligible.

Point and Figure  Disadvantages

1.    P&F charts send clear signals only for medium-term and long-term periods and are almost not intended for short-term trade.

Building Point and Figure Charts

The majority of the most popular charts, used for technical analysis, are built in accordance with opening price, closing price, maximum or minimum for a definite period. Only closing price for a period is used for building Point and Figure charts.

Point and Figure charts consist of X and O columns, which reflect the filtered price changes. Increase in prices is shown by “X” boxes, and drop in prices is shown by “O” boxes. New boxes are created only in case of price change by the size of a box or more in one of directions.

As a result, each chart has a setting called “box size” – conventional unit of price movement direction, which is shown on a chart. Box size is an amount of pips, on which price should move above the current X box (or below the current O box) for a new Х (or О) box to be created and added to the chart. For example, if price increased by three conventional box sizes, it will be displayed on a chart like three X boxes.

If there is a reverse of price movement, a new column of O boxes will be displayed on a chart. This being said, X and О boxes never appear in one and the same column.

Besides, each chart has a setting called “reversal threshold”, which defines the amount of pips, necessary for a new column to be created and a chart to start moving in the opposite direction (downwards, if a previous column was the column of Xs, or upwards, if a previous column was the column of Os). When a reversal threshold is crossed by price, a new column, which moves in the opposite direction, will be created next to a previous column.

Thereby, if securities move, for example, in ascending trend, a chart will show the growing column of Xs until these securities move downwards for a distance more that a reversal threshold (as a rule, several boxes represent a reversal threshold, for example, 3 boxes). The same situation occurs in case of appearance of a column of Os.

It is necessary to remember two important specific points:

1.    There is no linear time scale on Point-and-figure charts, so each column can represent several minutes or several days depending on price movement patterns.
2.    There is no definite price value in a box on Point-and-figure charts. On the contrary, a certain range of price values is displayed, which is situated within the limits of the box size.

Point and Figure Charts Signals

-    Reversal pattern signals

Appearance of a new column of Os is a signal to sell.
Appearance of a new column of Xs is a signal to buy.

-    Support and resistance levels

Support and resistance levels are always horizontal lines because of specifics of Point and Figure charts. Support level appears on Point and Figure charts if there is a row of successive O columns, which minima are situated on a level. Resistance level appears on Point and Figure charts if there is a row of successive X columns, which maxima are situated on a level.

You should remember that the XO chart doesn’t point to a specific level, but to a support zone (equal in size to the box size), because arrangement of minima of several successive O columns on a level doesn’t mean that prices have stopped exactly on this level, but indicates that prices simply haven’t passed below more than one box. The same is true of resistance levels.

-    Trend lines

Support and resistance levels are always lines with 45-degree slope because of specifics of Point and Figure charts.

It should be noted that in most cases the current position of a trend line on a Point and Figure chart is not match the position of the same line on a bar and candle chart in point of price. There are two reasons: firstly, Point and Figure chart doesn’t reflect the real minima and maxima of the market, but only points to their position in the diapason of a box; secondly, time scale is non-linear.

XO MetaTrader Indicator

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Modern Elliott Wave Description

An Impulse 2 is an uncommon pattern that resembles a normal impulse considerably. In our daily analysis we allow for a maximum retracement of 51.5% for wave 4 in an impulse or other trend pattern. Of course sometimes the retracement of wave 4 could be 51.6% and an impulse would then be eliminated, in spite of the fact that the limit was exceeded by 0.1% only. Naturally the Elliott Wave does not apply this strictly and the Impulse 2 pattern corrects for this problem. Apart from this, we have witnessed a retracement up to 62% for a wave 4 frequently in intra day charts.
Rules and guidelines
The same rules and guidelines apply as with a normal impulse except for the following:
•    Wave 4 is allowed to retrace between 51.5% and 62%, without penetrating the region of wave 1.
•    As a guideline, wave 4 very often is a Zigzag.
In which wave
Impulse 2 patterns mostly occur in waves 1,A or C, never in a wave 3!
Internal structure
It is composed of five waves. The internal structure of these waves is 5-3-5-3-5. Note that the mentioned 3s are corrective waves, which could be composed of 5 waves in a corrective triangle.

learn more about Elliott Indicator

2010 BJF Trading Group

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to be continued…

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http://iticsoftware.com

Bollinger bands consist 3 lines. First one,  central  line and other  two price channels lines. Channel lines also called bands. The center line is an exponential moving average; the price channels lines are the standard deviations of the forex market being studied. The bands will expand and contract as the price action of an issue becomes volatile (expansion) or becomes bound into a tight trading pattern.

For our opinion this indicator will be useful for scalping. Very strong signal for position opening is Bollinger bands forex divergence.

Bollinger Bands Divergence Explanation

BollingerBands Divergence Generation III is new professional forex divergence indicator with complex mathematical algorithm (BJF Trading Group invention).

Forex Divergence Algorithm short explanation

• Search for significant peaks on the both chart and indicator;
• Match pairs of peaks from the chart to pairs of peaks from the indicator;
• Apply main divergence conditions to accept divergence pattern;
• Apply user defined filters.

BJF Trading Group inc.

http://iticsoftware.com

Your main goal is to have the indicator run the same way in the test as it does in the actual run time. Although this can be slightly tricky, with enough knowledge and practice, you will be able to do it. You will want to keep in mind that during the testing phase, there are no ticks. Even though Metatrader will try its best to simulate prices that are probable with the help of OHLC, it is not the same, and you will have to consider that when going through this phase of building your forex indicator.

In the event that the indicator you are building has many complexities, or if there are multiple metatrader indicators open at one time, chances are the computer will begin to slow down. While this problem may be a difficult one to overcome for some, you will be able to do it by using a certain piece of code in order to figure out whether or not the very first tick is the start of a new bar. A new dot will be added to the indicator in the event that it is the start of a new bar. While this may be a somewhat difficult phase to get past, with enough attempts you will be able to get it right.

When recalculating each time, you will need to consider the number of bars. A lot of people use codes that utilize all available data which tends to get redrawn. Although you may see it a lot on the Internet, it is still a fairly inefficient way of going about building an indicator. What is really important to keep in mind is that with each new bar, there are certain things which are not immediately known, including the high, low, and the close; there is only the “open” that is known.

There are those that want their indicator to draw the last point with every single tick, and that is certainly something that you will be able to do. When you are doing this, you will have to realize that “close” simply means that it is the last value and not the close of the bar itself. Building a reliable indicator will certainly give you an advantage when it comes to trading. It is something which everyone who uses this software should do themselves. You will be able to use your own code to come up with a highly effective method of trading, so you can drastically increase your money-making potential.

BJF Trading Group inc.

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Content: Everyone who would like to try their luck in the forex market must have a trading platform that could help them lessen the risk of losing. Therefore, it is just essential that you get only the best online tool such as the Meta Trader 4. This is actually has a lot of features including metatrader indicators that would help you analyze and even control the outcome of the trading so it will be on your advantage.

One of the biggest advantages of using the Meta Trader 4 is that you can get a security system that you can never have from any other software. It is very user-friendly and you can easily access all the features that are in store for clients like you. No technical skills are needed but it would be a plus if you would know something or at least have a background about forex trading. Moreover, the said platform will also increase your chances of winning a trade even without experts or professionals telling you about the right strategies to do. Managing your forex trading venture can be very easy and you can do this even at the comfort of your own home. The metatrader indicators would also allow you to do more important things as well. You don’t have to wait right in front of the computer the whole time since the indicator will let you know if there is any change in the market.

Aside from these facts, the Meta Trader 4 can also handle different currencies all at the same time. Language will no longer be a barrier for you to trade efficiently as well. It would be very convenient since there is a wide array of languages that the client can use. You could certainly depend on the software for all your trading needs.

Dr Alan H. Andrews is among the famous forex traders who invented Pitchfork Method for traders to make profit and find opportunities in this market. This is a method to observe the overall trading market and find the fundamental technique in making money in forex trading. So, here is the basic information on how to use this method.

First of all, you can trade by applying two techniques called trading outside the lines and trading within the lines. Pitchfork actually applies a middle line, also known as median line, between the highest and lowest pitch line. In his theory, he believes that for long term trading, almost 80% of the time, the market price will move towards the median line and the rest will be the unforeseen fluctuations. A trader can always use the opportunity when price stray due to sudden change in the market to make profit.

So, how do we apply Andrew’s Pitchfork method? First of all, get the trend chart. Identify the first point, either the trough or peak. Then, select another two points; one line which connects the peak and another line which connects the trough. These two lines serve as the resistance and support. From the chart, a trader can actually decide easily whether to trade within the line or outside the line. It is actually easier for you to determine the right time to buy and sell currency.

You need to study the trend well before deciding on which technique to apply. It is quite complicated, so for beginners, it is recommended to break the technique into steps so that you can understand it better. First, you need to identify the median line. Then, test the prongs and place an entry.

This is usually being applied for U.S dollars pairs where the currency price moves in trend. It would be more effective if you can combine it with other techniques such as textbook analysis or money management method.

Actually the majority of the forex traders make use of the Metatrader indicator for trend trading. In this type of business, what matters here is who well you trade. You should be smart enough so that you take advantage of the profits that are waiting for you to grab hold of. Intelligent decisions are a must when it comes to using the forex indicator. Yes, you may use any kind of forex indicator so that your decision making will be successful. However, this will not always be the case. With numerous people competing in this market, you can never be sure that you will win against them. If you do, it may not always happen that way.

Meanwhile, trend trading forex indicator will be your guiding instrument so that you can make decisions based on the data that you have fed into it. What makes this forex indicator unique is that it is very reliable and provides fairly accurate data as it makes use of mathematical algorithms that are based on the previous important events. Before, the traders will have to depend on what the experts say. Even though they were quite valuable, it is inevitable for humans to commit errors. This is why a Metatrader indicator for trend trading has been presented to the public.

A Metatrader indicator for trend trading is focused on giving out predictions that are reliable and almost precise. One can say that this Metatrader indicator is the solution to avoid the undependable assumption so that you can make the appropriate decisions. Since trading in the forex market is very risky, you will need to protect your gains well. This functions on the financial leverage principle. You can only earn big profits if you are blessed.

Trend indicators will help you realize profits and keep away from the losses. You can base your decisions upon the current market trend. One of the best features of these indicators is that they come with trend analysis, which covers the past events in forex market. You are safe from pure guesswork since what is involved here is the fact that mathematical calculations are used. In addition, it does not only concentrate on one aspect of the market but he entire factors that contribute to the changes that you have to deal with.

Forex trading is not about making only one trading transaction per day. You can perform more than one trade. If this is the case, you will have to make sure that your strategy is right so that you will not invite losses on your part. In the Metatrader indicator for trend trading, the number one priority is the direction of the market. Take note however that there is always a risk involved here. Trend trading then requires you to make intelligent trading decisions.

MetaTrader 4 Indicator Trend

Learn more about indicator ‘Trend’

Best regards,

BJF Trading Group inc.

MACD Definition

As mentioned above, MACD is an easy indicator to use and understand. It mainly gauges the difference between a 26 day and 12 day EMA or exponential moving averages. The former is the slower one obviously while the other is the faster one. To calculate the two values, the closing prices are used to determine the difference for the moving averages.

If you are using the MACD chart, you can check it now and you will observe that the 9 day EMA is also plotted. This EMA will act as the go signal for decisions of traders regarding the buying and selling of currencies. For instance, you will have to sell whatever currency you have at hand when the signal goes down to the 9 day EMA. Otherwise, you are going to purchase your currency pair.

Trading divergence often makes use of the MACD histogram because it helps them calculate momentum. The price movement that it detects will be determined easily so instead of using MACD to watch the direction of the current trend, the traders use it to detect the price movement’s strength.

Trading MACD Divergence

To start this, you will need to find the chart points wherein the current prices make the latest swing high or low. However, you should remember that this tool will not let you view the divergence between the momentum and the price of the currency pair.

Before you start trading divergence, you should bear in find that there is a greater chance that you will fail here. This is because just when there are profitable trends and trades, the traders are forced to exit their position due to the results in the MACD divergence indicator.

MACD Histogram Application

Because there is a great conflict in the values of the entry and exit signals, you can resolve this with the help of the MACD histogram. So for instance, if you will have to trade he negative divergence, you should take a fractional short position at the starting point of the divergence. However, you will do this in a different way unlike the conventional one, which compels you to set the stop at the closest swing high, which is reliant upon the price of the currency. Thus, you will put a stop on the trade when the previous swing high is exceeded by the MACD histogram. This is an indication that the momentum is currently in acceleration and the trader is actually committing a trading mistake.

The main reason behind why traders use MACD divergence as their forex technical indicator because it will lead to greater profits once the position is large. With trading as a challenging task, you will have to take advantage of this strategy but only if you understand the whole concept well.  Whether you are a day or position trader, it does not matter. As long as you have a methodical and logical approach, you can take advantage of the whole MACD divergence method in the forex market.