Technical analysis plays a critical role in the success of a trader. It helps predict when to enter or exit a trade, in turn, minimizing risks. But given the complexity that comes with technical indicators, beginner traders may shy away from using these essential tools. Luckily, the MT4 trading platform offers some of the most user-friendly technical analysis tools in the market. Some of the best for beginners are highlighted below.
Order History Indicator
As the name suggests, the order history indicator enables you to view your past trade transactions. This allows you to see when you entered a trade and when you got out. With this information, you can then replicate your success and take note of the opportunities missed.
The indicator also allows traders to modify various variables from color variation to type of text, giving you a more detailed trade analysis. If you would like to share your trade history, this indicator makes it easy for you through social media sharing tools.
Moving Average Convergence Divergence Indicator
MACD is one of the best MT4 indicators for beginners. It is used to show the relationship between two dynamic price averages. If the prices dramatically rise, it prompts the short term price average to pull away from the long term price average. The indicator works in cooperation with the signal line to indicate when to sell or buy into the market. For instance, when the MACD falls below the signal line, it signals the time to sell. Similarly, when it falls above the signal line, it shows time the market is in upward momentum.
To enhance accuracy, the indicator uses the divergence formula to show the end of the current market trend.
On-Balance Volume
The on-balance volume is a free indicator is used to show the negative and positive flow of a trading volume. This is achieved by adding or subtracting the trade volume of a specific trading day while considering the price movement.
As a general rule, market volume change before the prices. As such, if a currency is increasing in OBV, it signifies that the currency volume is growing on a bull market. If the OBV decreases, the currency volume is increasing on a bear market.
Bollinger Bands
This indicator is designed to help keep up with the market volatility. Generally, the indicator consists of 3 Moving Average lines. The middle band shows the direction of the market trend while the upper and lower bands are deviated by the volatility above or below the middle band.
To project these deviations, the indicator encloses the currency/security price between the outer lines. As such, the price regularly moving around the middle line causing the outer lines to move close together or far apart. The wider the range between the two lines the higher the market volatility.
Using these movements, the indicator also shows the overbought currency pairs. This happens when the price moves close to the upper band. If the price declines below the lower band, it shows a buying signal.
Zigzag Indicator
This is one of the most overlooked indicators mainly due to its simplicity. However, even with its simplicity, the zigzag indicator is a crucial technical analysis tool that connects highs and lows. This helps identify trends as well as resistances and supports.
Since highs and lows are controlled by buying and selling, the zigzag indicator is characterized by high flexibility making possible to indicate even the slightest market trends. Likewise, by identifying highs the indicator signals horizontal resistance and lows as horizontal supports.
Stochastic Indicator
Stochastic indicator this compares a particular closing price of a currency pair to a range of its prices over a certain period. From this comparison, traders can identify overbought and oversold currency pairs. During an uptrend, prices remain equal to or go beyond the closing price of the previous period. On the other hand, prices will fall below or remain equal to the previous closing price.
To indicate these signals, the indicator uses a scale to measure changes between closing periods, consequently predicting current direction trend.
Summary
MT4 is one of the most popular trading sites for professional and novice traders alike. To ensure you get the most out when using this trading platform, you may consider using the outlined tools above in your next trade.
