MetaTrader Indicators

Principles of basing a Trading Strategy on Divergence Metatrader Indicators

We’ve already described the concept of divergence and how we offer to define it in the article. That’s why let’s skip the definition.

In my opinion, there is no indicator that could precisely (100%) predict behavior of the market. Divergence is quite a strong signal, but I wouldn’t make a decision basing only on one indicator. If you test divergence indicators in visual mode, you can notice that indicator predicts behavior of price to high precision (up to 90%) in some areas. But at the same time the number of false entries is high enough in other areas.

Almost all divergence metatrader indicators show divergence of oscillator and price, and almost all oscillators work well during a flat market and have high inaccuracy if there is a trend. It is not difficult to understand that divergence metatrader indicators give more precise signals during a flat market. We’ve received many letters with such questions: “What is the best divergence indicator and what currency and timeframe you recommend to use it for?” On the basis of aforesaid you can make a conclusion that there is no unambiguous answer on such questions. So, how to use divergence indicators correctly?

There are many methods, but I would like to offer a technique, developed by me several years ago. You should choose several currencies for trade, preferably with low currency correlation. The number of currencies depends only on your experience and attentiveness. For starters, we should find out the phase of the market on the given currency: flat or trend. There are many techniques in the case of using divergence and in the case of determining the phase of the market, and I don’t know which one is the best. But, in my opinion, you can precisely determine the phase of the market, only analyzing several timeframes.

For example, m15  H1  H4 D1 timeframes. You can either make visual analysis or use indicators. We’ve developed HeikenAshi MultiTF and Trend MultiTF indicators, which are perfect for this purpose,

Pic. 1 Metatrader Indicator HeikenAshi MultiTF

but you can also use oscillators (RVI, PowerRvi, etc.)

Pic.2 PowerRVI Metatrader Indicator

and analyze their direction in all timeframes; if directions coincide in higher timeframes, then it is possible to say with high probability that we are in the phase of trend. If oscillators are pointed towards each other, the market is in the phase of flat.

Having analyzed all currencies, selected for trade, we choose currencies, which are in the phase of flat. Divergence metatrader indicators signals on these currencies will be more precise. We can also use divergence indicators on trend currencies, but we will ignore the signals, directed against the trend. Signals, directed along the trend, will show you exit points of currency from retracements.

BJF Trading Group inc.

http://iticsoftware.com

Metatrader Indicators – What Indicators Are Available?

Summary: You will have to experience Metratrader before knowing the indicator. This article states all the important indicators obtained in this program.

You should know that Metatrader Expert Advisor is a great tool in dealing with forex market trades. This program helps you in the way that it contains indicators that provide you the necessary information on whether to buy or to sell that particular currency. Here are some important indicators that greatly assist you in forex trading.
The Metatrader indicator will be BB MACD. It is a combination of Bollinger Band and Moving Average Convergence Divergence indicator that predicts the market trend. You can also determine the strength of the trend by looking at the gap between the 2 bands. The concept of this indicator is based on standard deviation and moving averages.
The next Metatrader indicator will be BMA or Band Moving Average in full. This indicator is used save the older Metatrader moving average’s function. 2 bands are added to the standard line at both 2% below and above it. These lines function as the strong-pull back levels.
Fisher is also another indicator available in the software. This indicator is used to find the maximum and the minimum levels on the given period. In other words, it looks on the potential of the trades within the period desired. This indicator is created based on custom algorithms and it uses histogram to outline the trend.
Pattern recognition master also plays as a very important role in becoming an indicator. It is based on Japanese candlestick recognition automatically. The candle is marked with respect with the code written and the pattern shows corresponding to the markings. It is used to find the signal value of the pattern recognized.
Apart from that, price alert is also one of the important indicators. Price alert notifies you the changes in price of various currencies through sound. Once there is a change, a sound will beep and you can look at which currency is changing. In case you don’t trust the trading method, use this for manual trading.

Improve FX Profitability with Multi Timeframe Trading Forex Indicator

There are several traders across the globe who choose to have only one time frame while they are trading in the forex market. When they emerge to be profitable, they are contented with the situation. However, if you are a trader and you want to increase your success, it would make much more sense if you make use of two or more time frames for your trading decisions. Why? This is for the reason that basing entries and exits with a single time frame will make you oblivious to the broader trend. Therefore, you will risk trading for the longer term trend even when you are using any type of forex indicator.

To make it simpler, we will have an example. If both the four hour and one hour charts for a currency pair show that there is a sturdy bullish trend, it is definitely not a good idea for a trader to look for potential shorts using the 15 minute chart. A forex indicator will be able to guide you on how you are going to make the right decisions for your trade. Thus, you should always trade in the direction of the market. Using a forex indicator with a longer time frame will help the traders buy and sell for the trend’s longer term. You can time your trades using the forex indicator so that the trend will become your friend.

As a classic approach, the trader will have to choose his preferred time interval and later, he will apply the necessary forex indicator and other tools during this time frame. However, many doubt about this and they raise several questions not only with the use of the multi timeframe forex indicator but the whole strategy as well.

The questions raised include which among the intervals should be used along with the length of the period from which the time frame will work. There are several other queries but they are often solved using multi time frame Metatrader indicator optimization. There are options here including building a system that can be tested later for each time frame beginning at one minute up to a day. From here, one can choose the best. However, this can be very tricky, which is why one should choose to use all possible time frames instead of only one.

The classic Metatrader indicator can produce signals in the figure of one buy or sell for a single time. If you will be using voting based Metatrader indicator, you can blend the signals originating from the different time frames for only one Metatrader indicator, which will stand for the result of the selection of the intervals for buying and selling. To construct a multi time frame Metatrader indicator, there are four stages involved here. First, you will have to define the rules for buying and selling. Next is to generate the signals from the different intervals. Third is to sum up the indicators into a composite Metatrader indicator. The last one is normalization of the indicator, which is done by dividing the calculated sum by the amount of timeframes used.

Using multi time frames for your trading process will allow you to evaluate a currency pair. Therefore, one has the ability to improve his profits. In addition, the trader can identify the support and resistance levels as well as the strong readings for entry and exit. It is important that you understand the essence of multi time frames and how you can benefit with this strategy. The reality is this: there is no perfect model for intervals. However, you can always have an above average approach for time frames.

MULTI-TIMEFRAME METATRADER INDICATORS

Learn more about MULTI-TIMEFRAME METATRADER INDICATORS

MetaTrader Indicator HeikenAshi+

MetaTrader Indicator i-MultiRVI

MetaTrader Indicator TREND

Best regards,

BJF Trading Group inc.

A Primer on Andrew’s Pitchfork Application on Forex Trades

Andrew’s Pitchfork is invented by the well-known and celebrated market master, Dr. Alan Hall Andrews. This is a technical indicator that can be used by forex traders as well as those that are involved in the other markets. It can help a trader identify and measure the general cycles that have an effect on the fundamental market activities. There are two different applications in which you can make use of the indicator on your trading technique. These are the approaches in which you can trade within and outside the lines.

By Definition

Before we tackle the two approaches, it is vital that you know first what Andrew’s Pitchfork is. Basically, this is called the median line studies and is similar to the support and resistance indicator. The inventor of this believed that the price of the currency in the forex market would descend to the median line almost eighty percent of the time. The remaining 20% is for the change or the fluctuations in the outlook accounting. Thus, the theory states that whether there are changes in the market trend, the overall market performance will remain unaffected. To know that the current trend will be replaced by a new one, the supply and demand elements will shift and the prices of the currencies will drift. These situations are the key to finding the trading opportunities for beginner and experienced forex traders. If you want to increase your chances of getting accurate trades, the Andrew’s Pitchfork indicator will help you win your game.

The Application

Before you use this technical indicator, you are required to classify the highs and lows that appeared on the chart. Now, draw the pivot at the peak and label it. After the pivot, you will need to make out the trough and the peak, which are both at the right side of the pivot. You have now isolated the high and low with the pivot point. This time, you can place the application. It all begins at the first pivot point, which is also the median line. The peak and the trough will be the support and resistance for the trend of the market.

The Two Approaches

As previously stated, there are two approaches which can be applied for the Andrew’s Pitchfork technical indicator. The first one is to trade within the lines. To profit from this strategy, you will need to understand how exactly it works. For instance, your currency pair is USD/GBP and in the indicator, it shows that it has moved away from the median line towards the pitchfork’s top resistance. Considering these indications, a trader will only benefit from it if he places an entry at the uppermost part of the signal line. Of course, rigorous money management will always help along with a correct stop loss strategy. Even as the price of the currency moves toward the median line once again, the momentum will remain downward. This means that there is a great chance of getting close to a profitable position of 1000 pips during the trading process.

On the other hand, to trade outside the lines is yet another approach that you can apply using the technical indicator. Although this is less recurrently used, they are most considered for long term trends. This is a little bit more complicated than the other approach. You have to understand that the theory here states that the price action will descend to the median line but it can also be assumed that the market has decided that there will be a new trend coming. This can lead to losses on the trader’s part. To avoid this, you can add parameters to secure the retracements and close your position early.

Useful Divergence Metatrader indicators

Before you make use of a Metatrader indicator particularly the divergence indicator, you should first understand what it means when someone speaks of the Metatrader indicator. Basically, this is a series of data points, which can be used by traders who wish to enhance their knowledge in predicting and examining the movements of the forex market especially the currency pairs. Because of the advancement of the technologies today, one can effectively create his own technical indicator. This is important so that a trader will be able to develop his or her own strategies in the forex market.

The divergence indicator is among the most popular indicators for the traders in the forex market. Divergence here pertains to the signal that a reduction is dropping steam. The divergence indicator is currently considered as the strongest most especially if a trader decides to make use of the said indicator with the stochastic divergence ones. Most of the time, the buyers of the currency pairs will purchase the currencies and then they will push the prices into a specific direction even though a lot of traders have already stopped dealing with transactions for the day.

There are a great number of divergence indicators that are present today and among the most widely used are the MACD or the Moving Average Convergence Divergence and the stochastic oscillator. Stochastic is often used to point out whether the currency you are looking at us oversold or even overbought. Often, this is presented in such as way that it is placed on the zero scale up to one hundred percent. You can calculate this with the use of the two lines that can be found on the chart itself. These lines are a representation as to whether a currency is excessively bought or sold. This is believed to be one of the most powerful signals that can be used in trading in the forex market.

Meanwhile, the MACD divergence indicator involves the two lines related to the momentum or the movement of the currency value at a certain period of time. The single line that can be observed from the chart is actually the difference between the 2 exponentials known as the moving averages. You can also see that there is another line that is called the trigger or more commonly known as the signal line. This is the outcome of the exponential of the averages that is taken from the single line difference. Here is an example of a result produced by the MACD divergence indicator:

You can definitely combine the two divergence indicators and this will help you understand more about the dealings in the forex market. With the stochastic indicator telling you if it is time that you buy the currency pair you are looking out for, the MACD will confirm if you will really have to make a purchase. If it is in a high fractal formation, you should certainly buy the pair. If you want, you can also make use of the stochastic indicator with the Relative Strength Index or the RSI.

Divergence Metatrader Indicators

Before you get to know more about divergence indicators, you should first understand the meaning of a forex Metatrader indicator. This is a sequence of data points that are used by every knowledgeable trader to predict and even examine the movements of the currencies in the forex market. There are now a lot of popular technical indicators today and they grow in number each day because a trader is allowed to develop his own indicator.

With the divergence indicator, this is believed to be the most well known indicator that is being used by the traders today. When we speak of divergence, we are pertaining to the signal that a contraction or a rally is dropping steam. These indicators are even considered as the strongest signals especially when they are used together with stochastic divergence indicators. What happens here is that there are buyers during the last periods of the trades who are pushing the prices of the currencies into a certain direction while a greater number of traders have stopped transacting. This is because they are cautious of the retraction or the correction.

There are certain types of divergence indicators that are extremely popular today. Two of them are the stochastic oscillator and the Moving Average Convergence Divergence or MACD. The former is used to indicate whether the currency is being oversold or overbought and is presented on a scale of zero to one hundred per cent. This is based upon the observations that the indicator has obtained during a specific amount of time particularly on the closing prices. Stochastic is calculated once there are two lines that appear on the chart. They represent if a certain currency value is overbought or reversed. Divergence between the lines of the outcome of the stochastic oscillator as well as the action of the prices is actually a very powerful signal in forex trading.

On the other hand, MACD is an indicator that involves the setting of two lines that are related to the momentum of the currency value. The single line from the MACD chart is the difference between the two exponentials which are moving averages. Another line called the trigger or the signal line is the result of the exponential of the moving average from the difference of the first single line. Whenever the MACD and the lines that are known as the trigger cross each other, a trader can predict that there is a change in trend that will come in the not too distant future.

MACD divergence and stochastic divergence can be combined and this is actually a powerful method that a trader should try. It will also be much more effective if you try different custom indicator combinations using the stochastic and the RSI or the Relative Strength Index. Since stochastic is often used to determine whether it is time for a trader to buy a currency pair, having the MACD on check may lead to potential gains. What you will do here is to examine whether the value of MACD has a high fractal formation. If this turns out to be the case, you should definitely make the purchase as soon as possible. It is inevitable that traders like you will find other ways on how they can make their job easier and with the Metatrader indicators, you will surely discover them one way or the other.

Whatever divergence indicators that you choose to work on simultaneously, you should have a great understanding about their main elements. Since these types of indicators are really powerful, your trading opportunities will increase and in line with this, your gains will mount higher.

Divergence Metatrader Indicator

A divergence Metatrader is often believed as the leading indicator that exists today. When a forex trader speaks about this situation, they are referring to the price action analyzed and measured based on the various indicators such as MACD Divergence, CCI, RSI and Stochastic. Others include those relating to other instruments or market measurement like Tick.

Divergence has two types and they are the Regular Divergence or RD and the Hidden Divergence or HD. In the former, the price is making soaring highs even though the indicator is not. Also, when the price is creating lower lows and the indicator is stating otherwise. With HD, the indicator has higher highs whilst the price is not. Once you have recognized these relationships, you will be able to improve your strategy and implement it way better than what you have been doing during the past.

When you really want to determine whether there will be a change of course when it comes to the price patterns, you will need the right indicator too find out. However, there are some who believe that you can do this really well if you have more than one to help you. You can use both the MACD and the stochastic divergence. MACD stands for Moving Average Convergence Divergence. This indicator specifies fractal divergence using the indicator itself. When there is a divergence that appears connecting the price and MACD, this is an indication that that there is a great chance that the current trend in the forex market is going to end sooner than you expected.

If you want to know whether it is time to buy, then just check if there is a formation of low fractal below the previous one. Also, as a guide to buying, if the MACD value that corresponds to the low fractal formation is higher, then you should purchase the currency you are watching. Whereas, with selling, check if an up fractal is formed on top of the previous one and that the MACD value is below the previous value. In addition to the easy to understand feature, there are a lot of customizable settings that you can modify to make the indicator more useful to you.

When it comes to the stochastic indicators, whenever divergence occurs between stochastic and the price, this means that this is the end of the current trend. You will acquire a signal as to whether it is time to buy or not just like MACD. The team of these two Metatrader indicators works really well because stochastic is the one responsible for comparing the closing price of the stock to the price range for that period of time while MACD is focused on the development of two moving averages converging with and diverging from each other. You will really appreciate the teamwork of these two especially when they are at their fullest potential.

If you want to work with both indicators, you should be able to understand both of their components. What is the most important here is that you comprehend how they will react on various situations. Both MACD and stochastic are powerful tools and gives traders a great opportunity to propose an improved entry point when it comes to up–trending the stocks. Moreover, with downtrend, you will surer that this will reverse itself when you are fishing out for long term holds.

Metatrader Indicators: Can They Really Help?

With the rise of popularity of the forex market, many people want to get involved with this kind of business. However, not all people can be professional traders especially those who are not careful. Trading needs to be analyzed and to be able to do so, you have to watch out for the trends in the market that will affect the rise and fall of a currency pair. That is a tiresome job to do and this is one of the reasons why developers have chosen to create forex robots. Now the Metatrader indicators are available also so that you will be able to strategize your plans well.

Metatrader indicators are predefined to create the signals when there is a need for you to buy and sell. They also help in determining the levels of resistance as well as the market support and the trends that will affect your trading. There are a great number of indicators that works well if you use them with your daily charts every week. Indicators have different characteristics and aspects you just need to pick the ones that are vital to your trading style. There are some that displays the value of a currency for a certain period of time. The moving average is known as the average of the price value of the currencies over a period of time.

These averages come in four types: the simple or arithmetic, the exponential, smoothed and linear weighted. MA’s can be calculated through a set of sequential information. Examples of these are the staring and ending prices, peak and the bottom prices as well as the volume of trading. With single MA’s, the prices often have an equivalent value. When it comes to Exponential and the Linear Weighted MA’s, they are more concentrated on the current prices of the currencies.

Metatrader Expert Advisors carry the trading operations for the trader in automated mode. These EA’s are very effective when you use them together with Metatrader Indicators. For the best indicators, you can go to http://iticsoftware.com where you will be able to find more information regarding the latest in the world of forex. There are examples of indicators that a trader can use along with the details of the tool you may choose to use.

Metatrader Indicators are a classic way for traders. They have visual constituents and internal buffers. These features make them work well with the Metatrader platform you have been using. Now you do not have to buy a new system just so you can use the indicator.

Metatrader Indicators: Ichimoku Kinko Hyo

Ichimoku Kinko Hyo technical indicator is predefined to generate signals of buying and selling and to distinguish the resistance levels, market support, and market trends. This technical indicator works best at daily charts and on weekly basis.

Four time intervals of different lengths are used to define the dimensions of parameters. Composing this technical indicator the values of individual lines are based on these intervals:

• Tenken-sen shows that the average price value during the first time interval is defined as the sum of minimum and maximum within the given time and divides by 2.
• Kijun-sen shows the average price value during the second time interval.
• Senkou Span A shows that the middle of the distance between the two previous lines has been shifted forwards by the value of the second time interval.
• Senkou Span B shows that the average price value during the third time interval has been shifted forward by the value of the second time interval.

Chinkou Span shows that the closing price of the current candle has been shifted towards the back by the value of the second time interval. The distance between the Senkou lines is formulated with another color and this is known as cloud. If the price is between these lines, the cloud margins form the resistance and support levels and then the market should be considered as non-trend.

• If the price is above the cloud, the first support level forms as its upper line, and the second support level forms as its second line.
• If the price is below the cloud, the first resistance level forms the lower line, and the second level forms as the upper one.
• If the Chinkou Span line passes through the price chart in the bottom-up direction then it’s the signal to buy. If the Chinkou Span line passes through the price chart in the top-down direction then it’s the signal to sell.

The technical indicator of the market movement is the Kijun-sen. If the price is above the indicator, than the prices will probably continue to increase, when the price passes through this line the trend, more changes in the trend are possible.

Another kind of giving signals is using the Kijun-sen. When the buy signal is generated then the Tenkan-sen like pass through the Kijun-sen is in the bottom-up direction. The signal to sell is the top-down direction.

The technical indicator of the market trend is the Tenkan-sen. If this Tenken-sen line decreases or increases, the trend exists. When it’s straight, it indicates that the market has come into the channel.

Metatrader Indicators: Moving Average (MA)

The MA or Moving Average is a form of technical indicator which depicts the price value over a given period of time. The average of the price for certain period of time is better known as the Moving Average (MA).

Moving averages are of four types:

1. Simple or Arithmetic Moving Average.
2. Exponential Moving Average.
3. Smoothed Moving Average.
4. Linear Weighted.

Moving Average can be calculated for a given set of sequential data like that of starting prices and ending prices, peak prices and bottom prices, volume of trading and many such other indicators. This happens quite often with the use of moving averages twice.

The single point of divergence between the moving averages is that when the weight coefficients given to the current data differ from each other. When we are discussing SMA, all the prices of that given period of time have equal value. Exponential MA as well as Linear Weighted MA gives added importance to the current prices.

There is a very common method of interpretation of the price MA. It is done by evaluating the difference between the dynamics and the action of price. The buying signal appears with the rise in price, much higher than its moving average and with the fall in price, much lower than its moving average it is the time to sell.

The method of trading based on moving average does not intend to allow way inside the market when it is at its lowest, and way out when the market is at its peak. It permits the trend which says it is best to buy when the prices are the lowest and sell off when the prices are at its highest.

These can be used as an application for indicators. This is the point of similarity between the indicator and MA, as their interpretation is the same. It means that if there is a rise in the indicator higher than the moving average, it is assumed that the rising movement of the indicator will continue and if the indicator slips down, much lower than the moving average it is assumed that it will go even lower.

Calculation:

Simple or Arithmetic Moving Average (SMA)

Summation of the instrument closure prices over N number of particular periods is the Simple moving average (SMA). The result is further divided by N number of similar period.

sma=total (closure, N)/N

Where, N stand for the total periods calculated.

EMA or Exponential Moving Average

The calculation of Exponentially moving average is done by summing up the MA of a particular portion of the latest concluding price to that of the earlier value. With EMA the current prices have more value.

EMA= {closure (i)*p} + {EMA (i-1)*(100-p)}

Where:

Closure (i) stands for the current closing period

EMA (i-1) stands for EMA of earlier closing period

p stands for the percentage of price value usage

SMMA or Smoothed Moving Average

Calculating the initial value of SMMA is the same as SMA.

S1=S (closure, n)

SMMA=S1/n

The next step of calculation is done using the following method:

SMMA (i) = (S1-SMMA+closure (i))/n

Where:

S1 stands for the sum total of price closure for certain (n) periods;

SMMA stands for first smoothed moving average;

SMMA (i) stands for current smoothed moving average (leaving aside the first one);

closure (i) stands for the present price closure;

n stands for period of smoothing.

LMWA or Linear Weighted Moving Average

In this method, more importance is given to the current data than the earlier data. The calculation is done by multiplying every price closure within the stated sequence, by a particular weight coefficient.

LWMA=S (Close (i)*i,n)/SUM(i,n)

Where, S (i,n) stands for the sum total of coefficients of weight..

MACD is another form of a dynamic indicator that follows a particular trend. It states that two moving averages are inter related.

The MACD technical indicator is basically the divergence between two particular moving averages, the one whish has 26 periods and the other has 12 periods of Exponential Moving Average. While predicting the buying and selling opportunities a line of signal is used. It is usually a moving average indicator showing 9 periods. Then it is plotted on MACD chart.

The MACD has been regarded as the most efficient one in case of greater fluctuations in the trade market. There are 3 major ways of using MACD:

Crossovers

MACD follows a general rule of trading which says that when the it is the best to sell off when the MACD is at the bottom of the line of signal. In the same way, the best time to buy is when the MACD is above its line of signal. It is preferred to either buy or sell when the MACD is greater than or less than zero.

Conditions of overbought and oversold

MACD is used as over bought and oversold indicator. As the lesser moving average shifts away from the higher moving average, which indicates a rise in MACD, it is assumed that the price of security is going overboard and will slip down to its practical level very soon.

Divergence

With the divergence of MACD from security it is predictable that the present trend is about to come to an end. When MACD reaches new highs which the price cannot meet, then it is noted as bullish MACD. Whereas, when the MACD reaches its new lows and price cannot follow the same it is known as bearish divergence. The divergences are both significant when it takes place at overbought and oversold situations.

MACD calculation:

The value of difference between moving averages of 26 periods and 12 periods respectively results in the MACD. Then a simple moving average of 9 periods is plotted on the MACD chart in the dorm of dotted lone.

MACD = EMA (CLOSE, 12)-EMA (CLOSE, 26)

SIGNAL = SMA (MACD, 9)

Where

EMA stands for Exponential Moving Average;

SMA stands for Simple Moving Average;

SIGNAL stands for signal line of the indicator.

OsMA or Moving Average of Oscillator

The subtracted value of the oscillator from the oscillator smoothing is the value of Moving average of the oscillator. Here the oscillator is denoted by the MACD base line and smoothing is denoted by the MACD line of signal.

OsMA=MACD- line of signal

Metatrader Indicators: Money Flow Index

Money Flow Index or MFI is another technical indicator used to indicate the rate, based on which money is invested into securities and withdrawn from the same. Volume is of great importance for MFI and that makes it different from Relative Strength Index, or else both follow the same procedure of construction and analysis.

The following points must be considered while you are analyzing MFI:

Whether the movement of price is divergent from the indicator i.e.; with the rise in price the MFI slips down or vice versa. In such cases the price tends to turn.

Money Flow Index or MFI value is usually above 80 and below 20, which signifies the market’s probable rise or fall.

Calculation

The Money Flow Index is calculated in several stages. In the first stage we the typical price or TP of that particular period is defined.

TP= (HIGH+LOW+CLOSE)/3

The next stage involves calculation of the amount of Money Flow (MF)

MF=TP*VOLUME

If typical price (TP) today is greater from what it was previously, then it is noted as positive Money Flow (MF) .if typical price today is smaller than what it was previously, then it is noted as negative Money Flow.

The summation of positive flow of money for a certain time period is known as positive flow of money. The summation of negative flow of money for a certain time period is known as negative flow of money.

Calculation of the momey ratio (MR) is the next stage. The method involves division of positive money flow by negative money flow.

MR=Positive Money Flow (PMF)/ Negative Money Flow (NMF)

The final step is the calculation of the MFI or Money Flow Index, which is done by using money ratio.

MFI= 100-(100/(1+ MR))

Metatrader Indicators: Market Facilitation Index – BW MFI

The market facilitation index (MFI), is created by Bill Williams, and attempts to determine the efficiency of price movement by quantifying the price movement per unit of volume. This is done by taking the day’s range high minus low and dividing it by the total volume.

• When the market facilitation index increases and volume increases:

a) The number of players coming into the market as well as volume increases.

b) Once there is a movement and its pick up has happened to speed things up, therefore as the new players start to open positions, the direction of bar then begins to develop.

• When the market facilitation index and volume decreases, this means that the market participants are not interested any more.
• When the market facilitation index increases its volume decreases. This means that it’s most likely that the market is not supported with the volume from clients and the price is changing due to traders’ that is dealers and brokers on the floor speculations.
• When the market facilitation index decreases, the volume also increases then there is a clash between bulls and bears. These are characterized by a large sell and buy volume, but the no considerable change in the price, since the forces are equal. Any one of the contending parties that is buyers or sellers will eventually win the battle. The break of such a bar lets you know that if this bar determines the trend annuls or the continuation of the trend, such bar is known as curtsying and Bill Williams was the person to name it.

Calculation

For calculating the MFI, you need to minus the lowest bar price from the highest bar price and then divide it by the volume. The formula is to find out BW MFI as follows:

BW MFI =Range x (High - Low)/Volume

Metatrader Indicators: Momentum

The change in the amount of security’s price in a given period of time is measured by the Momentum Technical Indicator.

The Momentum Indicator can be used in two ways:

It functions almost like Moving Average Convergence/Divergence (MACD) which fluctuates according to situations. When the indicator goes down and then pops up, it is the ideal time to buy and sell off when the indicator is at its zenith and falls down. If you want to keep a track of the rise and fall you will have to plan a temporary moving average.

If a significant rise or fall is noticed as compared to its previous trend then it is assumed that the current state will last for sometime. If the momentum indicator is at its peak and then falls down then it clearly indicates that the prices are going even higher. It is suggested to wait for the prices to confirm the current state of affairs. Do not trade until you are too sure of the prices.

Momentum Indicator can also be used as primary indicator. The method follows a general rule which states that when the market shoots up it is evident that there is a price rise and everyone believes that the prices will go even higher and as the market falls there will be speedy rejections ad people will want to make their way out. This happens very often, but it is just an overview of the situation.

As the market reaches its highest point, the Momentum Indicator will rise up and then fall straight, deviating from the movement of the price. In the same way when the market falls off, the Momentum Indicator falls right down and then makes its way up. The results of both the cases are divergent from the prices and the indicator.

Calculations

The ratio of current price to the price N years ago is the Momentum.

MOMENTUM = CLOSE (i)/CLOSE (i-N)*100

Where:

CLOSE(i) — is the current bar’s closing price.

CLOSE(i-N) — is the price of closing bar N years ago..

Metatrader Indicators: OBV or ON BALANCE VOLUME

ON BALANCE VOLUME is another technical indicator which is used to relate the volume to the change in price. This indicator was brought in by Joseph Granville and is a very simple one. When security finishes off with a value that is higher than its previous closure then it is considered an up-volume for the whole of the day. When the situation is reversed i.e.: the present value of closure is lower than its previous value, then the situation termed as down-volume.

It is understood that the change in on balance volume is ahead of price changes. It is noted that with a rise in on balance volume there is an inflow of smart money.

A situation of “Non confirmation” occurs when the movement in price goes ahead of on balance volume movement. Non confirmation can happen during bullish markets (earlier rise in security than OBV) or bearish markets (earlier fall in security than OBV).

The rising trend of OBV is noted when there is every new growth reaches a mark above its previous growth and every new reduction is more than the previous reduction. In the same way the falling trend of OBV is noted when every high is lower tan its previous high and every low is lower than it previous low. If the movement of OBV is sideways with no significant growth or reduction, then the trend is said to be doubtful.

A trend once formed, cannot be altered until and unless it is broken. To break the trend of OBV , two ways have to be followed, the first being the change in trend from high to low or from low to high. The second way is if by any chance the trend becomes doubtful and stays as long as 3 days. Therefore, it can be noted that if the trend is doubtful and it lasts for 2 days and then shifts to a rising trend on the third day, it is assumed that the trend was ever rising.

Changes in OBV, from a rising to a falling trend might cause a “breakout”. As OBV breakouts tend to go ahead of price breakouts, it is better to buy when there is an upside OBV breakout and sell off when there is a downside OBV breakout. Investors must hold on to the position until there is a change in trend.

Calculation of OBV:

If closure today is larger than the closure yesterday - OBV(i) = OBV(i-1)+VOLUME(i)

If the closure today is smaller than the closure yesterday - OBV(i) = OBV(i-1)-VOLUME(i)

If both the closures are equal - OBV(i) = OBV(i-1)

Where:

OBV(i) stands for indicator value of today;

OBV(i-1) stands for indicator value of the previous day;

VOLUME(i) stands for the volume of the present bar.