Just get into trading and don’t know how to interpret such a complex market chart or don’t know how the MT4 indicators work?
In this comprehensive guide, you’ll discover the most popular MT4 indicators for 2024 and how to use them to understand the movements of traded assets, spot trends, and make more accurate trading decisions.
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Top MT4 Indicators
At the end of this guide, you’ll be able to use these tools on the MT4 platform as you practice with Finbok brokers to boost your trading knowledge.
1. What Are MT4 Indicators?
First of all, what are MT4 indicators? Well, MT4 indicators are technical analysis tools that come with the MetaTrader 4 platform, which is one of the most prominent trading platforms in the world. These indicators help traders read historical price action and predict future market moves by using different types of indicators, such as trend indicators, oscillators, volume indicators, and volatility indicators.
For instance, MA smooths price data to provide a trending signal, whereas RSI helps identify overbought or oversold conditions, which can be used to determine market trends and momentum to know when to enter or exit a trade.
2. Why Are MT4 Indicators Important in 2024?
The markets in 2024 are more volatile than ever. A combination of inflation, interest rate changes and geopolitical issues are all wreaking havoc on global economic health. Having the right set of MT4 indicators can make the difference between knowing how to react to these market changes or not.
Why use top MT4 indicators? If you like to trade commodities or forex in fast-moving markets, you might well be interested in the Moving Average Convergence Divergence (MACD) indicator, which identifies trend shifts and momentum changes.
For example, if you’re trading crude oil futures, MACD can help you spot when a market is likely to reverse, enabling you to enter and exit trades at the correct times.
Disclaimer: Using indicators without knowing the overall context of the market could lead to trading mistakes. For trading purposes, these indicators should be used along with other fundamental studies, risk management and money management methods.
3. Top MT4 Indicators for 2024
The most popular MT4 indicators that traders will surely use in 2024 to earn more money in the market are described below.
Step 1: Moving Average (MA)
The Moving Average is probably the most popular among the MT4 indicators. It smoothes price data over a certain period of time to show you the overall direction of the market.
Why use it? The MA helps the trader to sense the trend of the market. If the price breaks above the moving average, it could signal an emerging upward slant in the market. There are two types: Simple Moving Average (SMA) and Exponential Moving Average (EMA). EMA places more weight on the recent prices, making it more reactive to new information.
For instance, if you’re trading forex, it’s possible that a bullish market might exist if the price crosses up the EMA, while a bearish trend could be present if the price crosses down through the moving average.
Step 2: Relative Strength Index (RSI)
RSI measures the velocity and change of price movements Momentum oscillators measure the speed and change of price movements, and oscillate between 0 and 100. Above 70 indicates an overbought condition and below 30 is considered an oversold condition. This is the RSI for the above chart.
What’s the point of it? RSI is a great indicator of potential trend reversals: if you’re above 70, an asset might be overbought and ready for a correction; if you’re below 30, an asset might be oversold and ready for a rebound.
For instance, in a volatile market such as cryptocurrency trading, when the RSI reading is high, it suggests trading may be overheated and it is wise to avoid buying at the top of a rally. Conversely, when the RSI reading is low, it indicates trading may be too depressed and it is better to avoid selling at the bottom of a dip.
Step 3: Bollinger Bands
Bollinger Bands include a middle band (usually an SMA) and two outer bands that widen and tighten according to market volatility. When the market is volatile, the bands widen, and when it is quieter, the bands tighten.
What’s the point? Bollinger Bands can assist in identifying potential breakouts or reversals – prices moving close to the top band can suggest the underlying asset is overbought, while prices near the bottom band can indicate the asset is oversold.
For instance, a Bollinger Bands trader might spot a ‘squeeze’ – where the bands converge to suggest low volatility – and get ready for a breakout in price.
Step 4: MACD (Moving Average Convergence Divergence)
MACD is a type of trend-following momentum indicator that shows the relationship between two moving averages of an assets’ price, the MACD line is the difference between the 26-day EMA and the 12-day EMA, and the signal line is a 9-day EMA of the MACD.
But why? MACD is very effective at revealing turns in momentum: when the MACD line crosses above the signal line, it might signify bullish momentum; when it crosses below, bearish momentum.
For example: a crossover of the MACD when trading gold could alert traders to a potential change in trend, providing a signal to enter or exit the market.
Step 5: Stochastic Oscillator
The Stochastic Oscillator compares a security’s closing price relative to its price range over a given period and could used to recognise potential reversals.
What for? Stochastic Oscillators are good for uncovering overbought (or oversold) conditions, like RSI, but they react faster to changes in the market, which makes them useful to those who like trading on the short term.
For example, a forex (foreign exchange) trader could use the Stochastic Oscillator to try to identify potential reversals when the market is in a correction or pullback.
4. Best Trading Practices When Using Top MT4 Indicators
While access to the best and most reliable MT4 indicators is essential, knowing how to use them is just as important. These are some tips for using MT4 effectively in 2024:
Combine Multiple Indicators
Each indicator will give us a certain insight, but, when combined, they might give us a more rounded picture. For example, we might use an indicator to track trends, like Moving Average, and then combine this with a momentum indicator like RSI to check if this trend is gaining steam or losing momentum.
For instance, a trader may employ Bollinger Bands in conjunction with RSI to enter or exit a position. Should the price on a chart hit the upper Bollinger Band, and RSI is also showing oversold conditions, then a reversal of the market may be imminent.
Confirm with Price Action
Never make a trade based solely on an MT4 indicator. Always do a reality check on an indicator signal by referring back to price action or chart patterns, or both. For example, check a bullish MACD signal by taking a look at support and resistance levels or a candlestick pattern.
Manage Your Risk
Having the best MT4 indicators around will not by itself enable you to trade successfully. Always use risk management tools such as stop-loss orders to limit your losses.
Risks of Over-relying on Indicators
But we can also easily get too wrapped up in indicators, and therefore miss the bigger picture. For instance, using Bollinger Bands without looking at market news or economic reports could make us miss an opportunity to buy or sell. It might also lead to big losses.
Why Trade with Finbok?
Finbok is a reliable platform with number 1 MT4 indicators, that is easy to use. The creators of this platform understand the needs of traders and have added advanced charting tools, low commissions, and 24/7 support to make global markets accessible for any trader at any stage of their trading.
Whatever your experience, with the best indicators, the platform features at Finbok will help you make the most of these indicators.
5. How to Apply Top MT4 Indicators for Optimal Trading
Here’s how you can put these top MT4 indicators to good use in 2024:
Step 1: Download and Install MT4
If you don’t already have it, download MetaTrader 4, install it on your computer, tablet or smartphone (it’s available in a desktop, mobile and web version).
Step 2: Load the Indicators
When MT4 opens, choose any of the indicators by going to the Insert menu (on the top menu bar) and then the Insert Indicators submenu. You will then see a list of built-in tools, such as MA, RSI and MACD.
Step 3: Customize the Settings
Each of these indicators has a set of parameters that can be adjusted. For instance, there is an option in Moving Average to set the number of periods and whether to use a simple or exponential moving average.
Step 4: Analyze and Confirm Signals
Once you have applied these indicators, look at the signals that they have given. Use a combination of indicators to confirm that there is a trend or price momentum, or that a possible reversal is coming, before you take a trade.
Conclusion
As a trader, having a good understanding of the best MT4 indicators in 2024 is essential. They will give you an edge in the market, whether it’s catching trends with Moving Averages, identifying overbought conditions with RSI, or giving you a heads-up for an upcoming breakdown with MACD. With an advanced platform like Finbok, implementing the best MT4 indicators is simple.
