Out of the MT4 indicators that are available, the MT4 indicators to choose are the ones that will work best when combined.
The key here is to attempt to create an ideal combination of MT4 indicators.
Ideally, the best combination of MT4 indicators will mean that each one will provide different data as to how the market is operating and reinforce not just repeat signals provided by other MT4 indicators.
Your deals won't be any better if you have at least two MT4 indicators giving you the same signals.
Rather unhelpfully, this is termed 'signal confirmation' when in actual fact it would be more appropriate to call it 'signal duplication'.
The more money at stake, the greater the seriousness of this situation...
If you go about your MT4 indicator selection in a undisciplined way don't be surprised if you notice that you see some with similar study types.
So how can you prevent this from taking place?
It's best for the dealer to first understand the sort of MT4 indicator they are using.
The following are the high level MT4 indicators:
1st MT4 indicator - Trend indicators
- When trading Forex, these show three main price movements:
Sideways, Down and Up.
When you are looking at the general trend direction of price moves, these are the indicators that will help as, throughout the relevant time frame they will even out the price information.
Or put another way, these types of indicator will allow traders to get a visual perspective on the trends in the market.
2nd MT4 indicator - Volume indicators
These will be used to specify the degree of interest the investor has in the market. You can see that a new trend is likely to emerge if there is a high volume near important levels in the market, as opposed to the lesser volumes reporting that traders have doubts and are disinterested in that market.
When trading Forex, the volume data means the total quote activity over a particular period in time.
3rd MT4 indicator - Momentum indicators
How quickly price moves over a particular time period is represented by this indicator for Forex Trading.
These indicators will simultaneously follow how strong a trend is while it moves over a time period; the momentum peak will be seen as the start of a trend and ends at the lowest point.
4th MT4 indicator - Volatility indicators.
The magnitude and size of fluctuations in price are shown with these indicators.
Across any given market there will be instances of much more intense volatility (high intensity) and much less intense volatility (low intensity). These occurrences take place in waves; less volatile will be overtaken by greater intensity and ultimately once some higher volatility has taken place you will have lower volatility.
So the intensity of fluctuations in price will give a more detailed look at market activity by these indicators.
5th MT4 indicator - Cycle indicators
Any market cycle is defined by a range of repeating patterns.
There are common circumstances that will determine the patterns of a market like when a season changes, any market theories and the counts from the day.
It is better for traders to hold back from using any MT4 indicators within the same category.
The occurrences of more than one MT4 indicator from the same category is easy to find.
When these similar MT4 indicators are lined up within a chart , you will notice that their behaviour will be almost identical.
The signals they provide will match the identical increases and decreases.
For instance, momentum indicator, ultimate oscillator and RIS are from the same camp so will produce similar results. For this reason, you should pick one and ignore the rest.
This is a basic principle to apply to picking your MT4 indicators but it's one that even the most seasoned forex traders follow.