The top 10 MT4 Indicators that I use in my trading

As a trader, one of the first things I do right after installing Metatrader 4 is to go and get all of my favorite indicators/tools.

This is my list of the top 10 Metatrader 4 indicators that I use and that make my live easier and improve my trading.

ForexTradingTools

1. Key PA Levels

The first indicator is called Key Price Action Levels and it works by creating horizontal lines for price levels that are relevant for traders. These are psychological levels of support and resistance and they often work because we think in whole numbers, and when placing stops or limits, human beings will most likely use these prices.

Round numbers are important. This was one of the first concepts that I learned about forex trading, and this is one of the first indicators I that I put on a chart whenever I analyze a currency pair.

Key PA Levels indicator

2. Session High Low

If you are trading intraday, the ability to keep an eye on the different trading sessions and their relevant levels is very important.

I like this indicator because it not only informs you when a session starts and ends, but it also shows you the high and low levels that were achieved in that session. You can also easily see the overlap time between sessions. This indicator comes from cjatradingtools.com, and I recommend you explore their website, they have some other very good indicators.

Session High Low indicator

3. Support & Resistance Price Zones 

Horizontal levels of support and resistance are one of the most reliable ways to trade. However, I don't know about you, but when I started trading I wasn't very confident in the levels that I drew. 

That's when i found this indicator. It uses fractals to find the levels of support and resistance. It then categorizes them in order of verified, unverified, tested, untested and strong and weak zones.

This is definitely one of the better support and resistance indicators that I have ever found, and I strongly recommend it to new traders that are not yet experienced in drawing the levels by themselves.

Support Resistance indicator

4. Equity and Balance

This one is an indicator that I frequently like to use in conjunction with my robots. Whenever I'm live testing or trading a robot I usually use this indicator to easily see at a glance how the robot is doing.

It is very helpful in knowing what recent trades were taken and what were their results. Ideally this should show a steady line growing in direction of the upper right corner. However I cant say that this has been my case 🙂

5. MTF Bollinger Bands

This indicator is one of the indicators that I personally developed. One of my favorite strategies to trade uses Bollinger Bands and requires that I keep in mind the Bollinger Bands from higher timeframes.

So I developed this indicator because I wanted to be able see on the same chart the Bollinger Bands from different timeframes. I use it frequently instead of the default BBands indicator that comes installed with metatrader.

MTF Bollinger Bands

6. Daily Profit Loss

This indicator is somewhat similar to the Equity indicator, but instead of showing show your trade results on a line chart, it presents them on a small table on the top right corner. 

It shows your trading results in points, money earned/lost and percent change of your account based on several periods. Like the Equity indicator, it is also very useful for keeping track of your trading. 

Daily Profit Loss indicator

7. Daily Data

This indicator will draw a box on all of the candles of the current trading day and show you the daily candle on the right side of the chart. This way you can easily see the open, high and low of the day and understand how the day is unfolding. It is mostly useful if you are doing intraday trading. 

It also has the ability to show additional information, like the current range and the pips distance from the day high and low. It is a good indicator to use in conjunction with the Session High Low.

Daily Data indicator

8. CalendarFX

There are a lot of news indicators. After experimenting with some of them, I found this one to be one of the simpler ones and my personal favorite.

It is easy to configure and has several useful features. Besides showing a simple table with the news, it can also show event flags, and news lines on the price chart. I highly recommend it.

CalendarFx indicator

9. Strategy Checklist

This is one of the first indicators that I have ever developed. At the time I wanted something to help me in my discretionary trading. 

A simple checklist that would be always attached to the chart. This way there would be no excuse for not following my strategy. It has definitely helped to prevent me from taking trades for the wrong reasons.

FxTT Strategy Checklist

10. Zig Zag Value

And last but certainly not least, the Zig Zag indicator is an indicator basically serves to simplify the price movement. It does that by filtering out smaller price movements. 

This is very useful indicator if you trade using fibonacci retracements and projections.

Zig Zag indicator

My trendlines trading strategy 

Trading Strategy Description

Following the blog post on how to trade using trendlines this is a trading strategy that I developed and that uses the points highlighted on that post.

Keep in mind that at the moment is a trading strategy that I am experimenting with. My ultimate goal is to keep improving it and tweaking it based on the results that I achieve.

My plan to improve this strategy consists of using it first on a demo account on a reduced number of currency pairs and monitor its progress.

Trading Strategy Process

Entry

  1. First of all, I try to find the context based on the higher time-frames. Are we in a trend or a ranging environment? Is a pullback expected or should the trend continue? These are the kinds of questions that I try to answer before continuing with the process.
  2. The second step is to find the support and resistance levels and draw them on the chart. These levels are drawn based on previous price action and where has price reversed direction on the recent past.
  3. Finally on the last step, I decide what to do when price hits the trend line based on the higher time frame context. Most of the time I try to trade the bounce of the trendline. I usually only go for breakouts if my analysis says that the price is overextended

Stop Loss

  • The stop loss is set based on previous price action. Usually not very far from the entry and with a max distance of 1.2x average daily range

Take Profit

  • The take profit is set also based on previous price action. I try to find the nearest support or resistance and that will be my target. By default the take profit should be 2x the average daily range.

 

Trading Strategy Example

Analysis

First of all, the reason why I chose the EURGBP currency pair was because it just felt like a currency that would be suitable for range trading, since I usually like to trade price reversals.

Next,  I checked the weekly timeframe and drew the support and resistance lines. This step told me that the higher timeframe context is that the pair is in a range and approaching the resistance level.

Weekly timeframe analysis
Weekly timeframe analysis

Dropping down to the daily timeframe, I first drew the support trendline, and later created the parallel resistance line that identified the rising price channel. This step told me that the price is currently trending up (but will soon approach the horizontal resistance line) therefore I should probably be biased to only take buy orders.

Daily Analysis
Daily timeframe analysis

Finally on the H4 timeframe, I was able to draw a few more support lines, taking into account that I would like to enter into a buy trade whenever price pulls back to these same levels.

I also added the commands to open my BUY trades when price approaches the lines that I drew (according to the Trendlines EA that I developed). The only exception is the D1 Resistance line, that I’m expecting price to reverse at least a small amount.

For my stop losses and take profits, I used 1.2ADR(20) and 2ADR(20) correspondingly. However I intend to manage these targets manually whenever a trade is opened depending on the movement of the price.

Trading Strategy analysis applied to EURGBP
Trading actions applied to the EURGBP pair using the Trendline EA

If you like my color scheme, you can download it here.

How to trade using Trendlines

In order to successfully trade using trendlines you must first understand a few key concepts.

Right after horizontal lines of support and resistance, trendlines are probably the most used tool to analyse price movement.

First of all let’s start with the definition.

What is a trendline?

According to Google, the definition of a trendline is:

a line indicating the general course or tendency of something, e.g. a geographical feature or a set of points on a graph.

Similarly, in trading terminology, a trendline is basically a line drawn connecting either tops or bottoms in order to show the prevailing direction of price.

In this way trendlines work as a visual representation of support and resistance, with the caveat that they don’t have to be horizontal lines.

A trendline connecting the tops of price movement can be called a resistance trendline. Likewise the trendline connecting the bottoms of price movement is called a support trendline.

Support and Resistance Trendlines
Example of support and resistance Trendlines

Why are they important

Trendlines are very versatile, they can be used to show not only direction but also speed of price.

Regarding the direction, while a rising (or bullish) trendline clearly shows that price is going up, a falling (or bearish) trendline shows you that price is going down.

Bullish and Bearish Trendlines
Bullish and Bearish Trendlines

To find the speed of price however, you must look at the slope of the trendline. The steeper the trendline, the faster price is rising or falling. Do keep in mind that very steep trendlines don’t tend to hold very long, as price cannot maintain a high speed for longer periods of time.

Fast & Slow Price Trendlines
Trendline angle showing the speed of price change.

Trendlines are also quite flexible since they can be used both in trending and ranging environments and also to identify chart patterns like triangles and flags.

In my view, the basis of a good trading strategy should always start with clearly defining support and resistance areas.

In that regard, trendlines are only second to horizontal lines of support and resistance.

How to draw good trendlines

The simplest rules for drawing a trendline are:

  1. The line must connect at least two points on a price chart;
  2. In an uptrend the line is drawn along the bottom of easily identifiable support areas (bottoms);

    Bullish Trendline
    Price is going up
  3. In a downtrend, the line is drawn along the top of easily identifiable resistance areas (tops);
Bearish Trendline
Price is going down

Some traders defend that in order to be valid, a trendline cannot be broken. Personally I disagree. Trendlines are just like horizontal levels, they should not be treated as exact price levels, but should instead be treated as zones.  Sometimes price breaks a few pips through the line and sometimes the price reverses before reaching the line. That does not mean that the level is invalid.

Close and High trendline
Trendline at close of candle and Trendline at high of candle

What you should keep in mind is that broken trendlines are less reliable than unbroken ones. For instance, in my personal experience I frequently found that a resistance trendline was broken only to be respected on the opposite side as support and vice-versa. To me that proves that the trendline was valid.

Support turns to Resistance
Support turns to Resistance

How to trade using trendlines

To trade using trendlines you only need to know one thing. You need to choose a direction!

Basically you need to decide what will you do when price reaches the trendline. You only have two choices. Price will either hit the line and bounce back, or price will continue and break through beyond the line.

Bounce and Breakout
Bounce and Breakout

To help you decide there are several tools that you can use. You can use fundamental analysis and trade according to your fundamental beliefs. You can perform a technical analysis of the higher time frames and trade counter trend or you can trade with the prevailing trend. This decision is up to you and should be followed according to your trade plan.

Now lets discuss our two options. Lets first start with the easiest of the two. The bounce back.

How to trade a bounce

To trade the bounce you must simply choose a minimum distance from the trendline that you wish to enter into a trade and whenever price reaches that minimum distance you open your trade. You can use some tools that will open the trade for you or that will alert you when price reaches the level you intend.

There are some traders that prefer a little bit of confirmation before entering into a trade and they wait for a predetermined number of touches to the trendline in order to open the trade. For instance, you may only consider a trendline to be valid if price touched it three times and bounced back. In this manner you will only open a trade when price approaches it for the fourth time. From personal experience, waiting for this kind of confirmation has not worked well for me. However it may work well for you.

Trendline Bounce
Trendline Bounce

How to trade a breakout

The second option to trading using trendlines is the breakout. The breakout is harder because you must first define for yourself what a breakout is. Some definitions say that if price reaches a specific distance from the line one should already consider it a breakout. However others say that the candle of the time frame that you are analyzing must first close beyond the trendline for it to be considered a valid breakout.

Trendline Breakout
Trendline Breakout

These differences will impact your trading because your entry point will be different. Depending on the close of the candle may cause your entry to be taken quite far from the trendline. On the other hand, if you enter into a trade as soon as price crosses the trendline, you will find that many times price will reverse and stop you out.

That is why there is a third way that you can use to trade breakouts. It is the pullback. Basically it states that you do not enter into a trade if price breaks the trendline and not even if the candle closes beyond the trendline. You actually wait for price to close and return back to the trendline. Only then you will enter into your trade. The pullback is usually a safer method but it has the disadvantage that sometimes price just goes and the pullback never happens.

In conclusion

Trendlines are a very simple tool to use, you are simply connecting dots on a chart.

Hopefully this post will help you draw better and more reliable trendlines which in turn will make you feel more confident in your analysis and help you in your trading with trendlines.

If you wish to trade with trendlines, check out the Trendline EA robot I developed to help me trade. With it I just draw my lines, input my desired actions and leave the rest to the robot. It’s awesome.

Good luck and happy trading!