Ultimately trend indicators help reduce risk, but to a trader the reasons for using trend indicators are generally to
- reinforce assumptions
- avoid false signals
- predict new trends
This quick article is not about the versatile Moving Average (MA) and Exponential Moving Average (EMA), which are baked in the the MT4 plaatform, here are some other fairly common trend indicators to help traders.
OsMa – Moving Average of Oscillator
The Moving Average Oscillator is an indicator that provides 4 signals for interpretation.
- If the OsMa rises above zero, this indicates a buy signal
- If the OxMa falls below zero, it indicates a sell signal
- If the OsMa was rising but starts to change this may indicate a bearish reversal
- If the OsMa was falling but starts to rise, then it may indicate a bullish reversal
The strategy is very basic, but that also means it’s simple. You can download it directly from within MT4, or using the links below.
ADI or ADX – Average Directional Movement Indicator
This indicator was developer by Welles Wilder to determine Trend Strength. I find this one a little hard to decipher.
The indicator strength will go up on a downward trend as well as going up on an upward trend. What I find odd, is that where there price is ranging, that the strength stays high, I would have thought the strength would decline.
There are 3 lines, the first line shows the current trend, the highs, and the lows.
Strategy for this is to really not look at the ADX line, but look at the other 2 lines, if they cross over it indicates a sell or buy.
The Parabolic indicator
The Parabolic indicator was also created by Welles Wilder, and it is a versatile indicator. Here is what it does.
- Possibly Indicate when to close trades
- Confirm or deny trend direction
- Determine if a trend has ended
- Flat stages
This indicator is based on the Stop and Reverse principle.