What is the MACD Divergence Indicator for MT4?
The MACD Divergence Indicator (MDI) is used to identify whether a security’s price is overbought or oversold. The indicator uses the two moving averages of the MACD histogram to determine whether prices are above, below, or at their average levels. When the medium-term trend changes and one Moving Average crosses the other above it, this signals an overbuying environment; when prices cross under the other Moving Average, this signals an overselling climate.
How to use the MACD Divergence Indicator for MT4?
To use MACD divergence for MT4, open your trading account and click “Indicators.” From there, scroll down until you find “MACD Divergence” and select it. The indicator will then appear in the grid across the top of your trading window. When you see an opportunity to trade based on MACDS divergences, please take advantage of it!
MACD Divergence Indicator MT4 trading settings
For the ForexMACD Divergence Indicator to work correctly, you’ll need to set up your MT4 trading platform with these proper settings:
1) Draw a buy signal when both MACD lines cross below their respective EMAs (Exponential Moving Averages). This means that the prices have started retreating from their previous highs and will likely continue until they reach new support levels.
2) Set up-sell stops just beyond where one of the MACDS lines crossed above its EMA – this will serve as your exit point if you’re bullish on the trend (sell) or want to preserve any profits made while trend trading (hold).
MACD Divergence Indicator Advantages
There are several advantages of using the MACD Divergence Indicator in trading:
-It allows you to identify rallies and corrections before they become too big.
-By analyzing the difference between two Moving Averages, you can determine if a trend is strengthening or weakening. This information can then be used to make informed trading decisions.
-The indicator’s reliability has been proven over time by many successful traders who use it for long-term investment purposes.
MACD Divergence Indicator Disadvantages
There are several disadvantages of the MACD Divergence Indicator when trading forex:
-The indicator can be easily fooled, as it can react quickly to short-term price changes without considering long-term fundamentals. This often results in traders making unnecessary trades based on false signals.
-It’s also easy for traders to get emotionally attached to a certain uptrend or downtrend lines, which can lead them into dangerous territory if they attempt to trade beyond those levels.
-This indicator is best used with experienced traders who understand chart formations and how markets work. For amateur traders, this indicator may not be the best strategy overall.
Indicator installation on MT4
To install the MACD Divergence Indicator on the MetaTrader 4 (MT4) platform, you will need to follow these steps:
- Download the MACD Divergence Indicator you want to use. Make sure it’s in .ex4 or .mq4 format.
- Open the MT4 platform and click on the “File” menu at the top of the screen.
- Select “Open Data Folder” from the drop-down menu.
- In the Data Folder, open the “MQL4” folder.
- Open the “Indicators” folder.
- Place the MACD Divergence Indicator file(.ex4 or .mq4) into the Indicator folder.
- Close and restart the MT4 platform.
- In the Navigator window, under the “Custom Indicators” tab, you should see the MACD Divergence Indicator listed.
- Drag and drop the indicator onto your chart, or right-click on the chart and select “Indicators List” and then select the MACD Divergence Indicator you just added.
- Adjust the indicator’s settings to your preference.
- You should now be able to see the MACD Divergence Indicator on your chart.
MACD Divergence Indicator is used to identify potential trend reversal by comparing the direction of the price movement with the direction of the MACD; it will show you when the price is diverging from the MACD.
It’s good to note that, like any other indicators, the MACD divergence indicator should not be used alone, and it’s better to combine it with other technical analysis tools and a good understanding of market conditions.
The MACD Divergence Indicator is a useful technical analysis tool that can be used to identify potential trend reversals. It’s important to note that the indicator should not be used alone, and it’s best combined with other technical analysis tools and market knowledge.