What is the Schaff Trend Cycle Indicator for MT4?
The Schaff Trend Cycle Indicator is a technical indicator that helps determine the overall trend of a currency’s value. It essentially compares the current price of a coin with the average of its past prices over time to determine if it is moving up or down.
The cycle begins with a base period, which is the average value of a currency during a given period. The indicator usually stays at or near the intermediate level during this base period. As the hand progresses into the middle period, it moves higher and higher.
This indicates that prices are increasing. The middle period can last from several days to several months, followed by an ascendant phase in which prices rise even further. This may last for several weeks or months, and then there will be a descent phase in which prices fall again. The cycle repeats until a new base period or prices change direction.
How to use the Schaff Trend Cycle Indicator for MT4?
The Schaff Trend Cycle indicator is a technical tool used to analyze a currency’s price movement trend. The hand uses three variables to determine whether a currency’s price increases or decreases. These variables are based on the number of daily price changes, the direction of those changes, and their magnitude. If the daily price changes are positive (that is, rising), the indicator signals that the currency’s price is likely upward.
If the daily price changes are negative (falling), the indicator signals that the currency’s price will likely go downward. Lastly, suppose the daily price changes are mild and widely distributed. In that case, the hand signals that there may be no clear direction for the currency’s trend, and it may be worth watching but not necessarily acting upon.
Schaff Trend Cycle Indicator MT4 trading settings
The settings for this indicator are discussed below:
1. The first setting determines how long each of the three moving averages (MA) will be used in calculating the STCI indicator. For example, if you choose 10-day MA as your first set, each 10-day MA will calculate STCI for ten days before being replaced with another MA. The second setting determines how fast each MA will decay (decay rate). The third setting determines how often macd lines are calculated (signal frequency). All these settings choose how often STCI will update its values and give signals about the current trend direction in a currency’s price.
2. The second setting determines whether to use exponential decay for each MA period or linear decay for each MA period in calculating STCI values. Exponential decay means that each MA period will decrease faster than the previously estimated value. In contrast, the linear decline means that each MA period will fall at the same pace as the previously calculated value regardless of the previous values’ magnitude. The linear decay method gives more stable signals than the exponential form but may offer less precise movements sometimes; it is usually used when a more stable trend direction is required.
3. The third setting determines how often macd lines are plotted in the chart and indicates the current market sentiment (signal frequency). When the signal frequency is high, traders are aggressively buying or selling currencies, and vice versa when the signal frequency is low. Higher signal frequencies may provide better signals about upcoming changes in currency prices. Still, they can also increase noise on charts if too many calls are generated simultaneously.
Schaff Trend Cycle Indicator Advantages
The advantages of using the Schaff Trend Cycle indicator include its ability to identify short-term trends and its reliability over several years. Additionally, it can help identify potential price reversals, especially when combined with other indicators such as support and resistance levels, MACD lines, and Bollinger bands.
Schaff Trend Cycle Indicator Disadvantages
Disadvantages: Although the Schaff Trend Cycle indicator effectively identifies long-term trends in the market, it can sometimes be wrong when short-term price movements are more pronounced. This is because the hand relies on past data and may not fully capture short-term price movements. Therefore, watching for other indicators and making informed trading decisions based on all available information is essential.
STC Indicator installation on MT4
The Schaff Trend Cycle (STC) Indicator is a technical analysis tool traders use to identify potential trend reversal points. Here are the steps to install the Schaff Trend Cycle Indicator on MT4:
- Download the Schaff Trend Cycle Indicator file from a trusted source.
- Open your MetaTrader 4 platform and click “File” at the top left corner.
- Select “Open Data Folder” from the drop-down menu.
- Locate the “MQL4” folder in the opened folder and click on it.
- Locate the “Indicators” folder and click on it.
- Copy the downloaded Schaff Trend Cycle Indicator file into the “Indicators” folder.
- Restart the MetaTrader 4 platform.
- On the platform’s left side, locate the “Navigator” window and the “Indicators” folder.
- Double-click the “Indicators” folder to expand and locate the Schaff Trend Cycle Indicator.
- Drag the Schaff Trend Cycle Indicator from the “Navigator” window and drop it onto the chart.
- Configure the indicator settings, such as the color, line style, and period settings.
- Click “OK” to apply the settings to the chart.
The Schaff Trend Cycle Indicator should now be visible on the chart, showing potential trend reversal points. Traders can use this information to make informed trading decisions.
The Schaff Trend Cycle Indicator is a valuable technical analysis tool traders can use to identify potential trend reversal points. It should be installed on MT4 and configured with the appropriate settings to be seen on the chart.