What is the Synthetic VIX Indicator for MT4?
The Synthetic VIX Indicator (SVI) is a technical indicator that helps traders identify whether markets are overreacting to future news events. The SVI is calculated by taking the Average of the 20% and 10% volatilities on the 30-day moving averages of the SVI index.
The primary purpose of using an indicator like this, especially in forex trading, is to help identify whether market volatility will increase due to future news events. By analyzing past volatility levels and how they’ve responded to similar events, traders can better anticipate what might happen next and make informed investment decisions accordingly.
How to use the Synthetic VIX Indicator for MT4?
To use this indicator on your MetaTrader 4 platform, go to Account > Overview > Technical Analysis Tools > SYNTHETIC VOLATILITY INDEX and fill in the values for Average Volume (30 Days), Periodicity (Daily), Widget Size (Large). Then click OK to apply these settings.
Synthetic VIX Indicator MT4 trading settings
Forex synthetic VIX indicator MT4 trading settings are as follows:
-First, set the trend following level at 20%. This will determine how much of the moves in the underlying asset(s) you want to follow.
-Second, set your Stop loss at 1% below the current market price. This will protect profits if markets move against you, but it will also prevent losses in cases of solid upward movements.
-Third, set your Take profit level above the breakeven point (but still below your stop loss). This ensures that profits are automatically taken out of a trade when prices reach this level, without manually adjusting take profit levels on each trade.
Synthetic VIX Indicator Advantages
-It helps identify opportunities to sell stocks or commodities short when volatility increases.
-By hedging your positions against volatility, you can avoid significant losses on your investments if prices move quickly and unexpectedly.
-The use of a forex synthetic VIX indicator allows you to remain flexible and opportunistic while trading; it does not limit your options or constrain your ability to take advantage of sudden changes in market conditions.
Synthetic VIX Indicator Disadvantages
But there are some disadvantages associated with using the forex synthetic VIX indicator. First, it has the potential to lead investors astray by creating false perceptions about market conditions and trends. And second, it can also be volatile and unsuitable for high-frequency trading (HFT).
As such, users should only use forex synthetic VIX indicators as part of broader financial planning strategies that include other tools and resources (such as risk management frameworks) to mitigate potential risks.
Indicator installation on MT4
To install the Synthetic VIX Indicator on the MetaTrader 4 (MT4) platform, you can follow these steps:
- Download the indicator: You can find the Synthetic VIX Indicator online; sometimes, it’s a custom indicator you can download to your computer.
- Open MT4: Open the MetaTrader 4 platform on your computer.
- Go to the “Navigator” window: To access the Navigator window, click on the “View” menu, and then click on “Navigator.”
- Click on “Indicators”: In the Navigator window, click on the “Indicators” tab.
- Select “Custom Indicators”: In the Indicators tab, select the “Custom Indicators” option.
- Add the indicator: Click the “Browse…” button and navigate to the location where you saved the Synthetic VIX Indicator on your computer. Select the arrow and click “Open.”
- Drag and drop the indicator: Once added to the list of custom indicators, you can drag and drop it onto your chart.
- Configure the settings: You can configure the indicator’s settings to suit your trading style.
- Apply to a chart and start using it.
Please note that the above steps are general and may vary depending on the version of MT4 you are using. Also, ensure you have the appropriate rights to use the indicator if you got it from a third party. Also, note that Synthetic VIX indicators are not official and may not have the same level of reliability as official VIX indicators. Hence it’s essential to use it with other hands or analyze the market conditions before making any trades based on this indicator.
This article presents a step-by-step guide on how to add the Synthetic VIX indicator to your MetaTrader 4 platform. This indicator can help you track market volatility and make informed decisions about your trading strategy.