Trading in a stock market can be easy if the trader is well aware of different indicators and technical analyses. These indicators and technical analysis can help traders gain the desired outcome. 

One such popular technical analysis is Divergence. A trader who has been trading for quite some time now will be well aware of how this technical analysis, combined with an efficient indicator, can be instrumental in predicting the market. 

What is a divergence in forex trading?

Divergence is the price movement process when an asset’s price (currency pair) moves in the opposite direction of a technical indicator, usually an oscillator. Divergence warns that the current price trend may lead to a price-changing direction.

Divergence indicates whether the ongoing trend will continue or there will be a reverse in the trend. This interpretation becomes more convenient when a trader has subsequent knowledge of what type of divergence indicates which situation.

Traditionally, there are two types of divergence, namely, Regular Divergence and Hidden Divergence. The divergence shows different predictions, and understanding them completely can work as a divergence cheat sheet for the trader.

Divergence Bias

Before getting into the cheat sheet, it is important to understand the word bias in divergence. Every prediction that may arise due to the above divergences will have either a bearish or bullish bias. Bias means the strong signal that the divergence is creating. It becomes even more clear when one learns about the two types of divergences. 

Let’s read the cheat sheet to help a trader understand the hidden divergence and the regular divergence more clearly. 

Cheat Sheet for Regular Divergence

A regular divergence is a signal of an expected reversal in the current trend. The regular divergence bias shows in which direction the possible reversal may take place. 

Following are the two types of regular divergence bias and what they indicate. 

• Regular Bullish Divergence: In this case, the market shows the security price at a lower low, but the indicator or oscillator shows a higher low. This situation indicates that the bearish trend is losing its strength, and a possible bullish trend is taking a powerful position. Hence, the possibility of a trend reversal from bearish to bullish. 

• Regular Bearish Divergence: Another case is when the market shows the price at a higher high, but the oscillator or indicator shows a lower high. This situation is bearish bias as it indicates that the bullish trend is no longer powerful, and the bearish trend may take over. Therefore, a possible situation of a trend reversal from bullish to bearish. 

Cheat Sheet for Hidden Divergence

Unlike the Regular Divergence, the Hidden Divergence indicates that the current trend may continue. The bias of hidden divergence indicates in which direction the trend is likely to continue. 

Following are the two types of hidden divergence bias and what they indicate. 

• Hidden Bearish Divergence: when the price shows a lower high, but the indicator reflects a higher high, the trader can expect the situation to be bear bias. , the bearish or downward trend is expected to continue. In such cases, the traders take selling positions. 
• Hidden Bullish Divergence: when the market price of the security is at a higher low, but the oscillator reflects a lower low, the trend is bull bias. In this case, the trader can expect a continuation of a bullish or upward trend. Thus, this is expected to be a perfect time for traders to enter or re-enter the market. 

See hidden bearish divergence:

Understanding divergences is not very complicated. Just a thorough read and a little practice can make traders use divergence to make predictions in the market. But, it is important to know that using a technical indicator is an essential part of making these predictions. As without an indicator, the trader can not ascertain the movement of the trend. This becomes even more crucial when using a momentum oscillator like RSI (Relative Strength Index), CCI (Commodity Channel Index), or Williams %R.  

Conclusion

Please read the above two types of divergences and their biases to predict the security or commodity market. Then, the cheat sheet can help the trader ascertain their entry or exit from the market and make decisions according to the predictions.

The goal of every Forex trader is to develop a profitable trading strategy of their own. Your lucky day has arrived. A professional trader developed this ADX strategy, and we’re happy to share it with you. However, many trend decision rules have been discussed: Evaluating the intensity of a trend in any possible timespan hasn’t been covered yet. Only a particular trading indicator can be used to determine the strength of the movement. Example: the ADX, or Average Directional Index (ADX).

A trader’s most important skill is the ability to detect a strong motion. You need a place precisely to move after you enter a position, no matter what type of trader you are! Profits can only be made by following the path of your trade. Your financial goals can be achieved with the help of the ADX indicator trading rules. For the best ADX strategy, it’s crucial to determine which technical indicator you will use.

Market participants prefer ADX because it combines past and present data and the ability to predict the future. Identifying which futures contracts are mispriced in the status quo is essential to purchasing futures contracts successfully. As a result of the use of standard ADX readings for large deals, this is now possible.

What is an ADX Indicator?

ADX or Average Directional Movement Index Indicator represents a technical analysis indicator that measures the overall strength. ADX value from 0 to 25 describes a weak trend, while 75 to 100 represents a powerful trend.

Almost all tradable assets, marketplace funds, including stocks, futures contracts, and mutual funds, can benefit from the Average Directional Index’s principles. There are several reasons why ADX has become so valuable in the futures markets.

ADX advantages are:

• ADX has a standard range of 14 bars, unlike many other technical indicators, giving it a “bigger picture.”
• ADX describes trend strength from 0 to 100.
• The most recent data is given a higher weight than older ones.
• Using ADX, you can determine the trend’s strength, which will be helpful for any future contracts.
• When comparing mutually exclusive futures and options at once, ADX makes it simple.

ADX values for major indices (such as the DJIA and S&P 500) can also be used to determine whether the general market is going to experience bearish or bullish conditions, as well.

How to use ADX measures and what are the best ADX negotiating rules. Please see the following:

ADX trading values

• If ADX is from 0 to 25 trend is weak
• If ADX is from 25 to 50 trend is strong
• IF ADX is from 50 to 75 trend is very strong
• If ADX is from 75 to 100 trend is extremely strong

Let’s first define the ADX criterion or how you can profit before moving on to the trade laws for the ADX indicator.

The ADX indicator measures simple trend strength and whether we’re trading or not. The ADX, on the other hand, is a trend strength metric. To identify solid downtrends and buy signals, technical analysts use this method of analysis.

How we read and interpret, the ADX indicator must be done with care. It does not have a bullish or bearish bias. On the other hand, its moving average only measures how strong a trend is at any given point in time.

If the market is paid up, we have a strong bullish case, and the ADX measure is also increasing.

Following the first trading rule of the ADX indicator, a reading below 25 indicates a period of non-trading or range-trading. Conversely, a strong bullish/bearish trend is displayed when the ADX indicator is above 25 points, according to the second ADX trading rule.

Continue to keep in mind that the ADX indicator does not tell you anything about market direction. Only the strength of a trend can be determined by using this method of calculating trend strength.

The ADX indicator can be used in a variety of trading styles.

• Day trading with the ADX indicator
• Using the ADX indicator to trade swings

Adx indicator for intraday trading is the first thing we’ll cover.

How to use ADX in day trading?

ADX you can use in trading as an additional trigger in combination with other indicators when we want to follow the main trend because a strong trend is formed when the ADX value is above 25.  ADX indicator is an excellent choice when we want to avoid false breakout during a non-formed trend.

Adx day trading strategy begins with selecting the proper settings for the indicator. ADX settings need to be tweaked for short-term charts because the market moves so quickly.

So, when it comes to day trading, the best ADX setting is the 3-period.

According to a general rule, the shorter the time, the more sensitive a technical indicator becomes to the price. As a result, the 3-period ADX indicator is the most effective for day trading applications. Low ADX readings indicate a weak trend, while high ADX readings indicate a strong direction. In addition, we know from the market’s natural ebb and flow that prices move from cycles of consolidation to intervals of trending and conversely.

As a result of combining the two market hypotheses, we can say that

There should be an increase in ADX after low readings (consolidation) (trend).

When trading with the ADX indicator, we look for clues to buy and sell when ADX falls below. In addition, whenever the ADX falls below 25, it indicates that the trend is weak and that we’re probably in a consolidation phase. As a result, we can take a glance at moving average breakout indicators.

Since the ADX does not indicate the trend, we must wait until the ADX starts to break above 50 before acting:

If the ADX is rising and prices are rising, we buy.
As long as the price is falling and the ADX is growing, we will sell.

Nothing carries more weight than a real-world case study in this regard.

Now, let’s move on to the ADX indicator for trading options and how does it work?

The best ADX settings for swing trading

The best ADX settings for swing trading are when the ADX value on H4 or Daily chart is above 25 or 30. In that case, you can open a BUY position if the price breaks an important high price level or a SELL position when the price breaks an important low price level and keep your trade from two days up to a couple of weeks.

One of the excellent swing trading strategies is Larry Connors and Linda Raschke’s book “Street Smart.” which uses the ADX indicator and 20-period exponential moving average.

ADX swing trading rule for BUY trade is:

• ADX crosses above 30
• Price is above 20 EMA
• Wait for the price to pull back to the 20-EMA.
• BUY  when the price touches 20 EMA
• Place stop to be last 24 hours low.

ADX swing trading rule for SELL trade is:

• ADX crosses above 30
• Price is below 20 EMA.
• Wait for the price to go up to the 20-EMA.
• SELL  when the price touches 20 EMA
• Place stop to be last 24 hours high.

The best settings for the ADX indicator

The best setting for the ADX indicator is the 14-period setting. The best performance ADX indicator will show if you catch the trend forming moment to enter into a trade, such as when the ADX value is above 25. Weak trend (from 0 to 25) is not good for trend trading strategies because there is no strength and volatility, only a sideways direction.

The smoothing moving average is used in the ADX indicator’s calculation. Therefore, a 14-period ADX indicator is recommended. As a result of our ADX indicator settings, you’ll get more accurate signals and start trading sooner.

Use the ADX indicator in conjunction with other chart patterns to get the most out of it.

As part of the best ADX strategy, the RSI indicator is also used to time the markets. However, using the ADX indicator, we can only determine the trend’s intensity. This is why entry signals are dependent on the RSI indicator.

The RSI uses the same 20-period setting as the ADX indicator.

The Best ADX Strategy

The best ADX strategy for trend trading is when traders enter into trade above ADX value 30 when a strong trend is formed. Buy trade will be triggered if the price is above SMA 200, ADX above 30, and is on an important price level. Sell trade will be triggered if the price is below SMA 200, ADX above 30, and is on an important price level. 

However, ADX can be used as a trigger in various strategies when entering into a trade when the trend is formed and strong enough.

Only trade when there is a significant movement on the 5-minute chart or the daily chart, thanks to ADX indicator trade laws. The best ADX strategy is one that performs the same no matter what time frame is used.

RSI ADX trading strategy is:

• Step 1: Wait for the ADX measure to show learning above 25 before taking any action.

We must first wait for the ADX criterion to show a reading underneath 25 before even considering whether the market will rise or fall. If the ADX value is above 25, the ADX indicator trade laws indicate a strong trend and the possibility of one developing.

Even though we all know that trends are our friends, a newly formed pattern can quickly fade away if it lacks real strength.

The actual price action must also be considered to determine the trend’s direction. As a result, we’ve reached the next stage of the best ADX strategy.

• Step 2: Using the last 50 candlesticks as a guide, determine the direction. For location estimation, look for a downward trend in the price.

There must be a practical way to determine the path of a trend, no matter what your timeline is.

The use of 50 candlesticks to ascertain a trend allows us to trade in the present moment. The cost is heading lesser during the last 50 candlesticks, but we’re in a bearish trend if that’s the case.

For the best ADX strategy, we must now concentrate on the precursor that will trigger our sell signal.

• Step 3: You should sell when the RSI indicator breaks and shows a reading of less than 30.

The RSI indicator, which uses the same configurations as the ADX indicator, will be used for our entry signal. Oversold markets are indicated by an RSI reading of less than 30, which indicates reversal territory. On the other hand, trading more competent means going beyond what is written in a textbook and thinking outside the box.

The ADX indicator defines a strong trend, and that’s exactly what we want to see. We’d like to see more sellers enter the marketplace.

When the RSI indicator shows and breaks a reading below 30, we would like to sell.

What’s next is determining where to place your protective stop-loss order.

• Step 4: At the very last ADX high, a watchful stop loss must be set.

Before entering the market, you must first identify where the last ADX high occurred to determine where your stop-loss should be placed. To find your stop-loss level, see the price chart high that corresponds to the ADX high.

Before entering the market, you must first identify where the last ADX high occurred to determine where your stop-loss should be placed. To find your stop-loss level, see the price chart high that corresponds to the ADX high.

A profit target is a final requirement for the best ADX strategy, which helps bring us to the last step of this new application.

• Step 5: A good time to buy is when the ADX indicator falls below 25 again.

To maximize profits, only trade in a strong trend when it is present. Therefore, our strategy is to take profits as soon as the prospects of a clear trend fade away.

When the ADX indicator drops below 25, we take profits.

ADX values below 25 indicate a weakening trend.

Conclusion

As traders, we don’t want to get into something stagnant and not trendy strongly. The best ADX system gave us that data. Moreover, a trader can take advantage of the advantages of the trend by using ADX indicator trading rules. As a result, catching strong trends and using the best ADX strategic plan can help you achieve your trading objectives.

One of the most popular candle timer indicators for Metatrader 4 is described in this article. We’ll also examine how a candle measurement might be used in combination with a relatively brief FX candle business plan.

Why Is Forex Trading Timing Important?

Timing is everything in comedy, according to an adage. Many short-term investors believe that the same is true for trading as well. It’s important to know when to enter a trade when trading long-term, but it’s not essential. In the end, however, the exactness of your timing becomes increasingly necessary as you reduce your trading timeframe.

A long-term trend follower is a good example. Their charts may be checked only once a day to determine whether the latest daily bar indicates a trade entry or not. So it doesn’t make much of a difference to their profits if they’re trading for several weeks or months.

On the other hand, Short-term traders need to be aware of events that occur much more frequently. The clock is always ticking for short-term traders. To be ready for a potential trading signal when the next candle on their chart appears is prepared when the next candle appears. A scalper’s profit or loss can depend on this. When a new candle appears, how can you tell from a glance?

In this case, candle timer indicators can be used as a tool. If your chart has a candle-timer indicator, it will show how much time is left in that candle. Candle timers show precisely how so many moments and seconds remain before the current tea light closes and an innovative one opens. Then, when the next candle appears, you’ll be prepared.

The Candle Timer Indicator for MT4

MetaTrader 4 (MT4) does not include a candle timer measure as part of the basic set of tools and standards. Therefore, if you’re using a candle countdown clock, you’ll need to download a custom indicator. When it relates to custom metrics, there are a lot of options. For example, quick online searches will reveal various “CANDLE COUNTDOWN” clocks that do precisely what they assert.

What you’ll notice most is how much flexibility they give you when configuring variable settings. Others excel in this area. Consider the Candle Countdown Indicator as an example. Thanks to the MetaTrader 4 Supreme Edition plugin, it’s also included in a larger package of tools and indicators.

What is Forex Bar Timer Indicator?

Forex Bar Timer Indicator or candle countdown indicator represents an indicator that plots the chart of how many minutes or percentage is left before a new candle is open. Below you can download candle time indicator MT4:

Download Forex Bar Timer Indicator – Candle Time MT4

It’s easy to customize the indicator’s appearance by adjusting its size, color, and location. Inputs tab is available upon launch of the indicator. To change the value of an input, double-click on it. The MT4 candle timer can be placed anywhere on your chart, thanks to the options available. Five options are available: any of the four corners or in line with the price, as shown in the screenshot above. By entering values for the X and Y coordinates, you can fine-tune these positions as well.

For example, the trader chose to have a countdown timer display along with the price. You must have ‘Chart Shift’ activated for this to work, which pushes the chart left. Chart Shift can be started by selecting Chart at the top of your MetaTrader 4 terminal and clicking on the dropdown menu that appears after selecting Chart.

As a result, you can change the time frame on your chart using the Candle Countdown indicator if you were primarily looking at a 15-minute chart and keeping an eye on a more significant trend on an hourly chart, for example. As an example, you could change the default candle countdown timeframe for M15 charts to ‘H1. When the hourly chart updates, you won’t have to keep tabbing backward and forwards.

Most importantly, you can set the alarm. Before the new candle appears, you’ll be alerted. If you want, you can change the default value of seconds from zero to whatever you want. Most indicators work better when they’re paired with another indicator, and this is no exception. If you use a candlestick timer indicator, this is even more important.

In isolation, a candle timer is unlikely to be very useful. However, as a means of sharpening your use of other indicators, it is beneficial in this capacity. As a result, your MT4 candlestick timer criterion is best used in conjunction with at least one—and possibly two indicators.

When an indicator shows a specific situation that suggests that the next candle could be your signal to exchange, it’s beneficial for those situations. When the next essential candle appears, the candle timer will alert you whether it is a trading signal. As an example, consider the following:

Conclusion

The best way to find out is to test them out in a risk-free environment. Demo trading accounts make this possible. Real-time indicators and prices can be used without risking your capital. Trading styles and strategies that work for you can be identified through this method and those that do not.

It’s easy to use and understand compared to other charting tools. Even though it doesn’t do anything revolutionary, it does meet a simple need for many short-term traders. It was knowing exactly when the next candle will appear, down to the nearest second. Those who need to be entirely in sync with their charts will appreciate this benefit, and it can enhance the use of other indicators while you have to wait for a signal.

Bollinger bands represent indicators that show a standard deviation level below and above a simple moving average (SMA) of the price.

It is one of the most used non-oscillator indicators in trading. This indicator is excellent for all traders that believe in the mean reversion principle in trading.  Mean reversion implies that prices of the assets tend to return to normal average levels after an extreme price move.

How to set Bollinger Bands on MT4?

To set Bollinger Bands on MT4, you need to open an asset chart, go to “Indicator list,” then choose “Trend,” and finally press “Bollinger Bands.” Bollinger bands indicator with standard period 20 and deviation 1 will be presented on the chart.

Now you can see video instructions on how to set Bollinger Bands on the chart :

How to get Bollinger bands on Tradingview?

To set Bollinger bands on Tradingview, you need to open the chart and choose “Indicators and strategies” by clicking on the icon “fx” in the upper horizontal navigation bar. Then you need to type “Bollinger bands” in the search box and choose this indicator from the dropdown list.

Balance of power indicator

Balance of power indicator represents a simple trend indicator that measures the bullish potential of the asset (push prices to higher extremes) or bearish potential of the asset (push prices to lower extremes). BOP indicator shows the bullish trend (blue lines) or bearish trend (red lines).

Power Balance (BOP) is a generator that measures purchasing strength and pressure to sell. This indicator, presented to Igor Levshin in August 2001 in the Commodities and Stocks Technical Analysis Magazine, compares the buyers’ power to push up prices with the sellers’ strength to push down prices. The bulls are in charge of the indicator when the measure is positive. If the measure is negative, sellers will dominate. A read close to the zero line shows the two in balance and can convey a turnaround.

This indicator is also known as the Balance of Market Power (BMP).

Download balance of power indicator for MT4

Balance of power indicator strategy

Balance of power indicator strategy implies BUY signal when the overall trend is bullish (SMA is above 200 on the daily chart) and BOP indicator shows a blue color, or SELL signal if SMA is below 200 on the daily chart and BOP indicator shows red color. 

Balance of power indicator can be useful and as BOP stock indicator. Balance of power stock indicator can be used as a bullish signal (blue color) or bearish signal (red color) in stock trading. Usually, this indicator mark stocks that are in the overbought or oversold condition.

BOP indicator Calculation

The original Livshin calculation method is reasonably complicated, But the formula is much simpler.

Of course, using these raw everyday values means an oscillator is choppy, and the rates are usually flushed with A moving average, which is a way to calculate this average. Livshin recommends smoothing using an SMA for 14 periods, although the time frame can be changed to match the time frame.

BOP indicator calculation formula = (Close – Open) / (High – Low)

The resultant indicator ranges from -1 to +1. A good value means open security; the higher the value, the greater the price increase. Thus, for each time included in the shifting average, the security is opening up at a value of +1 at a low and closed value.

The power balance indicator indicates the direction and scope of the change in price throughout trading. The Power Balance indicator can be used as most oscillators to identify trends, price differences, and conditions of overbooking/overbooking Crossings of the zero line offer signals for the purchase and sale.

BOP Zero-Line Crossover

The oscillator’s scale is -1 to +1, with 0 as its centreline. Zero-line crossovers indicate a shift into positive or negative areas, often used as buy or sell signals. A cross over the center line generates a purchase signal, and a cross below generates a sales signal.

To reduce the number of whipsaws, data is smoothed out. An SMA with additional periods decreases the number of false signals and the reaction rate of the indicator.

It can also be used to determine the trend, look for price divergences, and identify overbought/oversold securities.

Identification of Trends

An upward trend is shown with a rising BOP line and a downward trend with a falling BOP line. The null-line junction confirms the change in trend.

Price Differences

This is a negative discrepancy when new price levels are achieved, but BOP does not; when the price increases but BOP does not, the disparity between prices is positive. These differences can predict a trend change.

Terms and conditions Overbought/Oversold

Chartists must examine the historical security levels they are challenging to determine what should be considered oversold/bought for this security. Once these levels have been overbought/overbought for this security, then seek dips beyond them.

Conclusion

The power balance indicator (BOP) uses the price of purchase and sale pressure to measure. The strength of buyers and sellers is determined by considering how much the price has changed instead of using volume.

The BOP indicator Zero-Line Crossovers can be used as a signal to reverse the trend. In addition, the current price trend and the possibility to change prices can provide indications of indicator trends, price differences, and extreme overbought/oversold levels.

The balance of energy indicators should be used by dealers in conjunction with other indicators and analytical techniques, as with all indicators.