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Metatrader4, Stock exchange, Chart analysis, Indicators - What is this about?
Price movements are controlled by supply and demand. Trading places, such as the stock exchange, bring buyers and sellers together for the best possible turnover (for the trading place), a new price is created and the price (price) moves.
Financial products that have high liquidity, i.e. a high trading volume, as their underlying, e.g. the DAX30 or S&P500 index, and currency pairs, e.g. EURUSD or GBPUSD, are subject to many influences so that a completely fundamental decision on the trading direction (buy or sell) is hardly possible from a purely political or global economic perspective.
A large part of trading is done from a charting perspective, which also makes automated trading possible. The technical analysis is several hundred years old and has already been presented in Asia with the help of candle charts. Point and figure (another way of representing prices) was developed at the end of the 19th century and offers no room for interpretation - purely technical, without fundamental and temporal influences.
If, for example, a price is shown in the news (stock, currency, commodity, the instrument does not play a role here, the procedure is always the same), one may refer to trend strength and moving averages, which represent the current market situation from which chances for future price behavior can be derived - based on similar situations from the past. These are precisely the tools that are helpful in the technical price analysis.
Newer programs and many new brokers, as well as better networking of the financial markets, allow trading these products for almost everyone, live, from home. Usually, banks and brokers offer their own trading platforms for trading.
In the last years a trading program independent from banks and brokers, the "Metatrader4", has become generally accepted. This program is worldwide spread and offers many advantages for the user and is also free of charge, so also the prompt data supply of the offered products.
The decisive advantages are the free data supply and the possibility of programming individual indicators and Expert Advisors, which support the trader in trading decisions and order processing (the latter is of course also offered by other trading platforms). In addition, an extensive database from the manufacturer allows access, in part free of charge, to countless indicators programmed and made available by other users.
An indicator observes the price according to predefined changes and displays these, e.g. as arrows or lines. (=> an algorithm written in the programming language MQL4 (based on the programming language c++ ).
Why do trading systems fail?
... all influences on the market cannot be fully grasped by anyone in their entirety, therefore a forecast, however good and thoroughly discussed, can only be presented as a probability of the following price development.
In retrospect, one can learn for one's logic and simply accept that a trading logic only shows chances. The more important weak point is nevertheless the trader himself,
if a system is not traded consistently. To understand this, I recommend the following YouTube - article by André Stagge "The 7 deadly sins on the stock exchange and how you can avoid them" (in German) and in English "7 Deadly Trading Sins" by Bulls on Wall Street.
or said in other words - Why is trading Forex so difficult?
Trading in financial markets is a profession that requires training as a foundation. As in other professions, acquired expertise is just as necessary as for trading in financial instruments.
The financial markets, especially the foreign exchange markets are traded 5 days a week around the clock all over the world by countless traders. Each of these traders has a different motive, whether to hedge goods and services or to take counter positions, and both are influenced by political and economic events and will regularly adjust their positions as needed.
To follow these price movements without professional training requires at least sufficient basic knowledge, a strict method and extreme discipline.
A perfect trading system?
There is no generally valid formula for a perfect trading-logic. If there were, a trade would become less important. My trading logic is certainly not the measure of all things, but for me, it is manageable and profitable.
The possibilities to design a trading system can be seen when you open different trading programs => indicators and oscillators in vast numbers, different forms of charts like ticks, candles, lines, bars, point & figure, TLB (3LB), Renko, Kagi, Heiken Ashi, and others. Charts in minutes, hours, etc. - Charts, in 200-, 100-, etc. Tick charts. Patterns, such as triangles, pennants or flags, also resistance and support lines or zones have their meaning.
Fundamentals can be used, as well as seasonality, economic data, Commitments of Traders - Reports (COT), stock climate, political changes, (natural) disasters, tweets ?, Presidential Elections, sentiments from all areas or internal sentiments from your broker. Astro and moon phase trading can also be impressive. Not to forget trading by tape-reading, order book, and candle formations. You can see how diverse the possibilities are and yet everything has its justification if it leads to success.
Conclusion: Regardless of the opinions of others, trust only in what suits you, and brings profit!
How to trade with basic knowledge?
In addition to knowledge of technical analysis, which will be absolutely necessary, are supporting indicators of price changes that we can hardly perceive with the eye on the chart.
These indicators or algorithms do this hard work for us and conveniently inform us via email or trading app. Based on the most popular standard indicators, the following indicators are ingenious support, many well-known trading strategies can be recreated with it and checked for reliability.
These MT4 (Metatrader4) indicators take advantage of this simplicity and make visual work on the chart easier by focusing on the essentials to work on a clean, uncluttered view.
I focus on the actual possible trading time, the time when you do not sleep, volatile times of the day, movements with the trend and clear momentum and all this in one indicator.
How to know when to trade?
Trade the financial markets during your normal working hours. Every day there are at least two opportunities in the market that offer profitable entry chances. With the Breakout Box you can visually display your trading times on the chart, which makes it easier for you to define volatile times of the day as your trading times.
These times usually correspond to the opening hours of the markets. Volatility occurs at the opening of the London session and another time when the European and American sessions overlap, at the opening of the US session.
Here are a few examples that represent the exact same time:
09:00 Broker Time (may vary).
08:00 Europe (Germany)
02:00 US EST
10:00 Broker Time (may differ)
09:00 Europe (Germany)
03:00 US EST
16:30 Broker Time (may vary)
15:30 Europe (Germany)
09:30 US EST
How to know when to close a trade?
Closing a trade means securing profits and avoiding losses. Here is one way to calculate an optimal profit target using the Dynamic Support & Resistance Lines tool.
I focus exclusively on the current volatility, measured by the ATR, the average true range. Here, dynamic targets are created on a daily, weekly or monthly basis, starting at the respective pivot point.
What do you use in fundamental data?
Hats off to analysts who incorporate fundamental data into their trading. Those who understand the interrelationships of the global economy have a clear advantage in trading. My work is of a purely technical nature.
News are tradable, for this a good preparation is necessary and a clear decision in advance on "what if", i.e. the direction after publication should be known beforehand, as well as the present strength of individual currencies.
Commitments of Traders (COT) Reports (better than the sentiment (psychological mood)) and Reporting levels, if you see them as fundamental data. They are especially helpful in the commodity area, but less so for forex pairs. Nevertheless, a COT basic sentiment can be picked up here - if you know how to read the report.
The time advantage of almost a week is free of charge (because the COT data are only available on Friday noon on the basis of Tuesday). Admittedly, this is very bold, you might as well take the 200 sma, but it does not replace the CoT reports. If you want to understand CoT data, you can visit Suricate-Trading and Insider-Week, I don't know any site, neither in German nor English speaking countries, that can explain CoT better. Another recommendable site is Barchart.com, there are also clear charts with the corresponding positions of the market participants.
Trading with actual volume and footprint is clearly advantageous over tick volume as in most MT4 data feeds - nevertheless, the tick volume should not be underestimated if you know how to use it. My Momentum-Solo indicator offers this volume feature, which with a limited hour and minute settings provides a useful addition to smaller time frames.
V-POC Volume Point of Control from the Volume Profile is the source of support and resistance, providing a memory of the price. Free tools and chart providers also help to minimize risk, optimize entries and place stops in a sensible way. But especially with Metatrader4, the trade volume should be handled with caution. If you set up parallel further MT4 brokers for the same period and all data are available, you see at first sight that the data come from different sources, volumes and V-POCs run differently. Data often comes from their own company, from their own customers.
Order book: In addition, most MT4 brokers lack an order book, so we are flying blind, which makes MT4 traders blind trend surfers.
Do you give webinars for beginners in trading on the stock exchanges?
Tutorials for my indicators are in preparation. Live Trading is not planned, the same applies to trading rooms or social media groups because brokers offer basic knowledge free of charge via webinars and training material.
Besides, I recommend you to get appropriate books and to look for like-minded people in clubs or associations. Associations like IFTA or similar are surely also available in your area, e.g. VTAD or BVH in Germany.
Popular financial instruments for day trading?
Be careful with favorite assets. An asset marked with a heart can become a yield killer for the entire portfolio. If there is no reason to trade an asset, then "hands-off".
To trade an asset like crazy, because you only trade this one, is dangerous! Even if only the most volatile indices and currency pairs are traded and your trading system still gives you no reason to trade them, it may be better to take a break.
What broker should I choose?
I'll leave that to you. In general, I pay attention to the location of the broker, as well as the location of the regulatory authority. As described in the risk warning, prices from different brokers may differ.
My favorite brokers are in the UK, since there is no withholding tax for foreign traders, I have to take care of it myself once a year. Now after Brexit some brokers are moving their business to Ireland with a transition period.
Customer service with a phone number in your country should be an advantage - if the internet connection or the computer breaks down and your trades run without stopping, it would be good to be able to reach the broker quickly by phone.
Do not get carried away with deposit bonuses that could have a negative impact, there is no clear information from brokers. Ultimately, the bonus is not cash you can withdraw, the bonus only increases your liquidity, so you can take more risk (e.g. risk 5% of 1,000 or 5% of 1,500 (with a bonus of 500), i.e. your risk concerning your equity is now 7.5%).
I waive any bonuses. For the same reason, I reject IB broker relationships because of obvious conflicts of interest.
Who bears the risk for my money, my account?
You should be aware of the risk. I'd like to remind you of the risk warning:
The basis of my actions is based on data from my broker. These can differ from other brokers! I assume no liability for your decisions to copy my trading. Generally, trading in leveraged products, currencies, commodities, CFDs, other derivatives, and other products traded on the stock exchange is associated with very high risk, which can lead to a total loss.
My calculations are based on historical data, represent possible trading opportunities, and offer no guarantee of success. The same applies to my newsletter. Despite analysis and research, all influences on the market together are decisive for the development of prices and cannot be completely understood by anyone.
My analyses, therefore, serve neither as investment advice nor as a recommendation to buy or sell, but rather show opportunities that I use for my actions.
Can I set up my own signals service?
A personal signal service can be set up within one to two hours. It is possible to post an alert immediately in a blog (WP / via WP-Jetpack), in the social networks, by email (also to distribution lists) and in the Metatrader-App.
Messenger like Telegram e.g. can also receive information due to a bot, other messengers like Threema and WhatsApp, unfortunately, do not offer any interfaces.
I advise against selling signals out of an indicator. This here presented idea is only for your own use!
Why do you refer so often to the ATR?
The ATR (Average True Range) is an appropriate reference value for the current market, from which I can derive further values.
I prefer the Keltner channel in the same way - which is part of my Momentum-Solo Indicator.
Bollinger Bands or Keltner Channel?
Both are similar only at first sight. Where is the difference in the calculations. Bollinger Bands with standard deviation is based on simple moving averages, with Keltner Channel I am more flexible with the methods of moving averages. My basic idea for the upper, or lower bands is a suppression of noise and suppression of sideways movements.
During the research I noticed that some rules for the Bollinger Bands and statistical ratios are not correctly reproduced in many articles, see the original rules for the Bollinger Bands on the page https://www.bollingerbands.com/bollinger-band-rules.
Due to the popularity of the Bollinger Bands, I have included them in my Metatrader Indicator Momentum Solo, which shows good results in different settings with and without combination of other indicators.
Computer, operating system, monitor, data connection?
it should be a modern computer with enough memory, good graphics card and keyboard/mouse with cable (cordless = risk); nevertheless, there should be a plan-B in case the computer fails // plan-B => see below
Win10; the Metatrader4 was developed for Windows - operating systems, for other operating systems like Mac OS and Linux MetaQuotes gives detailed instructions; mobile versions are also available; a web trader is now available at https://www.mql5.com/de/trading; too many unnecessary background processes in Windows 10/11 slow the system, this can affect your order execution - ask Google to fix it;
22 inches and up with high resolution is good for the eyes; a second screen is not necessary, but makes parallel work with other programs easier; I always assume a part-time trader here; a professional may well use several screens depending on the direction of his job;
the data feed of the Metatarder4 doesn't need much, a stable 2Mb connection is sufficient, much more important is a reliable connection; furthermore, there should be an emergency plan (you can hardly sue your broadband provider after a failure and if you do, then it's a pity for the time you waste);
If broadband and phone should fail (thunderstorm season May to August), Plan-B would be your always charged mobile phone and the phone number of your broker/bank; Plan-B No.II would be MT4 as a tablet or smartphone app, which is of course already set up; Plan-B No.III would be your smartphone as a hotspot for your computer with a WLAN connection;
No desire for documentation/trading book?
The annoying documentary on every trade:
This is, in fact, the most important part. I am sure that almost every service we provide for a fee is documented and evaluated, regardless of the position we are in. Without reflection, without reviewing our actions, we will not evolve and fail, thus reaffirming the high risk and phrases like „you can lose a lot of money".
Trading diary, here now my contribution to it:
1. in MT4, under Terminal, Account history, Adjust period, Today, Save as report
2. Mark, copy and paste trades into a spreadsheet
3. add more columns: a) write a comment, b) add your own grade/evaluation, c) derive measures, d) add a screenshot as a link finished
1. Create an account at https://www.fxblue.com/ (there are other providers - please research yourself)
2. Download FX Blue Publisher EA for MT4
3. Create a template with the EA (I am satisfied with the data export 1x daily after the end of the day) - open the template - execute - close
4. Call up the account on https://www.fxblue.com/ and display evaluations, derive measures, document in the trading diary
5. with a PIN you can protect your data from the public
6. the evaluation of the statistics I do 1x per week
- Fxblue offers not only evaluations but also publication (data can be restricted during export), as well as other apps and widgets.
The best for last!
a view into the future:
Good intentions, programs, indicators and trading methods replace the crystal ball, but are of no use if you are not in shape mentally. I can only help technically, 90% of success lies with the trader sitting in front of the computer.
... well, imagine in your mind all the processes, where and how you act. Top athletes, for example, go through processes again and again in their thoughts, this trains the routine, neuronal connections are created, and the more often you play through the thoughts, the stronger the connections become. Our brain cannot distinguish whether the sequence of events comes from our thoughts or reality. All processes that we follow unconsciously were once trained mentally and in reality, think of driving a car, of your training or your work, see also Mental Training on the Net. And if you are mentally in a good mood, the documentary is also no problem.