If you are just entering the forex marketplace and are interested in making the best use of your trading activities, then MT4 indicators will greatly help out. 

These tools transform raw price data into actionable insights, helping traders make informed decisions. 

MT4 Indicators – Pro tools for Top traders

In this article, we’ll talk you through some of the best MT4 indicators you should know in 2024, showing you examples from the real world and how you can trade using those same tools.

By the end, you’ll have an understanding of how to use some of the best indicators available to you, as well as the best ways to manage risks – for example with Finxo Capital.

1. What Are MT4 Indicators?

 MT4 indicators are a set of inbuilt tools that help traders to analyse market data, foresee future price movements and spot trends. Regardless of whether you trade in stocks, forex, commodities, or indices, these indicators allow traders to evaluate the market using mathematical formulae applied to price data.

 For instance, if you’re trading FX, moving average (MA) indicators can tell you if you’re in a trending or non-trending market, while oscillators such as the Relative Strength Index (RSI) can be used to identify overbought or oversold conditions, where the market is likely to reverse.

2. Why Use Top MT4 Indicators in 2024?

 In 2024, financial markets are experiencing more volatility than ever before with price action driven by inflation, interest rates and geopolitical risk. MT4 indicators help traders interpret the unfolding scene so they can trade with more confidence.

  Why use top MT4 indicators anyway? Let us elaborate with an example. One of the most popular tools of technical analysis is the Moving Average Convergence Divergence (MACD). It is used to spot moments of change when a certain momentum is lost. For instance, when it comes to trading commodities, such as gold, the MACD can show when the price is losing momentum upwards. That might hint at an ideal moment to sell.

 Risks: Indicators can be helpful to traders, but they are not infallible. When used in isolation or without an understanding of the overall market context, they might not be effective. Combining them with other forms of analysis is the way to go. 

3. Top MT4 Indicators in 2024

 In this article, will try to describe the top MT4 indicators and how to apply them in 2024.

Step 1: Moving Average (MA)

 The Moving Average is the most popular of several trend-following indicators that smooth price data over time to identify various trends.

 – What’s the point? The MA filters out the noise and gives you a sense of the overall trend of the market. There are two types: Simple Moving Average (SMA) and Exponential Moving Average (EMA). The latter gives more weight to the most recent prices and is, thus, more sensitive to changes in the market.

 Example: if you are trading EUR/USD on the forex market and the price traverses above the 50-day EMA, it could be a sign of an uptrend. Alternatively, if the price drops below the EMA, it could be a sign of a downtrend.

Step 2: Relative Strength Index (RSI)

 It is a momentum oscillator that determines the velocity and direction of price movements and helps traders detect when markets are overbought or oversold.

 – Why use it? RSI is good to identify potential market reversals. Anywhere over 70 is deemed to be overbought and could correct downward, and below 30 is oversold and could bounce upwards.

 For instance, if the RSI of Tesla is at 80, this may suggest that it is overbought and traders should anticipate the price to correct.

Step 3: Bollinger Bands

 Bollinger Bands are made up of three lines: a middle band, and two outer bands. The outer bands expand when volatility spikes and contract when volatility contracts.

 – Why use it? Bollinger Bands help traders identify possible breakouts or reversals. When price comes near the upper band, it can indicate overbought conditions; coming near the lower band can signal oversold conditions. 

 – Example: Say, in crude oil trading. If it reaches a lower Bollinger Band and RSI confirms the oversold condition, there could be a buying opportunity.

Step 4: MACD (Moving Average Convergence Divergence)

 MACD is a momentum-chasing indicator that plots the difference between the two exponential moving averages of an asset’s price. It is used by traders to detect shifts in momentum and potential reversals in trends.

  What is it? MACD is a technical indicator to determine when bullish or bearish momentum is increasing. Crossing above the signal line is a signal of upward momentum, while crossing below is a signal of potential downward momentum.  Why use it? It helps traders determine when to enter a trade.

 – If you’re trading gold and you see MACD cross over above the signal line, that might signal that the market is shifting to bullish behaviour.

Step 5: Stochastic Oscillator

 This technical analysis indicator compares an asset’s closing price to its price range over a set time period to oscillate between 0 and 100, giving traders a signal when an asset is overbought or oversold.

 – why would you use it? The Stochastic Oscillator is helpful for identifying potential reversals. If the Stochastic Oscillator is above 80, the market is overbought. If the Stochastic Oscillator is below 20, the market is oversold.

 For example, in the foreign exchange market, if the Stochastic Oscillator for USD/JPY is above 85, then it may be that the market is overbought and that a reversal is about to happen.

4. Best Practices for Using Top MT4 Indicators

 The best MT4 indicators can still be very useful, so long as they are used properly and within the boundaries of their usefulness. Here are some best practices for trading in 2024:

Combine Indicators for Confirmation

 It may not be sufficient to base your trading decision on a single indicator; instead, you can combine multiple indicators to obtain a more balanced view about the market. For example, you could use a trend indicator, such as Moving Average, against a momentum indicator, such as RSI, to confirm the market condition.

 For example, if gold’s price is above the EMA but RSI is overbought, wait for a stronger confirmation to open a trade.

Avoid Overtrading Based on Indicators

 Never jump into a trade just because an indicator shows a possible move. One should always combine a signal from an indicator with a holistic analysis of the market – for example, an economic report or a global news item that alters sentiment.

Manage Your Risk

 And no top MT4 indicators can ever guarantee great success. Make sure to use stop-loss orders or other risk management tools to curb your downside risk. 

Risks of Using Indicators Without Proper Analysis

 Relying on indicators without regard to broader market conditions can land you in some poor trades. A black swan event or a sudden piece of news might move markets violently in one direction or another, regardless of what an indicator is telling you at the time: a volatility indicator might not reflect the movement for 10 minutes or more.

Why Trade with Finxo Capital?  

 You can apply the top MT4 indicators on an easy-to-use platform of Finxo Capital. This platform is designed in such a way that you do not have to struggle for finding the specific indicators under different categories. The low transaction fees, advanced charting tools, and a wide range of educational resources give traders the opportunity for making informed decisions. On the other hand, the risk management tools of Finxo Capital allow you to trade with full confidence.

5. Trading Examples Using Top MT4 Indicators

Forex Example Using MACD and RSI

 For instance, if you’re trading the GBP/USD pair, the MACD indicator shows a crossover of the MACD line above the signal line, indicating upward momentum; but the RSI is currently above 75, which indicates that the market might be considered overbought.

If that’s the situation, it would be better to wait for some further confirmation, such as the RSI dropping to 50, before taking the trade. This would reduce the possibility of a false breakout.

Stock Market Example Using Bollinger Bands and MA

 To wit, if Apple’s stock price were in the upper Bollinger Band and its 50-day moving average were to move higher, overbought conditions might be indicated. If a look at the Stochastic Oscillator revealed overbought conditions as well, time to take profits or even go short might be at hand. 

6. Popular Futures Markets and MT4 Indicators in 2024

 Since the futures markets are very volatile in 2024, the use of top MT4 indicators must be complemented by a clear idea of the market trends.

  Commodities: If you’re trading oil futures, Bollinger Bands and MACD can help you spot breakouts caused by supply-demand dynamics.

 – Indices: RSI can be a useful tool in trying to identify overbought or oversold conditions in trading indices like the S&P 500, at least around the time of earnings seasons or geopolitical events.

 – Currencies: When market volatility is high, a useful combination would be to use Stochastic Oscillator with Moving Averages as a signal for EUR/USD forex futures.

Conclusion

 To make informed decisions based on data in 2024, it’s crucial for traders to master the top MT4 indicators, such as Moving Averages for signaling trends and RSI for reversals. With Finxo Capital, you can gain access to a sophisticated platform that offers the tools to use indicators like these to optimise your decisions and manage the risks that trading entails.