Today I want to talk about the indicator currency power meter. It can’t be called a new development. However, traders do not use this indicator often, but in vain. This tool can improve the quality of opened trades and, as a consequence, the final result of trading. It is installed in the MT4 trading terminal according to the usual scheme. I described it in the article “Metatrader 4 cheat sheet”.
What is currency power meter
Algorithm embedded in the indicator allows you to calculate the coefficients of strength of currencies in the current market. The obtained results are displayed on the chart in the form of strips, whose color changes. The blue color is traditionally used to indicate cold, and the red color is used to indicate heat. So, the color of the strips on a particular currency will depend on the degree of its strength. As the strength of the currency grows, the color of the stripes will be close to red and “warm”. If the currency weakens, the stripes will turn blue. The numerical value of the coefficient displayed on the chart will also grow with increasing strength and vice versa.
I want to note that the indicator currency power meter draws on the chart two strips of different widths for each currency. A wider band indicates the strength of the currency on the D1 chart, and a narrow band indicates the strength of the currency on smaller timeframes, but not lower than H1.This is what it looks like:
Parameters in the settings, at first glance, a lot. But the ones you should pay attention to are only three.
I told you above that the indicator bars have different widths. Wide – for the daily schedule. Time frame can’t be changed for her. But you can set up a narrow band TP. The Hours. parameter is used for this
SPairs parameter can be used to indicate to the indicator: which currency pairs should be used to monitor the market situation.
A parameter sOutput is intended to highlight the currencies, from which the indicator should calculate the power factor. Note that the currency specified in sOutput must be present in sPairs.
Recommendations on the use of the indicator in trade
Of course, you can’t trade based on his readings alone. But as an additional tool in the process of making trading decisions, this indicator can be very useful.
Appose that trading is performed on the euro/dollar pair. At the same time, we see that the strength coefficient of the euro is much higher than the strength coefficient of the dollar. And that means that in this situation in the market you should consider buying.
If after a break-down of an important level of support, the main currency, according to the indicator, is stronger than the quoted one, then it increases the probability of the rate movement in the break-down direction. We can sell. By analogy, we arrive at a break-down of the resistance level.
Also, with the help of currency power meter we can estimate the probability of a break-down of an important level when the price approaches it. If the main currency is strong, a break-down is likely to happen. If it’s weak, we can expect a break from the level.
If the trade was opened in a trend, you may not close it until the forces of both currencies become almost equal.
If both currency pairs have approximately the same strength, it indicates the probable movement in the flat. In such a situation, it’s better not to enter the market.Download currency strength indicator:currency-power-meterFyodorov’s Inga30.01.2019