The Trend Direction Indicator MT4 is a directional Indicator that plots on the price chart.
This custom Indicator for MT4 uses the ATR or the average true range as its input and plots a continuous line above or below the price.
As and then these levels are breached, the direction changes, pointing to the buy and sell arrows in the price chart.
Trend Direction Indicator: When should you long?
When to go long using the Trend Direction Indicator?
Price should be initially trading lower with the Trend Direction Indicator plotting the line above the price level.
When price breaks this level, you will then see the trend direction changing. When you see the buy arrow that is plotted, go long.
When to exit your long positions?
Because this is a Trend Direction Indicator, you can simply trail your stops a few pips below the trend line that is plotted.
This allows you to capture profits when the trend is strong.
Trend Direction Indicator: When should you short?
When to go short using the Trend Direction Indicator?
Price should be initially trading higher with the Trend Direction Indicator plotting the line below the price level.
When price breaks this level, you will then see the trend direction changing. When you see the sell arrow that is plotted, go short.
When to exit your short positions?
Because this is a Trend Direction Indicator, you can simply trail your stops a few pips above the trend line that is plotted.
This allows you to capture profits when the trend is strong.
Where to set the stop loss?
The initial stop loss is set to the low or the high of the price candle depending on whether you are going long or short.
You might then wait to move your stops accordingly to trail the trend.
Conclusion
The Trend Direction Indicator is a simple to use technical Indicator.
There isn’t much of a learning curve here.
The drawback is that when the markets are ranging, you will be prone to false signals.
How to Increase Your Winning Ratio with the Trend Direction Indicator MT4?
When you add the Trend Direction Indicator and use it together with a proven trend trading system like the Elite Swing Trader or Simple Trend Trading System, you can only expect to achieve a better win ratio and better risk-reward ratio.
Recommended Time Frames
Technically speaking, you can use this MT4 indicator for all time frames.
However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly.
We recommend that you use higher time frames like the H4 or even higher for better consistency.
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