Step-up Your Trading with the MT4 High-Low Indicator
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This article will provide traders with a greater understanding of the High-Low indicator. By the end of this article, traders will know what the Forex High-Low Indicator is and how to use the High-Low Indicator in MT4 (MetaTrader 4), with detailed examples that guide you through every step involved in the process.
The High-Low Indicator for Forex Trading
Sometimes, there is strength in simplicity. This is especially true if you are new to analysing and trading Forex. There are some advanced tools available, but their complexity can often be a barrier to entry. If you are new to FX trading, you are probably looking for easy-to-use tools. One particularly useful tool that matches these requirements is the Forex High-Low indicator.
Put simply, this indicator plots horizontal lines on a chart, which represent the high and low price for a certain period. Why is this useful? Because it has to do with the way we process information. For most people, information is more easily digestible when it is presented visually. In fact, this is the reason that we use charts in the first place.
Without the High-Low indicator, we would need to compare the trading day's high and low with recent trading ranges, by looking at raw numbers: which would be tedious at best. The High-Low indicator plots the day's highs and lows as horizontal lines, so you can immediately see how the current day fits in the context of the market's recent performance.
If you have never traded with this indicator, you are probably still using the original version that is available with the MetaTrader 4 trading platform. The High-Low indicator comes packaged with the MetaTrader 4 Supreme Edition plugin (MT4SE).
But what makes this plugin 'supreme' exactly?
Well amongst other things, the High-Low indicator is just one of the many extra indicators and tools offered by the MT4SE plugin. These tools can provide you with a smoother trading experience, that few trading platforms offered by other providers can match.
Importance of the High-Low Indicator
First, let's talk about how the High-Low MT4 indicator can add value to your trading experience. One of the most widely used methods of assessing price movements is to compare the current highs and lows to previous ones. This method is a bit rudimentary, but its main benefit lies in how widely it is used by other traders. Think about it for just a moment - what happens when so many people are using the same analysis method?
In short - it becomes essential for gaining an insight into the overall market For example, if the current high is lower than the recent highs, this may cause other traders to view the current trading price as cheap. In turn, this can create buying pressure, and may lead to a price rise. Similarly, if the low is higher than the recent lows, it may attract sellers to the market. After that, it may push prices down. This is essentially how support and resistance levels form.
Of course, the market is less predictable than that, and therefore, may not always react in this way. Nevertheless, using the High-Low indicator is a good starting point for predicting price movements. The High-Low indicator is also very simple to use. This simplicity means that even beginners can learn how to use it in a relatively short amount of time.
Using the MT4 High-Low Indicator
Source: MetaTrader 4 Supreme Edition - Selecting the High-Low Indicator
Once you install MT4SE, you can see all the additional indicators listed in the 'Navigator' section on the left side of the screen. From there, launching the High-Low indicator is only a double-click away. When you launch it, a window pops up displaying different variables used by the indicator.
Source: MetaTrader 4 Supreme Edition - Altering indicator variables
The tool may seem simplistic at first, but it also offers a high degree of flexibility, because you can alter any of the listed indicator variables. These variables include:
- The timeframe for the high and the low
- Whether to start at the current or previous bar
- The number of bars to include
- The daily time range
- The colour and style of lines
- The offsets to widen from the high and low
- The settings for alerts.
If you're happy with the default values, click 'OK'. This instantly applies the indicator to your chart.
Source: MetaTrader 4 Supreme Edition - EURUSD Daily Chart - Data Range: 27 Jul, 2016 - 5 Sep, 2016 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.
The image above shows a daily EUR/USD chart, with the high and low for the current day. Can you see how easy it is to compare the current day's range, to the recent market numbers?
When it comes to tweaking the High-Low indicator to your own persona needs - the sky's the limit. Some changes in input values are fairly trivial and self-explanatory (e.g. changing the colour of the lines). But some changes are less obvious (e.g. altering a variable). It is a very simple process - you just need to double-click on the relevant box when you first add the indicator.
Alternatively, you can change the indicator you have already added by completing the following steps:
- Go to the 'Charts' tab
- Choose 'Indicator List'
- Select 'Admiral High-Low'
- Click 'Edit'
Source: MetaTrader 4 Supreme Edition - Changing settings for the indicator
For example in the image above:
- The trader double-clicked on the box next to 'timeframe for high & low'
- The trader then changed the value to 'W1'
The default value matches the chart's timeframe. By changing the value to 'W1' you are switching the timeframe to weekly.
Setting Up Alerts
Source: MetaTrader 4 Supreme Edition - EURUSD Daily Chart - Data Range: 15 Jun, 2015 - 1 Sep, 2016 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.
Another useful feature is the ability to set alerts for the price that is crossing the high or the low line. Where's the benefit in that? The alert lets you know when a key level is breached, even if you are working on a different chart. Additionally, you can customise the alert to your liking (e.g. set it to be a text or a sound).
A Summary of the Forex High-Low Indicator for MT4
This article has helped you to understand that the High-Low indicator is an uncomplicated and easy-to-use trading tool, that allows you to quickly compare the high and low of a certain timeframe, with recent market ranges. Furthermore, traders should consider exploring the powerful toolkit provided within the MT4SE plugin, which offers other popular, proven indicators like Donchian channels and Keltner channels. As with many other indicators, the High-Low indicator will probably work best in conjunction with other tools: all of which you can practice cost-free, and risk-free with a demo trading account.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.