COG indicator guide for traders - Key takeaways
When trading Forex, stocks, or other securities, one of the main aspects of the price movement traders want to find out is support and resistance levels - the areas and moments where/when the buyers’ and sellers’ interests are at their strongest. To do that, they use the Center of Gravity (COG) indicator.
In this COG indicator tutorial, we examined what the COG indicator is and how it works. Using the COG line and the signal line, also known as the COG Trigger, and by observing their intersection, traders can find out when the price is starting to increase (get support) or decrease (meet resistance). These signals then help them make more conscious trading decisions.
We also made it very clear that the COG indicator becomes useful for the market conditions with no definitive trends. For trendy markets, there are other technical indicators such as ADX, RSI, etc. Finally, we explained how the COG indicator MT4 download is done and that it takes very few steps to have it on your platform.
1.Where can I find the Center of Gravity indicator MT4 download file and how to install it?
As noted in the article above, MetaTrader platforms don’t usually come with the Center of Gravity indicator pre-installed. That’s why you need to download it yourself and then install it on the platform, which is quite easy for anyone.
First, you need to locate the actual download file on the internet. By just searching the “COG indicator download”, Google will bring out lots of different sources for different indicator versions. Once you find the most suitable COG version for your trading preferences, you hit download.
Then you need to take the downloaded file into the correct MT4 folder. For that, you need to go to the disk partition where you originally installed the software, open the MetaTrader 4 folder, go to the MQL4 folder, and paste the COG file in the Indicators folder. After that, you just need to restart the platform and you will have the COG indicator successfully installed on MT4
2.How to trade with the Center of Gravity indicator?
The Center of Gravity indicator is often plotted as an oscillator in the chart. This means that it contains a graph with a line that quickly moves up and down. Specifically, the COG indicator contains two lines - a COG line and a signal line (COG Trigger).
These two lines move against each other and when they intersect, the indicator generates a signal. Here’s how it goes:
- If the COG line crosses above the signal line, it means that the actual price of an asset has started to increase. Therefore, the indicator gives out a buy signal
- If the COG line crosses below the signal line, the asset price has started to decrease. Therefore, the indicator generates a sell signal
These two conditions derive from the calculation of the COG Indicator, which has a complex formula to explain here. We only need to know that this indicator and the above-mentioned configurations only work if the market doesn’t have a definitive trend.
3.What does it mean that the Center of Gravity is a leading indicator?
According to John Ehlers, a creator of the Center of Gravity indicator, the COG has little to no lag at all. But what does that mean? To understand this, you need to know what the difference between lagging and leading indicators is.
Lagging indicators are those that observe the already-occurred price movements, therefore, their signals are generated after a certain move. Traders usually use them to confirm a trend and make trading decisions in the same direction of that trend.
Leading indicators, in contrast, enable traders to make certain predictions about future price movements. Such indicators, like the COG, take a form of oscillators with their value fluctuating up and down within a graph. When Ehlers claims that the COG has little to no lag, he means that the buy and sell signals are generated live as the price is moving. Therefore, traders don’t lose much time to make decisions.