The best Forex indicators MT5 platform offers
MetaTrader 5 (MT5), alongside its predecessor MT4, have become incremental aspects of Forex trading. Yet unlike the previous version, MT5 had much more space for lots of different instruments, not just for Forex pairs, as well as many new technical indicators.
Indicators in this software allow traders to do a quick research of the recent price movements, detect various patterns in trends, and try to predict further occurrences. There are lots of top free MT5 indicators both pre-installed and available to download on the internet, and it would be unrealistic to review all of them.
Therefore, we have chosen three of the most popular indicators:
- The ZigZag
- The alligator
- The Money Flow Index (MFI)
Traders use these indicators for various different reasons. In this article, we will discover their functionalities together. But first, let’s see how you can toggle them within the software.
How to install MT5 indicators?
As we mentioned earlier, there are many indicators already available in MetaTrader 5, and those three in our list, the ZigZag, alligator, and MFI are all pre-installed on the platform. Therefore, traders only need to turn them on to start using them.
To toggle the ZigZag indicator on, you need to go to the Insert menu at the top-left corner of the screen, choose Indicators, go down to Custom, and find ZigZag all the way to the bottom of the list. When you select it, the window will appear where you can customize the color of the lines, as well as their timeframes.
As for the alligator, you need to go to the same menu and find Bill Williams under the Indicators list. There, you need to press the Alligator indicator and then customize the settings. The MFI indicator can be found in the Volumes sub-menu, and it also allows for a certain level of customizability.
The three indicators in action
After turning the top FX indicators MT5 becomes a price-analyzing platform. Each and every one of these indicators are powerful in their own way and can take the traders’ positions to the next level. Let’s see how they work:
The ZigZag - one of the best trend indicators MT5 offers in our opinion
The ZigZag is one of the most basic tools in MT5 that many traders and analysts use for observing the current trends and determining when they will reverse. But this predictive nature is less intuitive than other indicators and the ZigZag is predominantly used for analyzing the already-occurred trends.
The indicator first determines the support and resistance areas on the chart. What this means is that the ZigZag indicator will find out when the buyers’ and sellers’ positions are the strongest and how they affect the price trends on the market. Then, all of this translates into the up/down swings of the trend, giving us the form of a zig-zag pattern.
Usually, the default value for the ZigZag indicator is 5% fluctuation. However, this tends to produce much more price swings and overcomplicates the image. That is why traders prefer a 9% fluctuation value; this way, the zig-zag will be a lot cleaner and will show a bigger picture of market developments.
The alligator - transitions from a non-trending to a trending market
The next indicator in our list is the alligator. It was created by an American trader Bill Williams, who is known to have developed indicators with creative names, including the Awesome Oscillator Indicator and alligator.
This indicator is called the alligator because of its resemblance to the actual reptile: it has three lines that represent the jaw, teeth, and lips of the alligator.
- The jaw is a 13-period moving average that is shifted forward by 8 bars
- The teeth are an 8-day moving average that is shifted forward by 5 bars
- The lips are a 5-day moving average shifted forward by 3 bars
While there are the best MT5 indicators free download platforms offer other than the alligator, this indicator is still very special because it visualizes the transition of the market from one trend to another.
The above-mentioned moving averages are used in a combination to track the trends of the market. The idea behind the alligator is this: when the three lines are crossing one another, it is thought that the alligator is sleeping - there is no observable trend of the price going up or down.
The moment the beast wakes up, it sets out to find something to eat. And the longer it has been asleep, the hungrier the alligator is. But how does this translate into market terms? The moment of waking up can be spotted when the short-term MA (5-day) starts crossing other MAs above or below. From this time, an uptrend/downtrend starts to form. And as we said, if the non-trendy situation was present long enough, the uptrend/downtrend will be much more drastic.
The MFI - Spotting when the market is overbought/oversold
The third tool in our top three MT5 indicators list is the Money Flow Index. The MFI is a technical oscillator that combines the asset’s price and volume in order to determine whether the market is overbought or oversold.
It uses a scale from 0 to 100 that rates the trends and by doing that, it assesses the market conditions. As a rule of thumb, the MFI reading below 20 suggests that the market is oversold, while the MFI reading above 80 suggests that the market is overbought.
Now, this doesn’t necessarily mean that the price will definitely change its course; it just shows that the price is nearer to the highest/lowest point it has been recently. Some suggest that by changing the scale checkmarks from 20 and 80 to 10 and 90, the buy and sell signals will be more accurate because the lines that cross these points will have more chances of reversing.