MetaTrader Stochastic Momentum with Arrows is a custom trading tool for analyzing overbought and oversold market conditions. Its algorithm is more sensitive to changes in momentum and closing prices than ordinary stochastic indicators.
Is Stochastic a sign of momentum?
Because it is responsive to fluctuations in asset prices, Stochastic can be a good indicator of momentum.
How to interpret stochastic momentum indicators
The stochastic momentum indicator is useful as a reliable tool for framing trend bias. It oscillates between the negative zone (-50), and the positive zone (+50) of the indicator window. The price in the 50 zone is bullish, while the 50 zone is bearish.
It also includes a “buy”/”sell” signal point that will help you determine the best entry and exit points. The lime signal point indicates a potential bullish trend reversal. The red signal point is a potential bearish trend reversal.
This indicator is suitable for novice and experienced Forex traders. The indicator can also be used for swing trading, intra-day/inter-day scalping, and swing trading.
Stochastic Momentum with Arrows can be used to spot trend reversals or continuation. The indicator’s signal points make technical analysis easier.
Stochastic Momentum Indicator Buy/Sell Signals
This is what the indicator looks like on your MT4 chart. This screenshot also shows how to identify high probability trade setups.
It is recommended to use the Stochastic Momentum indicator with arrows in combination with price action / or any other technical indicator. This will allow you to filter out false signals due to price fluctuations and improve your trade winning rate.
Sell and buy signals. First, wait for the indicator’s LIME signal to show below the 0.00 level (-50 area), which indicates a bullish bias. This condition will allow you to open buy/long term trades in conjunction with price action (e.g. bullish engulfment). This principle can also be applied to identify sell setups.
Every trader has the option to take profit and stop loss. However, it is important that you have a realistic trading plan. a 2:1 risk to reward ratio should be acceptable. You can also exit a trade on a signal opposite to the indicator and track your profits.
Summing up
The MT4 Stochastic Momentum indicator with arrows is a dynamic indicator that identifies trend reversal areas in price. Although it looks similar to the MT4 Oscillator, it performs better due to its high responsiveness. It is also available for free download.
