Since the beginning of 2022, volatility in stocks has increased, and with a new earnings season set to begin, it would be prudent to prepare for huge market fluctuations. However, fundamental research alone is not always sufficient to identify profitable trading opportunities, leaving traders to rely on technical analysis.
There are various trading instruments available for stock trading when utilizing the popular MetaTrader 4 platform. The following are some essential tips and strategies for utilizing these tools.
1. Recognizing pricing trends and patterns
Adding too many indicators to a chart is counterproductive. Rather than that, traders might keep things simple by attempting to comprehend the market structure utilizing MT4’s sketching capabilities.
You can tell when the market is moving or producing distinct patterns such as channels, triangles, or wedges using various lines and graphs. This is true even when evaluating individual stocks, and traders may glean a wealth of information about the underlying order flow.
2.Observation of significant moving averages
Moving averages continue to be important indicators for traders of all skill levels, since they demonstrate a clear reaction from the market. Market players frequently see averages as dynamic support/resistance levels, and a stock’s price frequently takes a shift at a significant MA.
For instance, Tesla’s stock (TSLA) has recently made a significant rally, trading just below all-time highs. The price bottomed at the 200-day simple moving average, one of the most frequently used moving averages by traders. Moving averages of 100 or 50 periods can also be beneficial in this context, and all of these MAs – as well as others – can be plotted on the MetaTrader 4 platform.
Read: Comparing MetaTrader 4 and MetaTrader 5 – Key Differences Exposed
3.Using oscillators to determine overbought/oversold circumstances
Stock prices do not travel in a straight line up or down, which is why pullbacks might present an opportunity to re-enter the dominating trend. At some point, the stock price will always be overbought/oversold, at which point market players will begin to take profits.
Using oscillators such as the Relative Strength Index (RSI) or the Stochastic, it is possible to identify overbought/oversold scenarios. MT4 has a number of other indicators, but these two are by far the most popular.
Stocks appear to react to oscillator signals. Apple stock (AAPL) entered overbought territory in early December 2021, as shown by the RSI trading over 70. The price retraced downward, but buyers re-entered after the RSI approached the 30 level, indicating oversold circumstances.
Since its inception, MetaTrader 4 has been modified multiple times, making it even more dependable and trustworthy. Traders that use it now have a plethora of trading tools at their disposal. Trading stocks with MT4 is doable and even encouraged without overcomplicating the process or sacrificing performance.
Several of the platform’s capabilities have stood the test of time and may still assist traders in identifying fresh setups when studying a diverse group of equities.