The Candle Meter indicator helps to see the strength of the market and changes in the balance overweight towards buyers or sellers.
Forex can be called a decentralized market: the volumes of buying and selling currencies are distributed among institutional clients; transactions do not take place in single centers, as in the case of other commodity or financial assets. The disadvantage of such trading device is the absence of clearly separated volumes of Buyers and Sellers.
The standard set of indicators of the Metatrader 4 platform and other similar terminals, instead of volume numbers, indicates the total number of ticks (deals), or refers them to the side of “bulls” or “bears”, subjectively being guided only by the color and direction of the candlestick closing.
Candle Meter solves the above problem by disassembling a candle and breaking ticks into volumes of bulls and bears in percentage terms. This makes it an ideal oscillator, histogram, and a kind of adaptive moving average built based on the results of the intraday turnover on each individual timeframe.
What is the special feature of the indicator?
The Candle Meter indicator counts the number of ticks – bulls and bears deals – inside the current candle and then displays them in four ways simultaneously:
- By the percentage of purchases and sales displayed in the upper right corner of the chart , there is also an indicator showing the time until the end of the pattern formation;
- In numbers (in percent) on the chart history, below and above each candle;
- Two moving averages (dashed bearish and blue bullish);
- A histogram based on ticks for only one type of candlestick: blue bars for a bullish close, red bars for a bearish close.
The sizes of the histogram bars indicates the relative strength of the buy or sell volumes, estimated based on the percentage of their ticks.
The main settings affecting the direct operation of the indicator are located in the “Input parameters” tab:
- Fast – defines the period of the fast moving average;
- Slow – value of the period of the slow moving average;
- Display only Values above x – filter for the threshold of displayed volumes, by default it is 0 (zero). The indicator will exclude all data from the chart of the percentage volumes of bulls and bears below the value specified by the trader in this graph;
- Max Bar – the number of candles in history on which indicator data is displayed;
- Notification – setting the data refresh rate in seconds and ticks + the ability to receive alerts;
- Colors – indicator color settings.
Signals and methods of application of the Candle Meter MA indicator
The presence of moving averages in the indicator implies the use of Candle Meter signals to identify trends:
- Uptrend – crossing from bottom to top by a fast (dash-dotted) line of a continuous slow MA (blue);
- Downtrend – crossing of the fast moving average and moving below the continuous slow MA (blue).
The strategy based on the intersection of MAs of different periods is as old as the history of trading itself, and has drawbacks in the form of signal lag. The developers of the indicator advise evaluating the amplitude of the divergence of the curves prior to the formation of their intersection: the higher it is, the more accurate the signal.
The rising bars of the histogram will help to indirectly confirm the trend; they are also involved in creating counter-trend reversal signals. To get them, a trader must observe areas with a large number of the same type of bullish or bearish candles.
A fall in the strength of bears (a decrease in the size of the red bars of the histogram) at new market lows will indicate a possible trend reversal in the direction of growth;
The fall in the strength of the bulls at the established new highs of the market is a signal of the depletion of the growing trend and a possible reversal to the fall in the rate of the currency pair.
The divergence strategy has been successfully used on various oscillators, which are the indicators of the histogram, given the limited maximum possible share of bulls or bears ticks of 100%. Based on this, it will be easy for a trader to define levels (for example, 20 and -20) in the “basement” of the indicator, which will work as oversold and overbought zones.
Features of Candle Meter MT4 indicator
- Platform: Metatrader 4
- Ability to change settings: Yes
- Timeframe: any from 1 Minute to Daily
- Currency pairs: any
In CandleMeter.zip file you will find:
Download Candle Meter MT4 indicator for free: