Moving Average (MA) is one of the most common instruments used by the traders for determining the direction of the market trends. But MA shows you only a single value of the current time which works as a dynamic pivot line of the market trend. MA Histogram does a little extra for the traders than the MA does. Instead of plotting a single value, the indicator shows a price range that works as a dynamic stop level of the current market trend.
MA Histogram is a key indicator for determining the market trend as correctly as possible. It suits all sorts of timeframe charts and can be applied to trade all kinds of forex currency pairs available in the financial markets.
MA Histogram Indicator Overview
Download the indicator and install it on your MT4 terminal. Once you’re done, your trading chart appears like the following image
MA Histogram Indicator Explanation
MA Histogram applies a 6-day period of smoothed moving average based on the median price calculation method. It plots the trend signals by using its colored histogram bars. Instead of plotting a single line, these histogram bars state a price range for avoiding frequent entry signals and avoiding unnecessary stop outs from the opened trade positions.
Other than that, MA Histogram works in the same manner as traditional moving averages. Price closing above the MA Histogram bars signals for the bullish trend and price closing below the bars signals for the bearish trend of the market. The indicator bars turn blue means a green signal for going long and turns red whenever a possible short entry opportunity is confirmed.
MA Histogram: Buy Conditions
- Price candle closes above the MA Histogram bars
- The indicator bars turn blue
- Buy triggers after the above conditions are met
- Set stop loss below the low of the histogram bars
- Exit long or take profit whenever the bars turn into a red color
Also Read: The Best Forex Trading Strategy Ever
MA Histogram: Sell Conditions
- Price candle closes below the MA Histogram bars
- The indicator bars turn red
- Sell triggers after the above conditions are met
- Set stop loss above the high of the histogram bars
- Exit short or take profit whenever the bars turn into a blue color