Introduction to the Dots Indicator
Table of Contents
Momentum signals are some of the most basic trade signals that traders use to confirm the opening of a trade. This is because most momentum signals are very responsive to price action movements and have less lag. The Dots Indicator is a momentum indicator which indicates the current direction of the momentum of price action.
What is the Dots Indicator?
This Dots Indicator plots dots on each candle to indicate the direction of the momentum of price. The color of these dots changes to indicate the direction of the momentum. It plots blue dots to indicate a bullish momentum and red dots to indicate a bearish momentum.
How the Dots Indicator Works?
The Dots Indicator uses an underlying moving average with a short term bias to detect the direction of the momentum. It detects momentum direction based on the cosine of the change in the slope of the underlying moving average line.
How to use the Dots Indicator for MT4
The Dots Indicator has several options within its indicator settings.
“Length” refers to the number of bars used by the indicator to compute for the direction of the momentum.
“AppliedPrice” refers to the price point source on each bar used by the indicator, whether it is the open, high, low, or close of the candle.
“Filter” and “Deviation” are additional variables used within the indicators formula.
“Shift” refers to the shifting of the underlying moving average line forward or back.
This indicator can be used as an entry signal indicator based on the changing of the color of its dots. However, these signals should not be traded as a sole basis for a trade. It should be in confluence with other technical indications.
For example, traders could use these momentum reversal signals as reversal entry signals developing on support and resistance levels. It can also be used in a trend continuation setup as a signal of the resumption of momentum in the direction of the trend after a pullback.
Buy Trade Setup
When to Enter?
Identify an uptrend market based on a rising price action. Wait for price to pullback and the dots to temporarily change to red. Open a buy order as soon as the dots change back to blue. Set the stop loss on the support below the entry candle.
When to Exit?
Close the trade as soon as the dots change back to red.
Sell Trade Setup
When to Enter?
Identify a downtrend market based on a dropping price action. Wait for price to pullback and the dots to temporarily change to blue. Open a sell order as soon as the dots change back to red. Set the stop loss on the resistance above the entry candle.
When to Exit?
Close the trade as soon as the dots change back to blue.
This indicator can be a very useful entry signal indicator using momentum reversals as a basis for a trade entry. Since its momentum reversal signals have less lag, traders can open trades a bit earlier than other trade signals and squeeze in some profits. However, along with its responsive signals comes some false signals. As such, it should be used only when in confluence with other technical indications.
MT4 Indicators – Download Instructions
Dots Indicator for MT4 is a Metatrader 4 (MT4) indicator and the essence of this technical indicator is to transform the accumulated history data.
Dots Indicator for MT4 provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust their strategy accordingly. Click here for MT4 Strategies
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How to install Dots Indicator for MT4.mq4?
- Download Dots Indicator for MT4.mq4
- Copy Dots Indicator for MT4.mq4 to your Metatrader Directory / experts / indicators /
- Start or restart your Metatrader 4 Client
- Select Chart and Timeframe where you want to test your MT4 indicators
- Search “Custom Indicators” in your Navigator mostly left in your Metatrader 4 Client
- Right click on Dots Indicator for MT4.mq4
- Attach to a chart
- Modify settings or press ok
- Indicator Dots Indicator for MT4.mq4 is available on your Chart
How to remove Dots Indicator for MT4.mq4 from your Metatrader Chart?
- Select the Chart where is the Indicator running in your Metatrader 4 Client
- Right click into the Chart
- “Indicators list”
- Select the Indicator and delete
Dots Indicator for MT4 (Free Download)
Click here below to download: