KC Indicator is a volatility-based envelope that measures price movements about lower and upper moving average bands. It is named after its creator, Chester W. Keltner. The KC Indicator is less well-known than other volatility indicators, such as Bollinger Bands, but it is still widely used by traders.
Why Is It Important?
The KC Indicator is important because it helps traders identify levels offering good trading opportunities. It consists of three channel lines: the upper, the lower, and the central. The upper and lower lines help us identify potential breakouts, whereas the centerline serves as a median point.
How Does It Work?
The KC Indicator is plotted using a combination of Exponential Moving Averages (EMA) and the Average True Range (ATR) indicator. The calculation behind the indicator when using the standard Keltner Channel settings is as follows:
- Middle Line: 20-day Exponential Moving Average
- Upper Channel Line: 20-day EMA + (2 x ATR (10))
- Lower Channel Line: 20-day EMA – (2 x ATR (10))
What Are The Benefits Of Using The KC Indicator?
The benefits of using the KC Indicator include:
- Identifying levels offering good trading opportunities
- Providing a clear picture of market trends
- Helping traders make informed decisions
What Are The Drawbacks Of Using The KC Indicator?
The drawbacks of using the KC Indicator include:
- False signals.
- Over-reliance on the indicator.
- Difficulty in identifying trends in choppy markets.
What Are The Best Strategies For Using The KC Indicator?
The best strategies for using the KC Indicator depend on your trading style and risk tolerance. Here are some tips to keep in mind:
- Use the KC Indicator in conjunction with other technical indicators.
- Avoid over-reliance on the indicator.
- Use the indicator to confirm your trading decisions.
How to Trade with KC Indicator
Buy Entry
- Wait for the price to touch or break below the lower band of the KC Indicator.
- Look for a bullish candlestick pattern to form.
- Enter a long position at the close of the bullish candlestick.
- Set your stop-loss below the low of the candlestick that touched or broke below the lower band.
- Set your take-profit at the upper band of the KC Indicator.
Sell Entry
- Wait for the price to touch or break above the upper band of the KC Indicator.
- Look for a bearish candlestick pattern to form.
- Enter a short position at the close of the bearish candlestick.
- Set your stop-loss above the high of the candlestick that touched or broke above the upper band.
- Set your take-profit at the lower band of the KC Indicator.
Conclusion
KC Indicator for MetaTrader 4 is a powerful tool for traders looking to identify levels offering good trading opportunities. It is easy to download and install, and it can be customized to suit your trading style. Whether you are a trend follower, a breakout trader, or a scalper, the KC Indicator can help you make informed trading decisions. That’s All For Today Good Luck For Trading.
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