If you have been in the forex trading industry for some time, you are probably well conversant with the moving average (MA) trading indicator. The Mega Trend indicator is pretty much an enhanced type of moving average indicator. If you have not used MA in the past, do not fret. We will explain everything you should know about the Mega Trend Indicator for MT4-download free.

About Mega-Trend Indicator

As mentioned, the megatrend indicator is the Moving average variant that shows ideal reversal points. Traders majorly use the indicator to get buy/ sell signals. However, you can use it as a price filter. The default period is set at 144. While the value is excellent for long-term price movement identification, it makes the indicator slow.  If you are short term trade, you will want to make the indicator faster by using shorter periods.

The indicator is perfect for trend, price action, and reversal trading. You can use the Mega Trend indicator in any time frame ranging from one minute (M1) to a monthly time frame. In addition, it supports both long-term and short-term trend analysis. Therefore, it is the perfect technical tool for scalping or day trading.

Buy and Sell Signals

Using the Mega Trend indicator for MT4 is easy and straightforward. Simplicity is perhaps its best attribute. The indicator line changes color to define the direction of the market. To give you a clear picture, the line changes from red to blue, signifying a bullish signal. When the line changes from blue to red, it is a bearish signal.

Opening Buy Positions

Buy when the Megatrend indicator color turns from red to blue. Set your stop loss at the most recent support level. You can also exit the trade when the line reverses back to red.

Sell Signal

Enter the sell position when the line changes from blue to red. An ideal stop loss should be above the recent resistance level. Alternatively, you can exit if the indicator changes to blue.

Chart Example

The screenshot above show a one-hour time frame (H1) price movement for EUR/GBP chart. The uptrend starts at 07:00 18th of May. The price rose from 0.8582 before reaching consolidation on 19th May. The indicator changes from blue to red around 0.8603. This is an excellent indication of price reversal. It is also a great place to enter a sell position. True to the indicator, the price reverts to the previous support level.

Similarly, the line changes from red to blue once the price starts moving upwards. In fact, the price moved 50 pips upwards after the color change. This makes the indicator a perfect tool to complement your trading strategy.

Easy to Use Indicator

The Mega Trend indicator is one of the easiest indicators. You just need to check when the line changes from red to blue to initiate a buy position and vice versa. The simplicity feature makes it user-friendly and hence a handy tool for rookie traders.