The Psychological levels indicator for the MetaTrader 4 terminal.
Forex trading is very closely related to psychology. The psychological factors often cause spikes in demand or supply, which is bound to affect the movement of the currency quotes. In Forex, the price usually moves within a certain price corridor, the so-called psychological levels often serve as the boundaries of such corridors. Where are these levels located, and what causes their formation?
The psychological Forex levels occur near the round price values, as most traders believe that once a certain values is passed, the price is more likely to move further than to reverse in the opposite direction. Examples of such levels may be the marks - 1.1000, 1.3300, 2.6550.
Any financial market, be it Forex of stocks, futures, commodities market - they are all humans. And the human nature subconsciously tells to always strive to round everything. You don't believe it? It is easy to check! For example, you buy some goods for $19.9, and you later are asked what price you bought it at. How will you answer this question?
The crowd psychology in any financial market works similarly.
Advantages of the Psychological levels indicator
- Simple trading logic, accessible to even a novice.
- Absence of delayed signals.
- Never repaints.
- Does not require constant monitoring - market analysis takes a few minutes per hour.
- Low probability of triggering the stop losses.
- The psychological levels can be used for fixing profit and setting stop loss.
Recommendations on usage
- Number of levels - the number of the displayed levels.
- Color Psychological levels - the color of the psychological levels. The levels that are multiples of 100. For example: 1.2000, 1.4400, 1.9800.
- Style Psychological levels - the style of the psychological levels.
- Color sublevels - the color of the sublevels. The levels that are multiples of 25. For example: 1.2025, 1.4450, 1.9875.
- Style sublevels - the style of the sublevels.
Evgeny Belyaev, professional programmer and successful trader.