What are MTF indicators?
Very often in the name of the indicator you can see the letters MTFThe indicator has a number of features that beginners, and not only traders, perceive simply as part of the name, not suspecting that they describe a fairly powerful and useful function built into the indicator.
Today let's find out what MTF indicators are and how they work.
What is MTF mode?
The letters MTF in the name of the technical indicator stand for Multi Time Frame.
This means that the indicator is able to display on the price chart of the currency pair its values taken from other time intervals.
To analyze the market situation, a trader almost always uses the chart of a currency pair on several time intervals. This is a technically competent approach to the case. For example, on the M15 chart it is difficult to identify the daily, weekly and monthly lows and highs, which are the support and resistance levels, and the trend on the lower timeframe may be just a short correction on the higher one.
The trader opens a position on lower time intervals, but if he ignores the situation on higher timeframes, the probability of an erroneous entry increases significantly, and the opportune time to enter may be missed.
MTF indicators were created to simplify the analysis and processing of information from several time intervals.
Of course, it is possible to simply switch periodically between timeframesby tracking the indicator readings. But how quickly the trader will get tired of doing it? And for the scalper it will look like a punishment. And then MTF indicators come to the rescue.
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What are MTF indicators?
It is worth noting that there are no standard MTF indicators in the MetaTrader 4 terminal, but you can install many custom indicators. In principle, the MTF function can be implemented in almost any indicator.
All custom MTF indicators are divided into several groups according to their functionality:
Informational
This type of MTF indicators does not draw anything on the price chart, does not give any trading signals, but simply collects and displays the required information: indicator direction, the signal line above/below the zero line, etc.
Graphic
Graphical MTF indicators display the behavior of the filter on a higher timeframe. They can be any trend indicators or oscillators.
Signal
Signal MTF indicators convert the display of indicator values into lines consisting of points. The resulting lines are displayed in the basement of the price chart. The coincidence of indicator values on several timeframes is regarded as a signal for entry/exit or one of the necessary conditions.
Advantages and disadvantages of MTF indicators
The advantage of MTF indicators is immediately clear - it easy analysis of charts without switching timeframes, the possibility of using such indicators as a source of trading signals or a filter for a trading strategy.
The disadvantages they have, in fact, can be two:
- First - if the original indicator, for example, a moving average, is inherent lagThe indicator with the MTF function will do the same thing.
- The second disadvantage is. values are not displayed correctly enough. The presence of this flaw depends not on the characteristics of the original, but on the skills and abilities of the author who wrote the code. Most of the indicators are made competently and have the maximum payload. But sometimes you can come across a "craftwork" that looks more like a khokhloma painting than a technical indicator.
To summarize, it is necessary to say that MTF indicators are not the Grail. If a trader trades unprofitable, losing deposit after deposit, no MTFs will help him. This is an effective tool for analysis and trading, the proper use of which can increase the accuracy of trading signals and bring additional profits.
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