If you're looking to enhance your trading strategy, the Volume Divergence Marker (VDM) indicator for MetaTrader 4 might just be the tool you need. This nifty indicator places markers on your chart based on divergences between trade volumes and bar sizes. To put it simply, if the size of the bars has been consistently decreasing or increasing for a certain number of bars (let's say N), and the volume is moving in the opposite direction, a marker will pop up.
Typically, you'll find these markers showing up near peaks before a reversal or during a technical correction within a trend. This can be a goldmine for identifying potential entry or exit points, depending on how you tweak the input parameters. Remember, though, VDM shouldn’t be your only tool in the kit; it works best alongside other indicators to give you a clearer picture of potential trades.
One thing to keep in mind: the higher you set your input variable values, the fewer signals you'll get. I’m currently on a mission to filter out false signals, and I’m also working on a complementary indicator that will guide you on the direction to open positions. Your feedback on improving this indicator is more than welcome!
Update (27.05.2015): By popular demand, I’ve added lines between the markers. They’ll match the color of the markers by default.
Input Variables:
- Option to count the zero bar.
- Choose between convergence (if both volume and bar sizes move in the same direction) or divergence (if they move oppositely).
- Set how long the volume needs to increase or decrease to trigger a marker (in bars).
- Decide how long the bar size needs to increase or decrease to trigger a marker (in bars).
Here’s how it looks:
And here’s a demonstration of the potential profits:
Recommendations:
- The main goal here is to maximize profits by opening and closing trades at the most opportune entry and exit points.
- For best results, try setting your input variable values between 1-3 bars. Anything over 4 isn’t really practical in the market.
- This indicator shines during flat price movements.
- IMPORTANT! Don’t use this indicator alone to make trades; it doesn’t indicate the price direction.
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