Performing Technical Analysis on The Metatrader 5 Platform

If you're thinking about trading stocks online, there are now plenty of platforms online to do active trading. Each platform has its pros and cons and appeals to different types of traders. More than 1,000 hedge funds use Meta Trader 5 as their prefered trading platform.

Launched in 2010, MT5 might not be as successful as its older brother MT4. Even though the developers of Meta Trader suspended technical support for MT4 in 2018, more than 16 million traders still use it.

And yet, you'd be wrong not to switch to MT5 when opening a trading account, especially if technical analysis is a big part of your stock-picking strategy. In this tutorial, we go in-depth on the features of this trading platform, so you make up your own mind about MetaTrader 5.

Watch the markets

Like any self-respecting trading software, MT5 allows you to watch the prices of various assets offered by your broker. There is nothing new in this. You can create a list of stocks to watch by adding or removing "symbols" in the market watch window.

MT5 is distinguished by the depth of the market. In other words, MT5 gives you order book visibility, which was not possible with MT4. We have visibility into pending orders for a specific asset.

The image below gives you an idea of ​​what market depth looks like in MetaTrader 5. The tool provides us with information on pending orders on the EUR/JPY forex pair: current price, volume imbalance towards long positions (signalling that the price will soon move higher).

Technical analysis

The essence of technical analysis is that it is used to determine the price behaviour in the future based on historical data. The idea of ​​technical analysis is that the markets are cyclical; that is, history repeats itself, and the trader's task is to identify cyclical patterns in Forex. In turn, such patterns are called trading signals.

Technical analysts tend to believe that price fluctuations are neither random nor unpredictable. Once a certain type of trend is formed, it will continue for a certain period of time.

Technical indicators

Forex traders can use volume charts, price charts, and other mathematical representations of market data (hereinafter referred to as research) to discover ideal trade entry or exit points. This is what can help a trader learn how to forecast in Forex.

There are trend indicators.

These indicators smooth out the price data, often with the help of moving averages. The advantage of these indicators is that they can give fewer false signals. The disadvantage is that they can have a significant delay - this kind of indicator should be used more in long-term trading strategies and for predicting the long-term Forex rate. Your task is to detect the dominant trend in the market with the help of trend indicators.

Then we will move on to cycle indicators.

They identify recurring patterns in the foreign exchange market from recurring events such as elections. The cycle forecast indicator determines the moment of a particular Forex market pattern. It would be unwise if we didn't mention support and resistance - they describe price levels where markets often rise or fall and then vice versa.

Finally, last on our list is momentum.

These indicators determine whether a trend will be strong or weak after it has progressed over a period of time. Momentum is highest at the start of a trend and lowest when it reverses.

Most technical indicators have various settings that allow you to adapt them to specific tasks. Both analytical parameters and appearance can be controlled. For example, you can change the period for calculating the Moving Average, as well as change the colour, thickness and type of its line.

Indicators can be placed both on the quote chart itself and in special subwindows with their own scale of values. In this case, it is possible to impose one instrument on another.

In general, MetaTrader 5 offers you a serious arsenal for full-fledged analytics. However, the built-in toolkit is just the beginning. Market and Libraries contain thousands of technical indicators and make your analytical possibilities limitless. Download for free, buy or rent — tools for technical analysis of any complexity are available right on the platform!

What is technical analysis?

This is a concept used in all financial markets, not just currency markets. Technical analysis can be explained as the ability to predict future price movements by looking at past price movements. This is a method of analysis that investors often use, especially in highly volatile markets such as Forex.

Compared to fundamental analysis, it can be said that it gives more reliable results because more rational results are obtained, and it is based on historical data. However, the answer to the question of technical or fundamental analysis is not clear both at the academic level and in the markets.

Technical analysis, as we mentioned above, can be used in almost any market. The stock market is one of the markets where technical analysis methods work. However, speculative stock movements, important company news/announcements, or balance sheet changes reduce the functionality of stock technical analysis methods.

Use of technical analysis

To be able to do technical analysis, you need to know how to read charts. In addition, it is necessary to know such terms as support, resistance, trend, ascending channel, and descending channel, which are basic concepts of technical analysis. For trends and channels, click this link.

In addition to some basic technical analysis concepts, you need to know concepts called technical analysis methods or technical analysis indicators. Many indicators are used in technical analysis. First of all, instead of claiming that; There is no technical analysis indicator that works with a 100% guarantee.

The analysis methods used in technical analysis depend on the market. An indicator that is successful in the stock market may not work in the currency markets. In addition, the time frame used when performing technical analysis on charts also affects the result.

The indicator we use on the 1-hour chart and the same indicator we use on the 1-day chart can give different results. Another important point is that we should not make buying or selling decisions by looking only at the indicator.

Finally, although the most successful technical analysis methods differ from person to person, we need to find the most accurate analysis method for us by checking historical data. The MetaTrader 5 trading platform has a data testing program that allows you to test indicators with historical data. Using this, you can run your indicator on historical data and see the results.

The chief advantage of using these objects is that they can enhance your trading plan by preventing you from entering a trade or exiting from a position at the wrong time. All these objects are based on one simple principle: the theory of market trends coined by American securities analyst R. Buckham Brown in 1937.

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