The Delta indicator uses a straightforward moving average system that plots crossovers to evaluate the current trend. The trend status is displayed in a simple manner to ensure everyone can read its real-time signals.
Many short-term traders base all their trading choices solely on price actions and trends that can be drawn using the delta trend signals. It utilizes previous prices and current changes in price actions in computations which can be used to make precise trading decisions.
This guide will explain how you can accurately determine the market bias using the Delta indicator in MT4 platforms.
What is the Delta Trend Indicator?
The Delta Indicator is a trend oscillator that helps traders make correct trend-following trading decisions. It generates accurate trend signals on charts for forex, cryptocurrencies, and stocks by independently measuring the bullish and negative market momentum.
Additionally, it functions admirably as a trend filter in conjunction with all kinds of trend-following trading methods.
When the red line exceeds the blue line, we consider it a bullish crossover. Oppositely, a bearish crossover works when the blue line moves above the red one. These crossover signals give you a primary projection of the upcoming price trend.
To make buy-sell decisions using the Delta indicator, you must include additional chart analysis tools. For instance, the price rejecting significant support while the indicator plots a bullish crossover can be an ideal opportunity for placing buy orders.
Apart from the changes in market trends, the Delta indicator also helps you examine the strength/weakness of the market trends. For example, the distance between the red and blue line gets wider after plotting a bullish crossover, indicating a strong upside momentum of the price. Contrarily, both lines getting closer to each other indicates a weakness of the current market trend.
Delta Indicator Trading Strategy
Buy Signal
- The price reverses for a bullish move from a solid support level.
- The red line crosses over the blue line.
- Place stop-loss below the nearest support level.
- Take profit on bearish crossover signals.
Sell Signal
- The price rejects a significant resistance and initiates a bearish move.
- The blue line crosses over the red line.
- Set stop-loss above the most immediate resistance.
- Take profit on bullish crossover signals.
Delta Trend Indicator Pros & Cons
Pros
- Delta trend signals are easy to read and follow.
- Suits all types of trend-based trading strategies.
- Ideal for beginner-level traders.
- Applicable for multi-timeframe charts.
- Best for making day and intraday trading decisions.
Cons
- Delta trend signals may not work during price consolidations or irregular market volatilities.
- Requires additional indicators for assessing trading opportunities.
- Slower than exponential moving averages.
Conclusion
Delta indicator employs historical data to attempt to forecast future price movements. It determines short-term and long-term trends helping you simultaneously focus on scalping and intraday trading. Apart from market bias, it also enables you to assess price volatilities and potential price swing zones. Technically, the delta indicator provides you with an overview of market trends, including useful price information. So, you must include one or more additional price-action tools alongside the delta indicator if you intend to use its signals for making buy-sell decisions.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.
