Average Sentiment Oscillator Indicator for MetaTrader 4

October 28, 2014

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The world of Forex trading is vast and complex, with numerous indicators available to traders. One such powerful tool is the Average Sentiment Oscillator Indicator for MetaTrader 4. This indicator is a valuable asset for traders, providing insights into market sentiment and helping to predict future price movements.

Understanding the Average Sentiment Oscillator Indicator

With the use of Open, High, Low, and Close (OHLC) prices, the Average Sentiment Oscillator Indicator is a special instrument that assesses the bullish or bearish sentiment of each bar. The final % number is then obtained by averaging all the percentages in the time group of bars. This procedure offers a thorough understanding of market mood, assisting traders in making wise choices.

Modes of the Average Sentiment Oscillator Indicator

The Average Sentiment Oscillator Indicator operates in three modes:

Mode 1 – Intra-bar algorithm only (Leading): This mode uses only the intra-bar algorithm, providing leading signals.
Mode 2 – Group algorithm only (Lagging): This mode uses only the group algorithm, providing lagging signals.
Mode 0 – Both algorithms (Balanced): This mode uses both algorithms, providing a balanced view of market sentiment.

Using the Average Sentiment Oscillator Indicator

Two lines on the chart reflect the Average Sentiment Oscillator Indicator: the red line (Bears %) and the blue line (Bulls %). These lines’ crossing suggests a change in the balance of power between bulls and bears, giving traders possible indications to enter or exit the market.

How to Trade with Average Sentiment Oscillator Indicator MetaTrader 4

Buy Entry

Look for the blue line (Bulls %) to cross above the red line (Bears %). This indicates a bullish sentiment.
Confirm the crossover with other indicators or price action to ensure a strong buy signal.
Enter the trade at the opening of the next bar after the crossover.
Set the stop-loss below the most recent swing low.
Set the take-profit at a level where the reward-to-risk ratio is at least 2:1.

Sell Entry

Look for the blue line (Bulls %) to cross below the red line (Bears %). This indicates a bearish sentiment.
Confirm the crossover with other indicators or price action to ensure a strong sell signal.
Enter the trade at the opening of the next bar after the crossover.
Set the stop-loss above the most recent swing high.
Set the take-profit at a level where the reward-to-risk ratio is at least 2:1.

Average Sentiment Oscillator Indicator Settings

Conclusion

The Average Sentiment Oscillator Indicator for MetaTrader 4 is a powerful tool for Forex traders, providing valuable insights into market sentiment. Traders might potentially improve their trading success by making better judgments and utilizing this indicator with skill.