Introduction to the Percentage Indicator
Percentage Change is an information which is often used by stock traders and investors. It refers to the change of price from the previous period’s closing price in percentage form.
Some trading platforms, especially those that are used for stocks have the percentage change information. However, the MT4 platform do not have this.
The Percentage Indicator is an indicator which shows the percentage change of a tradeable instrument on the MT4 platform.
What is the Percentage Indicator?
The Percentage Indicator, which is also called the Percentage Change Indicator, is a technical indicator which shows the change in price between the current price and the last closing price in percentage form.
The Percentage Indicator shows percentage change of price for the monthly, weekly, and daily price. Along with the percentage change of price, it also shows the current price, the latest closing price, as well as the difference between the current price and the last close price.
This indicator displays the text in blue whenever there is a positive percentage change or red whenever there is a negative percentage change.
How the Percentage Indicator Works?
The Percentage Indicator uses the basic Percentage Change formula, which is to subtract the last close price from the current price, then divide the difference by the last close price, then multiply it by 100 to arrive at its percentage form.
Percentage Change = [(Current Price – Last Close Price) / Last Close Price] x 100
Both the current price and last close price is retrieved by the indicator’s algorithm from the broker’s price feed.
It also uses the candle close price for the corresponding timeframe. The daily percentage change is based on the previous day’s close price. The weekly percentage change is based on last week’s close price. The monthly percentage change is based on the previous month’s close price.
How to use the Percentage Indicator for MT4
The Percentage Indicator has a few options within its indicator settings. However, these options are merely aesthetic modifications on its display since the Percentage Change formula is fixed.
The “corner” field allows users to change which corner the information would be displayed on.
The “xdis” and “ydis” fields allow users to adjust the display’s distance from the corner both on x and y axis.
“Font” and “Font Size” allows users to modify the type and size of font used for the text.
“Font Plus” refers to the color of the text for positive percentage changes, while “Font Minus” refers to the color of the text for negative percentage changes.
Percentage Change and Momentum
Some traders use percentage change to objectively identify the direction of momentum. High absolute value percentage changes indicate a strong momentum. High positive percentage changes indicate that there is strong bullish momentum, while high negative percentage changes indicate that there is strong bearish momentum. With this concept, traders would trade in the direction of the strong momentum.
Percentage Change and Overbought or Oversold Markets
The anti-thesis to momentum would mean reversals. Some traders would use the percentage change information to identify overbought or oversold markets. Extremely high positive percentage change indicates an overbought market. On the other hand, extremely high negative percentage change also indicates an oversold market. With this assumption, traders would often trade mean reversals against an extremely overbought or oversold market.
Conclusion
The Percentage Change data is a useful information used by stock traders. However, this information is often disregarded by forex traders. Although it is uncommon for forex traders to use this, it is a useful information which traders can use.
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