WHAT ARE MTF INDICATORS?
MTF indicators in the foreign exchange market are filters that display information on several time frames at once for the convenience of analyzing the situation.
Very often MTF letters can be found in the indicator name in which beginners, and not only traders, perceive it simply as part of the name, not suspecting that they carry a description of a rather powerful and useful function built into the indicator.
Today we understand what MTF indicators are and how they work.
WHAT IS MTF MODE?
The letters MTF in the name of the technical indicator are deciphered as Multi Time Frame This means that the indicator is able to display its values taken from other time intervals on the price chart of a currency pair.
To analyze the market situation, a trader almost always uses the chart of a currency pair at several time intervals. This is a technically competent approach to business. For example, on the M15 chart, it is difficult to distinguish daily, weekly and monthly minimums and maximums, which are levels of support and resistance, and the trend on the lower timeframe can be just a short correction on the older one.
A trader takes a position at lower time intervals, but if you ignore the situation at higher TFs, the probability of an erroneous entry is significantly increased, and the time that is favorable for entry may be missed.
MTF indicators were created to simplify the analysis and processing of information at once from several time intervals.
Of course, you can simply periodically switch between timeframes tracking the indicator. But how quickly will the trader get tired of doing this? And for a scalper, it will generally look like a punishment. And then MTF indicators come to the rescue.
WHAT ARE THE MTF INDICATORS?
It should be noted that there are no standard MTF indicators in the MetaTrader 4 terminal set, however, many custom ones can be additionally installed. In principle, the MTF function can be implemented in almost any indicator.
Functionally, all MTF custom indicators are divided into several groups:
This type of MTF indicator does not draw anything on the price chart, does not give any trading signals, but simply collects and displays the required information: indicator direction, the signal line above below the zero lines, etc.
Graphic MTF indicators display the filter behavior on the higher timeframe. It can be any trend indicators or oscillators SIGNALING.
Signal MTF indicators transform the display of indicator values into lines consisting of dots. Received lines are displayed in the basement of the price chart. The coincidence of the indicator values on several timeframes is regarded as a signal for input output or one of the necessary conditions.
ADVANTAGES AND DISADVANTAGES OF MTF INDICATORS
The advantage of MTF indicators is immediately clear this is the convenience of analyzing charts without switching timeframes, the ability to use such indicators as a source of trading signals or a filter for a trading strategy.
In fact, they may have two drawbacks:
The first is that if the original indicator, for example, a moving average, is lagging inherent then the indicator with the MTF function will also sin.
The second drawback is that the values are not correctly displayed The presence of this drawback does not depend on the characteristics of the original but on the abilities of the author who wrote the code. Most indicators are made competently and carry the maximum payload. But sometimes you can find such a “craft”, which is more like a Khokhloma painting than a technical indicator.
Summing up, it must be said that MTF indicators are by no means the Grail. If a trader trades at a loss, merging deposit after deposit, then no MTF will help him. This is an effective tool for analysis and trading, the competent use of which can increase the accuracy of trading signals and bring additional profit.