Balance of Power Indicator is best known as a trend oscillator that can detect the market trends and generates trade signals at the same time. The signals are demonstrated in a very simple way that enables traders with any level of experience can understand them.
Balance of Power Indicator offers great flexibility in trading life since it can be applied to trade all kinds of forex currency pairs listed in the MT4 trading platforms. Furthermore, this tool is a good match for all sorts of timeframe charts.
Balance of Power Indicator: Explanation
After the installation, when you load the Indicator at you MT4 terminal, you’ll find your chart like the following image
Balance of Power Indicator applies a dual smoothed MA system over the selected period of data and transforms the information into trade signals. Its bars turn positive means the trend is bullish and it’s Moving Average line moves above the zero levels is considered as the confirmation of buy entry signal.
For sell entry, the bars must be turned as negative and the Moving Average line should be moved below the zero levels. The usual Risk to Reward ratio for each trade should be 1:2. Although, you may take the opposite signal to your trade as an exit signal at any point of the market momentum.
Also Read: Forex Pattern 123 Indicator MT4
Balance of Power: Trading Rules
- The Indicator bars turn positive
- The Moving Average line remains above the zero level
- Buy triggers when both of the above conditions are met
- Set stop loss below the current low of the market
- Exit long/take profit whenever the indicator bars turn negative
- The Indicator bars turn negative
- The Moving Average line moves below the zero level
- Sell triggers when both of the above conditions are met
- Set stop loss above the current high of the market
- Exit short/take profit whenever the indicator bars turn positive