The Aroon indicator is a technical tool that determines the strength and the direction of a trend, as well as reveals the transition to flat. In other words, the robot shows the state the market is in, at a certain point in time. Below, we will describe how the bot works and what you need to pay attention for, using it.
Any trader would like to receive signals to enter the market, or leave it without a risk. With the help of this tool, you'll be one step closer to this goal. Just download the latest version of the Aroon indicator on the MTDownloads website. There you can also find information about installing a sales assistant to the MT4 terminal.
The description of the Aroon
This robot isn't built-in by default to the MetaTrader4 platform, so it must be installed. This won't take much time and even the novice user can understand the details. We have described how to do this in detail, on the MTD website, and below are the main characteristics of the bot.
Drag the indicator from the toolbar to the graph, and it will be open in a new window. The robot itself represents two lines, the first one shows the local maximum and minimum of the price, and the second shows the trend. Visually, it looks like this:
The blue line indicates the trend, so when it rises, that means that an upward trend is appearing on the market. If the red line is moving upwards, then a downward trend reigns on the currency exchange. The figure below (2a) shows how the indicator corresponds to the price graph sections.
If the price fluctuates in a narrow range, or the flat is observed, the Aroon will draw frequent small denticles, as on the figure below (2b, 2c).
Setting up the program
In the configuration window, the user can change only three parameters:
- Aroon Period - the number of bars on the price graph, taken into account searching for the local minimum and maximum. The default value is 14.
- Mail Alert - the notification option. Here you can configure whether there will be any alerts from this indicator to your email, and how often they should be sent. By default, this option is disabled.
- Sound Alert - the sound notification about the signal appearing. By default, this option is disabled.
The way the technical tool works
The program is often used in various strategies due to the fact that it shows accurate signals and operates on an understandable basis.
The indicator evaluates and analyzes three conditional levels on the price graph. If you set the reference point to the nearest minimum or maximum, then at this point, one of the lines will have a 100% indicator - the line will be on top of the graph. Next, the number of bars set in the program settings will be analyzed. If, at this time, the price doesn't rise or fall to a new high / low, then the indicator of one or more Aroon lines will reach 0%. In this case, the line will move from the very top to the lowest position of the window.
By analogy, the second line moves.
Aroon signals in currency trading
The robot generates three types of signals for buying or selling: strong, medium and weak.
- A strong signal occurs when both lines reach the end position of the window. Entering the market at this point is a bit dangerous, since the probability of a trend reversal is high.
- The second type of signals occurs when the lines are parallel, which means that the trend is stable on the market. This is the best time to enter the market, since you're using the trend trading strategy.
- When the lines intersect, then the trend changes. This is a weak signal to enter the market and only the professionals trade at such times.
We would like to draw your attention to the fact that the considered robot isn't self-sufficient, and it's better to use it with other programs to confirm the signals. The SMA, ZigZag, Volumes and Fractals indicators are perfect for the pair. They can also be downloaded for free on the MTD website.
Pros and cons of the indicator
The advantages of the program in question include the simple user customization and a simple graphical presentation. Although the assessment is visual only, it's not difficult to read the graph and understand the state of the market. You can get used to the work of the indicator in a couple days, it will be a bit more difficult to find a convenient pair that corresponds to your strategy.
The disadvantage of such a program are the untimely signals, which the indicator provides during a strong trend. That's why the analysts strongly recommend to use the other indicator groups along with the Aroon. You can find the most comfortable way of work on the MTD website.