The Absolute Strength Indicator MT4 is a custom-built technical indicator that works somewhat similarly to the ADX indicator.
In other words, the Absolute Strength Indicator signals the absolute strength in the instrument’s trend.
When the price trends are strong, one of the lines diverges sharply, signaling that the trend is strong.
This is the main objective of the Absolute Strength Indicator... to signal and show the strength of the trend.
When to go long using the Absolute Strength Indicator?
The first step is in waiting for the green line to cut across the red line.
When the green line is rising, it indicates a strong uptrend.
You can consider taking a long position when you see this signal.
When to exit your long positions?
Exit the long position using the Absolute Strength Indicator as and when you see the lines intersecting again.
Alternately, you can also make use of a fixed risk to reward ratio to book your profits.
When to go short using the Absolute Strength Indicator?
Wait for the red line to rise above the green line. This indicates that the downtrend is strong.
Take a short position in the market when you see the bearish trend rising sharply.
When to exit your short positions?
Exit the short position using the Absolute Strength Indicator as and when you see the red and green lines intersecting again, in the opposite direction.
You can also set your take profit level based on the fixed risk to reward ratio.
Where to set the stop loss?
The stop loss should be set either at the nearest low or the high prior to taking the long or short position.
Once the trade moves in your favor, you can move the stop loss to break even.
Conclusion
The Absolute Strength Indicator, as the name suggests indicates the trend strength.
This indicator can be used in a trending strategy.
However, the indicator works almost similar to the ADX indicator and doesn’t offer any new edge.
How to Increase Your Winning Ratio with the Absolute Strength Indicator MT4?
When you add the TTM Scalper Indicator and use it together with a proven trend trading system like the Elite Swing Trader or Simple Trend Trading System, you can only expect to achieve a better win ratio and better risk-reward ratio.
Recommended Time Frames
Technically speaking, you can use this MT4 indicator for all time frames.
However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly.
We recommend that you use higher time frames like the H4 or even higher for better consistency.
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