KDJ Indicator mt4 Introduction:
The indicator which plots a histogram of three lines K, D, and J based on the stochastic calculations is called the KDJ indicator mt4.
KDJ indicator, in essence, works the same as the stochastic indicator. The only difference is that it also has the J lines and the K and D lines. The J line is the difference of K and D and generally in the middle.
KDJ indicator settings:
The KDJ indicator has the following settings in which you can change the colors and factors of K, D, and J lines.
Working of KDJ indicator MT4:
When applying this indicator on the charts, you will see a histogram in a new window below your charts. The histogram will consist of three lines representing the percentage of K, D, and J, respectively.
There will also be an upper reference line at 80 and a lower reference at 20
The kdj indicator for mt4 allows us to see the hidden patterns in the forex market that we can easily ignore with the naked eye.
Trading Strategy for kdj indicator mt4:
This indicator represents the currency’s strength, and we can use it to trade by following this strategy.
Buy strategy:
The J line of the KDJ indicator should be followed, and as this line crosses below the value of 20, it means that the currency is oversold. And it is an excellent time to buy. You should put your stop loss just a few pips below your entry. To take profit, you should wait for the J line to crosse above,80 and at that point, you should conclude your trade.
Sell strategy:
When the J line crosses above 80, the currency is overbought, and it is the right time to sell. Your stop-loss should be just above your entry, and take profit should be at the price where the J line crosses 20 in the downward direction.
Conclusion:
There is no doubt the KDJ indicator is a reliable source to tell if the currency is overbought or oversold. But, you should not use this indicator alone. I highly recommend using this indicator in combination with BB alert arrows mq4 Indicator. Also, keep in mind that KDJ is most effective for stocks and futures. But it can also be used for forex at lower timeframes with proper analysis
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