The Overbought Oversold indicator is an effective tool for analyzing the market situation. In this regard, I decided to tell you about it. The signals of this indicator are not only of high quality, but also quite easy to read. Therefore, even traders with little trading experience can use it in their trading. The use of the indicator is not limited to anything. You can use Overbought Oversold on different timeframes and in trading any currency pair. It displays its signals in a separate window in the form of a line color change. But we’ll talk about this a little later. First, let’s consider the parameters of the indicator.
Installing and configuring the indicator
There are no problems with installing this market analysis tool in MT4. This is done according to standard instructions. As for the parameters, there are only three of them:
The Ind-Short-Period parameter is used to set the value of the indicator’s fast line period.
Ind-Long-Period is used to set the period of the slow line Overbought Oversold.
And the last parameter is Ind-Level. It can be used to specify the period of the signal line.
To begin with, you can not make any changes to the settings and test the indicator’s operation with the default parameters. Then, if desired, you can try to optimize the settings in order to get the best trading results.
Overbought Oversold Indicators
You can open a buy order if the indicator line is in the oversold zone and changes its color from red to white. Accordingly, you can open a sell order if the indicator line is in the overbought zone and changes its color from red to white.
Let’s see examples of opening trade deals using Overbought Oversold signals:
This indicator can also be used to close active trading orders. This is done when the opposite signal appears.
I want to warn you that despite the effectiveness of this technical analysis tool, I do not recommend trading only by its signals. They must be filtered using other indicators and methods for analyzing the market situation. You can pick them up when testing the indicator in demo trading.
And I would also like to draw your attention to the fact that Overbought Oversold does not redraw its signals. This, of course, can be attributed to its benefits.