How to Use Forex Strength Meter Indicator on the MT5 Platform (2024)

Currency Strength Meter

A forex strength meter for MT5 or currency strength meter is one of the most useful and simple indicators you can use.

This indicator can tell you how strong one currency is against another currency in its simplest form.

In this guide, we’ll dig deeper into the forex strength meter indicator and how you can trade with it.

What is a forex strength meter MT5?

The currency strength meter indicator shows which currencies are tradingthe strongest and the weakest.

The forex strength meter MT5 applies to 28 currency pairs involving majors and minors. The currencies include:

• USD
• EUR
• GBP
• JPY
• AUD
• CHF
• NZD
• CAD

Depending on the currency’s strength, these pairs appear in different colors on the side. In addition, the forex strength meter indicator depicts the movements of several currency pairs in different colors.

When the indicator displays a red color, it indicates that the currency pair is moving downward. On the other hand, the pair is an uptrend when the forex strength meter is green. So, for example, the signal becomes red if the USD falls in value.

The indicator is built on the mathematical correlation of 28 currency pairs. It uses the percentage difference in closing price linear-weighted averaging.

Because the indicator does not provide buy and sell signals, you may use it for any period. The advantage of using the forex strength meter is that you constantly know the market mood and may adjust your positions appropriately.

How to find the Forex Strength Meter Indicator on the MT5 Platform

Are you wondering how to access the tool on your MT5 trading platform? Simply follow the given steps to add it to your charts:

• Click on the file menu and then click on data then click on Open Data Folder.
• You will see another window opened on your computer. Now open the MQL folder and then open the Indicators folder.
• Your Forex Strength Meter indicator file should be placed in the folder.
• Now restart your MT5 platform.
• Go to the navigation pane (press CTRL + N).
• Click on the Indicators tab.
• You will see a list of indicators. Double click on Forex Strength Meter, alter settings if you want and then click on Ok.
• Now you will see the Forex Strength Meter indicator lines on your chart.

How to read the forex strength meter?

It is not difficult to interpret a forex strength meter on MT5. The indicator uses a line to depict the strength of a currency, and it may be interpreted using a few simple rules.

• A rising line indicates that the currency is gaining strength.
• A downward-pointing line indicates that the currency is weakening.
• Flat or almost flat lines show currencies holding their current strength.
• A line that is higher than another indicates that one currency is stronger than the other.
• A line above zero indicates an uptrend vs. currencies below zero and vice versa.

How can you trade with the forex strength meter MT5?

The forex strength is not a typicalbuy or sell indicator. Instead, it illustrates the strength of each currency in a specific period.

The best way to trade with the indicator is to find the strongest and the weakest currency.

This method is ideal for beginners or those who do not want to complicate their strategy.All you have to do is choose the strongest and weakest currencies and trade their pairs.

For example, if the EUR is the strongest currency and the USD is the weakest, you should buy the EUR/USD pair.You’ll just trade in the direction of the trend. If you notice the currency has reached high levels of strength or weakness, you may use the same method to predict a trend reversal.

Another example, if the NZD is the strongest currency and the USD is the weakest, you should buy the NZD/USD pair.

FX strength colors

Another strategy for trading with FX strength is to check for colors. The red and green colors allow you to predict where the market will go within a default period.

You can adjust your positions based on the strength of the currency.

If the pair is green, bulls outnumber bears, and you can enter long positions or leave short ones.

If the pair is red, this indicates that the bears are winning the war, and you can initiate short or leave long positions.

When trading intraday, you may find the strength of any currency over a larger duration, such as a day or a week, and then apply it to a shorter timeframe.

Tip for trading with the indicator

Here are some tips you need to grasp if you want to achieve success with the forex strength meter:

It would be best if you did not trade negatively correlated currencies in the same direction. This concept applies to correlation techniques where you shouldn’t start trades in the same direction since most pairs move in opposing ways.

This rule includes the currency strength meter. So even if the currencies in the pairings are both strong, but the pairs often move in opposing directions, don’t open the same trades.

The currency strength meter can aid with portfolio diversification. You can enter a trade for a currency that is losing strength and trade with a currency that is gaining strength. This approach does not guarantee avoiding losses, but it can assist in limiting them.

How can the forex strength meter help you in your trading?

When discussing the strength of a currency, it is generally with another currency.

In many circ*mstances, knowing the absolute strength of the currencies and comparing them to discover which one is the strongest is beneficial.

To determine the strength, this MT5 indicator employs an algorithm that considers the currency’s most recent exchange prices in all of the pairings in which it is involved.

To understand the strength of the EUR, for example, the indicator scans all EUR pairs such as EUR/USD and EUR/GBP. This approach provides a trend of the strength of all currencies.

You may use this strong trend to compare other currencies and help you make trading decisions.

It is very helpful in finding

• Sharp price moves
• Price declines
• Price volatility during major news events

Pros of using the forex strength meter

• It displays the overall strength, verifying or rejecting the price trend in a pair.
• It Shows you which currencies are strong and weak, allowing you to pick which pair to trade.
• Assists you in determining if a trend is still strong or has peaked.
• Aids in the detection of potential trend reversals.

Cons of using the forex strength meter

• The currency strength meter does not provide a completely accurate picture of the currency’s strength or weakness.
• Although the indicator may be used on any timeframe, higher timeframes give a clearer indication of a currency’s strength.

Summary of forex strength meter MT5

Forex strength meter for MT5 is a beginner-friendly indicator that helps you find the strength of a currency. It can also help you in detecting the current direction of the trend.

Just remember that like any indicator, there is no 100%. If you decide to enter a position, this indicator could strengthen your decision.

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