In this article, we are going to present a modified indicator for Metatrader 4 which shows the technical indicator KST (Know Sure Thing) in a window below the main price chart and in any time frame. We include this indicator for free download at the end of the article.
Before explaining how works this indicator for MT4, let’s talk a little about the generalities of the KST.
What is the KST indicator?
The KST oscillator, as it was originally developed by Martin J. Pring, is well known and much appreciated in the stock market but not so much in the Forex community. It is unique in how it is calculated and has an amazing ability to identify dominant market cycles.
It is popular with traders who practice swing trading. The indicator is used to detect market momentum and capture big trends.
According to Wikipedia, we can define the KST indicator as follows:
“The KST indicator is useful for identifying the main stock market cycles because its formula is weighted in such a way that it is much more influenced by the longer and more dominant time periods, in order to better reflect the main oscillations of the stock cycle. The concept behind the oscillator is that price trends are determined by the interaction of many different time cycles and that major trend reversals occur when a series of price trends change their direction simultaneously.”
Description of the KST indicator for MT4
The indicator we describe below presents a way to make it more suitable for high volatility markets such as Forex by limiting the effects of atypical movements. The developer has expanded its capabilities to run the algorithm on the RSI (Relative Strength Index) and Stochastic Oscillator as options within an indicator.
It actually consists of two indicators in one. The former displays the KST in a window below the price chart but unlike the classic KST, it displays a MACD-like appearance with a blue (bull market) or red (bear market) histogram, with a signal line. The bullish and bearish crossing of the histogram by the signal line is what gives us the buy and sell signals.
The indicator also provides alerts when a crossover of the signal line with the histogram occurs.
Indicator parameters
The second indicator shows the KST analysis directly on the price chart using blue or red dotted lines. At first glance, it seems more complicated to interpret but it is actually a complement to the previous indicator. For example, you can also run the algorithm on the RSI and the stochastic oscillator, so that combinations can be made. For example, in one indicator the classic KST can be used while in the other the KST calculated on the RSI can be used so that we have a comparative view of both indicators.
Indicator parameters
As you can see, some knowledge of the KST indicator is required to properly configure this custom indicator. However, the default settings are more than adequate to produce good results.
Example
In the previous image, we see an example of this indicator used to analyze the market behavior in the GBP/USD currency pair. As can be seen, the indicator shows the two lines that make up the KST on a screen below the price chart, with the addition of a histogram similar to the one seen in the MACD. Likewise, the graphic version of this indicator is also shown, represented by blue and red points that represent periods of bullish or bearish behavior. In general, the crossovers of the signal line with the histogram indicate changes in the market direction.
Important note: As with any other market analysis tool, it is not recommended to use this indicator as the sole criterion to open and close traders. The best practice is to check its signals using other technical analysis tools or better yet, use the KST as part of a complete trading system.
Alternative KST indicator
You can also try the following alternative KST indicator for MT4. Just like the original KST, it displays two lines in a window below the price chart. This indicator is the ideal option for the trader who prefers an identical KST to the original version without any extra addition.
As can be seen in the previous image, the only parameters that can be modified are those corresponding to the same indicator, such as the ROC and the moving averages periods, for example, and the type of moving average (SMA, EMA, SMMA and LWMA).
Apart from these parameters, the indicator does not have signal functions, alerts, or anything similar. It is the KST in its simplest form, although it can be quite useful for analytical uses.
You can download the two custom indicators for Metatrader at no cost at the following link:
KST Indicator for Metatrader 4
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