Envelopes are formed by two lines constantly fluctuated upward and downward from the moving average. It is a technical indicator used to determine the distance between market price and moving average.
Basically, price fluctuations will vary widely within the range of certain distances to the moving average, so your strategy could be executing a “sell" order in upper vicinity of the band and executing a “buy" order in the lower vicinity of the Band.
How to display Envelopes in MT4
It is very easy to display Envelopes in MT4.
Can display with 4 steps.“Insert" → “Indicators" → “Trends" → “Envelopes".
After the setting screen is displayed, select “14" for period, “Exponential" for MA method, the and “Close" for apply to.
In deviation value field, enter a value for each case.
Sample for setting envelope deviation
The deviation value of the envelope is set differently depending on the currency pair, market price, and time frame. For example, if time frame is 15-minute, the deviation of the envelopes is usually adjusted to 0.07% ~ 0.14%.
- Sample setting for Envelopes
- MA Method :“Exponential”
Two Envelopes can be displayed with different deviations and the one with larger deviation can be used as stop loss line.
In addition, you can also select “line type" and “color change" at properties. Once the setting is complete, click “OK".
You can display Envelopes with simple setting as above.
You can refer to the articles below for more information on how to set or how to trade with envelopes.