The Market Strength Indicator (MSI) is yet another in our stable of volume-based indicators, and as such, is a must-have tool for trading virtually any type of market and across a myriad of applications from trend trading to swing trading, scalping, and much more. While its sister indicator, the Currency Strength Indicator (CSI), helps you analyze which currencies are oversold, overbought, correlating, and trending, the MSI or Market Strength Indicator does this also, but in this case, for all markets, including stocks, ETFs, futures, and cryptocurrencies, but with one key difference – VOLUME.
As with our core methodology of volume price analysis, volume adds an entirely new dimension to trading analysis as it reveals the driving pressure behind the price action, be it strong or weak, which are all factored into the algorithm that drives the Market Strength Indicator. But with the MSI indicator, its use and application is only limited by your imagination.
For example, we can use it to see which markets are correlating and which are not so that we might use it as an intraday tool for index futures. And, of course, with knowledge gained from the stock trading and investing program, we could then further validate any analysis by setting each against the top five market cap stocks, for confirmation of strength and to give us more confidence in trading an index future.
And not just index futures, but any futures you care to consider, such as energy, metals, softs, currencies or anything else.
For day traders of stocks, you might wish to see which are correlating with one another and which are not, for example, if you are pairs trading, and also whether a particular stock is moving with the primary futures index. If not, this may be a warning sign. And of course, for ETF traders, we have the SPY, a host of ETFs, and alongside them, the sectors, such as the XLK, the XLE, and more, giving you an instant and powerful insight into sentiment across the entire market complex.
The Market Strength Indicator has much to offer; whether you are a stock investor or day trading scalper, index or ETF trader, swing trader or trend trader, it is all here as the indicator signals in a clear and intuitive way when a stock, future or ETF is overbought or oversold in all timeframes, giving you that potent insight into potential reversals from strong to weak and back again. If you enjoy getting into a trend early and trading reversals, then this is the indicator for you, but if you prefer trading trends – no problem, just jump aboard once the move has some momentum and is underway as displayed by the steepness of the line on the indicator.
It’s all here and so much more, from market correlations to market strength and weakness and in all the timeframes from seconds to months.
And just like its sister indicator, the CSI, the MSI is an oscillator that moves seamlessly from overbought to oversold and back again between a value of 100 at the top and zero at the bottom, with each instrument or market represented with a single-colored line. To help further, we’ve included two regions on the indicator to represent these states at 70 and 30, respectively. These levels are purely intended as guides to help provide additional information as to the market state and a potential reversal in due course.
Now, in a single indicator, you have the opportunity to gauge sentiment across multiple markets, whether these are correlating or not, and from there develop a myriad of trading opportunities, or alternatively give you that all-important confidence to dive in, or maintain an existing position. Through its unique algorithm based on volume, it is another indicator only limited by your imagination, and like all our other indicators, one we urge you to use in multiple timeframes.
Getting started
The MSI can calculate and display the strength of up to 6 different instruments at once in the same window but at the minimum, it will always display the chart’s current instrument which we will call the Primary Instrument. Additional instruments can be added in the MSI in the indicator properties window using the instrument selector where you can quick search any symbol. There are 5 slots for additional instruments labeled Instrument 1, Instrument 2, and up to Instrument 5. If the instrument slot is enabled and the selected symbol exists in your data feed, then it will create a new line within the MSI alongside the Primary Instrument.
Instrument types and timelines
Please keep in mind that every instrument type has its own session periods that dictate how the intervals in the timeline (the y-axis of the chart) are laid out. This becomes more apparent when adding different types of instruments in the MSI which always use the Primary Instrument’s time axis. All 5 of the additional instruments adapt to the chart’s time-axis which can produce interesting results in different scenarios.
The first scenario is when the added instruments are the same type as the Primary Instrument. For example, the Primary Instrument is a stock and all instruments added are also stocks. The resulting chart is what you would say is typical as all the data points of all instruments are displayed fully as their sessions align perfectly with each other.
The second scenario is when the added instruments are of different type with different session times. Consider this example: the Primary Instrument is the AAPL stock, but a YM future instrument is added. Because stocks have limited session times compared to futures, YM’s line is incomplete with some of its parts hidden. In this case, the MSI is not able to display YM’s entire output. In a different example, YM future is the Primary instrument and the AAPL stock is added. Futures are active in more time periods than stocks which means their time-axis show more date/time than a stock chart. In this case, no data point is omitted as a result but AAPL’s line will have gaps where the stock was out of session and the future was active.
Having mentioned these scenarios, it is important to consider the type of your Primary Instrument and of the instruments that you plan to add in the instance.
Applying the Indicator
Open your MT4 platform and in the main menu, select View > Navigator to open the Navigator window which appears at the left hand side of your workspace.
In the Navigator window, expand the Indicators tree by clicking the “+” symbol. Find the Quantum section and expand it by clicking the “+” once again to reveal the full list of Quantum Trading indicators.
To start using the indicator, you can click and drag QuantumMarketStrengthIndicator from the Navigator to a chart or you can also double-click QuantumMarketStrengthIndicator (which will then be applied to the currently selected chart). Doing either one of these will display the Custom Indicator window where you can configure all the various user settings for your indicator. These options are grouped and can be accessed by selecting the tabs. Once you are done customizing the indicator’s options, click OK to run the indicator.
Configuring the Indicator
Let’s focus on the Inputs tab and explore the different options available to configure the Market Strength indicator:
Account Email
When running the Quantum VRSI for the first time in your trading account, you need to enter the email you used to purchase the indicator as part of its initial process. You only need to do this once as the email is stored in the terminal’s global variable cache after it is entered. Please make sure that you enter your email address correctly and exactly without any extra spaces before and after it. If you made an error, simply fill this field again to update it.
Look Back
Sets the look back period or the number of bars the indicator takes from its roster of instruments to calculate their strength. Its default is 14 bars.
Primary Instrument Color
Sets the plot color and label color of the Primary Instrument
Instrument 1 Symbol
Identifies the symbol and activates the slot of the first instrument to calculate its strength alongside the primary instrument. It is recommended to select an instrument from the same market as the chart to ensure all data points are synchronized. IMPORTANT: Please make sure to enter the symbol name EXACTLY as written in your Market Watch including any suffix/prefix otherwise the instrument will not be referenced properly.
Instrument 1 Color
Sets the plot color and label color of the first instrument.
Instrument 2 Symbol
Identifies the symbol and activates the slot of the second instrument to calculate its strength alongside the primary instrument. It is recommended to select an instrument from the same market as the chart to ensure all data points are synchronized. IMPORTANT: Please make sure to enter the symbol name EXACTLY as written in your Market Watch including any suffix/prefix otherwise the instrument will not be referenced properly.
Instrument 2 Color
Sets the plot color and label color of the second instrument.
Instrument 3 Symbol
Identifies the symbol and activates the slot of the third instrument to calculate its strength alongside the primary instrument. It is recommended to select an instrument from the same market as the chart to ensure all data points are synchronized. IMPORTANT: Please make sure to enter the symbol name EXACTLY as written in your Market Watch including any suffix/prefix otherwise the instrument will not be referenced properly.
Instrument 3 Color
Sets the plot color and label color of the third instrument.
Instrument 4 Symbol
Identifies the symbol and activates the slot of the fourth instrument to calculate its strength alongside the primary instrument. It is recommended to select an instrument from the same market as the chart to ensure all data points are synchronized. IMPORTANT: Please make sure to enter the symbol name EXACTLY as written in your Market Watch including any suffix/prefix otherwise the instrument will not be referenced properly.
Instrument 4 Color
Sets the plot color and label color of the fourth instrument.
Instrument 5 Symbol
Identifies the symbol and activates the slot of the fifth instrument to calculate its strength alongside the primary instrument. It is recommended to select an instrument from the same market as the chart to ensure all data points are synchronized. IMPORTANT: Please make sure to enter the symbol name EXACTLY as written in your Market Watch including any suffix/prefix otherwise the instrument will not be referenced properly.
Instrument 5 Color
Sets the plot color and label color of the fifth instrument.
Send Alert on Overbought
Activate to allow the indicator to send alerts when an instrument breaches the Overbought level (70).
Send Alert on Oversold
Activate to allow the indicator to send alerts when an instrument breaches the Oversold level (30).
Send Notifications
Activate to allow the indicator to relay its alerts to your mobile device through push notifications. You can learn more about MT4’s push notification feature and how to set it up in the following link:
https://www.metatrader4.com/en/trading-platform/help/setup/settings_notifications
Send Emails
Activate to allow the indicator to relay its alerts to your email’s inbox. You can learn more about MT4’s email notification feature and how to set it up in the following link:
https://www.metatrader4.com/en/trading-platform/help/setup/setup_email
Removing the Indicator from the Chart
Open the chart’s Indicator List window by pressing Ctrl+I. You can also right-click the chart and select Indicator List from the context menu.
Select QuantumMarketStrengthIndicator and click the Delete button then click the Close button.
