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Market Activity Index MT4


This innovative technical indicator was created to detect a period of calm in the market before the beginning of high market volatility. Like many other good technical indicators, the Market Activity Index is very stable, and it is widely applicable to many financial and non-financial instruments without any special restrictions. The Market Activity Index is best used to visualize the alternating shape of a low-and high-volatility market. This is a very useful tool for taking a calm market, but ironically, it is the most powerful tool for predicting highly volatile markets. The best thing about the Market Activity Index is that the values of this indicator are limited by its upper (1.0) and lower (0.0) limits, but at the lower limit value, the indicator will never deviate from the current price movements. This means that with a value of 0.08, the Market activity Index cannot be calculated based on highly volatile price movements. To make it easier to understand the importance of this concept, imagine that the price can go even further up even after the RSI values show an overbought signal of 70 (This can happen with 99% of the oscillators). The same can happen with ADX or most other indicators. For example, an ADX value of 25 can still be calculated, even if there were previously quite extreme price movements. We can say that this is a false or delayed signal. The Market Activity Index is not a magic indicator, but it will do its job by consistently notifying the trader of a period of calm or sideways movement most of the time. This tool will help you understand and learn the rhythm of the market.

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Theoretically, the Market Activity Index should range between 0.0 and 1.0. The 0.0 level indicates a theoretical period of dead calm, and the 1.0 level shows the theoretical maximum volatility. However, in practice, both levels 0.0 and 1.0 are never reached. Instead, the user can choose a value of 0.05 or 0.1 to detect a period of sideways movement or low volatility. A level of 0.05 or 0.1 also corresponds to the generally accepted 95% or 90% of the critical value used in testing statistical hypotheses. According to our observations, some currency pairs work better with a critical value of 0.05, and for some other currency pairs, a critical value of 0.1 is more suitable. The choice of a critical value should be made in accordance with the price data itself.

Users may need to configure the Market Activity Index settings for different currency pairs. Here is a brief explanation of each of the input parameters:

  • Use White Background Chart: Use White background Chart, true or false
  • Calculation Period: the calculation period of the Market Activity Index
  • Average Period: the smoothing period of the Market Activity Index
  • Use Weighted Average: Use weighted average, true or false (weighted average is more sensitive than unweighted average)
  • Index Level Critical value: the critical level of 0.05 or 0.1
  • Index Critical Level Width: The width of the critical level line
  • Index Critical Level Color: The color of the critical level line

The Market Activity Index best defines a period of calm in the market, which is also called a flat market or a low-volatility market. In practice, this period of calm is cyclically followed by a highly volatile period. The indicator itself is an alternate picture of market volatility in quantitative terms. This indicator successfully determines the beginning of a period of high market volatility. Despite the fact that the Market Activity Index often accurately determines the pivot points, at the development stage, the Market Activity Index was not intended to predict the direction of the market.


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