What is the baseline?

What is the baseline?

A baseline or trend line is an indicator that is only on the charts.

The baseline has 3 purposes:

  • To signal which direction you should be trading. If the price crosses and closes above the line, you are to trade long. If the price crosses and closes below the line, you are to trade short.
  • To signal when to exit the trade. If price crosses and closes above/below the line in the opposite direction you are in a trade, you exit.
  • It signals if you are entering a trade at the best price. To enter into a trade all of your indicators must be giving you a signal BUT price also must be within the 1 ATR zone before you can enter trade. If price goes outside of that zone the price is too far gone and you are overpaying for it.

Now that you understand the purpose of the baseline you can hunt for a good one. There are so many trend line indicators for MT4 and they all have great methods of calculating the price action so this might be the easiest indicator to find on your journey.

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