I was reading this pipsology course article: What is the Best Technical Indicator in Forex? - BabyPips.com. It says that they cover and change positions when an indicator changes direction. I am wondering what it means to cover? How do I implement cover on metatrader 4? I would like to try out the indicators and cover as stated in the article to see for myself the effect.
In this case “to cover” means to close the position. When the trader sells something what he doesn`t own, uncovered position appears, and he need to buy again to cover it. At the same time, this term also used not only for short position, but to long positions too, meaning to exti the trade. Thus, the article describes the approach when traders watch indicators, close their positions and open opposite positions in case if indicators change their direction.
It is important to mention that most indicators are lagging, meaining that they show signals only after the price movement occurs. That is why sometimes the signal is no longer valid just from the moment it appears. This is the main disadvantage of indicators-based trading. The delay between the price movement and the actual signal provided by indicator depends on particular indicator and its period. For example, 9-period moving average will be more responsive than 200-period moving average. The same difference would be applicable to all other indicators. That is why you will need to test it and choose the best settings yourself, depending on your particular strategy, timeframe and instrument you are going to trade.
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I see, JC already replied your question with the details! Hope, now you have the idea! Anything else?
Thanks everyone. That’s why I love being here.
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