Wouldn’t it be great if there was an indicator that could help you identify candlestick patterns? Well, there is. In fact, there are many.
The problem is most of them are terrible.
I recently tested a bunch of the most popular indicators of this kind to find out which is the best candlestick pattern indicator for MT4.
Personally, I don’t need an indicator to help me identify candlestick patterns.
Also, since I apply my own filters to qualify good candlestick patterns, simply pointing out candlestick patterns isn’t necessarily very useful to me.
See one of the updated articles in my candlestick trading course to see what I mean.
However, when I first started trading candlestick patterns, a good candlestick pattern indicator for MT4 would have been very useful to me, so I figured some of you would find this useful.
The Best Candlestick Pattern Indicator for MT4
I chose the 3 indicators below after testing many candlestick pattern indicators for MT4. Many of the indicators I tested were junk. Others no longer worked.
The indicators that I could get working were ranked by their ability to identify strong reversal patterns.
Keep in mind that just because an indicator made it onto this list doesn’t mean that I’m endorsing it. In fact, I’m only recommending one of these indicators and even it isn’t perfect.
I’ll explain more below.
The screenshots used are from the same broker, timeframe, and section of the chart. My hope is that this provides a fair comparison.
Below are my top 3 picks, including the best candlestick pattern indicator for MT4 that I could find:
#3 Pattern Recognition Master
I noticed a few other websites recommending this indicator, so I had high hopes for it. Unfortunately, it didn’t live up to the hype.
The Pattern Recognition Master indicator claims to identify 10 popular candlestick patterns (5 bullish and 5 bearish patterns).
Each individual candlestick pattern can be turned on or off. Alerts for each individual pattern can be turned on or off as well.
It also has the option to set a separate color for each pattern.
Note: Of the 3 indicators listed on this page, this is the only one that allows you to assign a separate color to each candlestick pattern.
It uses abbreviated labels, which keeps the chart less cluttered, and includes an onscreen legend to help you identify each pattern that is highlighted.
Sounds good, right? So… what’s the problem?
Actually, there are several problems with this indicator that kept me from ranking it higher.
This indicator also seems to think almost anything with a long wick is a shooting star or hammer, regardless of how large the real body is.
On a more general note, this indicator works on candlestick shapes alone – not context.
Candlestick patterns are useless if they are not traded within the proper context of the market.
#2 Candle Patterns Indicator
The next candlestick pattern indicator for MT4 is slightly better in terms of identifying patterns, although it falls short in every other aspect.
Candle Patterns Indicator was designed to identify over 30 popular candlestick patterns.
Unfortunately, you can’t turn each individual candlestick pattern on and off. Instead, you chose from strong reversals, weak reversals, continuations, and unclassified patterns.
You have to turn these patterns on or off in groups, which I found to be problematic (more on this later).
Morning star and evening star patterns are identified by this candlestick pattern indicator, which is an improvement over the previous indicator.
Example: In the section of the chart pictured below, there were no hammer patterns. The indicator did not identify any hammer patterns, which is accurate.
Compare that to the previous chart, where 4 hammers where identified incorrectly.
It uses full labels (except with the morning star and evening star), which can look messy, but that’s just my personal preference.
It’s not perfect, but so far there are no deal breakers, right? So why am I not recommending this indicator?
There are several serious problems with this candlestick pattern indicator that keep me from ranking it higher.
Earlier, I mentioned that you can’t turn each pattern on or off individually, which means you’re stuck with this mix of strong and weak patterns no matter what you do to the settings.
If you’re new to candlestick trading, this could be confusing.
Just like the last indicator mentioned, this one also identifies candlestick patterns out of context, although it does a better job at identifying hammers and shooting stars.
Add to the fact the chart is already crowded, because the indicator has no option to use abbreviated labels, the labels also crowd the candlesticks that they’re identifying (see the image above).
This can make it difficult to, for instance, measure from the high or low of a candlestick using the measuring tool.
You also get random candlesticks with just an arrow and no label from time to time (see the image above – bottom right).
#1 Nison Candle Highlighter
This is the only indicator that I can recommend for identifying candlestick patterns. I believe it is, by far, the best candlestick pattern indicator for MT4.
Update: You can now read my full Nison Candle Highlighter review for more information about this indicator.
Steve Nison is THE authority on candlesticks. He is responsible for introducing Japanese candlestick trading to the Western world.
The Nison Candle Highlighter is designed to identify 28 candlestick patterns according to Steve’s own specifications, so you know the patterns are accurate.
It has the ability to turn each individual candlestick pattern on or off, so you can focus on just the patterns that you’re interested in trading.
You can use full or abbreviated labels (pictured below), so you can keep your charts uncluttered.
The sales page has a legend that you could reference or print out if needed, although the abbreviated labels are pretty self-explanatory.
This is the most logical and elegant abbreviation system that I encountered while I was testing these candlestick pattern indicators.
As you can see from the image above, the labels don’t crowd the candlesticks either.
Okay, so enough about labels. How well does it identify candlestick patterns?
For starters, it actually identifies all 28 patterns that it’s designed to identify.
The Nison Candle Highlighter accurately identifies each candlestick pattern, as you might imagine, but it also identifies each candlestick pattern within the proper context of the market.
In other words, it won’t identify a hammer (bullish reversal pattern) after a bullish price movement. None of the other indicators that I tested could do that.
Of course, it’s not perfect.
For instance, if you look at the chart above you can see a couple of engulfing patterns that were nothing more than a small real body candlestick engulfing a doji or spinning top.
Although those are technically engulfing patterns, they aren’t worth considering because their size is so small relative to the previous candlesticks.
I tested many indicators to find the best candlestick pattern indicator for MT4. All of the free candlestick pattern indicators that I tested were terrible.
Most of them seemed to have a problem with their labels in one form or another, which may not be a big deal to you.
I like to keep my charts as clean as possible.
More importantly, the free indicators identified candlestick patterns on the shapes of the candlesticks alone.
They did not accurately identify candlestick patterns within the proper context of the market, which is crucial to candlestick trading.
There is no substitute for experience and actually learning to identify these candlestick patterns for yourself. However, an accurate candlestick pattern indicator could be very beneficial to certain traders.
The Nison Candle Highlighter accurately identifies candlestick patterns within the proper context of the market, which is why I believe it’s easily the best candlestick pattern indicator for MT4.