If you’ve ever tried a prop firm challenge, you are already familiar with the drill: rigorous daily drawdowns, stringent overall loss limitations, and the pressure to succeed under regulations that seem to be watching you every step of the way. It’s thrilling but also stressful, and every little advantage counts when trading in those circumstances.
Using the appropriate indications on MT5 is one of the simplest—and, to be honest, most underappreciated—edges you can give yourself. I’m not referring to filling your chart with fourteen vibrant, squiggly lines till you are unable to see the candles at all. I’m referring to the use of intelligent, trustworthy, and challenging indications that assist you in making well-informed judgments without adding unnecessary complexity.
So, let’s go over some of the best MT5 indicators you can use to increase your accuracy, control your emotions, and pass prop firm challenges like FTMO, My Forex Funds, Funding Pips, The Funded Trader, or whatever firm you’re shooting for.
Why Indicators Matter So Much in Prop Firm Challenges
Let’s first examine the significance of indicators for funded-account difficulties before moving on to the best ones.
Typically, prop company challenges are organized around:
- Risk management
- Regularity
- Strict drawdown guidelines
- Regulated frequency of trading
- Excellent timing and patience
MT5 Indicators can help you adhere to the rules of engagement, but they cannot force you to be disciplined. You won’t force trades, chase candles, or go too early if you have the appropriate indicators. They reduce guesswork, which is really the key to passing a challenge, and they offer structure.
Moving Average (EMA/SMA): Your Foundation for Trend Confidence
Let’s be real-most traders fail challenges due to them always fighting the trend. That’s where moving averages come in handy. The two best ones to use on MT5 are:
- 20 EMA
- 50 EMA
- 200 EMA
These EMAs help you quickly understand whether you should look for buys, sells, or stay out altogether.
Why EMAs Are Perfect for Prop Firms
They keep you from trading against momentum.
They reduce chart clutter.
They help you identify high-probability pullback entries.
For example, if the price is above the 20 and 50 EMA and it comes back to retest the 20, that’s usually a clean continuation setup. These types of trades work beautifully in challenge phases because they are low-stress and high-probability.
RSI (Relative Strength Index): Your Overtrading Prevention Tool
If there is one indicator that saves traders from blowing a challenge early, it’s the RSI.
Most traders use the RSI incorrectly. Many of them just wait for 70/30 levels and believe that this means “sell now” or “buy now,” respectively. But the real power of RSI comes from:
- Identifying momentum exhaustion
- Stopping FOMO entries
- Identifying Hidden divergences
Why RSI Works So Well During Challenges
You really can’t afford to take impulsive trades when you’re on a tight daily drawdown limit. The RSI acts like a quiet voice telling you, “Relax. Don’t chase this candle. It’s too stretched.”
Divergence signals also give you early warnings when the trend might be slowing down, super helpful if you’re trying to catch safer reversals during slow market periods.
ATR: The Prop Trader’s Risk-Management Sidekick
The ATR isn’t flashy—but it’s a lifesaver.
This indicator helps you:
- Set realistic stop losses.
- Avoid ultra-tight SLs that get wicked out
- Choose the right lot size
Most traders fail challenges not because they’re wrong about direction but because their stop losses are too tight. The best prop firms don’t care how “clean” your technical analysis looks-if the market wiggles 10 pips before moving your direction, your trade is gone.
How ATR Helps in Real Life
If ATR is showing that the volatility of a pair like GBPUSD is 20 pips, placing a 5-pip SL is basically suicide. ATR shows you the market’s breathing room so you can adapt your stops and avoid unnecessary losses.
Market Structure Indicators (Fractals / ZigZag)
Market structure is huge when trading under prop firm conditions. Indicators like Fractals or ZigZag help you visually confirm:
- Higher highs
- Higher Lows
- Lower highs
- Swing points
- Break of format
These indicators are super helpful if you struggle with:
- Identifying trend reversals
- Spotting clean support/resistance
- Understanding where liquidity zones are forming
Fractals, especially, are simple yet powerful. They pinpoint clean swing highs and lows, making it easier to follow the market flow without second-guessing your analysis.
The Session Indicator: Because Timing Is Half the Battle
The forex market moves differently depending on which session you’re trading:
- London = volatility
- New York = Continuation & breakouts
- Asia = consolidation
A session indicator on MT5 highlights these sessions so that you know when exactly you should expect movement.
Why this matters for prop firms
Most challenge losses happen in the Asian session due to traders getting bored and over-trading in low volatility. If you have the session indicator turned on: You instantly know when liquidity is entering the market. You can avoid low-quality times. You can focus on high-probability windows. This alone reduces unnecessary losses dramatically.
Volume Indicator:
The “Hidden Power” Behind Smart Entries Volume is one of those indicators that traders either overrate or completely ignore. However, if used appropriately, it’s powerful.
Below is the standard volume indicator on MT5:
- Building momentum
- Liquidity coming into the market
- Weak or false breakouts
That’s particularly useful when one is trying to avoid false breakouts-something that commonly hits traders during prop challenges.
Example: Think of a situation where price breaks a key level but volume doesn’t increase. That’s a red flag, and chances are that the market is about to snap back. Volume helps you avoid these traps.