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Pinbar Continuation Scalping Forex Trading Strategy

Yup, you’ve heard it right, pinbar continuation. This may sound absurd to most price action and candlestick pattern traders, but this is worth exploring.

While most candlestick pattern traders know that the pinbar is not a continuation pattern but a reversal pattern, there some instances when a pinbar occurs on a chart where reversal is not possible. This is because sometimes pinbars point towards the direction of the trend. So, many traders just disregard this as this does seem as a useless information. There is no reversal action that we can trade, so they just don’t trade it anyway.

But any information that could increase the odds of winning is helpful information. Even a seemingly useless pinbar telling us to go the direction we know the market wants to go could be used. That is if you understand the logic behind the pinbar pattern.

All candlestick patterns tell a story. The pinbar tells a story of how the market changed sentiments in a very small fraction of time. In fact, price changed directions in a single unit of time represented by the candle. This is why most traders see it as a reversal candlestick pattern, in which if a pinbar pattern presents itself going against the trend, then we have a probable reversal.

However, the pinbar tells more than just that. It also tells a story of how the market rejects a certain price level. For a pinbar to occur, the market should change its mind in a single candle. This often happens when price reaches a certain level and the market instantly sees that price level as an imbalance. Traders would then take trades going against that price level, causing price to instantly rise or fall in a single candle. This then forms the usual pinbar pattern, where the long wick signifies price rejection.

Another very important story the pinbar tells is that of momentum. Most traders see long full-bodied candles as momentum candles. But in my opinion, pinbars are also momentum candles. In order for the market to change directions in a single candle and form a pinbar, price has to move rapidly in one direction. This is basically the same as momentum, price leaving a certain level in a very short period of time. So, on the micro level, pinbars are momentum candles. If you would split them further, you would most likely see a long-bodied candle.

So, let us see how we can use these information that pinbars are telling us to make profit out of the market.

The Setup

When trading a continuation strategy, we need to know the direction of the trend, even with the pinbar pattern. To identify the direction of the trend, we will be using the 20-period Exponential Moving Average (EMA). This is a relatively fast moving average. If we consider the pinbar pattern as a momentum candle on the micro level, then we would be needing a strong trend, which necessitates that we use a fast moving average. We will only be taking pinbars that agree with the direction of the trend based on where price is in relation to the 20 EMA. If price is above the 20 EMA, then we only take buy trades. If it is below the 20 EMA, then we only look to sell.

Timeframe: 5-minute chart

Buy Entry:
  • Price should be above the 20 EMA
  • Price should never touch the 20 EMA
  • Wait for a bullish pinbar candlestick pattern
  • Enter at the close of the candle

Stop Loss: Set the stop loss at the low of the candle

Take Profit: Set the take profit at 3x the risk on the stop loss

Sell Entry:
  • Price should be below the 20 EMA
  • Price should never touch the 20 EMA
  • Wait for a bearish pinbar candlestick pattern
  • Enter at the close of the candle

Stop Loss: Set the stop loss at the high of the candle

Take Profit: Set the take profit at 3x the risk on the stop loss

Conclusion

This strategy is a very simple strategy, yet this has so much going for it. For one, pinbar patterns are very strong indications of price rejection. This allows us to place the stop loss at the end of the wick, knowing that in theory, the market has already rejected that price level. This then gives us a relatively tighter stop loss for a better reward-risk ratio.

Another thing going for it is the idea that pinbars are momentum candles when scrutinized on the micro level. For example, a pinbar on a 5-minute chart would probably have long candles full-bodied candles on the 1-minute chart. This often results to a strong momentum move on the next candle, which are the case on our two examples.

The combination of tight stop losses and strong momentum on the following candle results into a higher probability trade. Not only does it have a higher probability, but it also gives us the benefit of a better reward-risk ratio. With this strategy, we could have a reward-risk ratio of 3:1, when most successful traders with high win rates would be happy to have a reward-risk ratio of 2:1.


Forex Trading Systems Installation Instructions

Pinbar Continuation Scalping Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Pinbar Continuation Scalping Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Pinbar Continuation Scalping Forex Trading Strategy?
  • Download Pinbar Continuation Scalping Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Pinbar Continuation Scalping Forex Trading Strategy
  • You will see Pinbar Continuation Scalping Forex Trading Strategy is available on your Chart
Click here below to download:

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Ozzy Forex Trading Strategy

Oscillators are a pretty common type of indicator used by many traders. Various types with different computations, different features and advantages. But what is it really?

Oscillating type of indicators are indicators that are usually displayed in a separate window. It usually displays lines or bars which usually oscillates up and down a middle line, usually zero, thus it is called an oscillating indicator. These oscillating indicators are usually derived from a complex formula which results should instruct the computer to plot a line around the zero line. But what does these formulas and line really mean?

Usually, these formulas are derived from various computations of the mean or a difference of two or more means. Having this in mind, we could say that oscillating indicators are derivative of crossover strategies. This is probably the reason why like many crossover strategies, using oscillating indicators as a sole strategy for entries and exits could usually be counterproductive. This is because, like crossover strategies, the exits of oscillating indicators are usually a little too late. Even though the trade did have a period when it was profitable, but greed would often cause us traders to hold on and wait for the peak, or for the reversal of the indicator before we exit. Sometimes, the exit is back on the negative.

Another reason is probably because using oscillating indicators alone, which usually refer to the short-term trend, might cause traders to overlook the importance of the longer-term trend. We have to take trades based on short-term based oscillating indicators in relation to the bigger picture, the main trend.

The Setup: The OsMA Oscillating Indicator Strategy

For this strategy, what more best way to prove our point regarding oscillating indicators being derivatives of moving average crossovers than the Oscillating – Moving Average (OsMA). This will be our main entry signal indicator. A cross over the zero line is also tantamount to a crossover of a moving average, thus it also signifies a change in the short-term trend. As the OsMA reflects the first positive bar, we get a buy signal. As the OsMA reflect the first negative bar, we get a sell signal.

But before we fire our shots, we have to screen our trades first. To have a higher probability trade, we should be trading in the direction of a higher timeframe trend. To determine our trend, we will be using the 50 Exponential Moving Average (EMA). This is a moving average that many traders refer to to determine the bias of the trend.

Lastly, we have to be able to set our Reward-Risk Ratio by being able to determine our stop loss and take profit. This would ensure us that we have a positive Reward-Risk Ratio giving us half the battle done. For this, we will use the Bill Williams’ Fractal indicator. This is an indicator that gives us a pseudo minor low or high, which is a smart area to put our stop loss on. Then, as we have determined our stop loss, we will base our take profit on the stop loss distance to give us a fixed Reward-Risk Ratio.

Buy Setup:
  • Price should be above the 50 EMA (gold)
  • Enter a buy market order on the close of a candle corresponding a cross above the zero OsMA

Stop Loss: Set the stop loss at the low of the most recent low fractal

Take Profit: Set the take profit at 1.5x the stop loss in pips

Sell Setup:
  • Price should be below the 50 EMA (gold)
  • Enter a sell market order on the close of a candle corresponding a cross below the zero OsMA

Stop Loss: Set the stop loss at the high of the most recent high fractal

Take Profit: Set the take profit at 1.5x the stop loss in pips

Conclusion

The OsMA indicator is a classic example of how to use an oscillating indicator as a basis for an entry. This is a logical idea since most, if not all oscillating indicators, are derivatives of moving average crossovers. If we use crossover strategies as a basis for our entry, then we could also use oscillating indicators, such as the OsMA, as a basis for entries.

However, the crucial part here is not to wait for the OsMA to reverse. On the first setup, the buy setup, we could have gained more if we waited for the OsMA. However, on the second setup, the sell setup, you would notice how we would have given up most of the profits if we waited for the OsMA to reverse. This shows how the same weakness that crossover strategies have carries over to strategies with entries and exits based on the oscillating indicator alone. By limiting our take profit to 1.5x, we not only fix our reward-risk ratio to 1.5, we have also defused that greed which cause us to give most of the profits back to the market. This an area however, which you could tweak to your liking. The higher the reward-risk ratio, the higher the risk of not reaching the take profit.


Forex Trading Systems Installation Instructions

Ozzy Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Ozzy Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Ozzy Forex Trading Strategy?
  • Download Ozzy Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Ozzy Forex Trading Strategy
  • You will see Ozzy Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

ozzy-forex-trading-strategy

La entrada Ozzy Forex Trading Strategy se publicó primero en Forex MT4 Indicators.

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Ozzy Retrace Scalping Forex Trading Strategy

Sometimes, looking at the market differently than the rest of the market helps. Looking through a different lens allows us to see the market differently. This could mean we could see things happening before the market sees it.

Today we will be looking at using oscillator indicators in a different way.

Most traders use oscillating indicators to identify overbought and oversold market conditions. This a pretty straight forward mean reversion type of strategy. Buy when price is too low, sell when price is too high. Very logical and effective.

But what if we could use oscillating indicators to trade with the trend instead of looking for the trend to reverse? Yes, we could do that with a little bit of tweaking.

The oscillating indicator we will be looking at will be the Relative Strength Indicator (RSI). Normally, traders use it to determine overextended prices. If the RSI is above 70, the market is said to be overbought. If it is below 30, then the market is said to be oversold. But I find that this is not the only way to look at RSI. Instead, in a bullish bias market, we will be looking first for RSI to drop, before it continues its bullish trend.

The Setup: Ozzy (RSI) Retrace Scalping Strategy

Since this is a scalping strategy, we will be using the 1-minute chart exclusively. For those who are not yet adept to quick trading, you may use the 5-minute chart, however that would already border more towards a day trade type of time frame. There will be advantages and disadvantages for both timeframes though. The 1-minute chart will have more noise, but personally I find it easier to predict due to the short span of time I hold the trade on this timeframe. The 5-minute chart will have less noise, but I find that many things could happen that could reverse the market sentiment during the span of time I hold trades on the 5-minute chart. Each to his own though.

Before we jump into how we will use the RSI, let’s first discuss how we will determine the bias of the long-term trend, which will be the direction of our trade. To identify the direction of the long-term trend, we will be using the 200 Exponential Moving Average (EMA). This is a moving average that many traders use to determine the long-term trend. The 200 EMA will be our green moving average. If price is above the 200 EMA, we will be looking for long trades. If price is below the 200 EMA, then we will be looking to short the market.

Now, onto the RSI. Remember, that we are looking for retracements. So, we won’t be looking for overbought or oversold market conditions. In fact, we will be avoiding trades where the RSI has gone above 75 on a short trade or below 25 on a long trade. This might already mean that the momentum going that direction is already too strong. On a long (buy) trade, what we will be looking for is for the RSI to go below 40 but not below 25. That will be our retracement. Then we wait for the RSI to go back above 40, which will be our signal candle. On the other hand, on a short (sell) trade, we will be looking for RSI to go above 60 but not above 75, indicating a retracement. Then, we enter the trade as the RSI goes below 60.

Buy Entry:
  • Price should be above the 200 EMA (green moving average)
  • The RSI should go below 40 but not go below 25
  • Wait for the RSI to go back above 40
  • Enter at the close of the candle corresponding to when the RSI crosses above 40

Stop Loss: Set the stop loss at the swing low generated by the bullish price thrust

Take Profit: Set the take profit at 2x the risk on the stop loss

Sell Entry:
  • Price should be below the 200 EMA (green moving average)
  • The RSI should go above 60 but not go above 75
  • Wait for the RSI to go back below 60
  • Enter at the close of the candle corresponding to when the RSI crosses below 60

Stop Loss: Set the stop loss at the swing high generated by the bearish price thrust

Take Profit: Set the take profit at 2x the risk on the stop loss

Conclusion

By trading retracements using an oscillator indicator, we are able to quantifiably determine if price has retraced to a specific figure which we think is a considerable retracement. This allows us to enter at a reasonable price, but still trade with the trend.

By waiting for price to close back inside our RSI middle area, which is below 40 & 60, we are also waiting for the normal market condition of the forex pair we are trading, which is a trending market condition. This means, using our parameters, that the retracement has ended, and the direction of the trend bias has resumed.

The parameter that could be tweaked though, depending on your risk averseness or aggressiveness, will be the take profit multiple. You could raise the take profit multiple to 3x or more, depending on your risk appetite. It would mean a higher reward-risk ratio, but you would also be giving up on your win ratio. Try to find the right mix though for your risk appetite.


Forex Trading Systems Installation Instructions

Ozzy Retrace Scalping Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Ozzy Retrace Scalping Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Ozzy Retrace Scalping Forex Trading Strategy?
  • Download Ozzy Retrace Scalping Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Ozzy Retrace Scalping Forex Trading Strategy
  • You will see Ozzy Retrace Scalping Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

ozzy-retrace-scalping-forex-trading-strategy

La entrada Ozzy Retrace Scalping Forex Trading Strategy se publicó primero en Forex MT4 Indicators.

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Overbought-Oversold Confluence Forex Trading Strategy

Indicators, price action, candlestick patterns, to some extent these individual trading technical tools work. Some better than the other. Some are not so good, backtested it would yield a negative return. Those that are really good individually, would yield a positive return but it won’t be stellar. However, if you’d bring them all together, it could be something that could be really good.

Think of your trading strategy as a recipe. All of these components, indicators, patterns, etc., these are ingredients to your masterpiece. Each one brings a different flavor and characteristic to what you are making. And as you add each component together, the result becomes something far greater than each individual component. That is how you build a strategy.

However, when building a strategy, each component must complement each other for better results. Components of trading strategies should either filter out and agree with each other. Having these different components agree is called confluence. This is when several components, indicators, price action, candlestick patterns, etc., agree as to the direction of the trend.

With this strategy, we will be looking to combine a couple of indicators that specialize in identifying overbought and oversold market conditions with candlestick patterns.

The Setup: Bollinger Band, Stochastic, and Candlestick Pattern Confluence

Bollinger Bands is an indicator that draws a mean, represented by a middle line, and its standard deviations represented by the outer bands. This results in an indicator that draws three lines, an upper band, a middle line (mean), and a lower band. Having an upper and lower band, the Bollinger Bands is an excellent tool in identifying overbought and oversold market conditions. Basically, if price is above the upper band, then the market is overbought. If price is below the lower band, then the market is oversold. Being able to identify overbought and oversold market conditions is a gem if used in a market reversal trading strategy. However, the Bollinger Band has a weakness. Although it does identify if the market is ready to reverse, it doesn’t identify when exactly the market is starting to reverse.

To identify the actual reversals, we will be using the Stochastic indicator. The stochastic indicator is also an excellent tool to use when identifying overbought and oversold conditions. Basically, what you have is an oscillating indicator with two lines crisscrossing each other. It also has horizontal lines on the 80 and 20 mark to identify overbought and oversold conditions. If the lines are above the 80 then the market is said to be overbought. If the lines are below 20 then the market is said to be oversold. Its advantage though is that the stochastics itself could generate a buy or sell signal. A buy signal is generated as the faster line crosses above the slower line, while a sell signal is generated as the faster line crosses below the slower line. Signals could occur anywhere on the stochastic indicator, but for higher probability setups, a crossover on the overbought or oversold areas usually yield better results. This means that both lines should be above 80 or below 20.

To cap off our reversal signals, we will make use of reversal candlestick patterns. These are identifiable patterns that have been statistically proven to signify reversals. We will be using two of the most popular patterns, the pinbar and the engulfing pattern. The pinbar is a candlestick pattern with a long wick either above or below a small body. An engulfing pattern on the other hand is a full bodied, long candle, that is bigger than the preceding candle. Since these two are very popular and are easily identifiable, more traders are looking at it and would most likely be trading the same direction as this strategy’s trade direction.

All of these should be in confluence. Price should have been going over the outer Bollinger Bands, the Stochastic indicator should have a crossover either on an overbought or oversold area, and the crossover candle should also be a reversal candlestick pattern.

Buy Entry:
  • Price should be below or should have come from below the lower Bollinger band
  • The faster Stochastic line should cross above the slower Stochastic line
  • Both Stochastic line should be below 20 indicating an oversold market condition
  • A reversal candlestick pattern should be identified
  • Enter at the close of the candle

Stop Loss: Set the stop loss at the low of the entry candle

Take Profit: Set the take profit 2x the stop loss distance

Sell Entry:
  • Price should be above or should have come from above the upper Bollinger band
  • The faster Stochastic line should cross below the slower Stochastic line
  • Both Stochastic line should be above 80 indicating an overbought market condition
  • A reversal candlestick pattern should be identified
  • Enter at the close of the candle

Stop Loss: Set the stop loss at the high of the entry candle

Take Profit: Set the take profit 2x the stop loss distance

Conclusion

This strategy is all about confluence of reversal indications. Having all three, Bollinger Bands, Stochastics, and candlestick patterns, pointing towards the same direction significantly increases the probability that a reversal may occur. Plus, factoring in the overbought and oversold conditions of both the Bollinger Bands and the Stochastics, a reversal will more likely occur.

However, many traders may easily get frustrated or impatient waiting for all three to line-up. Some may take trades even though all the rules have not yet been met.

Another error that traders could make is taking a trade even though a crossover of both lines occurred on areas not exactly on overbought or oversold areas. Take note that both lines should either be above 80 or below 20.

Although it was only the pinbar and the engulfing pattern that were used in this strategy, other reversal candlestick patterns could also work. But these two have higher probabilities because many traders easily identify them. Having some additional knowledge of reversal patterns would certainly be beneficial.


Forex Trading Systems Installation Instructions

Overbought-Oversold Confluence Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Overbought-Oversold Confluence Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Overbought-Oversold Confluence Forex Trading Strategy?
  • Download Overbought-Oversold Confluence Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Overbought-Oversold Confluence Forex Trading Strategy
  • You will see Overbought-Oversold Confluence Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

overbought-oversold-confluence-forex-trading-strategy

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Oracle Re-Entry Forex Trading Strategy

Many strategies are geared towards catching the beginning of the trend and exiting before the trend dies out. This is all well and good, but there are just times when the market trends for too long and those whose strategies revolve around entering at the beginning of the trend would find themselves having no opportunity to join the market and make money out of it. What we need in addition to our usual trend reversal strategies is a trend re-entry strategy. This would allow us to make money from an already established trending market condition.

Crossover Strategies versus Trend Re-Entry

Perhaps one of the most popular trend reversal strategies are the crossover type of strategies. These are strategies that determine trends reversals by having some sort of moving average or other custom indicators crossover on the price chart. Entries and even exits are usually determined by the crossovers of the lines drawn by the indicators. Much like the one shown below.

As you would notice, although crossover strategies don’t always work 100%, they do seem effective in catching trends from start to finish. However, those who weren’t able to join the market early on, or were prematurely stopped out, don’t have another opportunity to join the market if purely based on crossover strategies. But there are ways to re-enter the market, while still using the same moving average or other similar custom indicators.

Trends often have several contractions that offer opportunities for re-entries, and the same indicators used for crossovers are excellent for identifying contractions and resumptions of trend direction.

If you would notice, there are phases during the trend when price would either contract and move sideways for a little while, or better yet retrace towards the indicator lines. These contraction phases or retracements are excellent opportunities to re-enter the market. This is because, usually right after this phase, is the expansion phase, where price could rapidly explode with a bias toward the direction of the trend.

Strategy Concept

In this strategy, we will be using the Oracle set of indicators to identify trending market re-entries. These indicators include the Oracle Move, Oracle Strength, and Oracle Direction indicators.

The Oracle Move indicator tends to identify the trend of the market, whether it is bullish or bearish. The same goes with the Oracle Direction. It also tends to identify on a micro level, whether the market is still trending or not, and conveniently points the direction of the trend. Lastly, the Oracle Strength indicator measures the momentum of the trend. Its concern is not only the direction of the trend, but also if the trend has strength to push further.

What we will be looking for is for all three to be in confluence, pointing the same direction. Having all three indicators agree with each other increases the probability that the trade setup would work.

But we are not to enter all available trades based on if all three are in confluence. This would mean we will be chasing price, and that is a recipe for disaster.

Instead, we will be waiting for the market to contract, or better yet retrace to a better price. We will be identifying retracements or contractions as candles with bodies or bars at the wrong side of the blue Oracle Move line, while the Oracle Move line still hasn’t crossed-over indicating a reversal. On a bullish trend, this will be a close below the blue Oracle Move line. On a bearish trend, it will be a close above the blue Oracle Move line. Usually, this will be accompanied by having either the Oracle Strength or Oracle Direction indicator printing yellow histogram bars or “Xs”. This indicates that the trend is still in a pause.

Then, we wait for a signal that the trend has resumed. This will be when all three indicators are in confluence and price closes back on the right side of the blue Oracle Move line.

Timeframe: any

Currency Pair: any except on 5-minute timeframe and lower, use GBP/USD and EUR/USD instead

Session: any except on 5-minute timeframe and lower, trade on London and New York sessions instead

Buy Trade Setup

Entry

  • The blue Oracle Move line is above the red Oracle Move line indicating a bullish trend
  • Retracement: part of the candle’s body is below the blue Oracle Move line
  • Resumption of bullish trend: price close back above the blue Oracle Move line
  • Oracle Strength: histogram is blue
  • Oracle Direction: blue arrow pointing up

Stop Loss

  • Set the stop loss at the low of the candle or below the Oracle Move indicator lines

Take Profit

  • Set the take profit target at 2x the risk on the stop loss

This is an example of a buy trade setup that worked. Price retraced for a couple of candles prior to our entry. On those two candles, the Oracle Strength indicator also turned yellow indicating a pause of the trend’s strength. Then, on our re-entry, everything lined up for a profit.

Buy Trade Setup

Entry

  • The blue Oracle Move line is below the red Oracle Move line indicating a bearish trend
  • Retracement: part of the candle’s body is above the blue Oracle Move line
  • Resumption of bearish trend: price close back below the blue Oracle Move line
  • Oracle Strength: histogram is red
  • Oracle Direction: red arrow pointing down

Stop Loss

  • Set the stop loss at the high of the candle or above the Oracle Move indicator lines

Take Profit

  • Set the take profit target at 2x the risk on the stop loss

On this sample of a sell trade setup, although price didn’t close above the blue Oracle Move line, the open of the candle was above it, causing part of its body to be above the blue Oracle Move line. Also, the two bullish candles that has wicks on above the body are indicative of a retracement, with price above the candle being rejected by the market. This time it is the Oracle Direction indicator that printed a yellow
“x” mark prior to the entry. After the retracement, a strong candle closing below the blue Oracle Move line was printed in confluence with all the other Oracle indicators. This trade setup was also profitable.

Conclusion

Trend reversal strategies are not the only ways to earn from the market. Seeing a trend run while you are not riding it is not the end of the world. You could still re-enter the market using the same indicators but looking for a different market condition. Instead of a reversal prior to a trend, look for a contraction or retracement prior to a market expansion going the direction of the trend.


Forex Trading Systems Installation Instructions

Oracle Re-Entry Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Oracle Re-Entry Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Oracle Re-Entry Forex Trading Strategy?
  • Download Oracle Re-Entry Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Oracle Re-Entry Forex Trading Strategy
  • You will see Oracle Re-Entry Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

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Oracle Crossover Forex Trading Strategy

There are many ways to make money out of trading. Many swear by indicators as the Holy Grail of trading, while others profess their belief on price action. In any case, as long as you’ve done your due diligence on any of the two, studied it, and backtested it, any of these could work. It all depends on you.

Price Action versus Technical Indicators

While I do see the merits of price action trading, I think both are good if it fits the personality of the trader. Some traders would like to think they are making the decision based on their own analysis, while others prefer to be told what to do. This is what indicators do, it tells you what to do, or at least gives you a hint what to do. Price action trading on the other hand makes some traders think they are deciding on their own because no indicator is telling them what to do. However, often price action traders look for certain candlestick pattern or some other price action pattern or characteristic to tell them what to do. In a sense it is still the same as having an indicator, only that this time the signals are a little more subjective. In a sense, you are your own indicator.

The advantage of using price action is because of its subjectivity, there are certain market characteristics and conditions that could only be observed, but never statistically quantified, price action traders have the discretion to trade based on their observations of the market. However, it requires a lot of practice and screen time, and often it is unreliable.

On the other hand of the spectrum, technical indicators are more quantifiable and objective. Indicators plot histograms, lines, oscillators, etc. based on numbers. Numbers that are derived from price. Because of this quantifiable and objective approach, we could use indicators to trade based on statistics. Trading now becomes more of a data science rather than intuitive decision making.

The Case for the Oracle Indicator

Now, there are many indicators out there. The basics such as stochastics, moving averages, MACD, etc. However, there are also traders and programmers who would try to break out of the mold and develop their own concept, their very own custom indicators. While others are a bust, some do seem to work.

One of those that I find to have some merit is the Oracle set of indicators. Although they seem to be employing many different custom indicators, let’s take a look at just two of their main indicators. One seems to be based on crossover of moving averages or a derivative of other indicators, while another is a histogram that changes colors. Both seems to be based on momentum and trend direction.

Strategy Concept

As mentioned earlier, there we will be using two indicators from the Oracle system. The first is the Oracle Move indicator. This indicator is composed of two lines. The blue line signifies the faster moving line, while the red line seems to be a tad slower, or probably shifted. As with other moving average crossover strategies, we will be using this indicator in the same manner. A crossover going up points to a buy, while a crossover going down gives us a sell.

The second indicator is the Oracle Strength indicator. This is the histogram type of indicator, which plots blue bars for bullish direction, red for bearish direction, and yellow for indecisiveness.

With the two indicators applied on a chart, your chart should look something like this.

What we will be looking for is a confluence of both indicators, having both indicators pointing the same direction.

Timeframe: any

Currency Pair: any except on 5-minute timeframe and lower, use GBP/USD and EUR/USD instead

Session: any except on 5-minute timeframe and lower, trade on London and New York sessions instead

Buy Trade Setup

Entry

  • Oracle Move indicator: blue line crosses above the red line
  • Oracle Strength indicator: histogram turns blue

Stop Loss

  • Set the stop loss at the low of the candle or below the Oracle Move indicator lines

Take Profit

  • Set the take profit target at 2x the risk on the stop loss

On this sample trade, the initial thrust of the trend easily reached the take profit target before it had a minor retracement. However, more profits could have been squeezed out of the market if the trade was held until the Oracle Move indicator reversal.

This sample trade’s stop loss is also based on the low of the candle because it is lower than the Oracle Move lines.

Sell Trade Setup

Entry

  • Oracle Move indicator: blue line crosses below the red line
  • Oracle Strength indicator: histogram turns red

Stop Loss

  • Set the stop loss at the high of the candle or above the Oracle Move indicator lines

Take Profit

  • Set the take profit target at 2x the risk on the stop loss

This sell sample trade on the 1-hour timeframe shows how we could profit on trends based on 1-hour candles.

This time the stop loss was set a little above the Oracle Move indicator. This gave us a little more cushion, but that stop loss wasn’t even challenged a bit. Price did push through with strong momentum and easily hit the profit target. Price then moved sideways for several candles mostly on the Australian and Asian session, after which price continued to drop midday on the London Session. This could have been a bit more of a profit. But it is still better to take profits off the table because we really wouldn’t know if the trend would continue the next day.

Conclusion

The Oracle Crossover strategy is a classic example of how the use of custom indicators could work. Although not all custom indicators work, there are some out there that are gems waiting to be found.

This however is not the Holy Grail. You as a trader are the Holy Grail. It is you who would be doing the hard work, studying and learning.


Forex Trading Systems Installation Instructions

Oracle Crossover Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Oracle Crossover Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Oracle Crossover Forex Trading Strategy?
  • Download Oracle Crossover Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Oracle Crossover Forex Trading Strategy
  • You will see Oracle Crossover Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

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Momo Play Forex Trading Strategy

One of the most popular stock day trader uses a momentum day trading strategy, also known as a “Momo Play”, and rightfully so because he was able to turn his few hundred bucks to several hundred grand. Although the strategy which we will be exploring today isn’t exactly his strategy, we will still be learning a momentum play that could be incorporated in forex day trading.

Momo plays are very popular among traders because of the big moves that traders are able to catch in just a few minutes in a day. You see a big move, you get in, you get out, and hopefully at a profit.

The concept behind momentum trades is the idea that price moves with a strong force or velocity, should have enough momentum that should carry the move to the next time periods, and might even start a short rally. Think of it as a big freight truck running at 100 km/h. If the driver would try to hit the break, it surely wouldn’t stop in a split second. The freight truck would still continue moving for several meters before it could stop. The same is true with price moves. If a price move has so much weight behind it (a large number of traders) and the move happens at a high speed (price moves by so many pips in a few minutes), then it should have a strong momentum behind it. This is the concept that momo traders are banking on.

Many traders use it as a cornerstone for their trading, especially among breakout traders. So, we will be exploring a momo strategy which you could start with and employ in your own trading.

The Setup: Breakout Momo Play

Momo plays tend to be more effective on the lower timeframes. This might be because momentum usually dissipates in a period of time. Momentum can’t seem to sustain itself for such a long time. For this reason, momo plays are usually effective for day trading as opposed to swing trading. Since this strategy is a day trading momo play, we will be using the 5-minute chart.

This would also be done on a naked chart. No indicators, just pure skill in identifying specific points in the chart and price moves. There are just a couple of things you would need to learn to identify – highs and lows, and momentum candles.

Highs and lows will serve as our basis for support and resistance as since these are areas where price previously reversed, these are in effect natural areas of support or resistance. These price points will be the area where we will be looking for breakouts, either to the upside or the downside.

The second thing that we should learn to identify are momentum candles. These will be candles that are long, big bodied candles with small wicks. The usual examples will be you Marubozu candles and engulfing patterns. For a start, trade only these two candles.

So, how would we use the momentum candles and our high-low support or resistance? What we will be looking for are breakouts from our high or low support or resistance made by a momentum candle. It shouldn’t be candles that just barely broke through the support or resistance, but candles that have really punched a hole through the support or resistance. These types of scenarios will be our setups.

Buy Entry:
  • Identify a recent high on the 5-minute chart to serve as our resistance
  • Wait for a momentum candle to close strongly beyond the resistance
  • Set a pending buy stop order at the high of the momentum candle

Stop Loss: Set the stop loss at the low of the momentum candle

Exit: Trail the stop loss at the low of the two previous candles every time a candle makes a new high

Sell Entry:
  • Identify a recent low on the 5-minute chart to serve as our support
  • Wait for a momentum candle to close strongly beyond the support
  • Set a pending sell stop order at the low of the momentum candle

Stop Loss: Set the stop loss at the high of the momentum candle

Exit: Trail the stop loss at the high of the two previous candles every time a candle makes a new low

Conclusion

This strategy is just one of the many different variations of momentum breakout strategies. Some use trend continuation breakouts, others use pattern day trading breakouts, others use trendline breakouts, etc. I would like to consider this type of breakout strategy as more of a market flow breakout strategy. Market flow because we are considering recent highs and lows as supports and resistances as price areas of breakout, which is somewhat a market flow type of analysis.

Other variations include setting take profit targets on the next support or resistance. If you are quite well versed in price action trading and candlestick patterns, you may also opt to have manual exit variations on reversal candles or price rejection candles.

Study the concept, tweak it, and make it your own.


Forex Trading Systems Installation Instructions

Momo Play Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Momo Play Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Momo Play Forex Trading Strategy?
  • Download Momo Play Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Momo Play Forex Trading Strategy
  • You will see Momo Play Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

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Momentum Scalp Forex Trading Strategy

At the beginning of a new candle, there is often a few minutes wherein price don’t seem to move much. This is because many astute traders know that as a candle forms, other traders would make decisions based on the type of candle that was formed. No one would know what would happen next. Price may either continue the direction of the previous candle, or it may reverse. This few minutes window of indecision by the market is called consolidation.

Many scalpers in slower moving markets use the Depth of Market window or what others call Level 2 order flows to get a feel for where the market might be heading next. However, I seldom find traders who use Depth of Market in forex trading. There may be several reasons for this. For one, there are very few trading platforms that give the complete picture of pending orders based on the Level 2. Another reason might be because of the sheer size and volume of transactions in the forex market, pending orders on both sides are too big, information regarding the pending order’s volume move so fast, it humans couldn’t cope with the speed. Sadly, I think we don’t have a way to assess the direction using the consolidation phase every candle open.

But all is not lost. What we can do however is trade ignored consolidations. There are times when the market seems to skip the consolidation phase every candle opening and continue the direction of the previous candle. This is called momentum.

Momentum plays is one of the most common types of strategies, with varying approaches and styles. The idea behind this is that the force behind the previous candle is so strong, the market would just push through with its current direction.

With this strategy, we will be trading candles that we believe have momentum and that the next candle would ignore consolidation.

To do this, we will be using 7 & 14 Simple Moving Averages (SMA). We will also be targeting only five (5) pips. If the candle really does have momentum, a 5-pip target would be easy.

The Setup: Trading Momentum Using 7 & 14 SMA

Although this is a scalping strategy, we will still be using the 1-hour timeframe. This is because more traders are looking at the hourly candles as compared to the lower timeframes. If the previous hour does have momentum, traders looking at the candle on the next hour would immediately enter based on candle patterns without waiting on the consolidation phase. This volume of traders would push momentum further.

The rules of this strategy will be based on how a candle opens and closes in relation to the 7 & 14 SMAs.

Buy Setup:
  • The 7 SMA should be above the 14 SMA.
  • On the signal candle price should open in between the 7 SMA and the 14 SMA.
  • On the same candle price should close above the 7 SMA.
  • There should only be a little to no wick above the signal candle.
  • The low of the candle should not go below the 14 SMA.
  • Enter immediately at the open of the next candle.

Stop Loss: Stop loss should be 5 pips below the entry price.

Take Profit: Target take profit price should be 5 pips from entry price.

All our buy entry rules were ticked. If you would notice, on the next candle, price almost didn’t have a lower wick. This signifies that as soon as the next candle opened, price immediately pushed upwards without hesitation. This is a classic momentum play.

Sell Setup:
  • The 7 SMA should be below the 14 SMA.
  • On the signal candle price should open in between the 7 SMA and the 14 SMA.
  • On the same candle price should close below the 7 SMA.
  • There should only be a little to no wick below the signal candle.
  • The high of the candle should not go above the 14 SMA.
  • Enter immediately at the open of the next candle.

Stop Loss: Stop loss should be 5 pips above the entry price.

Take Profit: Target take profit price should be 5 pips from entry price.

Again, the same scenario. All the sell rules were ticked on the signal candle. Then, on the next candle, only a little upper wick was formed, and price immediately dropped down strongly. This is again a good example of a momentum trade on the sell side.

Conclusion

This momentum strategy is a good place to start trading momentums. However, being on the 1-hour chart, but doing a scalping strategy, this seems a bit counter-intuitive. Many scalpers might find that this is a different way to scalp. While many scalpers take many trades in a day, with this strategy, given that you only take trades at the beginning of an hour, you might find that you have fewer opportunities in a day.

It is also not wise to trade all currency pairs since some pairs are just not good for scalping, due to wide spreads of the bid and offers. Remember, we are only targeting 5 pips and have a stop loss of 5 pips. The spread might ruin your trades since when you open a trade, you begin in the red. A few pips of a negative move might already hit your stop loss.

Another thing to take note of is the type of candle that you are trading. Strong full-bodied candles with little to no wicks on your direction is what we are looking for. This is typical of Marubozu candles. However, some candles that are too hyper extended, overbought or oversold, could mean a probable reversal. Practice this trading strategy and notice how some setups with just the right candle size works, while others that are hyper extended, would reverse. Again, the clue to these reversals are the wicks. Take note also of the distance of price and the 7 SMA. If it is too far, it might already be hyper extended.

Practice this strategy, tweak, and make it yours.


Forex Trading Systems Installation Instructions

Momentum Scalp Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Momentum Scalp Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Momentum Scalp Forex Trading Strategy?
  • Download Momentum Scalp Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Momentum Scalp Forex Trading Strategy
  • You will see Momentum Scalp Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

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Momentum Pop Scalping Forex Trading Strategy

Momentum trades are one of the easiest types of trading. Yet it is also probably the riskiest.

It is easy in the sense that a trader could easily identify a momentum candle and trade it. The concept is basically to spot a momentum candle, then ride the continuation on the next candle.

However, unfiltered momentum trading is very risky. This is because trading momentum candles could also mean running the risk of chasing price. The forex market is very notorious for whipsaws causing momentum traders to buy at the peak or sell at the bottom.

Although momentum trading is very risky, there are ways to slightly increase the odds of the trade on our favor. This is by understanding what how the market behaves and how momentum candles take part in the overall behavior of the market.

The market cycles in a chaotic manner, yet through this chaos, there are certain repetitive patterns that occur. One of which is how the market moves in contractions and expansions. Contractions are phases in the market when price moves rather timidly in a tight range. This could occur for several candles. But these contraction phases don’t last. You might have heard of the phrase, “calm after the storm”? Here, the opposite is true. The market seems to have “storms after the calm”. Right after the timid price movements on the contraction phase, a wild rapid price expansion usually occurs. These are called expansion phases. These expansion phases could occur in several manners. It could be a gradual increase in strength, which could be observed at the start of many trending markets, or it could be a sudden pop signaling the start of the expansion phase. These sudden pops are called momentum candles. Full bodied big engulfing candles that dwarf the preceding candle by more than twice the size. This means a higher probability trading opportunity.

The Setup: Momentum Pop Scalping Strategy

With this strategy, we will try to filter out momentum candles as much as possible. For this reason, we will be using several indicators. First, we will be having a 5-period Simple Moving Average (SMA). This would serve as our trade direction indicator and filter for momentum candle size. Another very important indicator would be the Average True Range (ATR). This will serve as the measuring stick for our acceptable candle size.

To use the two indicators in tandem, we will have to calculate the distance of the price on the momentum candle’s close and the 5 SMA. This distance in pips should be greater than 1x the current ATR. If so, then the momentum going towards the direction where the 5 SMA is pointing will be considered strong enough.

Another filter would be that the momentum candle should be more than twice the size of the previous candle. Candlestick pattern traders might consider this as an engulfing pattern.

For good measure, we will also use the Relative Strength Indicator to indicate our trade direction. If the RSI is above 50, then our direction should be up, if below 50, then we go down.

But of course, all these rules would mean nothing without context. We should identify that all these things should occur right after a contraction phase. What we are looking for is for a momentum candle to pop out of the contraction phase.

Timeframe: 5-minute chart

Buy Entry:
  • RSI should be above 50
  • Price should be above the 5 SMA
  • Distance of price and 5 SMA should be more than 1x the ATR
  • Momentum candle should be more than 2x the size of the previous candle
  • A contraction phase should be identifiable prior to the momentum candle
  • Enter a buy market order on candle close

Stop Loss: Set the stop loss at 1x the ATR below the entry price

Take Profit: Set the take profit at 2x the ATR above the entry price

Sell Entry:
  • RSI should be below 50
  • Price should be below the 5 SMA
  • Distance of price and 5 SMA should be more than 1x the ATR
  • Momentum candle should be more than 2x the size of the previous candle
  • A contraction phase should be identifiable prior to the momentum candle
  • Enter a sell market order on candle close

Stop Loss: Set the stop loss at 1x the ATR above the entry price

Take Profit: Set the take profit at 2x the ATR below the entry price

Conclusion

If you would notice, both examples are types of contraction. The first example is a narrow range where price bounces up and down. The second example is that of a spinning top structure where price rejects a price level above and below, which signifies market indecisiveness. Understanding contraction phases are key to this strategy.

As with most momentum-based strategies that has a one momentum candle signal, this strategy is quite risky. In fact, if the context of contraction is removed, this strategy would probably not have a high probability. By using our understanding of the contraction and expansion phases of the market, we increase our chances of a successful trade

Also, by using the ATR, as our stop loss and take profit, we are logically telling ourselves that since this is a momentum candle, if price reverses on our entry by more than the usual candle size, then our momentum candle has failed. We are also rationalizing that since this is a momentum candle, the momentum should continue for more than twice the usual candle size. This also allows us to fix our reward-risk ratio at 2:1.

As long as we understand the context of the market, and we are able to identify it as a market contraction, this strategy could yield high probability trades.


Forex Trading Systems Installation Instructions

Momentum Pop Scalping Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Momentum Pop Scalping Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Momentum Pop Scalping Forex Trading Strategy?
  • Download Momentum Pop Scalping Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Momentum Pop Scalping Forex Trading Strategy
  • You will see Momentum Pop Scalping Forex Trading Strategy is available on your Chart
Click here below to download:

Save

Save

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Momentum Flag Forex Trading Strategy

Among all the basic chart patterns, I find the flag pattern to be one of the most effective. At least for my own personal trading though. I’m not sure how many traders also use this, but it sure is very popular in trading.

The advantage of flag patterns though is that it is a trend continuation pattern. This means you will be trading with the trend, instead of against it.

Flag patterns are also a form of contraction. Remember, a trending market is a series of expansions, then contractions, then expansions. With the flag pattern, the pole of the flag resembles an expansion, followed by the flag itself, which signifies contraction, then the breakout from the flag pattern signifies the start of another expansion phase.

Another advantage that the flag pattern usually offers is that the contraction phase is also usually a retracement. This gives traders the opportunity to enter at a better price instead of chasing price around.

On the flip side though, these retracements are also a bit of a challenge because retracements on the higher timeframe are actually whipsaws on the lower timeframe. This means that market entry could be a bit tricky.

Another thing about flag patterns is that breakouts from flag patterns are actually breakouts of resistances in the lower timeframe. As with all resistances, a touch on the area of the resistance could mean two things, either a breakout or a reversal. At times, even when price has closed beyond the resistance, it even reverses back below the resistance.

However, there is a way to increase the probability of entering the trade on the actual breakout. This is by identifying momentum. If a candle does have momentum as it breaks out of the flag pattern, there is a higher chance that price would start to expand again, continuing the major trend.

The Setup: Using Volume to Identify Momentum on Flag Breakouts

To identify candles with strong momentum, we will be using the aid of volume. The hypothesis is that candles with strong momentum coincides with having a higher than average volume traded within the candle.

We will also be using the aid of the 30 & 50 EMAs in order for us to easily identify the trend direction. Also, the 30-50 EMA will be acting as an area of dynamic support or resistance. This will be the area where we will expect the retracement to end and price will start to resume going the direction of the intermediate trend.

What we will be looking for are the following. Probable flag patterns that could break out, volume decreasing as price contracts or retraces, and the direction of the flag pattern should coincide with the trend direction based on the EMAs. Somewhat like the chart below.

Buy Setup:
  • Identify a bullish flag pattern
  • 30 EMA should be above the 50 EMA
  • Price should start retracing from above the EMAs
  • Volume should be decreasing along with the contraction phase
  • The breakout candle should have higher volume compared to the previous candles
  • Enter at the close of the breakout candle

Stop Loss: Set the stop loss below the breakout candle

Take Profit: Set the take profit at 1.5x the stop loss

Sell Setup:
  • Identify a bearish flag pattern
  • 30 EMA should be below the 50 EMA
  • Price should start retracing from below the EMAs
  • Volume should be decreasing along with the contraction phase
  • The breakout candle should have higher volume compared to the previous candles
  • Enter at the close of the breakout candle

Stop Loss: Set the stop loss above the breakout candle

Take Profit: Set the take profit at 1.5x the stop loss

Conclusion

This technique of using volume to determine momentum is commonly used in stocks and is quite effective in doing so. What we are doing is we are just importing the same technique used in stocks to trading. Hopefully it could help improve your trading as well.

However, we should take note also of a few differences in stock trading and forex trading that greatly affects the effectivity of using volume.

Stock trading to me is one dimensional. It is either a buy or a sell. Because it is one dimensional, retracements would often mean prolonged trickle of transactions causing the volume to be lower than usual. Breakouts with momentum on the other hand are usually one directional transactions with higher frequency and volume sizes in a single candle. This causes the volume to spike during the breakout.

Forex trading however, is unlike stock trading which is one dimensional. It is not just a buy or a sell of a currency. Actually, buying one currency also means selling the other and selling one currency means buying the other. To me this means forex trading is two dimensional.

How does this affect our strategy? At times, when there are buyers on both currencies, price would just bob up and down on a tight range, making small candles. But this doesn’t mean that volume is low. It just means that the buyers for both currencies are fighting it out at a smaller range. This gives us small candles with high volumes. What happens is that sometimes, when the breakout candles occur, the volume doesn’t become significantly bigger than the previous candles. For this reason, you would also find flag patterns in the forex market that don’t have volume spike coinciding with the breakout candle. And these flag patterns also work because it actually has one sided momentum. Only that the volume of the previous candles are also quite big because buyers for both currencies are still fighting it out within the range.

So, what is our main takeaway with this strategy? Volume could help us determine momentum candles. But, it is not the main thing when it comes to trading flag patterns. Another thing to take note of is that breakout candles with lesser volume than the retracement might be indicative of a candle with no momentum.

Hope this adds to your knowledge as traders. Study it, tweak it, learn it, trade it.


Forex Trading Systems Installation Instructions

Momentum Flag Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Momentum Flag Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this system accordingly.

Forex Strategies & Forex MT4 Indicators Installation Instructions - YouTube

Forex Metatrader 4 Trading Platform
  • Free $30 To Start Trading Instantly
  • No Deposit Required
  • Automatically Credited To Your Account
  • No Hidden Terms

How to install Momentum Flag Forex Trading Strategy?
  • Download Momentum Flag Forex Trading Strategy.zip
  • Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Momentum Flag Forex Trading Strategy
  • You will see Momentum Flag Forex Trading Strategy is available on your Chart
Click here below to download:

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La entrada Momentum Flag Forex Trading Strategy se publicó primero en Forex MT4 Indicators.

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