Introduction To BSI Trend and Channel Indicator For MT4
Table Of Contents:
- Introduction To BSI Trend and Channel Indicator For MT4
- Parameters
- How To Trade Using BSI Trend and Channel Indicator For MT4
- Bottom line
BSI Trend and Channel Indicator For MT4 allows traders to detect trading opportunities that can't be identified by any other indicators. This is the modified version of the original BSI indicator which plots additional trend lines and channels on the chart. This indicator is drawn by combining the BSI Value and LWMA (Linearly Weighted Moving Average) indicator values. BSI Trend and Channel Indicator For MT4 works best for breakout trades as it shows the condition of the ongoing trend. In a trending market, this indicator helps you in identifying a clear breakout in any asset by plotting the channel lines on any timeframe. This makes it easier for you to generate more trading signals.
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
BSI Trend and Channel Indicator For MT4 is built based on the BSI indicator. So primarily, this indicator checks the trend of the market by using the BSI indicator. After that, according to the conditions of the market, it plots trend lines and channels on to the chart. With this, traders can easily detect the buy/sell signals. For drawing trend lines, this indicator uses regression lines, and for channels, it uses the Tango line.
Component of the BSI Trend and Channel Indicator For MT4
Orange line - Trend line or channel (high)
Sky blue line - Trend line or channel (low)
Red mark - Reversal bar (high)
Blue mark - Reversal bar (low)
Deep pink line - This line is the tango line (it shows the entry-level)
Magenta line - Moving average of tango line;
Magenta dot line - BSI value
Parameters
Channel Period – 30
Trend Period – 30
Noise Filter – 5.0
These are the default settings. If you are a novice trader, please use these default parameters. You can experiment with the settings once you gain some experience.
How To Trade Using BSI Trend and Channel Indicator For MT4
As discussed above, this indicator consists of multiple trend lines, channel lines, moving averages, and a tango line. The combination of all these tools makes this indicator unique and powerful. Hence, it can be used stand-alone to identify trading signals. You might find this indicator a bit clumsy when you use it for the first time. But with enough practice, you will get the habit of understanding the market conditions in a better way. You can also pair the BSI Trend and Channel Indicator For MT4 with some other technical tools such as candlestick patterns, market patterns, Fibs, or with any other credible indicators. In this article, let’s understand the usage of all the features of this indicator. And most importantly, we will be generating accurate buy/sell signals in any particular asset.
Our strategy is this. When the prices hit the lower channel (sky blue line), see if the moving average (magenta line), and Tango line (deep pink line) goes below the price action. If yes, it means that every tool of this indicator is aligned and signaling us to go for a buy trade.
As you can see in the above CADJPY chart, before activating the buying signal, the market was in a downtrend. As the Tango line and moving average go below the price action, the market direction immediately reversed and ended up generating a potential buy signal. When the moving averages, Tango line, and channels are pointed in one direction, there is no need to put the deeper stop loss. You can use the recent low or the lower low of the most recent candle to exit your trade.
Scaling In
This strategy works very well in trending market conditions. But when the market is moving sideways, the signals generated by BSI Trend and Channel Indicator For MT4 are not accurate. So we suggest you to avoid taking trades in the ranging market as ranges are quite volatile and it often gives a lot of whipsaws. After your first entry, if the market gives you a pullback, wait for all the criteria to meet again. Then you can scale in that particular trade. Let’s discuss how you can scale in your buying trade.
As you can see in the above image, the market gives us two trading signals. At the second entry, the market turned sideways. When the Tango line and Moving Averages go below the price action, it's a sign for us to scale in our existing buy trade. Exit the trade when the BSI Trend and Channel Indicator For MT4 gives an opposite signal. You must have noticed that this trade gave us a profit of 150 pips in a single trade.
Aftermath
As you can see in the below image, prices hit the upper channel at around 82.67. Also, the Tango line and the Moving Average goes above the price action. This is a clear indication for us to close both of our buying positions. The market again gives us another buying signal at around 82.20. Make sure to follow all the rules and respect the risk level before placing any trade. It is essential to abide by the rules in this game of uncertainty.
Keep Riding The Trend
When the market allows you to keep riding the move, be cautious. Make sure if all the discussed rules are followed. As you can see in the image below, the BSI Trend and Channel Indicator For MT4 again generated two buying positions after exiting our buy trade. This trade again gave us nearly 100 pip profit.
Aftermath
In the below image, at around 83.04, the Tango line and Moving Averages go above the price action. The market then turned into a range, and that reversed the trend completely. After the range, just follow the direction this strategy generates to ride your moves.
Bottom line
BSI Trend and Channel Indicator For MT4 offers a diverse way to trade the market. A lot of times, we suggest our readers to always pair an indicator with other reliable indicators, candlestick patterns, or technical analysis for extra confirmation. But this is one of those self-sufficient indicators which can be used alone to generate trading signals. We hope you had a good read. Cheers!
