3c_DM Indicator For MT4
The 3c_DM Indicator For MT4 is a trend direction and strength indicator that fluctuates above and below a zero line (Grey). It gets plotted as a dotted line that can either be Green (bullish) or Red (bearish). A buy signal is generated when the indicator changes to Green above the zero mark. Conversely, a short trade is suggested when the indicator turns Red below the zero line. The 3c_DM Indicator For MT4 can be profitably applied across time frames and asset classes.
Trading ideas with the 3c_DM Indicator For MT4
We use the 3c DM trading tool as a trend-direction and trend-strength gauge to give us the hints of upcoming trade moves and little reversals. This indicator is a fluctuating line which is dual-colored. It comes with red dots and green dots.
So during the bullish periods or phases in the market, you find the indicator plotting green dots and when the market is going through a downtrend or bearish cycle it will paint red dots. So ultimately the dotted line is a trend-direction oscillator that depicts trend direction through the use of color.
3c_DM Indicator For MT4 - Adjustments And Signals
Below I have inserted an image of what the 3C indicator to show you what it looks like however you can see that the zero line is not here.
So as pointed out in the image above there is no zero line. Having a zero line allows us to see transitional phases in the market and it also aids us in spotting out different trading signals based on the color changes initiated by the 3c DM indicator. Looking at the image below you can see that the zero line has now been integrated into the indicator after making simple adjustments to the labels parameter which is found in the settings area of the indicator.
In the image above I pointed out different buying and selling opportunities but I have also shown you where you can actually exit the market however this will require some discernment because it is not as straight-forward as looking out for color changes.
The first trading opportunity was a buy signal which appeared so the idea here is to wait for a color-change to happen from red to green but it needs to happen below the zero line meaning that the signal emanates from an oversold region - this allows us the best possibility of maximizing our returns on the upward reversal.
This opportunity was a good signal because the market stayed in the green for a long time and there was an accelerated move to the upside and right at the apex of this move there was a color change from green to red. You should exit your buy position the moment you see the first red dot in this overbought region.
At that exact same point where you exited your buy position is the exact same spot where you open your sell trade. The reason being is because of the overbought zone where the color of the indicator changed from green to red. The market progressed in a downward direction but there was more than one color change that took place therefore you need to be careful about how you manage your trade.
It is not wise to exit the market when the color change happens from red to green in the mid-range area of the market because ultimately we need to identify signals in the oversold region. I have indeed circled the area where you are supposed to exit as you can see there at 3.1 the market changed from red to green in an extremely oversold area and that was a great time to exit the market because the bulls were beginning to gain some strength thus causing the market to eventually turn over.
3c_DM Indicator For MT4 - Sell Entry
In the next trading example I made a slight adjustment to my trading method because as you can see in the image below have included a 50-EMA which is the red line going across the screen and I also inserted a Bollinger bands indicator. The reason why I inserted a Bollinger bands indicator in my screen is so that I can identify overbought and oversold areas that coordinate with the 3C indicator itself.
The reason for the integration of 50-EMA is so that we can have a market-bias reference point in terms of our signals. So in essence when we are looking for sell positions you want the market to be on the upper band area but the market price action must also be trading above the 50-EMA and similarly, if you are looking for a buy entry then the market must be in an oversold area but it must also be below the 50-EMA.
In the image above you can see that I showed you what a sell signal looks like so ultimately I am waiting for a green to red color change to occur in an overbought region and the market must be trading above on the upper band of the Bollinger bands indicator. The sell trading example was timely because of the occurrence of a bearish engulfing pattern formation.
So it was a great trade for us to follow through with. We exited the market when the 3c indicator changed from red to green in an oversold region and when the market was trading on the lower band of the Bollinger bands indicator. When using the 3c indicator, it is paramount to have supporting factors to justify your trade ideas - and this comes in the form of having multiple confirmation elements which could be like regular divergence or simply reversal patterns. And that is exactly what I did in the image below.
The image above shows a bullish divergence but what was great about the signal is that there was a bullish pin bar reversal candlestick and after that there was also bullish engulfing pattern therefore these two reversal elements motivated that our entry point to buy.
3c_DM Indicator For MT4 - Conclusion
As mentioned before, it is not highly recommended for you to trade color changes solely. Rather, put more emphasis on using the 3c DM indicator in combination with multiple confirmation elements so that you can increase the probability of yield more winning trades on a consistent basis.