RSI_MA_Trade_Sist_Chart Indicator For MT4
Table Of Contents:
- RSI_MA_Trade_Sist_Chart Indicator For MT4
- Trading ideas with the RSI_MA_Trade_Sist_Chart Indicator For MT4
- RSI_MA_Trade_Sist_Chart Indicator For MT4 - Signal Representation
- RSI_MA_Trade_Sist_Chart Indicator For MT4 - Choosing Probable Signals
- RSI_MA_Trade_Sist_Chart Indicator For MT4 - In Conclusion
The RSI_MA_Trade_Sist_Chart Indicator For MT4 analyzes two Moving Average curves and one Relative Strength Index (RSI) to locate potential trade entry points. Areas to initiate longs are represented by upward pointing Blue arrows, while downward pointing Red arrows signify short sell areas.
Trading ideas with the RSI_MA_Trade_Sist_Chart Indicator For MT4
This indicator uses two moving averages and an RSI to output crossover signals that occur when there are transition periods. Luckily for you this indicator shows you the direction of the signals using arrows as mentioned in the introduction.
RSI_MA_Trade_Sist_Chart Indicator For MT4 - Signal Representation
So for sell signals you will look for red arrows and for buy trades you will look for blue arrows as shown in the image below.
In the image above I am simply showing you what respective sell and buy signals looks like. However, it should be pointed out that it is not encouraged to trade based on arrow signals only. By that I mean you need to support these signals given by the indicator with proper price action data that validates the generated signal.
That is the ultimate goal with confluence based trading - which is to minimize the risk and to identify highly probable trade setups. In the next trading example, I have inserted an image below which shows you what you need to look out for when using this indicator.
So basically what I do is lookout for a candlestick pattern which comes in the form of a reversal candlestick pattern and then I will wait for a corresponding arrow signal to be given by the indicator which acts as a confirmation element for me to actually open the trade.
Aggressive traders might critique me and consider this as an ineffective way to go about trading but for those of you who are conservative and who like to better manage their risk this way works out fine. In technical terms, this is in fact a trend trading system when used in this manner because you are looking for directional changes and then following the direction set by the new trend.
At the bottom right-hand side of the screen, you will see that there is a red display showing you a price level. It usually gives you the signal and it also gives you the price level at which the signal appeared.
So in the example, above we can see that the indicator defined the price level at which the latest signal appeared at however we are going to ignore it for now and I will explain in a few moments why we ignoring this data.
RSI_MA_Trade_Sist_Chart Indicator For MT4 - Choosing Probable Signals
Below I have illustrated to you the importance of not following through with every single signal given by the indicator, therefore, you should trade carefully and make sure that you have enough technical evidence to support the signal given by the indicator.
So based on the example above you can see that the indicator gave us a sell signal however it was not a good signal because this sell signal appeared to us right after a bullish engulfing pattern had formed thus deeming the sell signal irrelevant.
This was a proper approach because what transpired afterward actually consolidated the validity of the bullish engulfing pattern that had formed. Therefore the blue arrow came up at the right price level and also came at the right time because if you look at the top right of the screen you see that now we have some green text which is a buy alert and it also gives the opening price at which the buy signal appeared.
That price level actually corresponds with the arrow signal and the bullish pattern therefore it was a perfect moment for us to open up our buy position and to make the most of this bullish engulfing pattern. Your stop loss would go below the last swing low which occurred just before the second last blue arrow.
And then you can go with a risk to reward ratio of 1-is-to-1 as your initial take profit target. Given the fact that this was a reversal signal, you could have gotten away with may setting two more take profit targets to maximize your gains on this trade. However, it is always best to trail your stop loss so that you gradually minimize the risk as the market moves in your favor.
RSI_MA_Trade_Sist_Chart Indicator For MT4 - In Conclusion
The RSI MA indicator combines two prominent technical trading resources to generate buy and sell signals through the use of blue and red arrows. These signals are most reliable when you discover price action patterns that line up with each signal. I did exactly that in my examples but I also showed you how to identify fake signals so that you can capitalize on the proper ones.