Simple Price Action Style Strategy For MT4
Table Of Contents:
- Simple Price Action Style Strategy For MT4
- Long trade setup
- Short trade setup
- Trade management technique
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Simple Price Action Style Strategy For MT4 might look like a novice traders system but it holds enough power to change your career. It’s not necessary, you have to depend on a complex trading method to secure profit from this market. By using the core concept of trading, you can develop a simple system that will allow you to change things dramatically.
Support and Resistance Barry, Moving Average 21, Vcustom3, and minor small codes have been injected into the template file. The best part of this method is, you do have a prepared trading environment to analyze the market. But to open long or short trade, you have to know the steps required to open the trades. The system will allow you to trade with the trend and with the major reversal. It depends on the users.
But you must learn the two methods as the nature of the market is very deceptive and you might not be able to get the trend favoring setup. The best thing about this price action method is simplicity. No complex derivative is required however, we do need to rely on a single or double candlestick pattern to reinforce the idea for any trade. For this method, we will depend on the pin bar and the engulfing patterns only.
The pin bar has a long wick and small body. It usually tells us the price is going to reverse. On the contrary, the engulfing pattern is formed with two candles. The first candle is part of the existing trend and the second candle will engulf the first candle. Let’s see how the trades are taken and you will get the idea of how the edge is used.
Long trade setup
We will demonstrate who to buy an asset in favor of the trend. This means the existing trend will be bullish. The price has to trade over the 21 MA most of the time. As we are relying on 21 periods MA, we mustn’t choose the daily time frame. The recommended time frame for this trading system is M30, H1, and H4.
In an uptrend, the price usually drops which is the part of the bearish correction. When the bearish correction takes place, the support level again pushes the price up. In some cases, the 21 period MA acts as the support.
So, how do we know the support is valid as you will notice the frequent false break in the price in 21 MA? You have to wait for the green dotted lines in the chart and these green lines will tell us the price is ready to move to the next stage. But as a trader, you should be careful about the trading model.
Use the FXM VC as the filter tool. You should be seeing a small portion green mark at the bottom of the indicator and this tells us the price will go higher. Open the long trade when you see the green mark but limit the risk. The stop loss will be placed 5 pips below the green dotted line. Analyze the candles at the dotted line and you must find a bullish pin bar or engulfing pattern.
Short trade setup
To execute the short order, we will use the reversal trading method. The price needs to fall below the 21 period MA and this break must a valid one. The valid bearish break needs to be accompanied by a double top pattern. In the FXM VC filter tool, we will get the red or the signal mark, when the price is ready to break through the 21 periods MA.
After the break takes place, look for the brown dotted line to appear on any candle. The brown dotted line is the representation of the formation of the bearish price action signal. Note that, the delay in the formation in the brown dotted line might be significant and the traders might not be able to withstand such prolonged delay.
But without taking the dots into the consideration, manual observation of the bearish price action signal is required. Traders with less than 2 years of experience should stick to the brown dot entry process since it’s a reversal trading method. But if you are good at analyzing the market metrics, you can depend on the other variables. For instance, spotting a bearish evening start at the resistance level can help you to sell the asset.
But no matter which approach you use, you should be careful enough to take the trade with low risk. Managing the trades is the most difficult part of this trading process and can create massive confusion when you lose a few trades. Mental development and trade management is the most important factor to run a business successfully. Let us get some professional tips on managing the trades.
Trade management technique
The rules are simple for this system. If you trade with the trend, you can risk 3% but the risk to reward ratio must be greater than 1:3. If it is 1:2 you should be risking 2% of the account balance. On the contrary, when you are trading against the trend, the risk should be less than 1% and you must be well prepared to accept the losing trades at any instant.
Ignoring to lose trade makes the edge unusable. It also creates a false layer of confidence that pushes you to overtrade. You must trade the market with low risk and take the traders with confidence. When the dots are formed, don’t rush into the trade. Calculate the key factor and see if you can take the trade without taking too much heat from this market.
Remember, you are nothing but a trader. The market will crush you like a nut unless you are well prepared. For those who are relying on the technical factors only, must know about the news timing. Under no circumstances, trades should be taken 30 minutes before or after the major news. But some traders have strong skills to analyze the news.
They can trade the market at any instant but they should realize, chasing the trend in the most volatile state of the market creates fire in the line of success. You must have the skills to walk through that path without burning yourself. Its not that tough provided, you are following all the tips of this guide.
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