4 Rainbow Strategy For MT4

4 Rainbow Strategy For MT4

Table Of Contents:

  1. 4 Rainbow Strategy For MT4
  2. The 4 Rainbow Strategy For MT4 – Long positions
  3. The 4 Rainbow Strategy For MT4 – Short positions
  4. Is the 4 Rainbow Strategy For MT4 profitable?


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 4 Rainbow Strategy For MT4 is the trading system that attempts to make use of wave counting alongside the use of standard technical indicators. While the effort might be worth an applause, the four rainbow strategy completely fails at this attempt.

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What you end up with at the end is a trading system where you will have to basically ignore the different wave counting methods used. In some ways this completely defeats the purpose of using this trading strategy which is built upon the short term retracements as measured by wave counting.

There are quite a few indicators used in the 4 rainbow strategy. The first indicator is called the MA shortlines indicator. This is nothing but the moving average lines. It will make use of a 34. Moving average. It is a custom indicator and therefore comes with a lot of additional custom settings. The next indicator used in the 5 rainbow strategy is called the four rain moving average arrows.

The 4 rain moving average indicator is also a custom indicator and as the title suggests it makes use of four different moving averages. However, you will notice that the moving average periods used in this indicator are unconventional.

 While there is no evidence in the market that only certain types of moving average settings work best, it is rather interesting to see the choice of the moving average periods used in this trading system set up. The most important thing to note here is the blue line which is the thickest of the three moving average lines. You can expect a major shift in the trend when price breaks this blue thick line.

Finally, we also have the pivots indicator used in this trading strategy. This is the standard pivots indicator that seemed to have become a norm in just about every custom trading system that you see. The pivot points as he know can act as intraday support and resistance levels in the context of this trading strategy, the pivot level indicators can be used as a way to set your take profit levels as well As for entry points into your trades.

There is only one sub window in the 4 rainbow trading system template. The indicator used here is called the CCI histogram indicator. This indicator looks very similar to the commodity channel index indicator also known as CCI. The only difference here is that there is also a histogram that is plotted. Price trends can be confirmed as and when the CCI histogram indicator moves above and below the zero line. Finally, the most obscure part about the 4 rainbow trading system are the wave counting methods. Ideally one would assume that this trading system makes use of the 123 trading pattern set up. But that is not the case here. Because of the custom indicated that is used we do not have much information into how these wave counting's work.

Let's now take a look at how you can use these indicators to trade with the 4 rainbow trading strategy.



The 4 Rainbow Strategy For MT4 – Long positions




To take a long position using the full rainbow strategy, we only rely on price action, the moving average, the CCI histogram. No focus is paid on the different counts that you see on the price chart. This makes it no different to a regular moving average based trend following trading system.

Wait for price to close above all before moving averages. This indicates that the market is moving into an uptrend. In order to confirm this look to the CCI histogram indicator. The CCI histogram indicator should be moving from below the zero line to above.

When it plots the histogram above the zero line, you will see that it changes color to blue. Wait for a short term swing high to form. Now set up a pending long order near the swing high.

Set your stop loss to the recent low prior to the pending order. Now calculate your risk to reward ratio and set your take profit level accordingly. If the markets are in a strong trend, then you can trail your stop loss across the blue moving average line. This will ensure that you take maximum profits when the trends are the strongest in the markets.



The 4 Rainbow Strategy For MT4 – Short positions




To take a short position using the full rainbow strategy, we only rely on price action, the moving average, the CCI histogram. No focus is paid on the different counts that you see on the price chart. This makes it no different to a regular moving average based trend following trading system.

Wait for price to close below all before moving averages. This indicates that the market is moving into a down trend. In order to confirm this, look to the CCI histogram indicator. The CCI histogram indicator should be moving from above the zero line to below. When it plots the histogram below the zero line, you will see that it changes color to red. Wait for a short term swing low to form. Now set up a pending short order near the swing low.

Set your stop loss to the recent high prior to the pending order. Now calculate your risk to reward ratio and set your take profit level accordingly. If the markets are in a strong trend, then you can trail your stop loss across the blue moving average line. This will ensure that you take maximum profits when the trends are the strongest in the markets.



Is the 4 Rainbow Strategy For MT4 profitable?


In conclusion, the four rainbow strategy for empty 4 is a trading system that you can definitely miss out on. There is nothing interesting about this trading strategy and what we're left with is just a regular average looking trend following trading system.

While the concept of counting waves might have brought an interesting twist, the fact is that this wave counting method gets lost in this trading system. Therefore, there is no real edge that you can get. There are better working trend following trading systems that you can use.

Download the complete system description and the files here:

FREE 4 Rainbow Strategy

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