Kaufman Bands Trading System For MT4
Table Of Contents:
- Kaufman Bands Trading System For MT4
- The Kaufman Bands Trading System For MT4 – Long positions
- The Kaufman Bands Trading System For MT4 – Short positions
- Is the Kaufman Bands Trading System 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 Kaufman Bands Trading System For MT4 is a trend following strategy that makes use of price retracements and allows traders to take potential positions in the market. This is a short term trading strategy that can be used on the 15 minute chart time frame. There are quite a few trading indicators that are used in this trading system. However, as you will notice a few of these indicators are quite redundant and therefore they can be removed.
On the main price chart we have a moving average line which acts as a trend filter. Long and short positions can be taken depending on how prices are reacting to the moving averages. The zigzag indicator acts as a potential signal to the highs and lows in the price. Contrary to other trading systems which make use of moving averages, here, the zig zag indicator will signal you to the potential turning points in price.
The main advantage you get out of this is the fact that you are able to position yourself right when the trends are emerging. In the sub window, we have the commodity channel index indicator. As you might know the CCI indicator moves across a fixed value of overbought and oversold levels. The CCI indicator can be used as a timing indicator for your trades to confirm the turning points in price.
On the price chart, we also have the Murrey math lines. These are nothing but a set of horizontal lines which act as potential support and resistance levels. In some ways, they also resemble the regular pivot level indicators. However, the Murrey math lines make use of different calculations in order to plot these levels on the price chart. You can use these horizontal lines as potential take profit levels for your trades.
Besides the above mentioned indicators, the Kaufman bands forex trading system also makes use of two other additional custom indicators. These are the WadAtt indicator in the final sub window and the better volume indicator in the first sub window. These indicators do not really add any value to the trading system and therefore depending on your experience, traders can remove these indicators to make the charts a bit more easier to understand.
As you might have noticed, there are a few other indicators in the Kauffman bands forex trading system. These indicators basically plot the price on the bottom left corner of the chart an also shows additional information on the top left corner of the price chart. You can remove these indicators as they do not add any value to the trading system itself.
Let's now take a look at how you can trade long and short positions using the Kaufman bands trading system for MT4.
The Kaufman Bands Trading System For MT4 – Long positions
To take a long position using the Kaufman bands trading system, wait for price action to make swing low. You will notice that the zig zag indicator will also signal the same swing low. Following this, you will see the yellow dot appearing suggesting that price action is likely to move higher.
Now simply wait for prices to close above the moving average line. Wait for at least one candlestick to close above the moving average line and then go long at market. Set your stop loss to the recent swing low that formed. By using a calculated risk to reward ratio, you can set your take profit level initially. Utilizing the horizontal lines that you see on the price chart, you can set your second take profit level as well.
At the time of taking the long position, make sure that the commodity channel index indicator is sloping higher from the oversold levels. This will confirm that the market momentum is moving to the upside.
The Kaufman Bands Trading System For MT4 – Short positions
To take a short position using the Kaufman bands trading system, wait for price action to make swing high. You will notice that the zig zag indicator will also signal the same swing high. Following this, you will see the yellow dot appearing suggesting that price action is likely to move lower.
Now simply wait for prices to close below the moving average line. Wait for at least one candlestick to clothes below the moving average line and then go short at market. Set your stop loss to the recent swing high that formed. By using a calculated risk to reward ratio, you can set your take profit level initially. Utilizing the horizontal lines that you see on the price chart, you can set your second take profit level as well.
At the time of taking the short position, make sure that the commodity channel index indicator is sloping lower from the overbought levels. This will confirm that the market momentum is moving to the downside.
Is the Kaufman Bands Trading System For MT4 profitable?
The Kaufman bands trading system is a fairly simple forex trading system to understand. It makes it easier for traders at all levels to practice and get familiarity with this trading strategy. Bear in mind that the Kaufman bands trading system is a short-term scalping strategy. It follows the logic of the trends and allows traders to take potential trading opportunities as in when price makes a retracement.
The trading template that comes with the Kaufman bands trading system is relatively lightweight. Therefore, you could use this to apply to multiple instruments and monitor them at the same time. While this is subjective, we find that there are too many indicators that are redundant, used in this trading system. Therefore, we recommend that after traders get a bit of practice with this trading strategy, you could look to removing some of the indicators in this trading system.
This will help you to declutter the charts and also allow you to make better trading decisions. We should also note that the Kaufman bands trading system works best during trending markets. This is when retracements are also clearly identified, and you can trade in the direction of the trend.
But when it comes to sideways markets or ranging markets come up you will be prone to false signals which can lead to potential losses. Therefore, it is important that traders pay attention to their risk management when trading with the Kaufman bands trading system.
Having mentioned the above, we can therefore conclude that the Kaufman bands trading system is a fairly reliable and easy to use trading strategy.
Download the complete system description and the files here:
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
