Blue-Red- Forex Strategy For MT4

Blue-Red- Forex Strategy For MT4

 

Table Of Contents:

  1. Blue-Red- Forex Strategy For MT4
  2. Indicators Used and Time Frames
  3. Trading the Strategy
  4. Blue-Red- Forex Strategy For MT4 - Long Entry
    1. Blue_red_forex_strategy_2: long trade setup
    2. Stop Loss and Take Profit
  5. Blue-Red- Forex Strategy For MT4 - Short Entry
    1. Blue_red_forex_strategy_3: short trade setup
    2. Stop Loss and Take Profit
  6. Conclusion

 

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 Blue-Red- Forex Strategy For MT4 is a trend-following strategy which relies on confirmation of the trend move from several momentum indicators. The strategy looks to trade breakouts after the price has traded sideways for some time. This strategy uses several momentum indicators to provide confirmation to the trend breakout, which is detected by two trend-following indicators.

The strategy has been simplified for the trader, as the indicator signals are provided by a simple colour change. If the trader can spot the colour changes, then it should be easy to trade the strategy.


FREE Blue-Red- Forex Strategy

Download the FREE Blue-Red- Forex Strategy for MT4.

To receive my email 100% sure: 
Put my email on your whitelist!

 

Indicators Used and Time Frames

 

The Blue_Red Forex Strategy has been optimized for trading on the M30, H1 and H4 time frames. The use of the strategy on lower time frames is not recommended. This is because those time frames show price activity that is regarded as market noise by technical analysts. Only the time frames mentioned indicate ultra-short term price action. It is the price breakouts that occur in the near term that are traded using the indicators presented below.

The forex indicators are of two colours: DodgerBlue and Red. These colours represent the colour changes of the indicator for a long trade (DodgerBlue) and the short trade (red).

The indicators used for the strategy are as follows:

 

    • 2 FX Sniper MA indicator (2-10-0-0) (1-26-0-0)

 

    • VQ Bars in default (5-3-1-5-false)


    • NRTR_Rosh_v2eAlert-mtf in default settings (40-2.0-true-false-true-1-1-0)

 

The following indicators are optional and the trader can decide whether to add them to the mix or not:

 

    • Magnified Market Price (to better see the actual market price)

 

    • #FS30_7 (a BreakOut Signal Indicator, but not even correct)

 

    • Trade What You See (default 7-50.6-300)

 

    • CCI_Histogram (14)

 

    • Advanced_ADX (14)

 

    • SEFC084 (12)


    • fxfariz_scalpingM5 (set to 20)

 

For this strategy, more is not always better. In order to avoid a cluttered chart, it is advocated to use three momentum indicators (CCI-Histogram, Advanced ADX indicator and the Trade What You See indicator). In addition, two trend indicators are also used (NRTR_R as well as the FX Sniper MA indicator), along with a bar chart indicator known as the VQ Bars indicator.


Blue_red_forex_strategy_1: Indicators Used

 

Trading the Strategy

The strategy is dependent on visually identifying the colour changes on the indicators, as they show the change in momentum to the upside or downside. This is why it is called the “blue-red” strategy. But what really happens on the charts and with the indicators to indicate the changes to the blue or red colour?

There are periods when price is range-bound. At these times, the NRTR_R indicator traces two horizontal lines across the lows and highs of price action to demarcate the range. Once price breaks the range, then the trend indicators turn in the direction of the break and the NRTR_R indicator line continues to hold below the bar lows (upside breakout), or holds above the bar highs (downside break). Colour changes on the momentum indicators and the candle bars confirm the trades. Here are the trade setups.

 

Blue-Red- Forex Strategy For MT4 - Long Entry

The signal to go long on the asset is as follows:

 

    • Allow the indicators to all line up with the DodgerBlue colour.

    • Execute the trade at the open of the candle that follows the alignment of the Indicator alerts.



Blue_red_forex_strategy_2: long trade setup

On the charts, you will see that the trend indicators actually perform a visible change in colour that matches a directional change that can be traded. Of particular interest is the NRTR_R, which shows two horizontal bars when the asset is range-bound, but lacks the upper bar when price is trending upwards, signifying that the asset has free reign to push upwards.

Stop Loss and Take Profit

The stop loss for the long trade is set at a price level that is just below the point at which the trend-following indicators on the chart assume a dodgerblue colour.

For the Take Profit setting, the time-tested method of setting the Take Profit just below a point where a previous resistance occurred will also work, provided that the distance from the entry price to the TP is at least three times the stop loss. Otherwise, the trader can move the SL to breakeven point (i.e. the entry price) and use a trailing stop to chase the advancing prices so as to protect the profits in a risk-free environment.

 

Blue-Red- Forex Strategy For MT4 - Short Entry

The signal to short the asset also depends on a colour change as seen below:

 

    • Let the indicators all show a colour transition from dodgerblue to red.


    • Execute the trade at the open of the candle that follows the alignment of the Indicator alerts.

 

On the charts, you will see that the trend indicators actually perform a visible change in colour that matches a directional change that can be traded. Of particular interest is the NRTR_R, which shows two horizontal bars when the asset is range-bound. Once prices start to decline, the lower bar disappears, which is a sign to the trader that price now has freedom to continue the move to the south. Of course, there must be a corresponding colour change that matches the decline of price, which is the change from dodgerblue to red.


Blue_red_forex_strategy_3: short trade setup

As you can see on the chart above, there were actually two areas where sell setups occurred. This is the beauty of this strategy, especially when traded with the H1 and H4 charts.

 

Stop Loss and Take Profit

To set the Stop Loss, place the SL a few pips above the point at which the colour of the trend indicators changed from dodgerblue to red.

The Take Profit should be at least three times the stop loss, so as to conform to the risk-reward ratio of 1:3. Ensure that the TP is placed a few pips above an area where a previous support was established. If there is a previous resistance below the entry price which has been broken to the upside, this area would become a new support as a result of role reversal. Such an area can also be used as the reference point for setting a TP. Alternatively, where the RRR is not up to 1:3, you can move the SL to breakeven point and use a trailing stop to chase the price action, which also serves to protect any profits that have been made.

 

Conclusion

This is perhaps one of the easier strategies featured on this website, as all the trader really needs to do is to identify the colour changes, ensure that all indicators have a single colour, then execute the trade accordingly. If even one indicator shows a colour mismatch, attempts at taking the trade in such instances should be abandoned. Only trade what you see, as one of the indicators clearly points out.

Download the complete system description and the files here:

FREE Blue-Red- Forex Strategy

Download the FREE Blue-Red- Forex Strategy for MT4.

To receive my email 100% sure: 
Put my email on your whitelist!

 

Partially Automated Trading Besides Your Day Job

Alerts In Real-Time When Divergences Occur

My Recommended MT4/MT5 Broker

About Me

I'm Mike Semlitsch the owner of PerfectTrendSystem.com. My trading career started in 2007. Since 2013 I have helped thousands of traders to take their trading to the next level. Many of them are now constantly profitable traders. 

The following performance was achieved by me while trading live in front of hundreds of my clients:

Connect With Me:  

Results From 5 Months!
This service starts soon! Be the first who get's notified when it begins!

This FREE Indicator Can Transform
Your Trading!

FREE Indicator + Telegram Group


Request the Ultimate Double Top/Bottom Indicator which is used by 10,000+ traders.