Forex Signals Trading System For MT4

Forex Signals Trading System For MT4

 

Table Of Contents:

  1. Forex Signals Trading System For MT4
  2. Indicators Used and Chart Setup
  3. Trading the Strategy
  4. Long entry
    1. Stop-Loss (SL) and Take Profit (TP) Settings
  5. Short entry
    1. Stop-Loss (SL) and Take Profit (TP) Settings
  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 Forex Signals Trading System is built on strategies that do most of the analysis for the currency pair or asset you want to trade, and then indicate whether you should buy or sell the asset. There is also an option to wait if the indicators show that there is no valid setup that can be traded. All that is required of the trader is to make the entry at the right time, and apply the appropriate exit stops as well.



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Indicators Used and Chart Setup

 

The indicators that this strategy deploys are as follows:

 

    1. Signal 1 indicator (MA Period 6, MA Method)


    2. Signal 2 Indicator (Setting: Moving Average period 14, Method 3; Parabolic (0.2. 0.5) and (0.02 -0.05)


    3. Filter indicator, which is made of count bars.

 

According to the inventor, this strategy works best on the M30 and H1 time frames. Higher time frames tend to produce signals that are hard to confirm, while shorter time frames produce too many not-tradable setups. The strategy can be deployed on currency pairs and financial instruments from various asset classes.

The first indicator is known as the Signal 1 indicator. This indicator is built on a customized standard deviation setting, which plots a series of circles below or above the price action, along with a signal line which connects each of these circles or dots. The dots and the line connecting them tend to swap positions whenever the trend of the currency pair changes. This is the trend-seeking indicator.

The second indicator is the Signal 2 indicator. Signal 2 is what indicates to the trader whether a buy or sell opportunity is available. It displays a series of instructions on the top left corner of the chart. These instructions are:

 

    • Sell not advisable or buy not advisable: this is an instruction from the Signal 2 indicator that no buying or selling opportunities are available.

    • No data: there is insufficient price information to perform the analysis.

    • Possible buy/possible sell: indicates to the trader that there is a high probability of a long trade or short trade appearing on the chart.

    • Long position or short position: tells the trader to go ahead with the trade.

 

The Filter indicator is a momentum indicator that shows red (short entry) or blue (long entry) count bars. These bars serve to provide confirmation to the signals generated by the previous 2 indicators.


For this strategy to work to a high degree of accuracy, the following precautions must be followed:

 

    1. Only trade situations where price has retraced to the Signal 1 indicator, before initiating the trade in the direction of the signal. Do not just open a trade when the Signal 2 indicates it is time to go long or short.

    2. The use of reversal candlestick patterns also increases the chances of the trade’s success.

 

Trading the Strategy

 

Here is how to trade this strategy if you want to take a long position.

 

  1. Long entry

 

For the long entry position to be valid, initiate this in the following manner:.

 

    • The Signals 2 indicator should show a possible long entry or should display a message saying “long trade position” (preferred).

 

    • The Signal 1 indicator should show a green circle, followed by a series of circles all connected by a line.

 

    • The filter indicator should be showing blue count bars at the time the signals appear on the chart. Ideally, one or two bars should have formed to ensure that the bars do not repaint.


    • Allow the price to retrace to the signal 1 indicator line, then open a long trade position when the next candle opens.



This is a snapshot that displays the long trade setup with this strategy. On this chart, we see that there are two areas where the Signal 1 indicator appeared. However, the only valid setup is the current setup, where the Signal 2 indicator displays a “long position” message on the top left side of the chart interface. Price retraced to the Signal 1 indicator line on the right, at the same time that the filter indicator showed blue bars. This was the only valid entry point.

 

Stop-Loss (SL) and Take Profit (TP) Settings

The Stop Loss price target should be placed slightly below the line of the Signal 1 indicator.

The Take Profit setting should use a previous resistance level as the guiding point. The TP should be set in such a way that the risk-reward ratio (SL:TP ratio) is at least 1:2, since the time frames are typically short.

 

 

  1. Short entry

 

The rules for a short entry setup are indicated as follows:

 

    • The Signal 2 indicator should display a “possible sell, short position” or “short position” (preferred) message.

 

    • The Signal 1 indicator should display a yellow circle, along with smaller yellow circles connected by a line, above the price candles.

 

    • The filter indicator should be showing red count bars.


    • Open the trade only when the price has retraced upwards to meet the Signal 1 indicator line.



Here is the snapshot showing the short trade setup for this strategy. The price retracement to meet the Signal 1 indicator is very clear to see. Also, note the Signal 2 message display on the top left of the screen.

 

Stop-Loss (SL) and Take Profit (TP) Settings

The Stop Loss is placed slightly above the Signal 1 indicator line, while the Take Profit (TP) price target is set using a previous support as the point of reference. The SL:TP ratio should be at least 1:2, allowing for the targeting of a minimum of 2 pips in profit for every 1 pip risked as the stop loss.

 

Conclusion

One thing you will notice with this strategy is that signals are not generated very often. Therefore, a lot of patience is required to enable the trader derive only trade setups that are valid and have a potential to generate profit.

Download the complete system description and the files here:

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