The Snake Trading System For MT4

The Snake Trading System For MT4

 

Table Of Contents:

  1. The Snake Trading System For MT4
  2. The Snake Trading System For MT4 - Indicators Used and Chart Setup
  3. The Snake Trading System For MT4 - Trading the Strategy
  4. 1) Long Trade
    1. Long Trade Setup
    2. Stop Loss & Take Profit Settings
  5. 2) Short Entry
    1. The Snake Trading System For MT4 - Short Trade Setup
    2. Stop Loss & Take Profit Settings

 

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 Snake Trading System For MT4 is a forex trading strategy which combines elements of trend following with price momentum to get a direction for the traded assets. This strategy uses two indicators.

There is a trend-following indicator as well as a momentum indicator. Both indicators are combined to give the system added ability to filter out signals. Still, the trader has to be aware that a lot of success with this strategy depends on being able to identify the setup visually when it occurs on the chart visually.


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The Snake Trading System For MT4 - Indicators Used and Chart Setup

 

Once more, this strategy deploys two custom indicators, known as:

  • The Snake indicator, which is the trend-following indicator.
  • The Snake Force oscillator, which is the momentum indicator.

The snake indicator is applied on the chart against the bars that show price action, while the Snake Force oscillator appears below the charts in its own indicator window.

This strategy was first described using the 5-minute time frame. Some examples of its use in other time frames exist. It is safe to say that the 30-minute and 1-hour time frames are also suitable for use with this strategy. We will use the 30-minute time frame to describe the strategy.

Indicators on the EURUSD 30-min Chart

 

The Snake indicator has a peculiar set of lines that curve around the price bars in the shape of a snake. This is how the indicator derives its name. The indicator lines form an image of a snake moving on a path.

The snake body itself is red and creates a single line. Two lines also make up the path, but these lines are blue and are located on each side of the snake body. At various times, the red line (snake body) will appear to step out of the path in any of two possible directions. 

When the snake body threatens to step out of the blue lines to the upside, the trader should prepare to go short. Conversely, the times when the red line tries to step out of the canal/path’s lower blue line, this is an indication that the trader should think of going long.

These signals combine with those of the momentum oscillator (i.e. the Snake Force oscillator) to tell the trader to either buy or sell the asset.

Unlike the usual practice with momentum oscillators, the behavior of the Snake Force oscillator used to generate a signal is not the midline cross or the market extreme reversal points.

Momentum oscillators have a vertical range with a midpoint. This strategy aims to predict the trend change before the midline cross, thereby providing earlier signals for the trader. Therefore, the oscillator signal used will be the thinning of the histogram bars.

We will now describe how these two indicators work together to produce trading signals.

 

The Snake Trading System For MT4 - Trading the Strategy

 Here is the description of how to treat this strategy

 

1) Long Trade

The long trade setup is as follows:

 

  • The snake body line is touching the lower line of the path, i.e. tries to step out of the path to the downside.

  • The Snake body starts to rise, such that the lower path line becomes visible once more.

  • Snake Force indicator’s red bars are becoming thinner, which is an earlier indication of a trend change than the midline cross.

  • Use a market buy order to enter the market.

 

On the chart, you can see that the snake touched the lower part of the canal or path, and the red histogram bars of the Snake Form oscillator went from thick to thin, indicating an imminent trend change.

As the snake pulls away from the lower part of the path, your trade is expected to follow this move, allowing you to get enough pips from the price move. See the chart snapshot and analyze it carefully. 

This is what the buy trade setup looks like.

Long Trade Setup

This chart has two long trade setups. The critical points in the first setup are shown to help you understand the strategy. You can see where the red-coloured snake indicator touches the lower part of the path (blue colour). When the histogram bars start getting thinner, this is the time to initiate the long trade.

 

Stop Loss & Take Profit Settings

The Stop Loss (SL) for this setup is placed a few pips below the lowest price of the candles that immediately precede the buy candle. The potential Take Profit target is set using a previous resistance level as the benchmark.

Try to ensure that the trade has a risk-reward ratio of 1:3. If the risk-reward ratio is only 1:1, do not take the trade. You need to have a 3R risk-reward ratio to enable you earn profits, even if you end up losing as many as 12 out of 20 trades in a month. 

We need to state that a slim snake body with a very tight channel means that the emerging trend will most likely be a strong trend.

 

2) Short Entry

Here is how to identify and trade the short trade setup:

    • The snake body touches the upper line of the path or canal, i.e. tries to step out of the path to the upside.

    • The Snake body now starts to separate from the upper path line so that it becomes visible once more.

    • The Snake Force indicator’s green histogram bars start getting thinner, which indicates a pending trend change.

    • Use a market sell order to initiate the trade.

 

This is what the sell trade setup looks like.

 

The Snake Trading System For MT4 - Short Trade Setup

This is a 1-hour chart showing the short trade setup. The red-coloured snake body touches the upper part of the path (blue colour). When the green histogram bars above the midpoint start getting thinner, this is the time to initiate the short trade.

 

Stop Loss & Take Profit Settings

The Stop Loss (SL) for the trades is set at above the highest high of the candles that immediately precede the short trade entry point. The potential Take Profit target can be set using a previous support level. Alternatively, if a buy signal appears, you can exit the trade. 

The key is in being able to consistently find opportunities with this strategy that provide returns in the order of 3R.

 

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