Volume Arrow Indicator MT4 Strategy For MT4
The Volume Arrow Indicator MT4 Strategy For MT4 is a trading system that calculates the entry signals based on volume analysis.
The system comes with 3 indicators and 1 template. The names of the indicators are:
Nice Value Chart v1 a1.ex4
When you load the template “Volume arrows trading.tpl” onto your charts then all 3 indicators mentioned above are automatically loaded.
According to the developer you can use the system on any forex pair as long as you trade it on the timeframes M15 or higher.
Trading with the Volume Arrow Indicator MT4 Strategy For MT4
As you probably know, using volume information and incorporate it in your trading decisions can be a tough job. There are e.g. many books about volume spread analysis available. And you can use volume in many different ways.
The Volume Arrow Indicator MT4 Strategy For MT4 wants to make it easier for you to trade based on volume information. The system reads and interprets the volume information for you and then aggregates that information into a buy or sell arrow.
How does the system create the arrows based on volume?
The indicator volume_arrow.ex4 reads the values of the indicator bettervolume1.4.ex4 and gets the volume information. Then it looks at the open and close price of the candle. The candle price information and the volume information then produces a buy or a sell signal.
If you are an experienced trader then this approach is already ringing some alarm bells. With this approach you are only looking at 1 candle to decide for a trade or against a trade and that you are blind to the bigger picture of the market condition.
This means that you are either very short term oriented and that your trading approach is to close the trade within the next candle. Or, if you want to hold traders longer, that you do an additional filtering method instead of using these signals blindly.
In addition to the volume-based arrows the creator of the system suggests to use the values of the indicator Nice Value Chart v1 a1.ex4. You should only trade sell arrows if the indicator Nice Value Chart v1 a1.ex4 shows overbought conditions and buy signals only within oversold conditions.
The filtering mechanism with the indicator Nice Value Chart v1 a1.ex4 is already slightly better than taking the raw volume arrow signals as you can see in the following screenshot:
But you can do the filtering much better by looking at the bigger picture!
Buy trades with the Volume Arrow Indicator MT4 Strategy For MT4
You probably know the saying “The trend is your friend”. To apply this trading knowledge to the Volume Arrow Indicator MT4 Strategy For MT4 we can add a moving average to the chart. This will help you detecting the direction of the trend.
In this example I have used the Exponential Moving Average (EMA) with period 200. The EMA is drawn as the yellow line in the following screenshot:
Above the EMA we see the market in an upward trend. And if we apply the filtering method “The trend is your friend” then we are only allowed to enter buy signals above the EMA. Therefore, only 1 valid buy signal could be traded in the screenshot above.
Sell trades with the Volume Arrow Indicator MT4 Strategy For MT4
If we apply the same filtering logic for sell trades then we are only allowed to open sell trades if the market is moving below of the yellow EMA indicator.
The following screenshot shows such a condition:
From all these 11 signals shown in the screenshot above only 1 signal can be traded according to the rules of the system in conjunction with the EMA filtering method.
Further improvements of the Volume Arrow Indicator MT4 Strategy For MT4
You can always add more edges to a system and therefore being even more selective.
As an advantage of such an approach you will have less stress during your trading career. Imagine your equity curve in the long run. If you have a steady rising equity curve with only minor drawdown phases then you have better emotions and you will sleep well because you know that you are a winning trader.
Now imagine a rising equity curve over many years but this equity has deep and long lasting drawdown phases. How will you feel if you are in a drawdown phase during weeks or even months? How will you sleep during this time? And all this hassle is produced by selecting trades of mediocre quality.
Therefore, I can’t mention often enough to trade only highest quality signals / trading setups.
You can further improve your trading if you only trade buy signals within bullish divergences. Bearish divergences help you to improve the winning percentage of sell trades. Here is a helper to detect divergences.
Another improvement of the quality of your trades would be to select only buy signals directly at a major support price level. Then you will take advantage of the boost upwards if the price gets rejected from the support price level.
The same is true for sell trades directly at resistance price levels. Rejections from resistances levels are usually very strong and can improve your winning percentage a lot. Test this support/resistance tool to detect levels from higher timeframes.
Download the complete system description and the files here: