Paint Bar Forex Metatrader Indicator Strategy For MT4
Table Of Contents:
- Paint Bar Forex Metatrader Indicator Strategy For MT4
- Indicators Used and Chart Setup
- Trading the Paint Bar Forex Metatrader Indicator Strategy For MT4
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 Paint Bar Forex Metatrader Indicator Strategy For MT4 Is one of the easiest forex trading strategies to follow. The strategy is based on a simple colour change of their price bars or candlesticks. The strategy is a trend-following strategy which also relies on colour confirmation of the price candles or bars on two-time frames; the 1-hour and 4-hour candlesticks.
Indicators Used and Chart Setup
Only one indicator is used for this strategy and it is a colour-coded indicator. This indicator is known as the Pips 4 Idiots Color Indicator. The Pips 4 Idiots colour Indicator is a paint bar forex metatrader indicator. Better clarity is obtained when the bar chart is used as the method of price representation.
The time period used for the strategy is the 1-hour and 4-hour time frames. Confirmation is obtained by making sure that the same colour of the price bars appears on both time frames. This strategy is therefore a form of multiple time frame confirmation.
Trading the Paint Bar Forex Metatrader Indicator Strategy For MT4
What follows is a description of the short and long trading opportunities.
1. Short entry
Here are the conditions that must be fulfilled for a short entry setup. What is sought for is an opportunity to go short when the bars turn red on the chart.
- The Pips 4 Idiots Colour indicator must change from green to red.
- Allow for one or two bars to run to establish an area of short term resistance at the highs of these bars/candles.
- Check to see that the colour change is the same between the 4-hour and 1-hour charts and use the 1-hour chart for execution.
- Open the sell trade at the open of the next red candle.
The strategy is shown using the snapshot below.
Paint Bar Forex Metatrader Indicator Strategy For MT4 - Short Entry Setup
The chart shows several areas where short trade entries could have been set up on the 1 hour chart of the GBPUSD. It is very simple: wait for the colour change, allow one or two candles to close and execute the trade in the short direction. Please note that this strategy will only work well when the market is trending. If markets are trading sideways, there will be several trade entries that will not work out. But there is a way to mitigate this, as explained below.
Stop-Loss (SL) and Take Profit (TP) Settings
The Stop Loss is set at a rigid figure of 15-20 pips. The Take Profit setting aims for a 1:2 risk-reward ratio, but if the trade is in profit by 10-15 pips, the stop loss must be adjusted to the entry price to protect the trade. The trade margins are quite small and it is important to protect any unrealized profits in the manner just described. Another parameter that can be used to take profits is to close the trade at a site of previous support (as shown on the chart), or to exit the trade when a green candle appears.
2. Long entry
Here are the entry rules for setting up Buy trades with this strategy. At this time, the colour change from red to green is what is sought for when initiating a buy trade on the chart.
- The bars will be induced by the Pips 4 Idiots Colour indicator to change from red to green.
- Allow for one or two bars to close in the green colour to establish an area of short term support at the lows of these bars/candles.
- Check to see that the colour change is the same between the 4-hour and 1-hour charts and use the 1-hour chart to execute the trade.
- The trade is executed by opening a sell trade at the open of the next green candle.
Paint Bar Forex Metatrader Indicator Strategy For MT4 - Long Trade Setup
The chart shows several areas where the long trads could have been taken. As described, the entries are taken on the 1-hour chart, at the open of the 2nd consecutive green candle. You can see from the charts that some trades would not work very well; these are the ones taken at the range-bound price areas. However, any losses from there can be compensated with those that deliver a lot of pips from the trending price areas.
Stop-Loss (SL) and Take Profit (TP) Settings
The Stop Loss is set at a rigid figure of 15-20 pips. The Take Profit aims for a 1:2 risk-reward ratio, but the stop loss should be moved to break-even point (i.e. the entry price) when the trade has moved into profit by 10-15 pips. This protects any unrealized profits and reduces the chances of the trade reversing into a losing position. You may also take profit by closing the trade at a site where a previous resistance occurred, or to close the trade when a red candle appears.
Here are some things that the trader should observe and take into cognizance when trading with this strategy.
- You may probably need to allow the colour change to run for some time before you enter the trade. A look at the chart will show that the price sometimes trades in a range before it takes off in the direction of the colour change.
- The developers of the strategy advocate the use of smaller lot sizes such as 0.1 or 0.05.
Download the complete system description and the files here:
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