3 Level Semafor Forex Trading Strategy

The 3 Level Semafor Forex trading strategy should be used when trying to catch breakouts in the market.

The basic idea behind this strategy is the ability to utilize the colored circles, which are actually meant to reveal the direction price is heading and when to initiate orders.

The inclusion of additional indicators to this strategy is to minimize noise and to show clearly when actual trends are developing in the market.

This strategy is built around the popular Semafor indicator and works for any currency pair of your preference.

Let’s consider some examples that will help you better understand this amazing strategy.

Chart Setup

MetaTrader4 Indicators: 3-level-zz-semafor.ex4 (Default Setting), support-resistance-levels.ex4 (Default setting), AwesomeOC.ex4 (Inputs Variable Modified; demarker_trigger8=26)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the 3 Level Semafor Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a bullish trade if the following indicator or chart pattern gets put on display:

  1. If the 3-level-zz-semafor Metatrader 4 custom indicator forms a yellow ball below the candlesticks with a 3 inside it (see Fig. 1.0), bulls’ power is said to be surging, hence a buy order will suffice.
  2. If price experiences some support around the blue dotted line of the support-resistance-levels indicator as illustrated on Fig. 1.0, it is signaling a probable bullish propensity i.e. a signal to go long on the designated currency pair.
  3. If the bisque and tomato colored histograms of the AwesomeOC indicator gets aligned above the 0.00 center line (refer to Fig. 1.0), it is signaling an increased bullish market sentiment, hence a buy order will suffice.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from all trades if the following rules or conditions takes precedence:

  1. If the 3-level-zz-semafor indicator pops up a yellow ball above the candlesticks with a 3 inside it as depicted on Fig. 1.0, bulls power is said to be diminishing, as such an exit or take profit is recommended.
  2. If a possible resistance is experienced around the red dotted horizontal line of the support-resistance-levels indicator while a bullish trend is ongoing, it is likely that price is about making a U-turn, hence an exit or take profit is advised.
  3. If a tomato histogram of the AwesomeOC indicator gets positioned below the zero signal level during a bullish trend, an exit or take profit is duly advised.

Sell Entry Rules

Go short if the following setups gets displayed successfully on the activity chart:

  1. If the 3-level-zz-semafor Metatrader 4 custom indicator forms a yellow ball above the candlesticks with a 3 inside it as illustrated on Fig. 1.1, bear power is said to be halting i.e. a trigger to go short on the designated fx pair.
  2. If price experiences some resistance around the red dotted line of the support-resistance-levels indicator as exemplified on Fig. 1.1, it is signaling downward price pressures i.e. a signal to go short on the currency pair of focus.
  3. If the bisque and tomato colored histograms of the AwesomeOC indicator gets aligned below the 0.00 signal level as seen on Fig. 1.1, it is a trigger to go short on the currency pair of interest.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the 3-level-zz-semafor indicator pops up a yellow ball below price bars with a 3 inside it as indicated on Fig. 1.1, it’s signaling a probable end to bearish sentiments, as such an exit or take profit is duly advised.
  2. If a likely support is experienced around the blue dotted horizontal line of the support-resistance-levels indicator while a bearish trend is running, it is indicative of a halting bearish sentiment, as such an exit or take profit will do.
  3. If a bisque histogram of the AwesomeOC indicator gets aligned above the zero signal level during a bearish trend, an exit or take profit is thus recommended.

Sell Trade Example

Fig. 1.1

Free Download

Download the 3 Level Semafor Forex Trading Strategy

About The Trading Indicators

The 3-level-zz-semafor.ex4 custom indicator is built on the ZigZag indicator and does a great job in scanning the currency market for breakouts.

It can also function as a reversal indicator.

The support-resistance-levels.ex4 custom indicator is a technical tool that rules out major zones of support and resistance within the activity chart.

The AwesomeOC.ex4 is a technical tool used to gauge momentum.

It is usually deployed when confirming trends or to anticipate possible reversals.

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