The Advanced Chaikin Money Flow (CMF) trading strategy is a forex strategy that employs the idea behind the CMF and the EMA CROSSOVER SIGNAL custom indicator to define buy and sell entries.
The CMF_T3_v1.1.ex4 custom indicator offers a better visual representation in the form of histograms to further illustrate when it is above or below the zero mark.
Chart Setup
MetaTrader4 Indicators: CMF_T3_v1.1.ex4 (default setting), EMA CROSSOVER SIGNAL.ex4 (default setting)
Preferred Time Frame(s): All
Recommended Trading Sessions: Any
Currency Pairs: All pairs
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Download the Advanced Chaikin Money Flow (CMF) Forex Trading Strategy
Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Enter a buy if the following indicator or chart pattern forms:
- If the CMF_T3_v1.1 custom indicator line breaks above the 0.00 level, while also forming LimeGreen histogram, a sign that price is very bullish. Enter a long position if the aforementioned is true.
- If the EMA CROSSOVER SIGNAL custom indicator forms a SpringGreen upward pointing arrow that is aligned below price bar, the trend is said to be bullish, as such we can initiate long position(s).
Stop Loss for Buy Entry: Place stop loss below support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions hold sway:
- If the CMF_T3_v1.1 custom indicator line breaks below the 0.00 level, it is a trigger to exit or take profit. If while in an uptrend, a red histograms forms above the 0.00, it is an indication that the current trend is weaning and traders should be cautious.
- If the EMA CROSSOVER SIGNAL custom indicator forms a red downward pointing arrow, it indicates trend reversal i.e. an exit or take profit trigger.
Sell Entry Rules
Initiate a sell order if the following holds true:
- If the CMF_T3_v1.1 custom indicator line breaks below the 0.00 level, while also forming red histogram (also aligned below the 0.00 level), a sign that price is very bearish. Enter a short position if the aforementioned is true.
- If the EMA CROSSOVER SIGNAL custom indicator forms a red downward pointing arrow that is aligned above price bar, price is said to be bearish, as such we can initiate short position(s).
Stop Loss for Sell Entry: Place stop loss above resistance.
Exit Strategy/Take Profit for Sell Entry:
Exit or take profit if the following chart or indicator patterns are on display:
- If the CMF_T3_v1.1 custom indicator line breaks above the 0.00 level, it is a trigger to exit or take profit. If while in a downtrend, a LimeGreen histograms forms below the 0.00, it is an indication that the current trend is halting and traders should be wary.
- If the EMA CROSSOVER SIGNAL custom indicator forms a SpringGreen upward pointing arrow, it indicates trend reversal i.e. an exit or take profit trigger.
Fig. 1.1
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Download the Advanced Chaikin Money Flow (CMF) Forex Trading Strategy
About The Trading Indicators
The CMF_T3_v1.1 custom indicator is one of the variant of the Chaikin Money Flow (CMF).
It offers a better visual representation of movement of the line. When price is bullish, the line breaks above the 0.00 level, while also forming SpringGreen histogram above the said level.
A bearish trend depicts the indicator line breaking below the 0.00 level, while also forming red histograms below the 0.00 mark.
The EMA CROSSOVER SIGNAL indicator is a trend seeking indicator built on the crossover of two exponential moving averages.
It will generate a signal when the fast and slow EMA has crossed each other. Traders are able to fully adjust the FastEMA and SlowEMA input values.