Advanced Chaikin Money Flow (CMF) Forex Trading Strategy

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:

  1. 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.
  2. 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:

  1. 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.
  2. 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:

  1. 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.
  2. 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:

  1. 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.
  2. 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

Free Download

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.

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