Compounding Forex Strategy For Metatrader 5

Forex trading requires a lot of dedication, patience, persistence and self-control to become profitable in the long run.

The Compounding Forex strategy for Metatrader 5 will help you accumulate gains more faster during your trading career.

The compounding MT5 trading strategy is suitable for all available trading instruments but works the best on Forex pairs, Gold and Indices.

Our trading rules are also designed around the age-long trick that says “buy low and sell high”.

Money management should never be ruled out of any trading strategy.

In order to make money faster, traders must ensure they understand the risk associated with trading, whilst not taking their eyes off the reward the market can always provide.

Trade Setup 

MetaTrader 5 Indicators: Average Directional Movement Index.ex5 (Paraameters Modified; Period=28), IdeaTrend.ex5 (Inputs Variable Modified; Period=36), iheikenashism.ex5 (Inputs Variable Modified; Variant=Price, MAPeriod=24))

Trade Style: Scalping, day trading, swing trading

Trading Sessions: London | New York | Tokyo

Currency Pairs: Majors, cross pairs, exotics, Gold, indices

Platform: Metatrader 5 (MT5)

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Download the Compounding Forex Strategy For Metatrader 5

Buy Trade Example: AUDUSD, M30 Chart

Fig. 1.0

Trading Strategy Rules For Buy and Sell Trades Explained

Buy Entry

Enter a buy trade if the following trading conditions are met:

  1. If the light sea green line of the ADX Metatrader 5 indicator breaks above the 25.00 horizontal level as shown on Fig. 1.0, a strong trend is said to be developing and we’ll require directional confirmation signals from other indicator(s).
  2. If the IdeaTrend custom indicator displays green histograms within its indicator window (see Fig. 1.0), price is said to be pressured higher i.e. a trigger to go long on the stipulated currency pair.
  3. If the iheikenashism indicator displays dodger blue price bars within the activity chart as illustrated on Fig. 1.0, the overall market sentiment is said to be bullish, therefore a buy trigger will suffice.

Suggested Stop Loss for Buy Entry: Place stop loss 3 pips below immediate support.

Suggested Exit Strategy/Take Profit for Buy Trade

Exit the buy trade if the following trading conditions are met:

  1. If while a bullish trend is running, the light sea green ADX indicator line dips below the 25.00 horizontal signal level as depicted on Fig. 1.0, price is said to be entering a non-trending condition, therefore an exit or take profit is recommended.
  2. If the IdeaTrend custom indicator pops up red histogram within its window while a bullish trend is running, it is signaling weaning bulls power, as such an exit or take profit will suffice.
  3. If the iheikenashism indicator pops up a red price bar during the course of a bullish trend, it is pointing to diminishing bulls power, hence an exit or take profit will do.

Sell Entry

Open a sell trade if the following trading conditions are met:

  1. If the light sea green line of the ADX forex indicator breaks above the 25.00 horizontal level as shown on Fig. 1.1, a strong trend is said to be developing and we’ll need further directional confirmation from other indicator(s).
  2. If the IdeaTrend forex indicator displays red histograms within its indicator window (refer to Fig. 1.1), price is said to be dragged lower, as such a sell trigger is advised.
  3. If the iheikenashism indicator displays red price bars within the activity chart as exemplified on Fig. 1.1, the general market sentiment is said to be bearish, thus a trigger to go short on the designated currency pair.

Suggested Stop Loss for Sell Entry: Place stop loss 3 pips above immediate resistance.

Suggested Exit Strategy/Take Profit for Sell Entry

Exit the sell trade if the following trading conditions are met:

  1. If during a bearish trend, the light sea green ADX indicator line falls below the 25.00 horizontal signal level as demonstrated on Fig. 1.1, price is said to be in a weak trend state, therefore an exit or take profit is duly advised.
  2. If the IdeaTrend custom indicator pops up a green histogram within its window during a bearish trend (check Fig. 1.1), it is an indicator that bears power is halting, as such an exit or take profit will suffice.
  3. If the iheikenashism indicator pops up a dodger blue price bar during the course of a bearish trend, it is pointing to weakening bears power, hence a signal to exit or take profit at once.

Sell Trade Example: AUDUSD, M30 Chart

Fig. 1.1

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MT5 Trading Indicators Used For This Strategy

The Average Directional Movement Index or ADX Metatrader 5 indicator is one that quantifies the strength of a trend.

The default period value is set at 14 bars, although other time periods can also be tested.

The IdeaTrend Metatrader 5 forex indicator is designed to define the trend direction threshold using the histograms within the indicator window.

The iheikenashism forex indicator is a variant of the Japanese candlesticks trading strategy that is used in conjunction with candlestick charts to determine market trends and forecast future price.

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