Doji Forex Strategy For Metatrader 5

The Doji as we know, pops up on our activity chart in the form of a price bar that shows its closing price being equal or almost equal to its opening price.

During its life in the market, the doji bar is known to accommodate price movement above and below the opening price, but will eventually close around the opening price by the end of the session.

Clearly, price is seen to be in a standoff between the bulls and bears, with no clear winner as such.

However, using the Doji Forex strategy for Metatrader 5 gives us the opportunity to implement the Doji candle alongside other technical indicators and price patterns in a bid to establish a favorable buy or sell market bias.

Trade Setup 

MetaTrader 5 Indicators: Moving Average.ex5 (Parameters Modified; Period=44, Shift=2, Style=Magenta), Triple Exponential Moving Average.ex5 (Parameters Modified; Period=28), drsi_2.ex5 (Inputs Variable Modified; Dynamic rsi calculation period=28)

Trade Style: Day trading, swing trading

Trading Sessions: London | New York | Tokyo

Currency Pairs: Majors, cross pairs, exotics

Platform: Metatrader 5 (MT5)

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Download the Doji Forex Strategy For Metatrader 5

Buy Trade Example: USDCHF, H1 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 dragonfly Doji (┬) pattern pops up (see Fig. 1.0), it is pointing to a likely bullish reversal and as such a buy trigger will suffice.
  2. If the magenta 44 SMA indicator line crosses below the red Triple Exponential Moving Average indicator line as illustrated on Fig. 1.0, the general market sentiment is said to be bullish i.e. a trigger to go long on the selected currency pair.
  3. If the drsi_2 custom indicator pops up lime green dots within its window as shown on Fig. 1.0, price is said to be pushed to the upside i.e. a trigger to go long on the selected forex pair.

Suggested Stop Loss for Buy Entry: Place stop loss 3 pips below the most recent support price.

Suggested Exit Strategy/Take Profit for Buy Trade

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

  1. If a gravestone Doji pattern gets displayed during a bullish trend, bulls power is said to be halting, as such an exit or take profit will do.
  2. If the magenta 44 SMA indicator line intersects the red Triple Exponential Moving Average indicator line while a bullish trend is running, an exit or take profit is advised
  3. If the drsi_2 custom indicator pops up a pale violet red dot within its window during a bullish signal (refer to Fig. 1.0), bulls power is said to be diminishing, as such an exit or take profit will suffice.

Sell Entry

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

  1. If the gravestone Doji (┴) pattern gets displayed on the activity chart as illustrated on Fig. 1.1, it is pointing to a probable bearish reversal and as such a sell signal is recommended.
  2. If the magenta 44 SMA indicator line crosses above the red Triple Exponential Moving Average indicator line as shown on Fig. 1.1, the overall market sentiment is said to be bearish i.e. a trigger to go short on the currency pair of focus.
  3. If the drsi_2 custom indicator pops up pale violet red dots within its window as seen on Fig. 1.1, price is said to be dragged lower i.e. a trigger to sell the designated fx pair.

Suggested Stop Loss for Sell Entry: Place stop loss 3 pips above the most recent resistance price.

Suggested Exit Strategy/Take Profit for Sell Entry

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

  1. If a dragonfly Doji pattern gets displayed during a bearish trend, bears power is said to be weaning, as such an exit or take profit will suffice.
  2. If the magenta 44 SMA indicator line intersects the red Triple Exponential Moving Average indicator line while a bearish trend is ongoing, an exit or take profit stance is advised.
  3. If the drsi_2 custom indicator pops up a lime green dot within its window during a bearish trend, as exemplified on Fig. 1.1, bears are said to be leaving the market increasingly, therefore an exit or take profit is apt.

Sell Trade Example: USDCHF, H1 Chart

Fig. 1.1

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MT5 Trading Indicators Used For This Strategy

The 44 SMA (Simple Moving Average) is a technical analysis indicator that smooths out price data by constantly creating an updated average price over 44 periods.

The Triple Exponential Moving Average, which is also known as Trix is a Metatrader 5 momentum indicator that was developed by Jack Hutson in the 1980’s and finds its use in spotting the percentage change in a triple exponentially smoothed moving average.

The drsi_2 technical indicator is also known as the Directional RSI, and it represents a technical tool that is centered on Directional Movement.

It is used in the proper estimation of trend change.

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