Forex Price Action Strategy For Metatrader 5

Most times when we look at charts that are clustered with so many indicators, it is most likely that traders are trying to overcompensate their lack of certainty.

The burden of proof becomes overwhelming and traders tend to get even more confused in the midst of such setups.

The Forex Price Action strategy for Metatrader 5 provides an easy approach to future trend prediction which ensures that currency traders can eliminate such ambiguity that comes with trading myriad technical indicators on their activity charts.

The setup and trade rules are very simple and easy to follow for any trader.

Let’s identify various scenarios using the under listed examples to see just how this trading strategy can be best analyzed and traded for profits.

Trade Setup 

MetaTrader 5 Indicators: Adaptive Moving Average.ex5 (Default Setting), price_channel.ex5 (Inputs Variable Modified; Period=32), mfi.ex5 (Inputs Variable Modified; Period=24)

Trade Style: Any (scalping, day trading, swing trading)

Trading Sessions: Any (London, New York, Tokyo)

Currency Pairs: Any (Majors, Cross and Exotic)

Platform: Metatrader 5 (MT5)

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Buy Trade Example: EURUSD, 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 blue line of the price_channel custom indicator crosses below the red line of the Adaptive Moving Average Metatrader 5 forex indicator as seen on Fig. 1.0, the general market sentiment is said to be bullish i.e. a trigger to go long on the currency pair of focus.
  2. If the dodger blue line of the mfi custom indicator breaksand hovers above the 50.00 horizontal level as illustrated on Fig. 1.0, price is said to be pressured to the upside i.e. a signal to buy the underlying forex pair.

Suggested Stop Loss for Buy Entry: Place stop loss 5 pips below 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 ongoing, the blue line of the price_channel custom indicator intersects the red Adaptive Moving Average indicator line, bearish reversal is said to be building, as such an exit or take profit is recommended.
  2. If the dodger blue line of the mfi forex indicator dips below the 50.00 horizontal level during the course of a bullish signal, bulls are said to be leaving the market increasingly, therefore an exit or take profit will suffice.

Sell Entry

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

  1. If the blue line of the price_channel custom indicator crosses above the red line of the Adaptive Moving Average custom indicator 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 interest.
  2. If the dodger blue line of the mfi forex indicator breaksand hovers below the 50.00 horizontal level as exemplified on Fig. 1.1, price is said to be dragged lower i.e. a signal to sell the underlying currency pair.

Suggested Stop Loss for Sell Entry: Place stop loss 5 pips above resistance.

Suggested Exit Strategy/Take Profit for Sell Entry

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

  1. If while a bearish trend is running, the blue line of the price_channel forex indicator intersects the red Adaptive Moving Average indicator line (see Fig. 1.1), bullish reversal is said to be mounting, as such an exit or take profit is advised.
  2. If the dodger blue line of the mfi forex indicator readjust to break above the 50.00 horizontal level while a bearish trend is ongoing, more and more bears are said to be closing their market positions, therefore an exit or take profit will do.

Sell Trade Example: EURUSD, H1 Chart

Fig. 1.1

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MT5 Trading Indicators Used For This Strategy

The Adaptive Moving Average MT5 indicator is a brain child of Perry Kaufman and it smoothens price using the standard mean-square deviation.

It is a trend-following moving average type that spots possible market trends.

The price_channel Metatrader 5 forex indicator is a technical indicator that plots a channel around price, with its upper and lower boundaries being derived from the maximum and minimum prices for a specified period.

The mfi or Money Flow Index is a Metatrader 5 forex indicator that gauges the rate at which money is pumped into a currency pair and then taken from it.

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