M5 Forex Trading Strategy

The M5 (5-minute) Forex trading strategy is a typical scalping and day trading strategy that is fairly easy to implement.

The key logic behind this trading strategy is to initiate an entry order when a market trend has been established.

This reduces the number of unprofitable trades significantly.

Those who have stayed long in the market are familiar with the saying “the trend is your friend.”

Simply stick with it and you’ll face no troubles whatsoever.

Seemingly, what we have in our hands is a 5-Minute trading approach that combines two key indicators in finding high-probability price entry signals.

Let’s take a closer look at how it all pans out using the outlined examples.

Chart Setup

MetaTrader4 Indicators: FA.ex4 (Inputs Variable Modified; PeriodFA=36), Moving Average of Oscillator.ex4 (Parameters Modified; Fast EMA=23, Slow EMA=36, MACD SMA=19)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example: EUR/USD (EURO / US Dollar), M5 Chart

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  • If the lime histograms of the FA custom indicator break above the 0.00 horizontal level as illustrated on Fig. 1.0, the general market sentiment is said to be bullish, therefore a buy alert will suffice.
  • If the silver Moving Average of Oscillator Metatrader 4 forex indicator histograms align above the 0.00 horizontal level as depicted on Fig. 1.0, price is said to be pressured higher, thus a trigger to buy the stipulated currency pair.

Stop Loss for Buy Entry: Place stop loss below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  • If while a bullish trend is ongoing, the FA indicator pops up a red downward pointing arrow on the chart window (see Fig. 1.0), it is pointing to diminishing bulls power, as such an exit or take profit stance is duly advised.
  • If the Moving Average of Oscillator pops up a silver histogram below the 0.00 level during a bullish trend, bulls are said to be closing their positions increasingly, hence an exit or take profit stance is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  • If the red histograms of the FA custom indicator dipbelow the 0.00 reference level as seen on Fig. 1.1, the overall market sentiment is said to be bearish i.e. a sell alert is said to be most probable.
  • If the silver Moving Average of Oscillator forex indicator histograms fallbelow the 0.00 reference level as shown on Fig. 1.1, price is said to be driven lower, thus a trigger to sell the designated forex pair.

Stop Loss for Sell Entry: Place stop loss above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  • If the FA indicator pops up a lime upward pointing arrow on the chart window (refer to Fig. 1.1) during the course of a bearish trend, bears power is said to be weaning, as such an exit or take profit stance is highly recommended
  • If the Moving Average of Oscillator indicator displays a silver histogram above the 0.00 level during the course of a bearish trend, bears are said to be closing their positions more and more, hence an exit or take profit stance will suffice.

Sell Trade Example: EUR/USD (EURO / US Dollar), M5 Chart

Fig. 1.1

Free Download

Download the M5 Forex Trading Strategy

About The Forex Technical Indicators Used

The FA custom forex indicator combines four critical moving averages to best define trends i.e. the SMA 200, SMA 21, SMA 114 and SMA 83.

It includes arrows (red and lime), along with histograms (red and lime) in reporting sell and buy signals respectively.

The Moving Average of Oscillator or OsMA is a tool that tries to spot overbought or oversold conditions by gauging how far an oscillator lies from its moving average.

Easy Installation

Start using this forex strategy in just 5 minutes. Click here to get started now.

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