Simple Envelopes Forex Trading Strategy
The Simple Envelopes forex trading strategy combines the popular envelopes indicator and two others to look for trade entry and exit in the direction of the major trend.
The strategy works for any pair and timeframe.
Learn how it works:
MetaTrader4 Indicators: Envelopes.ex4 (Parameters Modified; Period=28, MA method=Exponential), IDWma.ex4 (Inputs Variable Modified; MA_Period=56), MAAngle.ex4 (Default Setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example
Long Entry Rules
Initiate a buy order if the following indicator or chart pattern gets put on display:
- If the aqua line of the IDWma.ex4 custom indicator intersects the blue and red lines of the Envelopes custom indicator in a bottom up manner as seen on Fig. 1.0, price is said to be pressured to the upside, as such a buy will suffice.
- If the yellow and lime green histograms of the MAAngle.ex4 custom indicator gets put on display above the 0.00 level as depicted on Fig. 1.0, price is said to be taken higher i.e. a trigger to buy the stipulated currency pair.
Stop Loss for Buy Entry: Place stop loss 3 pips below immediate 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, price closes below the aqua IDWma.ex4 custom indicator line (refer to Fig. 1.0), an exit or take profit is advised.
- If a yellow histogram forms below the 0.00 level while a buy signal is running, an exit or take is duly recommended.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the aqua line of the IDWma.ex4 custom indicator intersects the red and blue lines of the Envelopes custom indicator in a top downward manner as shown on Fig. 1.1, price is said to be pushed lower, hence a sell order will do.
- If the yellow and fire brick histograms of the MAAngle.ex4 custom indicator gets put on display below the 0.00 level as illustrated on Fig. 1.1, price is said to be driven lower i.e. a trigger to sell the listed currency pair.
Stop Loss for Sell Entry: Place stop loss 3 pips above immediate resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If while a bearish trend is running, price closes above the aqua IDWma.ex4 custom indicator line as depicted on Fig. 1.1, an exit or take profit will suffice.
- If a yellow histogram forms above the 0.00 level while a sell signal is ongoing, an exit or take is the right course of action.
Sell Trade Example
About The Trading Indicators
The Envelopes MT4 indicator is a trend indicator that is built after the moving averages and is also tagged a Moving Average Envelopes.
The Inverse Distance Weighted Moving Average (IDWma.ex4) is a custom indicator that is most sensitive to price moves and has its MA period set at a default of 14.