A lot of times we find traders putting in so much energy on finding the perfect time to initiate an entry.
Yes, this is important, but ultimately choosing the right exit will determine how profitable you’ll eventually become as a trader.
This trading strategy puts into perspective just how we can adopt technical indicators as perfect tools for sharpening our exit mechanisms.
In order to keep our emotions in check, we must have set rules for exits at the instance a trade is entered, without which our trades could get wiped out.
The Simple Forex Exit strategy for Metatrader 5 helps you to exit your open trades at the best possible price, before the trend reverses.
MetaTrader 5 Indicators: Stochastic Oscillator.ex5 (Parameters Modified; %K period=12, %D period=10, Slowing=10), chandelier_exit.ex5 (Default Setting)
Trade Style: Scalping, day trading, swing trading
Trading Sessions: London | New York | Tokyo
Currency Pairs: Majors, cross pairs, exotics
Platform: Metatrader 5 (MT5)
Buy Trade Example: EURJPY, H1 Chart
Trading Strategy Rules For Buy and Sell Trades Explained
Enter a buy trade if the following trading conditions are met:
- If the light sea green and red dotted lines of the Stochastic Oscillator Metatrader 5 forex indicator break and stay above the 50.00 horizontal level (see Fig. 1.0), price is said to be driven to the upside i.e. a trigger to go long on the currency pair of interest.
- If the chandelier_exit indicator displays a lime cloud that’s aligned somewhat below the candlesticks as depicted on Fig. 1.0, bulls are said to be driving price higher, therefore a buy alert will suffice.
Suggested Stop Loss for Buy Entry: Place stop loss 3 pips below support.
Suggested Exit Strategy/Take Profit for Buy Trade
Exit the buy trade if the following trading conditions are met:
- If the light sea green line of the Stochastic Oscillator dips below the 50.00 mark while a bullish trend is running as seen on Fig. 1.0, a bearish reversal is said to be looming, as such an exit or take profit will do.
- If the chandelier_exit custom indicator displays a violet cloud during the course of a bullish trend, bulls power is said to be weaning, thus an exit or take profit stance is duly advised.
Open a sell trade if the following trading conditions are met:
- If the light sea green and red dotted lines of the Stochastic Oscillator forex indicator break and hover below the 50.00 level as exemplified on Fig. 1.1, price is said to be dragged lower, thus a signal to go short on the currency pair of focus.
- If the chandelier_exit forex indicator displays a violet cloud that’s positioned slightly above the price bars as illustrated on Fig. 1.1, the overall market sentiment is said to be bearish, therefore a sell signal will do.
Suggested Stop Loss for Sell Entry: Place stop loss 3 pips above resistance.
Suggested Exit Strategy/Take Profit for Sell Entry
Exit the sell trade if the following trading conditions are met:
- If the light sea green line of the Stochastic Oscillator surges above the 50.00 level during a bearish trend as shown on Fig. 1.1, a bullish reversal is said to be imminent, as such an exit or take profit stance is apt.
- If the chandelier_exit custom indicator displays a lime cloud while a bearish trend is ongoing, bears power is said to be halting, therefore an exit or take profit instruction is recommended.
Sell Trade Example: EURJPY, H1 Chart
MT5 Trading Indicators Used For This Strategy
The Stochastic oscillator is a momentum oscillator that is attributed to George Lane.
The indicator is made up of two lines, the %K fast line and the %D slow line, while it oscillates between 1 and 100.
Essentially, the Stochastic gauges the relationship between an assets closing price and its price range over a specified time period.
The chandelier_exit was created by Charles Le Beau and was originally featured in Alexander Elder’s books, the Chandelier Exit.
It is broadly used for setting stop-losses during a trend, however, the ChandelierExit can also be used as a trend tool.