The slope direction line forex trading strategy is designed to detect the current trend in the market and as such trade signals are generated to reflect this.
The strategy combines 3 simple forex indicators.
MetaTrader4 Indicators: Slope Direction Line.ex4 (color modified), Stepupdown.ex4 (default setting), squeeze_v1.ex4 (default setting)
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: Any
Currency Pairs: Majors + currency crosses
Buy Example (click the image for full size):
Long Entry Rules:
The following conditions will suffice for a buy entry:
- The green line of the slope direction line custom indicator crosses the red line of the stepupdown custom indicator upward.N.B. The “Slope Direction Line” and “stepupdown“ lines are aligned below the price bars for the signal to be valid. The lime color of the Slope Direction Line custom indicator defines a bullish signal in itself.
- The blue histogram of the Squeeze_v1 custom indicator forms above the 0.00 level, an indication that market is about to go bullish.
Stop Loss for Long Entry: Place stop loss ≥5-35 pips below the low of the entry candle (5 pips for 5 min timeframe).
Exit Strategy/Take Profit for Long Entry:
The following conditions are necessary for an informed exit/take profit strategy:
- The color of the Slope Direction Line custom indicator changes to blue and is aligned above the price bars, a signal that an existing trend is about to fade away and as such an exit is advised.
- Watch out for the first bearish candle formation below the Slope Direction Line custom indicator, as an indication of an exit.
- The orange or tomato colored histogram forms below the 0.00 level of the squeeze_v1 custom indicator, indicating that price is about to reverse.
Sell Entry Rules
Initiate a sell entry when the following conditions are in place:
- The blue line of the Slope Direction Line custom indicator crosses the red line of the stepupdown custom indicator downward, indicating that price is heading bearish.
- When the orange or tomato colored histograms forms below the 0.00 level of the squeeze _v1 custom indicator, we should expect price to go lower and as such a sell is adequate at this point.
Stop Loss for Sell Entry: Place stop loss ≥5-35 pips above the high of the entry candle (5 pips for 5 min timeframe).
Exit Strategy/Take Profit for Sell Entry
The following rules should define your exit or take profit strategy:
- Look out for the first bullish candle that will form above the Slope Direction Line custom indicator, even so the reversal signal become stronger if the bullish candle is formed above the lime colored slope direction line custom indicator.
- When a blue histogram of the Squeeze_v1.ex4 custom indicator forms above the 0.00 level, an indication that price is about to peak and an exit is needed at this point.
About The Trading Indicators
The Slope Direction Line custom indicator is a trend indicator that is built on the foundation of the Moving Average and buy or sell signals are issued in line with the indicators position in relation to the price bars, as well as the color change.
The Stepupdown.ex4 custom indicator offers sell and buy signal by drawing on the directional movement of a single arrow (that can be up or down) on the activity chart. We decided to disregard the arrow signal due to the hybrid nature in which we deployed the strategy for this trading system.
The Squeeze_v1.ex4 custom indicator is built on the strategy that was talked about in John Carter’s book, Mastering the Trade. It also is an enhanced version of squeeze break indicator by Des O’Regan.