Flat Line Forex Trading Strategy


You can now download the Flat Line Forex Trading Strategy for free on AtoZ Markets indicators gallery.

This is a trading strategy that uses mean reversion trading and has three components.

We first need to determine what the mean or average is. A Simple Moving Average (SMA) is the easiest way to determine the mean. We will use the 50-period Simple Moving Average (SMA) for this strategy. It will be used to determine if the market is trending or flat. We are looking for a 50-year moving average (SMA) that is relatively flat. It would be a target that we would use, as the price will always return to the mean.

We would then need to determine if the price has risen sufficiently. This can be done best by using a bounded oscillator that has a clearly defined overbought or oversold level. We will use a Stochastic oscillator to find extremes when price moves away from the 50 SMA.

We would also need to know if the price has started to fall back to the 50 SMA. We will need to be able to identify candles that have long wicks in order to do this. Wicks can be a sign of price rejection. This is because the market quickly reversed its sentiment in a short time. It can be formed in just one candle. Long wick candles are fine, but a pin bar candle is better. This will serve as our entry signal.

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Indicators:

  • 50-period SMA (Gold)
  • Stochastic Oscillator
    • %K: 13
    • %D:5
    • Slowing: 5

Currency Pair: any

Timeframe: any

Trading Session: any

How do you trade Flat Line Forex Trading Strategy?

Trade Setup Rules

Entry

  • The 50 SMA should be fairly flat
  • Price must not exceed the 50 SMA
  • Stochastic Oscillators should be lower than the oversold level
  • Place a buy order for a candle with a long wick at its bottom that conforms to the above rules.

Flat Line Forex Trading Strategy

Stop Loss

  • Place the stop loss a few points below the low candle.

Take Profit

  • Option 1: Close trade if price crosses the 50 SMA.
  • Option 2: Close the trade after the close of any bearish candle that is above the 50 SMA.

Short Trade Setup Rules

Entry

  • The 50 SMA should be fairly flat
  • The price must not be lower than the 50 SMA
  • The overbought level must be met by the stochastic oscillators
  • You can place a sell order for a candle with a long wick that matches the above rules.

Stop Loss

  • Adjust the stop loss to be a few pips higher than the highest candle.

Take Profit

  • Option 1: Close trade if price crosses the 50 SMA
  • Option 2: Close the trade after the first bullish candle has passed the 50 SMA

How to download and install an indicator?

In order to install the indicator on your MT4 platform, you need to follow these steps:

  1. Click on “Download Indicator” button located at the bottom of the post.
  2. Save the file to your computer.
  3. Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
  4. Restart your Metatrader platform.
  5. Navigate to “Indicators.”
  6. And select “Flat Line Forex Trading Strategy” template to apply it on the chart.

Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.

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