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Four Average MT4 Forex Trading Strategy

Amandeep Sonewane | Sep. 10, 2019
Four Average MT4 Forex Trading Strategy

You can now download the Four Average MT4 Forex Trading Strategy for free on AtoZ Markets indicators gallery.

The Four Average Forex Trading Strategy is a simple crossover strategy that uses three moving averages, the 5-period, 10-period and 34-period Exponential Moving Averages (EMA). This strategy aims to catch short-term strong trends which could yield big profits.

The 5 and 10-period EMAs represent the short-term trend while the 34-period EMA represents the mid-term trend.

As price begins a bullish trend, the 5-EMA would often be the first to pierce above the 10 and 34-period EMAs. Then, the 10-period EMA would then follow crossing above the 34 EMA. This then forms a stack with the 5 EMA at the top and the 34 EMA at the bottom. This would be the typical buy signal.

As for sell signals, it is generated whenever the 5 and 10-period EMA crosses below the 34 EMA. In this case, the stack would be the 34 EMA at the top and the 5 EMA at the bottom.

However, to avoid being whipsawed by the market, we will be adding another filter using a custom indicator, the fouraverage-indicator. This custom indicator would print lime histograms and an upward arrow to signify a bullish market condition and red histograms and a downward arrow to signify a bearish market condition.

Indicator:

  • 5 EMA (gold)
  • 10 EMA (green)
  • 34 EMA (brown)
  • fouraverage-indicator

Currency Pairs: any

Timeframe: preferably 4-hour and daily charts

Trading Session: any

How to trade with Four Average MT4 Forex Trading Strategy?

Buy (Long) Trade Setup

Entry

  • The fouraverage-indicator should be printing lime histogram bars indicating a bullish market condition
  • The fouraverage-indicator should have printed a lime upward arrow indicating the probable start of a bullish trend
  • The 5 EMA should cross above 10 and 34 EMA forming a stack as follows:
    • 5 EMA: top
    • 10 EMA: middle
    • 34 EMA: bottom
  • Enter a buy order at the confluence of the above rules

Stop Loss

  • Set the stop loss below the 10 EMA

Exit

Close the trade as soon as the fouraverage-indicator prints a red downward arrow indicating the probable start of a bearish market condition

Sell (Short) Trade Setup

Entry

  • The fouraverage-indicator should be printing red histogram bars indicating a bearish market condition
  • The fouraverage-indicator should have printed a red downward arrow indicating the probable start of a bearish trend
  • The 5 EMA should cross below 10 and 34 EMA forming a stack as follows:
    • 34 EMA: top
    • 10 EMA: middle
    • 5 EMA: bottom
  • Enter a sell order at the confluence of the above rules

Stop Loss

  • Set the stop loss above the 10 EMA

Exit

  • Close the trade as soon as the fouraverage-indicator prints a lime upward arrow indicating the probable start of a bullish market condition

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 top right corner of the screen.
  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 “Four Average MT4 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.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.