You can now download the Four Average MT4 Forex Trading Strategy for free on AtoZ Markets indicators gallery.
The Four Average Forex Trading Strategy uses only three moving averages: the 5-period (10-period) and 34-period Exponential Moving Averages (EMA). This strategy seeks to identify short-term strong trends that could lead to big profits.
The short-term trend is represented by the 5- and 10-period EMAs, while the mid-term trend is represented by the 34-period EMA.
The 5-EMA is often the first to cross above the 34-period EMAs when price starts a bullish trend. The 10-period EMA will then cross above the 34 EMA. This creates a stack that includes the 5 EMA at top and 34 EMA at bottom. This would be the usual buy signal.
Sell signals are generated when the 5- and 10-period EMA cross below the 34 EMA. In this instance, the stack would consist of the 34 EMA at top and the 5 EMA below.
However, to avoid being whipsawed by the market, we will be adding another filter using a custom indicator, the four-average-indicator. This indicator would display lime histograms with an upward arrow and a red histogram to indicate a bullish market situation and red histograms with a downward-arrow to indicate a bearish one.
- 5 EMA (gold)
- 10 EMA (green)
- 34 EMA (brown)
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
- The four-average-indicator should be printing lime histogram bars indicating a bullish market condition
- The four-average-indicator should have printed a lime upward arrow indicating the probable start of a bullish trend
- The 5 EMA should cross over 10 and 34 EMA, forming a stack like the following:
- 5 EMA: Top
- 10 EMA: Middle
- 34 EMA: Bottom
- At the confluence above, place a purchase order
- Limit the stop loss to 10 EMA
When the average-indicator shows a red downwards arrow, it is time to close the trade. This indicates that a bearish market situation may be about to begin.
Want to trade Forex using Four Average MT4 forex trading strategy with a reliable broker? Open an account with any of the below AtoZ Markets approved forex brokers:
Sell (Short) Trade Setup
- The four-average-indicator should be printing red histogram bars indicating a bearish market condition
- The four-average-indicator should have printed a red downward arrow indicating the probable start of a bearish trend
- The 5 EMA should not cross the 10 and 34 EMA, forming a stack like this:
- 34 EMA: Top
- 10 EMA: Middle
- 5 EMA: Bottom
- At the confluence above, place a sale order
- Place the stop loss at least 10 EMA above
- When the average-indicator prints the lime upward arrow, it is time to close the trade. This indicates that a bullish market situation may be about to begin.
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on the “Download Indicator” button located at the top right corner of the screen.
- Save the file to your computer.
- Extract and move the files into the MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select the “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.
Should you trade using Four Average MT4 Forex trading strategy on your own at all?
Before you start trading with this strategy, you'll want to read this.
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