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 that 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.
- 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 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
- Set the stop loss below the 10 EMA
Close the trade as soon as the four average-indicator prints a red downward arrow indicating the probable start of a bearish market condition
Sell (Short) Trade Setup
- 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
- Set the stop loss above the 10 EMA
- Close the trade as soon as the four average-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:
- 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.