Instantaneous Filter Box Forex Trading Strategy

There’s a good opportunity for just about anyone to make profits when price moves outside a defined price zone.

A genuine breakout is accompanied by an increase in volume, but most importantly, a method that allows you spot support and resistance is vital.

The Instantaneous Filter Box forex trading strategy is designed to aid you avoid jumping into the currency market when the volatility isn’t right.

This way, it is possible to position yourself and get ready for a looming breakout.

The indicators that are in use includes the forex-breakout-box, kalman_filter and Instantaneous_Trend forex indicators, which generally provides a means to spot breakout in prices, smoothen price and gauge trend respectively.

Chart Setup

MetaTrader4 Indicators: forex-breakout-box.ex4 (Default Setting), kalman_filter.ex4 (Inputs Variable Modified; draw_begin=5000), Instantaneous_Trend.ex4 (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Instantaneous Filter Box Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  1. If price breaks above the upper boundary of the forex-breakout-box custom indicator as shown on Fig. 1.0, a breakout in price is said to be on the horizon i.e. a trigger to go bullish on the selected forex pair.
  2. If the turquoise line of the kalman_filter custom indicator gets put on display within the activity chart (see Fig. 1.0), a buy alert is advised.
  3. If the blue line of the Instantaneous_Trend custom indicator surges and stays above the red line as seen on Fig. 1.0, the overall sentiment is said to be bullish, hence a trigger to buy without delay.

Stop Loss for Buy Entry: Place stop loss below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions take precedence:

  1. If the price bar opens and closes below the forex-breakout-box custom indicator after trading within its boundaries (check Fig. 1.0), it is an indication of weaning bulls power, hence an exit or take profit will suffice.
  2. If the line of the kalman_filter custom indicator turns orange during a buy signal, more bulls are said to be exiting their positions, hence an exit or take profit is duly advised.
  3. If while a buy signal is running, the blue line of the Instantaneous_Trend custom indicator falls below the red line, an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If price breaks below the lower boundary of the forex-breakout-box custom indicator as depicted on Fig. 1.1, a breakout in price is said to be just round the corner i.e. a trigger to go bearish on the designated currency pair.
  2. If the orange line of the kalman_filter custom indicator gets put on display within the activity chart (refer to Fig. 1.1), a sell alert is recommended.
  3. If the red line of the Instantaneous_Trend custom indicator surges and stays above the blue line as illustrated on Fig. 1.1, the general sentiment is said to be bearish, hence a trigger to sell forthwith.

Stop Loss for Sell Entry: Place stop loss above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the price bar opens and closes above the forex-breakout-box custom indicator after trading within its boundaries (see Fig. 1.1), it is an indication of halting bears power, hence an exit or take profit will do.
  2. If the line of the kalman_filter custom indicator turns turquoise during a sell signal, more bears are said to be exiting their positions, hence an exit or take profit is duly recommended.
  3. If while a sell signal is ongoing, the red line of the Instantaneous_Trend custom indicator falls below the blue line, an exit or take profit is endorsed.

Sell Trade Example

Fig. 1.1

Free Download

Download the Instantaneous Filter Box Forex Trading Strategy

About The Trading Indicators

The Forex-breakout-box.ex4 acts like a zone that defines price direction, as such if price breaks out of the box downward or upward, then trend is said to be bearish or bullish respectively.

The kalman_filter.ex4 custom indicator is a moving average indicator that helps is smoothening price action.

The Instantaneous_Trend.ex4 custom indicator is a trend line created by John Ehlers, with the mandate to spot trend in the market by eliminating its cycle component.

The indicator comes in six variants.

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