Kalman Pips Filter Forex Trading Strategy
The Kalman Pips Filter forex trading strategy is a great strategy that is composed of a smoothening trend following indicator and an oscillator.
This strategy tends to give less false signals with the help of the Kalman trend following indicator…
… and less false signals means more profitable entry and exit signals!
MetaTrader4 Indicators: Kalman_filter.ex4 (Inputs Variable Modified; draw_begin=5000), HotPips.ex4
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
Buy Trade Example
Long Entry Rules
Enter a buy order if the following indicator or chart pattern gets put on display:
- If the turquoise line of the Kalman_filter custom MT4 indicator gets put on display within the activity chart (see Fig. 1.0), price is said to be driven higher i.e. a signal to buy the stipulated currency pair.
- If the yellow upward pointing arrow of the HotPips MT4 indicator pops up within the indicator window as shown on Fig. 1.0, the overall sentiment is said to be bullish i.e. a trigger to go long on the designated fx pair.
Stop Loss for Buy Entry: Place stop loss below trading support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the line of the Kalman_filter custom MT4 indicator turns orange while a buy signal is ongoing, an exit or take profit is recommended.
- If the HotPips custom indicator displays an aqua downward pointing arrow as depicted on Fig. 1.0, it is a trigger to exit or take profit at once.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the orange line of the Kalman_filter custom MT4 indicator gets put on display within the activity chart (refer to Fig. 1.1), price is said to be taken lower i.e. a signal to sell the currency pair of interest.
- If the aqua downward pointing arrow of the HotPips MT4 indicator pops up within the indicator window as seen on Fig. 1.1, the general market sentiment is said to be bearish i.e. a trigger to go short on the designated forex pair.
Stop Loss for Sell Entry: Place stop loss above trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes to the fore:
- If the line of the Kalman_filter custom MT4 indicator turns turquoise while a sell signal is running, an exit or take profit is advised.
- If the HotPips custom indicator displays a yellow upward pointing arrow as illustrated on Fig. 1.1, it is a trigger to exit or take profit immediately.
Sell Trade Example
About The Trading Indicators
The kalman_filter.ex4 custom indicator is a moving average indicator that helps smoothening price action.
The HotPips.ex4 custom indicator employs the yellow and aqua arrow in delivering buy or sell signals respectively.
In addition to this is the DeepSkyBlue histogram tainted at the top with red and at the bottom area with Lime, positioned above or below the 0.00 level to further mark bullish or bearish signals.