To understand the overall market trend, you need to own the right tools in your arsenal.
To time your entries right, you need to deploy the right indicators on shorter time frame, thus allowing you have a clearer picture of when to time your entries.
The Parabolic M-Close forex trading strategy is a well formulated profit generating currency strategy that provides trades with accurate buy and sell trades in the direction of the imminent market trend.
The indicators that make up this strategy include the Parabolic-close, ParabolicM, and Fisher_11 custom MT4 indicators.
Chart Setup
MetaTrader4 Indicators: Parabolic-close.ex4 (Default Setting), ParabolicM.ex4 (Colors Width Modified; #0=2), Fisher_m11.ex4 (Inputs Variable Modified; RangePeriods=36)
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
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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:
- If the blue line of the Parabolic-close custom indicator cuts across the lime dotted line of the ParabolicM MT4 indicator in a bottom up fashion, while the candlesticks are aligned to the upside, a buy signal is said to be imminent.
- If the lime histograms of the Fisher_m11 custom indicator gets placed above the 0.00 level (see Fig. 1.0), the overall market sentiment is said to be bullish i.e. a signal to buy the designated currency 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 center stage:
- If price closes below the blue line of the Parabolic-close custom indicator during a bullish trend as illustrated on Fig. 1.0, it is an indication of weaning bulls power, hence an exit or take profit will suffice.
- If a red histogram of the Fisher_m11 custom indicator gets placed below the 0.00 level during buy signal, price is said to be making a U-turn away from its earlier bullish stance, hence an exit or take profit is advised.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the blue line of the Parabolic-close custom indicator intersects the lime dotted line of the ParabolicM MT4 indicator in a top downward manner (refer to Fig. 1.1), while the candlesticks are aligned to the downside, a sell signal is said to be looming.
- If the red histograms of the Fisher_m11 custom indicator gets placed below the 0.00 level (see Fig. 1.1), the general market sentiment is said to be bearish i.e. a signal to sell the selected currency 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 center stage:
- If price closes above the blue line of the Parabolic-close custom indicator during a bearish trend or if the blue line of the Parabolic-close indicator intersects the lime dotted line of the ParabolicM indicator as shown on Fig. 1.1, it is an indication of halting bears power, hence an exit or take profit will do.
- If a lime histogram of the Fisher_m11 custom indicator gets placed above the 0.00 level during a sell alert, price is said to be making a U-turn away from its earlier bearish posture, hence an exit or take profit is recommended.
Sell Trade Example
Fig. 1.1
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About The Trading Indicators
The Parabolic-close custom indictor is an enhanced Parabolic SAR indicator that can be used in analyzing trending markets.
The Parabolic-close is constructed on the price chart in the form of a line.
It shares a lot of similarities with the Moving Average Indicator, but the only difference is that it moves with higher acceleration and may alter its position in relation to price.
The ParabolicM MetaTrader4 indicator is a simplified Parabolic SAR technical indicator.
The indicator was first designed for studying trending markets.
The indicator is built on the price chart, shares some similarities with the Moving Average technical indicator, but differs due to the fact that the Parabolic SAR moves with higher acceleration and possibly alters its position in view of price.
The Fisher_m11 on the other hand is a simple histogram indicator that isolates strength and the course of the trend and alerts changes in trend. Its code is devoid of any typical MT4/MT5 indicator.