Odds are with a 4hr KISS - MT4/MT5 Resources
Update: I no longer use this method, I have switched to a similar 15 minute method.
I have been studying Forex for over four years, jumping from one system to the next, multiple timeframes, indicators, etc... I think I have finally found something that works for me as a trader and is profitable. Maybe it works for you too. I’d also like to say that my approach is not new, it’s just a collection of little bits of knowledge I’ve picked up here and there throughout my journey.
Okay, here are the general settings and rules. I use the word "rules" loosely as they are not meant to be hard/strict rules to follow...more like guidelines. But in a rapidly changing market, one must remain flexible. Overall, what we are trying to do is put the odds of trading in our favor on the 4 hour chart in the simplest way possible... which is also the title of this post.
Chart settings
1) I use 4 hour charts and I find it more reliable (less noisy) to trade on the higher timeframes...while still giving you some good setups each week.
2) Paint 20 lwma in any color you want (I used magenta).
3) Use the MACD indicator with a histogram (I'll attach the one I found on ForexFactory at the bottom of this post). standard settings and double them, so (24,52,18).
Finding deals is as easy as 1-2-3...
1) Price action ...basically I want to follow the current trend (higher highs and higher lows = uptrend, and lower lows and lower highs = downtrend)...if the current (short-term) trend matches the overall trend of the currency pair...that's the best setup! Another thing to look for in price action is to look for simple candlestick patterns: engulfing, pinbar, tweezers, etc... that occur over previous support and resistance areas. Finally, just draw some simple trend lines and/or channels
2) Moving Averages ...you want to trade on/around the 20 moving average....the best setup is when you get a price action (PA) setup and the moving averages are going in the same direction (up for longs, down for shorts).
****The first version of this method had 3 moving averages on the chart...I have since modified and simplified it to only 1...20lwma****
3) MACD Histogram ... You want the MACD histogram to be aligned and in the same direction as your PA and MA. This helps me understand the momentum of the first two guidelines. The optimal setup is when the histogram is on the correct side of the zero line (longs are above the zero line, bears are below it).
It's true...it's really just 1-2-3...PA, MA, MACD histogram. Hopefully I haven't confused you too much so far, now let's look at some examples...
I used it right
This method has been tested on GU, EU, EJ, GJ, AU, pairing... I have not tested on any other device. My best results came from GU, EU, and EJ. If you can tolerate big swings/retracements, GJ can get a little wild at times (I can't, so I avoid it). The AUs are pretty good, but the first three are pretty solid and I trade them the most. I've also been keeping an eye on UJ...but this pair is tricky because some weeks it's pretty much the same...other weeks the deals are great!
Money management
(Warning...this worked for me...feel free to adjust your target price and stop loss to suit you).
1) I set an initial emergency stop of 100 pips in case something weird happens to the market, like unexpected news from a certain country, or if you temporarily lose power... at least you don't blow up your account.
2) For currency pairs with a higher average daily fluctuation range (GU, EJ, GJ), my target price is set to 75 points; for currency pairs with a smaller ADR (EU, AU), my target price is set to 50 points! I often see prices run 70-100 pips or more on good setups...but now, I'm looking for more consistent winners. This may be adjusted through further prospective testing.
3) If your target price has not been reached, you should exit the trade when the first candle closes in the opposite direction of your entry candle. With the right entry, your loss should be around 60 pips or less.
4) Stay away from huge candles...generally you want to enter on 50 pips or less candles...give or take a few pips.
As you can see, as long as I enter it correctly... my risk to reward ratio is about 1:1!
Attached below is the template I use for MT4 charts.
I have been studying Forex for over four years, jumping from one system to the next, multiple timeframes, indicators, etc... I think I have finally found something that works for me as a trader and is profitable. Maybe it works for you too. I’d also like to say that my approach is not new, it’s just a collection of little bits of knowledge I’ve picked up here and there throughout my journey.
Okay, here are the general settings and rules. I use the word "rules" loosely as they are not meant to be hard/strict rules to follow...more like guidelines. But in a rapidly changing market, one must remain flexible. Overall, what we are trying to do is put the odds of trading in our favor on the 4 hour chart in the simplest way possible... which is also the title of this post.
Chart settings
1) I use 4 hour charts and I find it more reliable (less noisy) to trade on the higher timeframes...while still giving you some good setups each week.
2) Paint 20 lwma in any color you want (I used magenta).
3) Use the MACD indicator with a histogram (I'll attach the one I found on ForexFactory at the bottom of this post). standard settings and double them, so (24,52,18).
Finding deals is as easy as 1-2-3...
1) Price action ...basically I want to follow the current trend (higher highs and higher lows = uptrend, and lower lows and lower highs = downtrend)...if the current (short-term) trend matches the overall trend of the currency pair...that's the best setup! Another thing to look for in price action is to look for simple candlestick patterns: engulfing, pinbar, tweezers, etc... that occur over previous support and resistance areas. Finally, just draw some simple trend lines and/or channels
2) Moving Averages ...you want to trade on/around the 20 moving average....the best setup is when you get a price action (PA) setup and the moving averages are going in the same direction (up for longs, down for shorts).
****The first version of this method had 3 moving averages on the chart...I have since modified and simplified it to only 1...20lwma****
3) MACD Histogram ... You want the MACD histogram to be aligned and in the same direction as your PA and MA. This helps me understand the momentum of the first two guidelines. The optimal setup is when the histogram is on the correct side of the zero line (longs are above the zero line, bears are below it).
It's true...it's really just 1-2-3...PA, MA, MACD histogram. Hopefully I haven't confused you too much so far, now let's look at some examples...
I used it right
This method has been tested on GU, EU, EJ, GJ, AU, pairing... I have not tested on any other device. My best results came from GU, EU, and EJ. If you can tolerate big swings/retracements, GJ can get a little wild at times (I can't, so I avoid it). The AUs are pretty good, but the first three are pretty solid and I trade them the most. I've also been keeping an eye on UJ...but this pair is tricky because some weeks it's pretty much the same...other weeks the deals are great!
Money management
(Warning...this worked for me...feel free to adjust your target price and stop loss to suit you).
1) I set an initial emergency stop of 100 pips in case something weird happens to the market, like unexpected news from a certain country, or if you temporarily lose power... at least you don't blow up your account.
2) For currency pairs with a higher average daily fluctuation range (GU, EJ, GJ), my target price is set to 75 points; for currency pairs with a smaller ADR (EU, AU), my target price is set to 50 points! I often see prices run 70-100 pips or more on good setups...but now, I'm looking for more consistent winners. This may be adjusted through further prospective testing.
3) If your target price has not been reached, you should exit the trade when the first candle closes in the opposite direction of your entry candle. With the right entry, your loss should be around 60 pips or less.
4) Stay away from huge candles...generally you want to enter on 50 pips or less candles...give or take a few pips.
As you can see, as long as I enter it correctly... my risk to reward ratio is about 1:1!
Attached below is the template I use for MT4 charts.
Attachment to original post (1)
📦 Summary of post attachments (3)
Below are all the files (3) shared in the reply.
💡 Featured Recommendations
✍️ Latest by the author
- •
- •
- •
- •
- •
- •
📌 Popular topics
- •
- •
- •
- •
- •
- •
- •
- •
🔗 You May Be Interested In
- •
- •
- •
- •
- •
- •