The Yang Trader trading strategy is based on price reversal at extreme areas. It utilizes the Yang Trader MT4 indicator, which is capable of showing signals at overbought and oversold levels due to its status as an oscillator. The Yang Trader MT4 Indicator is calibrated from 0 to 100. Values below 15 are seen as oversold areas whereas values above 80 indicate that the market is overbought. The Yang Trader signals on its own are not very accurate and therefore some element of filtering must be done to be able to get the most valid of signals. This filtering is performed by using other tools or other technical parameters for entry to get valid signals.
Yang Trader MT4 Indicator Strategy and Trading Rules
The Yang Trader MT4 Indicator is an oscillator. It can therefore be used to trade divergence situations in the forex market. For this strategy demonstration, we will show how the divergence works on the Yang Trader. Divergence is a situation where the highs of the indicator or lows of the indicator deviate from the highs or lows of the price action. The trade opportunity presents itself as the price action attempts to correct this divergence.
The Yang Trader MT4 Indicator can also be used to trade price reversals when it functions as an indicator which detects overbought/oversold levels in the market. We will also demonstrate how to use the line tool as a filter to pick out true reversal areas on the chart.
Yang Trader MT4 Indicator Long Trade Entry Rules
In this scenario, we are trading the reversal price action of the Yang Trader MT4 indicator. What we do here is to look for an opportunity where a trend line can be drawn across both the price action candles and the indicator bump points as shown on the chart. When the candle and indicator line both break their respective trend lines at the same time, this is a signal to buy.
The long trade entry signal occurs when the following is seen on the charts:
- The Yang Trader MT4 indicator line breaks above the trend line.
- The price action candlesticks break above the trend line which touches their high prices at the same time as the indicator line break to the upside.
- The long trade entry is made when the next candle opens, bouncing off the trend line. The chart example is shown below.
The bullish trend is signaled by the blue area and as the uptrend develops the histogram will tend to extend to the upside, the stronger the trend the higher the histogram will extend to the upside. The purple vertical line is used to show the simultaneous nature of the line breaks for the indicator signal to be considered valid.
Stop Loss and Take Profit Settings
The stop loss is set a few pips below the entry candle which takes off from the trend line. The stop loss is set as the trade is being executed. The Take Profit point should be set at a price area which coincides with the Yang Trader overbought readings. This is displayed on the chart as an area where the indicator line is in the region above 80.
Yang Trader MT4 Indicator Short Trade Entry Rules
For the short entry, we will demonstrate the classical divergence trade. This is defined by the following parameters:
- The Yang Trader MT4 indicator line is showing lower highs. Both highs are in the overbought area, i.e. the area above 80 on the indicator window.
- At the same time, the highs of the candlesticks are getting higher i.e. higher highs.
- The short trade entry is made when the next candle opens with a bounce off the trend line. The chart example is shown below.
In this chart, we can see the trend line on which price has been rejected on the chart, as well as the lower highs on the indicator line. The trade commences on the next candle where the pullback to the trendline has occurred. For best results, the indicator line’s lower highs should be in the overbought area.
Stop Loss and Take Profit Settings
The stop loss is set a few pips above the trend line which acts as a resistance to price action. The stop loss is set at the same time the trade commences.
The Take Profit point should be set at the area where the Yang Trader MT4 indicator is now oversold.
Precautions when Trading with the Yang Trader MT4 Indicator
It is very essential that the trader does not just enter the trade carelessly, but follow laid down rules for technical entry as described in this article. Entries should therefore only be made if there is a sound technical basis for such entries. If there are no clear-cut reasons for entry based on technical analysis, the trade should be ignored until the next opportunity presents itself.
Yang Trader MT4 Indicator – Recommended Time Frames
Technically speaking, you can use this MT4 indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.
Yang Trader MT4 Indicator Download
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