Boa Zigzag Arrows Duplex Trend Pullback Forex Trading Strategy For MT5


Price action traders often identify trending markets based on the characteristic pattern of its price swings. Price swings tend to move higher in an uptrend and move lower in a downtrend. Discerning traders know that these price swings present an excellent trading opportunity. This trading strategy shows us how we can objectively spot and trade these price swings for a more consistent trade setup.

Contents

Boa Zigzag Arrows Duplex Indicator

The Boa Zigzag Arrows Duplex Indicator is a technical analysis trading tool which bridges the gap between price action and technical indicators. It does this using the same concepts used on the Zigzag indicator.

The Zigzag indicator, which is where the Boa Zigzag Duplex indicator is based on, is an indicator which detects and indicates swing highs and swing lows. To do this, the indicator detects price movements and compares the immediate price movement against the prior price swing. It also has a preset threshold wherein if price would move against the prior price swing by a magnitude more than the threshold, the indicator would detect and indicate a swing point. For example, if the threshold is set at 5% and the market’s latest price swing is an uptrend, the indicator will detect a swing high if price moves against the uptrend by more than 5%. The Zigzag indicator would then connect the swing high with the prior swing low forming a zigzag like pattern.

The Boa Zigzag Arrows Duplex indicator works in the same manner. However, it has a unique feature which is not available in the classic Zigzag indicator. This feature is that it detects two sets of price swings based on two sets of preset thresholds. This allows the Boa Zigzag Arrows Duplex indicator to identify and indicate a longer-term price swing and a short-term price swing. The indicator plots an aqua dot whenever it detects a swing low and an orange dot whenever it detects a swing high. The indicator then proceeds to encircle the aqua dot with a dodger blue ring whenever it detects a major swing low and encircles the orange dot with a deep pink ring whenever it detects a major swing high.

Boa Zigzag Arrows Duplex Indicator

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator which presents the direction of price movements as a short-term oscillator. It does this by comparing the current price with recent historical price data.

The Stochastic Oscillator basically calculates for the difference between the closing price and the lowest low within a given period, as well as the difference between the highest high and lowest low within the same time window. It then proceeds to calculate for the ratio between the two values then multiplies the ratio by 100, normalizing the value within a 0 to 100 range. This becomes the data point for the faster Stochastic Oscillator line. The indicator then proceeds to calculate for the average of the faster line, the result of which becomes the data point for the slower line.

This oscillator plots two lines which oscillate within the range of 0 to 100. Momentum direction is identified based on how its two lines overlap. Crossovers between the two lines indicate a potential momentum reversal.

The range also has markers at levels 20 and 80, which represent the threshold of the oscillator’s normal range. Values dropping below 20 indicate an oversold market, while values breaching above 80 indicate an overbought market. As such, crossovers developing beyond the said range indicate a high probability mean reversal signal.

Stochastic Oscillator

Trading Strategy Concept

This trading strategy is a trend continuation strategy which attempts to use technical indicators to identify the direction of the trend using the same concept as finding and identifying market trends based on price action. For this reason, we would be using the Boa Zigzag Arrows Duplex indicator and the Stochastic Oscillator to objectively identify trend direction and trade entries.

The Boa Zigzag Arrows Duplex indicator is used to identify the trend direction based on price swings. Price action tends to have a consistently rising or dropping price swing whenever the market is trending, which is easier to identify using this indicator. The basis of the trend direction would be the appearance of the long-term price swing signal from the indicator, which is the ring around a dot. The long-term price swing signal would indicate that the market is starting to trend on the short-term basis.

As soon as a long-term price swing is identified, we could then start to look for a potential trade entry. The trade entries are based on the confluence of the short-term price swing signal coming from the Boa Zigzag Arrows Duplex indicator and the mean reversal signals coming from the Stochastic Oscillator. This would be the dots placed below the price swing and the Stochastic Oscillator crossovers which occur at levels beyond the 20 to 80 range.

Buy Trade Setup

Entry

  • The Boa Zigzag Arrows Duplex indicator should plot an aqua dot encircled by a dodger blue ring.
  • Allow price to swing up then swing down, causing the Stochastic Oscillator lines to drop below 20.
  • Open a buy order on the confluence of the crossover of the Stochastic Oscillator lines and the appearance of the aqua dot on the minor swing low.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • Close the trade as soon as the Boa Zigzag Arrows Duplex indicator plots an orange dot.

Boa Zigzag Arrows Duplex Trend Pullback Forex Trading Strategy - Buy Trade

Sell Trade Setup

Entry

  • The Boa Zigzag Arrows Duplex indicator should plot an orange dot encircled by a deep pink ring.
  • Allow price to swing down then swing up, causing the Stochastic Oscillator lines to breach above 80.
  • Open a sell order on the confluence of the crossover of the Stochastic Oscillator lines and the appearance of the orange dot on the minor swing high.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the Boa Zigzag Arrows Duplex indicator plots an aqua dot.

Boa Zigzag Arrows Duplex Trend Pullback Forex Trading Strategy - Sell Trade

Conclusion

Most trend following price action traders trade on pullbacks that develop during trending markets. However, newer traders often lack the knack for anticipating the reversals that form the short-term price swings. This strategy simply provides an objective method for identifying valid price swings. Still, traders who understand and have developed the skill of reading price action would have an edge given that technical indicators still do have lag.


Forex Trading Strategies Installation Instructions

This MT5 Strategy is a combination of Metatrader 5 (MT5) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

This MT5 strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this strategy accordingly.

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How to install This MT5 Strategy?

  • Download the Zip file below
  • *Copy mq5 and ex5 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex strategy
  • Right click on your trading chart and hover on “Template”
  • Move right to select the MT5 strategy
  • You will see strategy setup is available on your Chart

*Note: Not all forex strategies come with mq5/ex5 files. Some templates are already integrated with the MT5 Indicators from the MetaTrader Platform.

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