The Braid Filter Indicator was first introduced in 2006 by a man named Robert Hill, also known as “Mr.Pips” in Stocks and Commodities Magazine. By the way, Mr. Hill created the first version of this indicator. Over the years, coders created subsequent versions and added modifications. The “braid” is formed by line intersections based on various types of moving averages.
What is the Braid Filter Indicator?
Braid Filter Indicator is an indicator that is classified as an oscillator and can effectively identify buy and sell trends. This indicator is classified as a “confirmation indicator,” which means it serves as an initial checkpoint after the baseline indicator has provided you with a foundational signal. Additionally, the original Braid Filter is a “below chart” indicator. The indicator appears in a separate trading window as three colored signal lines. Braid Filter Indicator may alert you when the trend is about to reverse. This technical indicator can help scalpers and day traders. The Braid Filter Indicator can be used as an additional trading signals indicator with any existing forex trading strategy or system.
Braid Filter Strategy
The Braid Filter Strategy is not a difficult one to understand. The indicator involved (Braid Filter Indicator) is made up of three lines, which include the Short Signal Line in Red, Long Signal Line in Blue and Separation Percentage Line (the FILTER) in Yellow. The yellow horizontal line acts as an ATR (14) filter to include or exclude the intersection of the moving averages. When the two lines cross under the line, fewer signals are considered as the separation pop percentage variable is increased. In contrast, the lower the pip separation percentage line, the more signals that occur above the line are considered. The default setting is (50%).
In contrast to other crossover indicators, the yellow separation line provides us with additional precision and a second level of reliability.
Buy Signal
The following could be your checklist for a buy trade:
- When the asset being traded is in an overall uptrend.
- When the Blue Signal Line intersects both the Red Signal Line and the Yellow Separation Line.
Once these two events occur, you could do the following:
- Open a buy position immediately after the signal’s close.
- Set your stop loss just below the nearest support level.
- Set your take profit at the nearest resistance zone.
- For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Sell Signal
The following could be your checklist for a sell trade:
- When the asset being traded is in an overall downtrend.
- When the Red Signal Line intersects both the Blue Signal Line and the Yellow Separation Line.
Once these two events occur, you could do the following:
- Open a sell position immediately after the signal’s close.
- Set your stop loss just above the nearest resistance level.
- Set your take profit at the nearest support zone.
- For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Braid Filter Pros & Cons
Pros
- The Braid Filter Indicator helps to identify buy and sell trends.
- This indicator is easy to use even by novice traders.
- This indicator gives trade entry signals.
Cons
- The Braid Filter Indicator is not really effective enough for exiting trades.
- The signals given by this indicator can be somewhat choppy at times.
Conclusion
In conclusion, the Braid Filter Indicator for Metatrader is a great tool for traders to apply in their trading journey. It may look confusing at first glance due to the 3 different colored lines intersecting each other, but these lines have their functions, and when the strategy is understood it can be used to catch some good moves especially in a trending market.
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