The website magicfxformula created and published the Magic FX Formula mt4 Indicator V2 forex indicator. It is a forex indicator for both experienced and inexperienced traders. It is sometimes thought to be too advanced for assistance, although this may not be the case. For starters, it could keep your chart from seeming jumbled. It only displays the necessary information for the trader to conduct their business. The chart is kept blank so that the trader may see what is and has been happening in the currency market.
What is the Magic FX Formula Indicator?
Magic FX Formula Indicator was designed to assist traders in identifying the correct trend and choosing entry points. This indicator was created specifically for rookie traders who struggle to maintain their accuracy on trend-based trades. It is a standalone indicator that provides users with both entry and exit signals. However, you may combine this indicator with other trend-following tools to create a superior filter for trade signals.
Magic FX Formula Strategy
Trend Signals are colored dots that appear around the price bars to indicate the trend state. A green dot beneath the price bar indicates a positive trend. A red dot above the price bar, on the other hand, reflects the current trend’s bearish position. This template may always be found at the top right corner of the chart. It directly indicates long or short entries in both text and directed arrow styles. A trading signal could be considered when both the Trend and the Trade Signal indicate the same price movement direction.
Buy Signal
The following could be your checklist for a buy trade:
- When a green trend signal dot appears below the price bar.
- When the trade signal displays “Buy” along with an upward arrow.
Once these events occur:
- You could open a buy position after you confirm your entry with bullish candlestick patterns.
- You could set your stop loss just below the nearest swing low.
- You could set your take profit at the nearest resistance zone, or you could exit trade when a red trend signal dot appears.
- 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 a red trend signal dot appears above the price bar.
- When the trade signal displays “Sell” along with a downward arrow.
Once these events occur:
- You could open a sell position after you confirm your entry with bearish candlestick patterns.
- You could set your stop loss just above the nearest swing high.
- You could set your take profit at the nearest support zone, or you could exit trade when a green trend signal dot appears.
- For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Magic FX Formula Pros & Cons
Pros
- The Magic FX Formula Indicator may assist traders in identifying the prevailing trend of the asset being traded and also predict entry and exit zones.
- Gives clear trading signals that can be combined with other trading tools and price action analysis for making informed decisions.
Cons
- The Magic FX Formula Indicator may not meet the trader’s expectations in a narrow-ranging market.
- This indicator may require some knowledge of price action to benefit optimally from it.
Conclusion
The Magic FX Formula indicator is worth including in your trading arsenal. A decent forex indicator will likely boost your chances of success. Nonetheless, keep in mind the importance of maintaining realistic expectations. It, like any other technical analysis tool, is not capable of generating 100% correct indications. As a result, this forex indicator occasionally generates erroneous signals. Its performance will be highly variable depending on market conditions. You are free to create your own trading method based on it.
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