Introduction to the Strength Arrow Indicator
Timing trade entries can sometimes be very difficult. Sometimes it is the hesitation that would cause traders to miss good trades. Sometimes trading unconfirmed reversal signals could also cause traders to lose capital.
It is always a good idea to have an objective method of entering trades. One way to do this is with the use of an indicator that can provide reversal signals.
The Strength Arrow can be one of the most effective indicators that traders can use as a reversal signal indicator.
What is the Strength Arrow Indicator?
The Strength Arrow indicator is a momentum-based custom technical indicator which provides momentum reversal signals which traders can use to enter and exit trades.
This indicator plots arrow pointing the direction of a momentum reversal.
How the Strength Arrow Indicator Works?
It is unclear how the Strength Arrow indicator identifies momentum reversals. However, based on the indicator’s script, the Strength Arrow indicator makes use of an underlying Relative Strength Index (RSI) as a basis for possible momentum reversals. It seems that the Strength Arrow indicator identifies momentum reversals based on the crossing over of a pair of Relative Strength Index lines.
The Strength Arrow identifies momentum reversals based on its underlying algorithm. It then plots an arrow pointing the direction of the momentum reversal. An upward pointing arrow indicates a bullish momentum reversal signal, while a downward pointing arrow indicates a bearish momentum reversal signal.
How to use the Strength Arrow Indicator for MT4
The Strength Arrow indicator is an excellent momentum reversal signal indicator.
As a momentum reversal signal indicator, it can work really well as a trade entry trigger. Traders can use it as a signal to enter a trade. However, this is best done when in confluence with other trade setups. Traders can wait for possible trades on support or resistance levels and trade as soon Strength Arrow indicator plots an arrow indicating a possible reversal.
It can also work really well as a trade setup in itself whenever the signals are in confluence with a reversal candlestick pattern.
Buy Trade Setup
When to Enter?
Open a buy order as soon as the Strength Arrow indicator plots an arrow pointing up which is in confluence with a bullish reversal candlestick pattern. Set the stop loss below the pattern.
When to Exit?
Set the take profit target on the next resistance level and allow price to reach the target.
Sell Trade Setup
When to Enter?
Open a sell order as soon as the Strength Arrow indicator plots an arrow pointing down which is in confluence with a bearish reversal candlestick pattern. Set the stop loss above the pattern.
When to Exit?
Set the take profit target on the next support level and allow price to reach the target.
Conclusion
The Strength Arrow indicator is one of the most reliable momentum reversal signal indicators. Although the signals it produces are not perfect, many of the signals that this indicator provides tend to be the beginning of an actual reversal.
This indicator can be a very good addition to a trade setup as an entry trigger, especially with reversal trade setups.
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