The indicator which is used to filter the signals of crossover strategy to give more accurate and precise movements is called the octopus indicator.
We are all familiar with the crossover over strategy. The reason is that it is straightforward to understand, and people love it, especially newbies. So in a crossover strategy, what we do is we wait for the moving averages to cross to confirm the trend reversal. When a short moving average crosses over a long moving average, the market tends to go bullish. So we place a buy trade.
Octopus indicator working:
The problem with the crossover strategy is that it sometimes gives a false signal that the trend doesn’t change. Another disadvantage of this strategy is that it provides the signal too late. When two EMA lines crossover, the direction might already be getting ready to reverse. Which can result in losses.
But to filter out the signals given by Moving average crossover, we use octopus indicator mt4. It considers three moving averages and provides a clear signal in the form of a red or green bar. The three moving averages are 8, 13, and 28 periods EMA.
Settings of Octopus indicator mt4:
In the settings of this indicator, you can change the color of 3 EMA lines and change the duration of periods. A picture of the settings of the octopus indicator is attached below.
Trading Strategy for Octopus indicator mt4:
As explained above, this indicator considers 3 EMAs and plot signals as per the positions of these moving averages.
Buy signal:
The buy signal is when the moving averages crossover to take these positions.
8 period EMA at top
13 period EMA in the middle
23 period EMA at bottom
And the color of the signal bar should also be green.
Your take profit will be when the signal bar turns red, and stop-loss will be a few pips below the candle on which you take the trade.
Sell signal:
The sell signal is when the moving averages crossover to take these positions.
23 period EMA at top
13 period EMA in the middle
8 period EMA at bottom
And the color of the signal bar should also be red.
Your profit will be when the signal bar turns to buy, and stop-loss will be a few pips above the candle on which you take the trade.
Conclusion:
There is no doubt that octopus indicator mt4 is a perfect confluence for crossover strategy. It filters out false and inaccurate signals. But still, great care should be taken while placing the trade because an indicator is a mathematical formula. That’s why I always recommend using indicators in combination. You can use an octopus indicator in variety with BB alert arrows mq4 Indicator.
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