The DPO histogram buy and sell technical oscillator delivers short-term dual colored trading signals that can be used for scalping and day trading purposes.
The DPO fluctuates above and below its zero level.
- DPO oscillator values above the zero level suggest the short-term trend is up.
- DPO oscillator values below the zero level suggest the short-term trend is down.
The DPO oscillator paints blue colored bars above the zero line when the short-term trend is up and red bars below the zero line when the short-term trend is down.
The DPO indicator should be traded together with a longer-term trend following indicator.
For instance, use it together with the 200-period exponential moving average, 200-period simple moving average, Bollinger Bands,…
- Underlying trend up? Trade the blue DPO oscillator bars and ignore the red bars.
- Underlying trend down? Trade the red DPO oscillator bars and ignore the blue bars.
Feel free to experiment with the different indicator’s inputs settings to suit your needs and preferences.
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Download the “dpo-histogram-indicator.ex4” MT4 indicator
Indicator Chart (EUR/USD M5)
The EUR/USD 5-Minute chart below displays the DPO Buy/Sell Histogram Metatrader 4 forex indicator in action.
Basic Trading Signals
Signals from the DPO Buy/Sell Histogram MT4 forex indicator are easy to interpret and go as follows:
Buy Signal: Buy the currency pair when the DPO oscillator bars change color from red to blue. The short-term trend is up.
Place a stop loss below support or use your own preferred SL method.
Sell Signal: Sell the currency pair when the DPO oscillator bars change color from blue to red. The short-term trend is down.
Place a stop loss above resistance or use your own preferred SL method.
DPO Histogram + Scalper Signal MT4 Forex Scalping Strategy
This MT4 scalping strategy uses two indicators: the DPO Buy/Sell Histogram and the Scalper Signal.
The DPO histogram paints blue bars when the short‑term trend is up and red bars when the trend is down.
The Scalper Signal gives precise entry points: a green arrow for buys and a red arrow for sells.
By combining the two, the strategy filters entries for trend direction and timing, making it very effective for fast trades on M1 and M5 charts.
Buy Entry Rules
- Wait for the DPO histogram to turn blue, signaling a bullish short-term trend.
- Confirm a green arrow from the Scalper Signal appears after or around the time of the blue bars.
- Enter long on the close of the candle that generates the green arrow.
- Place a stop loss 5–12 pips below the most recent swing low, depending on your chosen pair and timeframe.
- Set a take profit target: on M1 aim for 8–15 pips, on M5 aim for 15–25 pips.
Sell Entry Rules
- Wait for the DPO histogram to turn red, signaling a bearish short-term trend.
- Confirm a red arrow from the Scalper Signal appears.
- Enter short on the close of the candle that prints the red arrow.
- Place a stop loss 5–12 pips above the recent swing high.
- Set a take profit target: 8–15 pips on M1, or 15–25 pips on M5.
Advantages
- Combines trend‑direction filtering with precise entries.
- Very suitable for scalping thanks to tight stop losses and fast signals.
- Helps avoid counter-trend entries by requiring DPO confirmation.
- Scalper arrows give clear entry timing, reducing guesswork.
- Works on major and volatile currency pairs for good opportunity frequency.
Drawbacks
- In very choppy or low‑volatility markets, the histogram may flip often, causing false signals.
- Because take-profit targets are small, slippage or spreads can erode profit.
- Requires fast execution and constant attention, especially on M1.
Example Case Study 1
On EURUSD M1 during the European morning session, the DPO histogram shifted from red to blue, signaling that the short‑term trend direction was turning bullish.
At almost the same moment, the Scalper Signal indicator painted a green arrow.
A buy trade was entered at 1.1062 with a stop loss at 1.1053 (9 pips) and a take profit set for 12 pips at 1.1074.
Price moved upward quickly, and the take profit was reached within a few candles, resulting in a +12 pip gain.
Example Case Study 2
On GBPJPY M5 during the New York session, the DPO histogram turned red, signaling bearish short-term momentum.
Shortly afterward, a red arrow appeared on the Scalper Signal.
A sell trade was taken at 153.45, with a stop loss placed at 153.57 (12 pips) and a take profit of 20 pips at 153.25.
The pair slid down steadily, reaching the target after three candles, delivering a +20 pip scalp.
Strategy Tips
- Use this strategy during high‑liquidity sessions, such as London and New York, where price moves are more reliable.
- Avoid trading when spreads widen, such as during low-volume times or broker news spikes.
- Stick to currency pairs with good volatility like EURUSD, GBPJPY, AUDUSD, or USDJPY for more consistent scalping setups.
- If many signals appear but the histogram is weak or barely above/below zero, skip those trades — they are higher risk.
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Download the “dpo-histogram-indicator.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (X period, average mode) Width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly, Monthly
Type: oscillator
