About the Kaufman 3 Signal Forex Indicator
The Kaufman 3 Signal Forex Indicator for Metatrader 4 is a crossover-based system built on the Kaufman trading method.
It uses two adaptive signal lines to help traders identify trend changes early while minimizing false entries.
The indicator plots a white and a purple signal line directly on the main MT4 chart.
When the white line crosses the purple line from below, it generates a buy signal.
When the white line crosses from above, it produces a sell signal.
This simple visual approach allows traders to quickly spot potential market reversals and trend continuations.
The indicator can be applied as a standalone tool for entries and exits or used as a trend-confirming filter within a larger trading strategy.
Free Download
Download the “Kaufman3.mq4” indicator for MT4
Key Features
- Crossover system with white and purple signal lines
- Generates buy and sell signals in real-time
- Can be used as a standalone system or trend filter
- Responsive to changing market conditions
Indicator Chart
The chart displays the Kaufman 3 Signal Forex Indicator with the white and purple lines overlaid on the price.
Buy signals appear when the white line crosses the purple line from below, and sell signals appear when the white line crosses from above.
This visual representation helps traders align their trades with the current market trend.
Guide to Trade with Kaufman 3 Signal Forex Indicator
Buy Rules
- Enter a buy trade when the white line crosses the purple line from below.
- Confirm the crossover is not during choppy sideways conditions for higher accuracy.
Sell Rules
- Enter a sell trade when the white line crosses the purple line from above.
- Ensure the crossover occurs after a slight retracement or consolidation for better timing.
Stop Loss
- For buy trades, place the stop loss below the most recent swing low or the low of the crossover candle.
- For sell trades, place the stop loss above the most recent swing high or the high of the crossover candle.
- Alternatively, use the ATR of the last 5–10 candles to set a volatility-based stop.
- Leave enough margin to allow for normal retracements without being stopped out prematurely.
Take Profit
- Set the first target near the next key support or resistance level on the chart.
- Consider trailing the stop along the crossover lines as the trend develops to lock in profits.
- Close trades if an opposite crossover occurs or the trend loses strength.
Practical Tips
- Avoid trading during flat, sideways market conditions when crossovers may give false signals.
- Focus on 1–2 currency pairs to learn how the indicator behaves in different market conditions.
Kaufman 3 Signal + Reflex Scalper MT4 Scalping Strategy
This MT4 scalping strategy combines the Kaufman 3 Signal indicator and the Reflex Buy Sell Forex Scalper.
The Kaufman 3 Signal indicator defines the short-term market direction: when the white line moves above the purple line, the trend is bullish; when it drops below, the trend turns bearish.
The Reflex Scalper provides fast trade timing, using a blue line for buy signals and a brown line for sell signals.
This combination works because the Kaufman 3 Signal gives a stable direction filter while the Reflex Scalper identifies quick momentum entries in that direction.
It’s designed for fast-moving pairs such as EURUSD, GBPUSD, and XAUUSD on M1 to M5 charts.
It suits traders who enjoy active scalping and want structured, low-lag confirmation tools.
Buy Entry Rules
- The white line of the Kaufman 3 Signal indicator crosses above the purple line, confirming a bullish bias.
- The Reflex Scalper displays a blue line, confirming upward momentum.
- Enter a buy trade at the next candle close after both indicators align.
- Place stop loss 5 to 10 pips below the most recent swing low.
- Take profit at 1.5x to 2x your stop loss distance, or close partially when the Reflex line starts flattening.
Sell Entry Rules
- The white line of the Kaufman 3 Signal indicator crosses below the purple line, confirming a bearish bias.
- The Reflex Scalper shows a brown line, signaling downward momentum.
- Enter a sell trade at the next candle close after confirmation.
- Place stop loss 5 to 10 pips above the recent swing high.
- Take profit at 1.5x to 2x your stop loss, or exit partially as soon as the Reflex line turns neutral.
Advantages
- Clear rules for quick decision-making.
- Combines a trend filter and an entry trigger for higher precision.
- Ideal for short-term traders who prefer frequent trades.
- Can adapt to different pairs and volatility levels.
- Low lag structure gives earlier signals compared to traditional MAs.
Drawbacks
- Not suitable for low-volatility or ranging conditions.
- Requires strong discipline for exit timing due to fast market changes.
- Scalping requires focus and consistent execution to avoid overtrading.
Case Study 1 – EURUSD M1 London Session
During the early London open, EURUSD moved steadily higher.
The Kaufman 3 Signal white line crossed above the purple line, confirming bullish direction.
A few minutes later, the Reflex Scalper printed a blue line, showing fresh momentum.
The trade was entered on the next candle close.
Stop loss was set at 7 pips, and take profit at 12 pips.
Within 10 minutes, the price hit the target as volatility expanded.
The alignment between both indicators provided clear confirmation and prevented premature entries.
Case Study 2 – GBPUSD M5 New York Session
In the New York morning, GBPUSD began to weaken after a short rally.
The Kaufman 3 Signal white line dropped below the purple line, showing bearish structure.
The Reflex Scalper soon switched to a brown line, confirming downward pressure.
The short position was opened at the candle close.
Stop loss was placed 9 pips above the entry, with a target of 18 pips.
The move accelerated and hit the target within half an hour, producing a clean 2:1 reward-to-risk result.
Strategy Tips
- Trade during high-volume hours such as the London and New York sessions.
- Avoid entries when both indicators are flat or conflicting.
- Keep spread costs in mind, especially for exotic pairs.
- Consider using a trailing stop once profit exceeds 10 pips to protect gains.
- Focus on trending phases and skip low-volatility periods.
The Kaufman 3 Signal + Reflex Scalper MT4 strategy is built for traders who want fast-paced setups with strong directional filtering.
When used during active hours, it can produce consistent results through tight risk management and quick decision-making.
Always backtest on your preferred pairs before applying the strategy live.
Download Now
Download the “Kaufman3.mq4” indicator for Metatrader 4
FAQ
How does the Kaufman 3 Signal work in sideways markets?
During flat or choppy conditions, crossovers may occur more frequently, which can lead to false signals.
Traders should wait for clear directional momentum or combine with a trend filter to avoid low-probability trades.
What is the best way to confirm a crossover signal?
Check that the crossover aligns with higher timeframe trends or that price momentum supports the direction.
Volume spikes or trend confirmation indicators can also increase the reliability of signals.
Can the indicator be used for multiple currency pairs at the same time?
Yes, but it’s best to monitor a limited number of pairs initially to understand how each reacts to the indicator before scaling up.
How should risk management be applied?
Use dynamic stops based on recent price action or volatility, and consider trailing stops as the trend develops.
Maintain a favorable risk-to-reward ratio and avoid over-leveraging.
Summary
The Kaufman 3 Signal Forex Indicator for MT4 is a reliable crossover-based tool for spotting potential trend reversals and continuations.
By using the white and purple signal lines, traders can quickly identify bullish and bearish opportunities without cluttering the chart with complex calculations.
It works well as both a standalone system and a confirming tool for other strategies.
Flexible enough for different trading styles, it can be combined with momentum or trend indicators to improve trade quality, while dynamic stop loss and take profit rules help manage risk effectively.
