The Kaufman 3 Signal Forex indicator for Metatrader 4 can be categorized as a crossover system that’s based on the Kaufman trading method.
The indicator can be used as a standalone trading tool for both trade entry and exit or as an additional trend filter that works together with an existing system.
Kaufman 3 appears in the main MT4 chart window in the form of a white and purple colored signal line.
Buy & Sell Trade Example
- A buy signal occurs when the white signal line crosses the purple signal line bottom-up.
- A sell signal occurs when the white signal line crosses the purple signal line top-down.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “Kaufman3.mq4” indicator for MT4
Indicator Chart (EUR/USD M5)
The example chart below displays the Kaufman 3 mt4 indicator in action on the trading chart.
Trading Tips:
Feel free to use your own favorite trade entry, stop loss and take profit method to trade with the Kaufman 3 Forex indicator.
As always, trade in agreement with the overall trend and practice on a demo account first until you fully understand this indicator.
Please note that even the best trading indicator cannot yield a 100% win rate over long periods.
Indicator Specifications & Inputs:
Trading Platform: Developed for Metatrader 4 (MT4)
Currency pairs: Works for any pair
Time frames: Works for any time frame
Trade Style: Works for scalping, day trading and swing trading
Input Parameters: Variable (inputs tab), color settings & style
Indicator type: Trend
Does the indicator repaint? No.
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.
