About the 3rd Candle Indicator
The 3rd Candle Indicator is a momentum-based signal tool designed to pinpoint short-term entry opportunities by identifying specific price action patterns.
Its essential function is to detect immediate shifts in market direction and plot visual buy or sell arrows directly on the activity chart.
Because it focuses on quick price fluctuations, it is particularly effective for traders looking to capitalize on volatility during major market sessions.
The indicator serves as a reactive trigger, helping traders enter moves as momentum begins to build rather than chasing price after a significant move has already occurred.
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Download the “3rdcandle-indicator.mq4” MT4 indicator
Key Features
- The indicator provides instant visual signals via blue and red arrows on the main chart.
- It is optimized for short-term trading styles, including scalping and intraday execution.
- The tool works across all currency pairs and is effective on lower timeframes like M1 and M5.
- It identifies potential reversal points based on recent candlestick price patterns.
Indicator Chart
The chart displays the 3rd Candle Indicator with arrows plotted against price action.
You can see a blue arrow appearing at the base of a bullish move, while a red arrow marks the start of a bearish decline.
When combined with a trend filter, these arrows highlight high-probability continuation points.
Guide to Trade with 3rd Candle Indicator
Buy Rules
- Determine the long-term trend using a tool like the 100-period Exponential Moving Average.
- Wait for the 3rd Candle Indicator to print a blue arrow on the chart.
- Ensure the price is trading above the moving average to confirm a bullish environment.
- Open a buy position at the start of the next candle after the arrow appears.
Sell Rules
- Determine the long-term trend using a tool like the 100-period Exponential Moving Average.
- Wait for the 3rd Candle Indicator to print a red arrow on the chart.
- Ensure the price is trading below the moving average to confirm a bearish environment.
- Open a sell position at the start of the next candle after the arrow appears.
Stop Loss
- For buy trades, place the stop loss below the recent swing low or the signal candle.
- For sell trades, place the stop loss above the recent swing high or the signal candle.
Take Profit
- Exit the trade when an opposite signal arrow appears on the chart.
- Scalpers may choose to exit at the nearest support or resistance level.
3rd Candle Indicator and Zero Lag Moving Average Trading Strategy
This MT4 scalping strategy combines the precise entry signals of the 3rd Candle Indicator with trend direction confirmation from the Zero Lag Moving Average Indicator MT4.
The 3rd Candle indicator gives blue arrows for buy entries and red arrows for sell entries.
The Zero Lag MA helps determine the trend: price above the MA is bullish and price below is bearish.
This strategy is ideal for very short timeframes such as M1 and M5, where quick moves can be captured.
Targets are small, usually between 3 and 10 pips, making it suitable for active scalpers who focus on fast execution and tight risk management.
Buy Entry Rules
- Price must be above the Zero Lag Moving Average, indicating a bullish trend.
- The 3rd Candle indicator displays a blue arrow on the chart.
- Enter a buy trade at the close of the candle where the blue arrow appears while price remains above the MA.
- Place a stop loss a few pips below the recent swing low or the MA.
- Set a take profit target between 3 to 10 pips depending on market volatility.
- Exit the trade early if a red arrow appears from the Buy Sell Scalper or price closes below the MA.
Sell Entry Rules
- Price must be below the Zero Lag Moving Average, indicating a bearish trend.
- The 3rd Candle indicator displays a red arrow on the chart.
- Enter a sell trade at the close of the candle where the red arrow appears while price remains below the MA.
- Place a stop loss a few pips above the recent swing high or the MA.
- Set a take profit target between 3 to 10 pips depending on market volatility.
- Exit the trade early if a blue arrow appears from the Buy Sell Scalper or price closes above the MA.
Advantages
- Combines trend confirmation with clear entry arrows for high-probability scalps.
- Targets are small and achievable, allowing multiple trades per session.
- Works well on fast timeframes such as M1 and M5 for active scalpers.
- Simple rules make it easy to follow and minimize emotional trading.
- Stop loss placement is tight, reducing risk per trade while allowing for small profits to accumulate.
Drawbacks
- Frequent small trades may be affected by spread and execution delays.
- Requires strict discipline to take small targets consistently.
- Signals may lag slightly if the market reverses very quickly near the MA.
Case Study 1 – EURUSD M1
During the London session, EURUSD on the M1 chart showed price above the Zero Lag MA.
The 3rd Candle indicator displayed a blue arrow.
A buy trade was entered at the close of the candle with the stop loss a few pips below the recent low.
Price moved quickly upward and the trade hit a 5-pip take profit target in a few bars.
Case Study 2 – GBPJPY M5
On GBPJPY M5, price was below the Zero Lag MA, indicating a bearish trend.
A red arrow appeared from the 3rd Candle indicator, signaling a sell entry.
The stop loss was set a few pips above the recent swing high.
Price moved lower and the trade achieved a 9-pip profit before a blue arrow appeared, signaling the end of the move.
This case shows how tight targets on small timeframes can produce consistent scalping results.
Strategy Tips
- Focus on high volatility sessions like London and New York to achieve targets faster.
- Keep an eye on spreads and avoid trading pairs with high transaction costs for small pip targets.
- Do not chase trades outside of the MA trend to reduce false entries.
- Consider using multiple monitors or alerts to catch M1 signals promptly.
Download Now
Download the “3rdcandle-indicator.mq4” Metatrader 4 indicator
FAQ
Why should I combine this tool with a moving average?
The 3rd Candle Indicator is a short-term trigger.
Using a moving average ensures you only take signals that align with the broader market trend, which significantly increases the overall win rate.
Which trading sessions are best for these signals?
This indicator performs best during the London and New York sessions.
These periods offer the high volatility and liquidity required for short-term momentum signals to reach their profit targets quickly.
Summary
The 3rd Candle Indicator is a highly efficient tool for traders who prioritize speed and precision in their execution.
Its primary benefit is the immediate clarity it provides through arrow-based signals, removing the need for complex chart analysis.
While it is a powerful trigger on its own, its true potential is unlocked when used as part of a trend-following system.
By focusing on high-volatility sessions and adhering to trend filters, traders can use this indicator to capture consistent short-term gains across any currency pair.
