About the Envelopes Histogram Indicator
The Envelopes Histogram indicator for MetaTrader 4 is a free trend-following tool that converts the classic envelope channel into a clear, easy-to-read histogram.
The colored yellow and red bars appear in a separate MT4 chart window, providing straightforward signals for potential buy and sell opportunities.
This indicator is particularly useful for scalpers and day traders, offering multiple trading signals throughout the day.
By tracking the first green bar for bullish momentum and the first yellow bar for bearish momentum, traders can act quickly and effectively.
The Envelopes Histogram works on all currency pairs and is compatible with different timeframes, making it flexible for various trading strategies.
Free Download
Download the “envelopes-histogram.mq4” indicator for MT4
Key Features
- Displays a trend-following histogram based on envelopes
- Colored yellow/green bars indicate potential trade directions
- Effective for scalping and intraday trading
- Provides multiple trading opportunities per day
- Can be combined with other indicators for confirmation
Indicator Chart
The chart below illustrates the Envelopes Histogram in action. Green bars indicate a buy signal, while yellow bars indicate a sell signal.
This visual representation allows traders to quickly identify entry points and follow the prevailing trend.
Guide to Trade with Envelopes Histogram Indicator
Buy Rules
- The first green histogram bar appears
- Confirm the overall trend direction aligns with the signal
Sell Rules
- The first yellow histogram bar appears
- Confirm trend direction aligns with the signal
Stop Loss
- Set a fixed pip stop based on recent price swings (e.g., 12–20 pips)
- Optionally place a stop just beyond the last minor high/low for extra safety
Take Profit
- Target 1.5–2 times the stop loss distance for good risk-reward
- Exit partially when the histogram changes color, secure profits gradually
- Adjust based on session strength or intraday momentum
MT4 Scalping Strategy: Envelopes Histogram + Best Forex Scalping Indicator
This strategy combines the Envelopes Histogram and the Best Forex Scalping Indicator for MT4 to create a high-precision scalping system.
It is designed for traders aiming to capitalize on short-term price movements in the forex market.
The strategy is effective on lower timeframes such as M1, M5, and M15, making it suitable for day traders and scalpers seeking quick entries and exits.
Buy Entry Rules
- Buy Signal: Enter a buy trade when the Envelopes Histogram shows green bars, indicating strong bullish momentum. Ensure that the Best Forex Scalping Indicator confirms the buy signal.
- Stop Loss: Place the stop loss just below the most recent swing low to protect against unexpected market reversals.
- Take Profit: Set a take profit target at a risk-reward ratio of 1:2, or exit the trade when the Envelopes Histogram shifts to yellow bars, signaling a potential trend reversal.
Sell Entry Rules
- Sell Signal: Enter a sell trade when the Envelopes Histogram displays yellow bars, indicating strong bearish momentum. Confirm the signal with the Best Forex Scalping Indicator.
- Stop Loss: Position the stop loss just above the most recent swing high to mitigate potential losses.
- Take Profit: Set a take profit target at a risk-reward ratio of 1:2, or exit the trade when the Envelopes Histogram turns green, suggesting a possible trend reversal.
Advantages
- High Accuracy: The combination of the Envelopes Histogram and the Best Forex Scalping Indicator provides reliable signals, enhancing trade accuracy.
- Quick Execution: Suitable for fast-paced trading environments, allowing traders to capitalize on short-term price movements.
- Clear Entry and Exit Points: The strategy offers well-defined levels for entering and exiting trades, aiding in effective trade management.
Drawbacks
- Requires Active Monitoring: Due to the fast-paced nature of scalping, traders need to monitor the market closely to execute trades promptly.
- Not Suitable for All Market Conditions: The strategy performs best in trending markets and may produce false signals during sideways or choppy market conditions.
Example Case Studies
Case Study 1
On a 5-minute EUR/USD chart, the Envelopes Histogram displayed a series of green bars, indicating strong bullish momentum.
The Best Forex Scalping Indicator confirmed the buy signal (blue arrows).
The trader entered a buy position with a stop loss below the recent swing low and a take profit target at twice the risk.
The trade was successful, yielding a profit as the price moved in the anticipated direction.
Case Study 2
On a 15-minute GBP/USD chart, the Envelopes Histogram showed yellow bars, signaling bearish momentum.
The Best Forex Scalping Indicator is aligned with the sell signal (red arrows).
The trader entered a sell position with a stop loss above the recent swing high and a take profit target at twice the risk.
The trade was profitable as the market continued its downward trend.
Strategy Tips
- Use Multiple Timeframe Analysis: Confirm signals on higher timeframes (e.g., M15 or M30) to increase the reliability of trade setups.
- Implement Proper Risk Management: Always use stop losses and adhere to a consistent risk-reward ratio to protect capital.
Download Now
Download the “envelopes-histogram.mq4” indicator for Metatrader 4
FAQ
How does the Envelopes Histogram generate signals?
It transforms the envelope channel into a histogram. Green bars indicate bullish momentum, while yellow bars indicate bearish momentum, helping traders time entries.
Which timeframes work best?
Shorter timeframes like M5 or M15 are ideal for scalping, while higher timeframes can be used for intraday trades.
Can it be used with other indicators?
Yes, combining it with trend or momentum indicators can improve trade confirmation and reduce false signals.
Summary
The Envelopes Histogram indicator is a practical MT4 tool for identifying short-term trend momentum and trading opportunities.
Its colored histogram bars simplify market analysis and highlight potential buy and sell points throughout the trading day.
By following histogram signals and applying disciplined stop loss and take profit rules, traders can create a consistent scalping or intraday strategy suitable for all currency pairs.
